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What changed in indie Semiconductor, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of indie Semiconductor, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+351 added−324 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-28)

Top changes in indie Semiconductor, Inc.'s 2023 10-K

351 paragraphs added · 324 removed · 258 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

56 edited+16 added−10 removed55 unchanged
Biggest changeThe aggregate consideration for the Merger, which is up to $270.0 million, consisted of (i) $90.0 million payable in cash at closing, (ii) $90.0 million payable in indie shares of Class A common stock, par value $0.0001 per share (the “Common Stock”) at closing, and (iii) up to $90.0 million payable in cash or Common Stock subject to achieving certain GEO-related revenue targets.
Biggest changeThe aggregate consideration for this transaction consisted of (i) $93.4 million in cash (including accrued cash consideration at closing and net of cash acquired); (ii) the issuance by indie of 6,868,768 shares of Class A common stock at closing, with a fair value of $75.6 million; (iii) 1,907,180 shares of Class A common stock at closing, with a fair value of $21.0 million payable in the next 24-month period after closing; and (iv) contingent considerations with fair value of $59.3 million at closing payable in cash or in Class A common stock, subject to achieving certain GEO-related revenue targets through September 30, 2024.
In-cabin UX used to be synonymous with the in-vehicle infotainment (IVI) system, but today UX is defined by much more than IVI; consumers want intuitive, informative, connected and engaging interactions with their vehicle as they have become accustomed to with their portable consumer devices, but they also want enhanced convenience, utility, comfort and customizability of the cabin to their personal preferences, the nature of the journey or even the driver’s mood.
In-cabin UX used to be synonymous with the in-vehicle infotainment (“IVI”) system, but today UX is defined by much more than IVI; consumers want intuitive, informative, connected and engaging interactions with their vehicle as they have become accustomed to with their portable consumer devices, but they also want enhanced convenience, utility, comfort and customizability of the cabin to their personal preferences, the nature of the journey or even the driver’s mood.
The total consideration paid for this acquisition consisted of (i) $8.7 million in cash at closing, net of cash acquired; (ii) a $10.0 million promissory note payable in January 2023 with a fair market value of $9.7 million; and (iii) an equity-based earn-out of up to 858,369 shares of indie Class A common stock based on future revenue growth.
The total consideration paid for this acquisition consisted of (i) $8.7 million in cash at closing, net of cash acquired; (ii) a $10.0 million promissory note payable in January 2023 with a fair market value of $9.7 million; and (iii) an equity-based earn-out of up to 858,369 shares of Class A common stock based on future revenue growth.
Industry Overview At the highest level, semiconductors can be classified either as discrete devices, such as individual transistors, or integrated circuits, where a number of transistors and other components are combined to form a more complicated electronic subsystem. ICs can be divided into three primary categories: digital, analog, and mixed-signal.
Industry Overview At the highest level, semiconductors can be classified either as discrete devices, such as individual transistors, or integrated circuits (“ICs”), where a number of transistors and other components are combined to form a more complicated electronic subsystem. ICs can be divided into three primary categories: digital, analog, and mixed-signal.
The most significant change in our reported financial position and results of operations was gross cash proceeds of $399.5 million from the merger transaction, which includes $150 million in gross proceeds from the PIPE financing that was consummated in conjunction with the Transaction.
The most significant change in our reported financial position and results of operations was gross cash proceeds of $399.5 million from the merger transaction, which includes $150.0 million in gross proceeds from the PIPE financing that was consummated in conjunction with the Transaction.
Through innovative analog, digital and mixed-signal integrated circuits (“ICs”) with software running on the embedded processors, we are developing a differentiated, market-leading portfolio of automotive products. Our technological expertise, including cutting-edge design capabilities and packaging skillsets, together with our deep applications knowledge and strong customer relationships, have enabled us to cumulatively ship over 200 million semiconductor devices since our inception.
Through innovative analog, digital and mixed-signal integrated circuits (“ICs”) with software running on the embedded processors, we are developing a differentiated, market-leading portfolio of automotive products. Our technological expertise, including cutting-edge design capabilities and packaging skillsets, together with our deep applications knowledge and strong customer relationships, have enabled us to cumulatively ship over 300 million semiconductor devices since our inception.
Through our customer collaboration at the R&D level, our team members are often integrated into a customer’s technology selection and design processes, a key aspect in indie’s winning track record of repeat business. Since our inception, we have shipped over 200 million devices to customers and our products are powering solutions in over 25 automotive suppliers.
Through our customer collaboration at the R&D level, our team members are often integrated into a customer’s technology selection and design processes, a key aspect in indie’s winning track record of repeat business. Since our inception, we have shipped over 300 million devices to customers and our products are powering solutions in over 25 automotive suppliers.
Our research activities are principally conducted at our headquarters in Aliso Viejo, California and we have design centers and sales offices in Austin, TX; Boston, MA; Detroit, MI; San Francisco and San Jose, CA; Córdoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Edinburgh, Scotland; Rabat, Morocco; Haifa and Tel Aviv, Israel; Quebec City, Canada; Tokyo, Japan; Seoul, South Korea and several locations throughout China.
Our research activities are principally conducted at our headquarters in Aliso Viejo, California and we have design centers and sales offices in Austin, TX; Boston, MA; Detroit, MI; San Francisco and San Jose, CA; Córdoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Edinburgh, Scotland; Rabat, Morocco; Haifa and Tel Aviv, Israel; Quebec City and Toronto, Canada; Tokyo, Japan; Seoul, South Korea; Schlieren, Switzerland and several locations throughout China.
As a fabless semiconductor supplier, this approach has allowed us to maximize scalability while minimizing capital expenditures. To meet demand as the business scales, we are continue to enhance our successful strategic supply chain partnerships. • Driving margin expansion through innovative designs and development.
As a fabless semiconductor supplier, this approach has allowed us to maximize scalability while minimizing capital expenditures. To meet demand as the business scales, we are continuing to enhance our successful strategic supply chain partnerships. • Driving margin expansion through innovative designs and development.
The purchase price is subject to working capital and other adjustments as provided in the merger agreement. The transaction was completed on March 3, 2023. Symeo GmbH On October 21, 2021, we entered into a definitive agreement with Analog Devices (“ADI”) to acquire Symeo GmbH.
The purchase price is subject to working capital and other adjustments as provided in the Agreement and Plan of Merger. The transaction was completed on March 3, 2023. Symeo GmbH On October 21, 2021, we entered into a definitive agreement with Analog Devices (“ADI”) to acquire Symeo.
The three megatrends driving the automotive semiconductor market are catalyzed by: (i) the increasing electrification of vehicle drivetrains leading to the rapid proliferation of electric vehicles (“EVs”); (ii) the adoption of advanced driver assistance systems (“ADAS”) and driving automation functionality to improve road safety and strive towards higher levels of vehicle automation; and (iii) consumer demands for engaging, connected and convenient in-cabin user experience (UX).
The three megatrends driving the automotive semiconductor market are catalyzed by: (i) the increasing electrification of vehicle drivetrains leading to the rapid proliferation of electric vehicles (“EVs”); (ii) the adoption of advanced driver assistance systems 6 Table of Contents (“ADAS”) and driving automation functionality to improve road safety and strive towards higher levels of vehicle automation; and (iii) consumer demands for engaging, connected and convenient in-cabin user experience (UX).
Toward that end, today indie is approved on multiple Tier 1 AVLs. • Proven management team. indie’s executive management team brings extensive semiconductor experience, with past successes in delivering leading-edge technologies and creating stockholder value. Company Strategy 7 Table of Contents We are dedicated to offering our customers a comprehensive portfolio of automotive technology solutions.
Toward that end, today indie is approved on multiple Tier 1 AVLs. • Proven management team. indie’s executive management team brings extensive semiconductor experience, with past successes in delivering leading-edge technologies and creating stockholder value. Company Strategy We are dedicated to offering our customers a comprehensive portfolio of automotive technology solutions.
We are ISO9001 and ISO26262 certified and intend to pursue further certifications. Intellectual Property The core strengths of our business are our intellectual property portfolio and engineering experience, both of which guide product development activities and our approach to patent filings.
We are ISO9001 and ISO26262 certified, compliant to IATF16949 and intend to pursue further certifications. Intellectual Property The core strengths of our business are our intellectual property portfolio and engineering experience, both of which guide product development activities and our approach to patent filings.
ITEM 1. BUSINESS Company Overview indie offers highly innovative automotive semiconductors and software solutions for Advanced Driver Assistance Systems (“ADAS”), autonomous vehicle, in-cabin, user experience (including connected car) and electrification applications. The Company focuses on edge sensors across multiple modalities spanning light detection and ranging (“LiDAR”), radar, ultrasound and computer vision.
ITEM 1. BUSINESS Company Overview indie offers highly innovative automotive semiconductors and software solutions for Advanced Driver Assistance Systems (“ADAS”), driver automation, in-cabin, user experience (including connected car) and electrification applications. The Company focuses on edge sensors across multiple modalities spanning light detection and ranging (“LiDAR”), radar, ultrasound and computer vision.
GAAP”). indie is deemed to be the accounting predecessor of the combined business and is the successor registrant for U.S. Securities and Exchange Commission (“SEC”) purposes, meaning that our financial statements 5 Table of Contents for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.
GAAP”). indie is deemed to be the accounting predecessor of the combined business and is the successor registrant for U.S. Securities and Exchange Commission (“SEC”) purposes, meaning that our financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC.
Automotive Quality and Safety We employ wafer and package technologies that meet or exceed the rigorous quality and safety requirements set by industry standards and our customers. Our robust development processes and company guidelines have resulted in indie devices that are capable of exceeding the requirements of AEC Q100 Automotive Grade.
Automotive Quality and Safety 10 Table of Contents We employ wafer and package technologies that meet or exceed the rigorous quality and safety requirements set by industry standards and our customers. Our robust development processes and company guidelines have resulted in indie devices that are capable of exceeding the requirements of AEC Q100 Automotive Grade.
To that end, we regularly review our investments to ensure alignment with our growth and profitability goals and make necessary changes in the allocation of resources as needed. In 2022, we spent approximately 109% of our revenues on research and development as we expand product development activities in support of pent-up customer demand.
To that end, we regularly review our investments to ensure alignment with our growth and profitability goals and make necessary changes in the allocation of resources as needed. In 2023, we spent approximately 69% of our revenues on research and development as we expand product development activities in support of pent-up customer demand.
Patent infringement is an ongoing risk, in part because other companies in our industry could 10 Table of Contents have patent rights that may not be identifiable when we initiate development efforts. Litigation may be necessary to enforce our intellectual property rights, and we may have to defend ourselves against infringement claims.
Patent infringement is an ongoing risk, in part because other companies in our industry could have patent rights that may not be identifiable when we initiate development efforts. Litigation may be necessary to enforce our intellectual property rights, and we may have to defend ourselves against infringement claims.
This commitment is reflected through our day-to-day activities, including the adoption of socially responsible policies and procedures, our focus on fostering an inclusive workplace, our constant drive toward more efficient use of materials and energy, our careful management of our supply chain, our products which help enhance road safety, and our ethics and compliance program. • We seek to protect the human rights and civil liberties of our employees through policies, procedures, and programs that avoid risks of compulsory and child labor, both within our company and throughout our supply chain. • We foster a workplace of dignity, respect, diversity, and inclusion through our recruiting and advancement practices, internal communications, and employee resource groups. • We educate our employees annually on relevant ethics and compliance topics, publish accessible guidance on ethical issues and related company resources in our global Code of Business Conduct and Ethics , and encourage reporting of ethical concerns through any of several global and local reporting channels. • We innovate to reduce the energy used by our products, the energy used to manufacture them, and the amount of new materials required to manufacture them.
This commitment is reflected through our day-to-day activities, including the adoption of socially responsible policies and procedures, our focus on fostering an inclusive workplace, our constant drive toward more efficient use of materials and energy, our careful management of our supply chain, our products which help enhance road safety, and our ethics and compliance program. • We seek to protect the human rights and civil liberties of our employees through policies, procedures, and programs that avoid risks of compulsory and child labor, both within our company and throughout our supply chain. • We foster a workplace of dignity, respect, diversity, and inclusion through our recruiting and advancement practices, internal communications, and employee resource groups. • We educate our employees annually on relevant ethics and compliance topics, publish accessible guidance on ethical issues and related company resources in our global Code of Business Conduct and Ethics , and encourage reporting of ethical concerns through any of several global and local reporting channels. • We innovate to reduce the energy used by our products, the energy used to manufacture them, and the amount of new materials required to manufacture them. 11 Table of Contents Employees As of December 31, 2023, we had approximately 900 full time employees.
The purchase price is subject to working capital and other adjustments as provided in the merger agreement. GEO Semiconductor Inc.
The purchase price is subject to working capital and other adjustments as provided in the Share Purchase Agreement. GEO Semiconductor Inc.
By establishing a trusted relationship with the industry’s leading suppliers, indie is well positioned to gain a growing share of new automotive solutions. 9 Table of Contents Revenues for the years ended December 31, 2022 and 2021 include sales to Aptiv, a leading Tier 1 automotive supplier, which represented approximately 37% and 39% of total revenue, respectively.
By establishing a trusted relationship with the industry’s leading suppliers, indie is well positioned to gain a growing share of new automotive solutions. Revenues for the years ended December 31, 2023, 2022 and 2021 include sales to Aptiv, a leading Tier 1 automotive supplier, which represented approximately 15%, 37%, and 39% of total revenue, respectively.
Our system-on-chip solutions are at the epicenter of a diverse set of emerging applications including radar, LiDAR, vision, wireless charging, wired power delivery, interior and exterior lighting, device-to-IVI interfacing, power management and small motor control. • Delivering on existing wins and extending product reach. Our products currently support multiple Tier 1 automotive supplier platforms.
Our system-on-chip solutions are at the epicenter of a diverse set of emerging applications including radar, LiDAR, vision, wireless charging, wired power delivery, interior and exterior lighting, device-to-IVI interfacing, augmented reality head-up-displays (“HUD”), power management and small motor control. • Delivering on existing wins and extending product reach. Our products currently support multiple Tier 1 automotive supplier platforms.
Also, on June 10, 2021, Surviving Pubco changed its name to indie Semiconductor, Inc., and listed our shares of Class A common stock, par value $0.0001 per share on The Nasdaq Stock Market LLC under the symbol “INDI.” The Transaction was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S.
Also, on June 10, 2021, Surviving Pubco changed its name to indie Semiconductor, Inc., and listed our shares of Class A common stock on The Nasdaq Stock Market LLC under the symbol “INDI.” The Transaction was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America (“U.S.
For the fiscal year ended December 31, 2022, indie incurred total issuance costs of $0.4 million. Reverse Recapitalization with Thunder Bridge Acquisition II On June 10, 2021, we completed a series of transactions (the “Transaction”) with Thunder Bridge Acquisition II, Ltd (“TB2”) pursuant to the Master Transactions Agreement dated December 14, 2020, as amended on May 3, 2021 (the “MTA”).
For the year ended December 31, 2023, indie incurred total issuance costs of $1.1 million. Reverse Recapitalization with Thunder Bridge Acquisition II On June 10, 2021, we completed a series of transactions (the “Transaction”) with Thunder Bridge Acquisition II, Ltd (“TB2”) pursuant to the Master Transactions Agreement dated December 14, 2020, as amended on May 3, 2021 (the “MTA”).
The SEC also maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC. 12 Table of Contents
The SEC also maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC.
Execution of At-The-Market Agreement On August 26, 2022, indie entered into an At Market Issuance Agreement (“ATM Agreement”) with B. Riley Securities, Inc., Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC (collectively as “Sales Agents”) relating to shares of our Class A common stock, par value $0.0001 per share.
Execution of At-The-Market Agreement On August 26, 2022, we entered into an At Market Issuance Agreement (“ATM Agreement”) with B. Riley Securities, Inc., Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC (collectively as “Sales Agents”) relating to shares of our Class A common stock.
Through our proprietary design flow, we also enable algorithm development and co-development with hardware. TeraXion Products and Solutions TeraXion designs and manufactures innovative photonic components on various technology platforms, including fiber Bragg gratings (“FBG”), low-noise lasers, athermal and tunable packaging, photonic integration and low-noise and high-speed electronics.
We utilize automotive grade software solutions and Arm 32-bit processors. Through our proprietary design flow, we also enable algorithm development and co-development with hardware. TeraXion Products and Solutions TeraXion designs and manufactures innovative photonic components on various technology platforms, including fiber Bragg gratings (“FBG”), low-noise lasers, athermal and tunable packaging, photonic integration and low-noise and high-speed electronics.
S&P Global forecasts that the semiconductor content value for in-cabin UX, which includes IVI, connectivity and body and convenience functions, will reach $45 billion in 2028, representing a 10% CAGR from $23 billion in 2021. indie’s addressable market is not solely dependent on global automotive vehicle volumes, but rather on the increased levels of semiconductor content that are required in vehicles to support the safety and automation systems, enhanced user experiences and electrification applications as introduced above.
S&P Global forecasts that the semiconductor content value for in-cabin UX, which includes IVI, connectivity and body and convenience functions, will reach $44 billion in 2029, representing a 7% CAGR from $27 billion in 2022. indie’s addressable market is not solely dependent on global automotive vehicle volumes, but rather on the increased levels of semiconductor content that are required in vehicles to support the growing deployment of safety and automation systems, enhanced user experiences and electrification applications as introduced above.
Information about Our Executive Officers Our executive officers are as follows: Name Age Position Donald McClymont 54 Chief Executive Officer and Director Ichiro Aoki 58 President and Director Thomas Schiller 52 Chief Financial Officer and EVP of Strategy Kanwardev Raja Singh Bal 47 Chief Accounting Officer Steven Machuga 58 Chief Operating Officer Donald McClymont serves as indie’s Chief Executive Officer and is responsible for formulating its strategic vision, ensuring the execution of business plans and creating shareholder value.
Information about Our Executive Officers Our executive officers are as follows: Name Age Position Donald McClymont 55 Chief Executive Officer and Director Ichiro Aoki 58 President and Director Thomas Schiller 53 Chief Financial Officer and EVP of Strategy Michael Wittmann 53 Chief Operating Officer Kanwardev Raja Singh Bal 48 Chief Accounting Officer Donald McClymont serves as indie’s Chief Executive Officer and is responsible for formulating its strategic vision, ensuring the execution of business plans and creating shareholder value.
Available Information Our primary Internet address is www.indiesemi.com. We make our U.S. Securities and Exchange Commission (“SEC”) periodic reports (Forms 10-Q and Forms 10-K) and current reports (Forms 8-K) available free of charge through our website as soon as reasonably practicable after they are filed electronically with the SEC.
We make our U.S. Securities and Exchange Commission (“SEC”) periodic reports (Forms 10-Q and Forms 10-K) and current reports (Forms 8-K) available free of charge through our website as soon as reasonably practicable after they are filed electronically with the SEC.
Mr. McClymont also serves on indie’s Board of Directors. Prior to co-founding indie in 2007, he was Vice President of Marketing at Axiom Microdevices, tasked with driving company strategy, developing sales engagements and building key industry partnerships.
Mr. McClymont also serves on indie’s Board of Directors. Prior to co-founding indie in 2007, he was Vice President of Marketing at Axiom Microdevices, tasked with driving company strategy, developing sales engagements and building key industry partnerships. Prior to Axiom, he was a Product Line Director at Skyworks Solutions and Conexant, and a Marketing Manager at Fujitsu.
Wafers, which are the fundamental components of our devices, are manufactured by multiple third-party foundries. Our primary foundry partners are X-FAB, HHGrace, and Global Foundries. We contract with X-FAB for mixed signal and high voltage foundry. HHGrace provides us deeper sub-micron capabilities with embedded Flash Memory.We use Global Foundries as our foundry partner for several process technologies, including advanced nodes.
Wafers, which are the fundamental components of our devices, are manufactured by multiple third-party foundries. Our primary foundry partners are X-FAB, HHGrace, TSMC and Global Foundries. We contract with X-FAB for mixed signal and high voltage foundry. HHGrace provides us deeper sub-micron capabilities with embedded Flash Memory.
Our capabilities include, but are not limited to: • system engineering, optimization and partitioning; • mixed-signal and RF design; • analog and power management; • digital design; and • Digital Signal Processors (“DSP”) and Arm(R)-based Microcontrollers (“MCU”) In addition, embedded software is a cornerstone of virtually all of indie’s products. We utilize automotive grade software solutions and Arm 32-bit processors.
Our capabilities include, but are not limited to: • system engineering, optimization and partitioning; • mixed-signal and RF design; • analog and power management; • digital design; • Digital Signal Processors (“DSP”) and Arm ® -based Microcontrollers (“MCU”); and • optical component technology In addition, embedded software is a cornerstone of virtually all of indie’s products.
Products under development range from FMCW-based LiDAR, radar and vision solutions for ADAS, charging controllers for electric vehicles, smart car access solutions and cybersecurity microcontrollers.
Products under development range from FMCW-based LiDAR, radar and vision solutions for ADAS, charging controllers for electric vehicles, smart car access solutions, cybersecurity microcontrollers and superluminescent LED-based solutions for HUDs and inertial management units (“IMUs”).
In accordance with the terms of the Sales Agreement, we may offer and sell shares of its Class A common stock having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal.
In accordance with the terms of the ATM Agreement, we may offer and sell shares of our Class A common stock and having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal. We implemented this program for the flexible access it provides to the capital markets.
With these global safety rating programs and governmental regulation, auto manufacturers are delivering more safety features to customers, the ADAS ECU market size will grow from $21 billion in 2021 to reach $50 billion by 2028, with corresponding semiconductor content of $8 billion to $31 billion, respectively, or a 21% CAGR, according to S&P Global.
With these global safety rating programs and governmental regulation, auto manufacturers are delivering more safety features to customers, and the ADAS ECU market size will grow from $25 billion in 2022 to reach $52 billion by 2029, with corresponding semiconductor content of $10 billion to $28 billion, respectively, or a 15% CAGR, according to S&P Global.
Specifically, according to IHS, the global automotive semiconductor market, which was valued at $54 billion in 2021, is projected to reach $130 billion by 2028, registering a compound annual growth rate (“CAGR”) over this period of 13%. indie’s Market Opportunity In today’s automobiles, semiconductors perform a variety of functions across multiple electronic components and systems, including sensing, processing data, storing information and converting or controlling signals.
Specifically, according to IHS, the global automotive semiconductor market, which was valued at $67 billion in 2022, is projected to reach $131 billion by 2029. indie’s Market Opportunity In today’s automobiles, semiconductors perform a variety of functions across multiple electronic components and systems, including sensing, processing data, storing information and converting or controlling signals.
According to S&P Global, these key applications are projected to grow at a 13% CAGR, from $54 billion in 2021 to $130 billion by 2028, substantially outpacing the total global semiconductor market, and representing a significant addressable market for indie. • Differentiated solutions with high barriers to entry.
According to S&P Global, these key semiconductor-enabled applications are projected to grow from $67 billion in 2022 to $131 billion by 2029, substantially outpacing the total global semiconductor market, and representing a significant addressable market for indie. 7 Table of Contents • Differentiated solutions with high barriers to entry.
New Car Assessment Programs (“NCAP”) have also directly influenced vehicle OEMs to incorporate minimum levels of crash safety and mitigation into new vehicles since 1979, and have evolved over time to include sophisticated semiconductor-enabled ADAS and automation capabilities such as Automatic Electronic Braking (“AEB”), Lane Keeping Assist (“LKA”), speed assistance and forward collision warning and, most recently, driver- and occupant monitoring (“DMS”, “OMS”), in order for a vehicle to be awarded a 5-star rating.
These safety technology initiatives have evolved over time to include sophisticated semiconductor-enabled ADAS and automation capabilities such as Automatic Electronic Braking (“AEB”), Lane Keeping Assist (“LKA”), speed assistance and forward collision warning and, most recently, driver- and occupant monitoring (“DMS”, “OMS”), in order for a vehicle to be awarded a 5-star rating.
We have a number of core technology patents currently in process, including provisions, but we do not rely on any particular patent or patents for our success and have instead relied on our know-how and trade secrets.
We have over 300 issued patents protecting a number of core technologies, and over 200 pending patent applications, but we do not rely on any particular patent or patents for our success and have instead relied on our know-how and trade secrets.
We dual source packaging at ASE, ATX and Hana Semiconductor. We use test services from Sigurd and Terepower. Having several sources and partners provides us with enhanced security of supply. Manufacturing lead time is 26 weeks. The lead time for wafers is 16 weeks. The backend processing including probe, assembly, and test is about 8 weeks.
We use TSMC and Global Foundries as our foundry partners for several process technologies, including advanced nodes. We dual source packaging at ASE, ATX and Hana Semiconductor. We use test services from Sigurd and Terepower. Having several sources and partners provides us with enhanced security of supply. Manufacturing lead time is typically 26 weeks.
According to IHS, the semiconductor value to support this global drivetrain electrification will grow at a 26% CAGR, from $6.1 billion in 2021, to $30.3 billion in 2028. 6 Table of Contents In parallel to the rapid electrification of vehicles, global ADAS system deployments are expected to increase substantially, driven in part by mandates for increased vehicle safety features by governmental bodies such as the European Commission and the National Highway Traffic Safety Administration (“NHTSA”) in the United States.
In parallel to the rapid electrification of vehicles, global ADAS system deployments are expected to increase substantially, driven in part by mandates for increased vehicle safety features by governmental bodies such as the European Commission and the National Highway Traffic Safety Administration (“NHTSA”) in the United States.
Employees As of December 31, 2022, we had over 600 employees. None of our employees or contract workers are represented by a labor union.
None of our employees or contract workers are represented by a labor union.
The finished product is then warehoused and drop-shipped to a specific location. We currently ship products to Greater China (including Hong Kong and Taiwan), the United States, Portugal, Korea, Mexico, and Germany.
The lead time for wafers is typically 16 weeks. The backend processing including probe, assembly, and test is about 8 weeks. The finished product is then warehoused and drop-shipped to a specific 9 Table of Contents location. We currently ship products to Greater China (including Hong Kong and Taiwan), the United States, Portugal, Korea, Mexico, and Germany.
Regarding electrification, S&P Global Mobility forecasts a 32% EV CAGR, with total annual EV production growing from 5 million in 2021, to 35 million in 2028, representing greater than one-third of all new light vehicle production.
Regarding electrification, S&P Global Mobility forecasts a 25% EV compounded annual growth rate (“CAGR”), with total annual EV production growing from 9 million in 2022, to 41 million in 2029, representing greater than 40% of all new light vehicle production.
Schiller has completed executive education programs at the University of California, Los Angeles and at Suffolk University, Boston. Kanwardev Raja Singh Bal , serves as indie's Chief Accounting Officer. In this role, Mr. Bal leads indie’s accounting and finance operations, and works closely with the Chief Financial Officer to oversee financial reporting, tax, global treasury and internal control activities.
Wittmann holds a Diploma in Electrical Engineering from RWTH Aachen University, Germany. Kanwardev Raja Singh Bal , serves as indie's Chief Accounting Officer. In this role, Mr. Bal leads indie’s accounting and finance operations, and works closely with the Chief Financial Officer to oversee financial reporting, tax, global treasury and 12 Table of Contents internal control activities.
McClymont holds five patents worldwide and earned a Master in Engineering Electronics and Electrical from the University of Glasgow. Ichiro Aoki serves as indie’s President and as a member of the Board of Directors. He works closely with indie’s executive team and Board to create, update and manage execution of indie’s strategies and technical roadmaps.
Previously, he was with Thesys (now X-FAB Melexis), and Wolfson (now Cirrus Logic), as a design engineer. Mr. McClymont holds five patents worldwide and earned a Master in Engineering Electronics and Electrical from the University of Glasgow. Ichiro Aoki serves as indie’s President and as a member of the Board of Directors.
These collective initiatives, commitments and regulations – enabled by semiconductor technologies - will drive global EV uptake, reduce harmful emissions and benefit society as a whole.
These collective initiatives, commitments and regulations – enabled by semiconductor technologies — will drive global EV uptake, reduce harmful emissions and benefit society as a whole. According to IHS, the semiconductor value to support this global drivetrain electrification will grow at a 19% CAGR, from $9.6 billion in 2022, to $32.4 billion in 2029.
Aoki has developed 35 patents worldwide and has authored numerous IEEE papers, two of them having over 400 citations. He is fluent in Japanese, Portuguese and English. Dr. Aoki holds a Ph.D. and Masters in Electrical Engineering from the California Institute of Technology and a Bachelor of Science in Electrical Engineering from the University of Campinas, Sao Paulo, Brazil.
Aoki holds a Ph.D. and Masters in Electrical Engineering from the California Institute of Technology and a Bachelor of Science in Electrical Engineering from the University of Campinas, Sao Paulo, Brazil.
Prior to co-founding indie in 2007, Dr. Aoki was a co-founder, Board Member and Chief Architect of Axiom Microdevices, which was subsequently sold to Skyworks Solutions. Previously, Dr. Aoki founded and served as co-CEO of PST Eletronica Ltd. in Brazil, which was later sold to Stoneridge, Inc. Dr.
He works closely with indie’s executive team and Board to create, update and manage execution of indie’s strategies and technical roadmaps. Prior to co-founding indie in 2007, Dr. Aoki was a co-founder, Board Member and Chief Architect of Axiom Microdevices, which was subsequently sold to Skyworks Solutions. Previously, Dr.
The closing consideration consisted of (i) $9.0 million in cash, (ii) approximately 980,000 shares of indie’s Class A common stock, par value $0.0001 per share and (iii) a contingent consideration payable in cash or in Class A common stock subject to Silicon Radar’s achievement of certain revenue-based and design-win milestones through December 31, 2024.
The closing consideration consisted of (i) $9.2 million in cash (including debt payable at closing and net of cash acquired), (ii) the issuance 4 Table of Contents by indie of 982,445 shares of Class A common stock at closing, with a fair value of $9.8 million and (iii) a contingent consideration with fair value of $9.2 million at closing, payable in cash or in Class A common stock, subject to Silicon Radar’s achievement of certain revenue-based milestones through February 21, 2025.
The fair market value of this equity-based earn-out was $7.8 million on January 4, 2022. 4 Table of Contents ON Design Israel Ltd On October 1, 2021, we entered into a definitive agreement with Onsemi (“Onsemi”) and completed the acquisition of ON Design Israel Ltd.
The fair market value of this equity-based earn-out was $7.8 million on January 4, 2022.
As of December 31, 2022, indie has raised gross proceeds of $17.2 million and issued 2,131,759 shares of Class A common stock at an averaged per-share sales price of $8.07 through this program and had approximately $132.8 million available for future issuances under the ATM Agreement.
As of December 31, 2023, and since the inception of the program, indie raised gross proceeds of $70.3 million and issued 7,351,259 shares of Class A common stock at an average per-share sales price of $9.57, incurred issuance costs of $1.5 million, and had approximately $79.7 million available for future issuances under the ATM Agreement. 5 Table of Contents During the year ended December 31, 2023, indie raised gross proceeds of $53.1 million and issued 5,219,500 shares of Class A common stock at an average per-share sales price of $10.18.
Bal holds a CPA accounting designation, a Master of Management Analytics from Queen’s University’s Smith School of Business, and a Bachelor of Commerce degree from the University of Ottawa's Telfer School of Management. Steven Machuga, serves as indie’s Chief Operating Officer.
Bal holds a CPA accounting designation, a Master of Management Analytics from Queen’s University’s Smith School of Business, and a Bachelor of Commerce degree from the University of Ottawa's Telfer School of Management. Our executive officers are appointed annually by and serve at the discretion of the Board of Directors. Available Information Our primary Internet address is www.indiesemi.com.
Recent Acquisitions Silicon Radar On February 21, 2023, Symeo GmbH (“Symeo”), one of our wholly-owned subsidiaries, completed its acquisition of all of the outstanding capital stock of Silicon Radar GmbH, a limited liability company organized under the laws of Germany (“Silicon Radar”).
The purchase price is subject to working capital and other adjustments as provided in the Share Sale and Purchase Agreement. Silicon Radar On February 21, 2023, Symeo GmbH (“Symeo”), a wholly-owned subsidiary of indie, completed its acquisition of all of the outstanding capital stock of Silicon Radar GmbH (“Silicon Radar”).
Better consumer safety awareness and demand created by safety assessment initiatives such as the European and U.S.
Better consumer safety awareness and demand created by safety assessment initiatives such as the European and U.S. New Car Assessment Programs (“NCAP”) have also directly influenced vehicle OEMs to incorporate minimum levels of crash safety and mitigation into new vehicles since 1979.
Removed
(“ON Design Israel”), for $5.0 million in cash paid upon close (net of cash acquired), $7.5 million of cash in 2022 and up to $7.5 million of cash based on design win performance.
Added
Recent Acquisitions Kinetic Technologies On January 25, 2024 (the “Deal Closing Date”), indie and ADK LLC completed an Asset Purchase Agreement (the “APA”), carving out certain assets, including R&D personnel and intellectual properties (“IP”) from Kinetic Technologies (“Kinetic”), in support of a custom product development for a North American electric vehicle OEM.
Removed
We paid a premium (i.e. goodwill) over the fair value of the net tangible and identified intangible assets acquired as part of the Symeo and On Design acquisitions brought us an engineering development team with broad experience in millimeter wave technology and radar system implementation, respectively, which will accelerate indie’s entry into the radar market and enable us to capture strategic opportunities among Tier 1 customers.
Added
The closing consideration consisted of (i) $4.5 million in cash as the initial cash consideration, subject to adjustments for an adjustment holdback amount of $0.5 million and an indemnity holdback amount of $0.8 million, payable after the 18-month anniversary of the Deal Closing Date in shares of Class A common stock, par value $0.0001 (the “Class A common stock”), (ii) $3.0 million of total contingent considerations, payable in cash or Class A common stock, subject to achievement of certain production based milestones 24 months after the Deal Closing Date, and (iii) $2.5 million of contingent considerations, payable in cash or Class A common stock, subject to achievement of a revenue based milestone 12 months after the Deal Closing Date.
Removed
TERAXION, INC On August 27, 2021, indie entered into a Share Purchase Agreement, pursuant to which indie’s wholly-owned Canadian subsidiary (“Purchaser”) agreed to purchase all of the outstanding capital stock of TeraXion from the existing stockholders. The transaction was completed on October 12, 2021 and TeraXion became a wholly-owned subsidiary of ADK, LLC as a result of this acquisition.
Added
The purchase price is subject to working capital and other adjustments as provided the APA. Exalos AG On September 18, 2023, Ay Dee Kay Ltd.
Removed
The aggregate purchase price of this acquisition was CAD $200.0 million (the “Purchase Price”), which was payable 50% in cash and 50% in indie’s shares of Class A common stock, subject to various purchase price adjustments.
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(“indie UK”) completed its acquisition of all of Exalos AG, a Swiss corporation (“Exalos”), pursuant to the Share Sale and Purchase Agreement by and among indie UK, indie and all of the stockholders of Exalos, whereby indie UK acquired all of the outstanding common shares of Exalos.
Removed
Upon completion of the transaction, the total consideration paid for this acquisition consisted of (i) approximately $75.3 million in cash (including debt paid at closing and net of cash acquired); (ii) the issuance by indie of 5,805,144 shares of indie Class A common stock with a fair value of $65.2 million based on the market value of $11.23 per share; and (iii) the assumption by indie of TeraXion options, which became exercisable to purchase 1,542,332 shares of indie Class A common stock with a fair value of $17.2 million.
Added
The closing consideration consisted of (i) the issuance by indie of 6,613,786 shares of Class A common stock, with a fair value of $42.8 million; (ii) a contingent consideration with fair value of $13.2 million at closing, payable in cash, subject to Exalos’ achievement of certain revenue-based milestones through September 30, 2025; and (iii) a holdback of $2.5 million subject to final release 12 months from the acquisition date payable in shares of Class A common stock.
Removed
TeraXion is a market leader in the design and manufacture of innovative photonic components. We paid a premium (i.e. goodwill) over the fair value of the net tangible and identified intangible assets acquired as this acquisition accelerates indie’s vision of becoming a semiconductor and software level solutions provider for multiple sensor modalities spanning ADAS and autonomous vehicles.
Added
Warrant Exchange On September 22, 2023, we announced the commencement of an exchange offer (the “Offer”) and consent solicitation (the “Consent Solicitation”) relating to our outstanding (i) Public Warrants to purchase shares of Class A common stock and (ii) Private Warrants to purchase shares of Class A common stock (together with the Public Warrants, the “Warrants”).
Removed
We implemented this program for the flexibility that it provides to the capital markets and to best time our equity capital needs.
Added
The Offer and the Consent Solicitation expired at 11:59 p.m., Eastern Time on October 20, 2023. Upon expiration of the Offer and the Consent Solicitation, 24,658,461 Warrants, or approximately 90.0% of the outstanding Warrants, were tendered.
Removed
Prior to Axiom, he was a Product Line Director 11 Table of Contents at Skyworks Solutions and Conexant, and a Marketing Manager at Fujitsu. Previously, he was with Thesys (now X-FAB Melexis), and Wolfson (now Cirrus Logic), as a design engineer. Mr.
Added
Subsequently, we issued 7,027,517 shares of Class A common stock, or an exchange ratio of 0.285, for the Warrants tendered in the Offer on October 25, 2023.
Removed
He has over 30 years of experience in electronics and semiconductor development and high-volume operations management of the entire supply chain. Prior to joining indie in March 2021, he was Vice President, Worldwide Operations at Skyworks Solutions since 2016. Prior to that, he was Vice President, External Manufacturing Operations & Engineering at Skyworks from 2006.
Added
Additionally, we received the approval of approximately 89.8% of the outstanding Warrants to amend the warrant agreement governing the Warrants (the “Amendment No. 2”), which exceeds a majority of the outstanding warrants required to effect the Amendment No. 2.
Removed
He holds a Masters in Chemical Engineering and Materials Science from the University of Minnesota and a Bachelor of Science in Chemical Engineering, from the University of Connecticut. He holds six U.S. patents and three European patents. Our executive officers are appointed annually by and serve at the discretion of the Board of Directors.
Added
This amendment permitted us to require that each Warrant that remained outstanding upon settlement of the Exchange Offer to be converted into 0.2565 shares of Class A common stock, which was a ratio 10.0% less than the exchange ratio applicable to the Exchange Offer.
Added
We completed the exchange of the remaining 2,741,426 untendered Warrants on November 9, 2023 through issuance of 703,175 shares of Class A common stock.
Added
As a result of the completion of the Exchange Offer and the exchange for the remaining untendered Warrants, the Warrants were suspended from trading on the Nasdaq Stock Market LLC as of the close of business on November 8, 2023, and delisted.
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Aoki founded and served as co-CEO of PST Eletronica Ltd. in Brazil, which was later sold to Stoneridge, Inc. Dr. Aoki has developed 35 patents worldwide and has authored numerous IEEE papers, two of them having over 400 citations. He is fluent in Japanese, Portuguese and English. Dr.
Added
Schiller has completed executive education programs at the University of California, Los Angeles and at Suffolk University, Boston. Michael Wittmann serves as indie’s Chief Operating Officer. In this role, Mr. Wittmann is responsible for expanding and optimizing our global supply chain, managing manufacturing engineering functions and information technology functions, and overseeing day-to-day operations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

102 edited+23 added−27 removed257 unchanged
Biggest changeRisks Related to Our Indebtedness • Our existing and future indebtedness could adversely affect our ability to operate our business. • We may not have sufficient funds to repay the indebtedness and repurchase the 2027 Notes or make cash payments upon conversions thereof. • Provisions in the 2027 Indenture for the 2027 Notes may deter or prevent a business combination that stockholders may consider favorable. • The accounting method for reflecting the 2027 Notes may adversely affect our reported earnings and financial condition. • The conditional conversion feature of the 2027 Notes, if triggered, may adversely affect our financial condition and operating results. 13 Table of Contents Risks Related to Our Organizational Structure • We are dependent upon distributions made by our subsidiaries to make certain payments, and such distributions may be delayed or restricted for reasons outside of our control. • We are party to a Tax Receivable Agreement, which requires us to make certain payments, and such payment may exceed our actual tax benefits or may be accelerated.
Biggest changeRisks Related to Our Indebtedness • Our existing and future indebtedness could adversely affect our ability to operate our business. • We may not have sufficient funds to repay the indebtedness and repurchase the 2027 Notes or make cash payments upon conversions thereof. • Provisions in the 2027 Indenture for the 2027 Notes may deter or prevent a business combination that stockholders may consider favorable. • The accounting method for reflecting the 2027 Notes may adversely affect our reported earnings and financial condition. • The conditional conversion feature of the 2027 Notes, if triggered, may adversely affect our financial condition and operating results.
Among other things, the Certificate of Incorporation and Bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the requirement that directors may only be removed from our board of directors for cause; • the requirement that a special meeting of stockholders may be called only by our board of directors, the chairman of our board of directors or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of meetings of our board of directors and stockholders; 33 Table of Contents • the requirement for the affirmative vote of holders of 66⅔% of the voting power of our outstanding voting capital stock, voting together as a single class to amend, alter, change or repeal certain provisions in the Certificate of Incorporation and the Bylaws, respectively, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our board of directors to amend the Bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, the Certificate of Incorporation and Bylaws include provisions regarding: • a classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board of Directors; • the ability of our Board of Directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of our Board of Directors to elect a director to fill a vacancy created by the expansion of our Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; • the requirement that directors may only be removed from our Board of Directors for cause; • the requirement that a special meeting of stockholders may be called only by our Board of Directors, the chairman of our Board of Directors or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of meetings of our Board of Directors and stockholders; • the requirement for the affirmative vote of holders of 66⅔% of the voting power of our outstanding voting capital stock, voting together as a single class to amend, alter, change or repeal certain provisions in the Certificate of Incorporation and the Bylaws, respectively, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our Board of Directors to amend the Bylaws, which may allow our Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Additionally, if we issue shares of our common stock upon conversion of our 4.50% convertible notes with a principal balance of $160.0 million issued in November 2022 (the “2027 Notes”), the ownership interest of our existing stockholders would be diluted. A default of our obligations regarding our debt could result in potential loss of collateral for secured indebtedness.
Additionally, if we issue shares of our Class A common stock upon conversion of our 4.50% convertible notes with a principal balance of $160.0 million issued in November 2022 (the “2027 Notes”), the ownership interest of our existing stockholders would be diluted. A default of our obligations regarding our debt could result in potential loss of collateral for secured indebtedness.
If one or more holders elect to convert their 2027 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their 2027 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If Nasdaq delists our Class A common stock and public warrants from trading on its exchange for failure to meet the listing standards, we and our security holders could face significant material adverse consequences including: • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that shares of the Class A common stock are “penny stock” which will require brokers trading in the Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists our Class A common stock from trading on its exchange for failure to meet the listing standards, we and our security holders could face significant material adverse consequences including: • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that shares of the Class A common stock are “penny stock” which will require brokers trading in the Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
Additionally, increases in the industry semiconductor manufacturing capacity could lead to declines in average selling prices and a decrease in short-term or long-term demand, resulting in industry oversupply, could materially adversely affect our business, results of operations, or financial condition.
Additionally, increases in the industry semiconductor manufacturing capacity could lead to declines in average selling prices and a decrease in short-term or long-term demand, resulting in industry oversupply, which could materially adversely affect our business, results of operations, or financial condition.
Any outstanding indebtedness, including any additional future indebtedness, combined with our other financial obligations and contractual commitments could have significant adverse consequences, including: • requiring us to dedicate a portion of our cash resources to the payment of interest and principal, reducing our cash available to fund working capital, capital expenditures, product candidate development and other general corporate purposes; • increasing our vulnerability to adverse changes in general economic, industry and market Conditions, such as interest rate fluctuations; • subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; • acceleration of payment of our debt obligations upon a default of payment; • potential loss of collateral for secured indebtedness; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and • placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.
Any outstanding indebtedness, including any additional future indebtedness, combined with our other financial obligations and contractual commitments could have significant adverse consequences, including: • requiring us to dedicate a portion of our cash resources to the payment of interest and principal, reducing our cash available to fund working capital, capital expenditures, product candidate development and other general corporate purposes; • increasing our vulnerability to adverse changes in general economic, industry and market Conditions, such as interest rate fluctuations; 20 Table of Contents • subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; • acceleration of payment of our debt obligations upon a default of payment; • potential loss of collateral for secured indebtedness; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and • placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.
Moreover, the Tax Receivable Agreement provides that, in the event that (i) we exercise our early termination rights under the Tax Receivable Agreement, (ii) we become bankrupt or undergo a similar insolvency event, (iii) certain changes of control occur (as described in the Tax Receivable Agreement) or (iv) we are more than three months late in making of a payment due under the Tax Receivable Agreement (unless we in good faith determine that we have insufficient funds to make such payment), our obligations under the Tax Receivable Agreement will accelerate and we will be required to make an immediate lump-sum cash payment to the indie Equity Holders equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to our future taxable income.
Moreover, the Tax Receivable Agreement provides that, in the event that (i) we exercise our early termination rights under the Tax Receivable Agreement, (ii) we become bankrupt or undergo a similar insolvency event, (iii) certain changes of control 23 Table of Contents occur (as described in the Tax Receivable Agreement) or (iv) we are more than three months late in making of a payment due under the Tax Receivable Agreement (unless we in good faith determine that we have insufficient funds to make such payment), our obligations under the Tax Receivable Agreement will accelerate and we will be required to make an immediate lump-sum cash payment to the indie Equity Holders equal to the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement, which lump-sum payment would be based on certain assumptions, including those relating to our future taxable income.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of ours to us or our stockholders, (3) action arising pursuant to any provision of the DGCL or our Certificate of Incorporation or our Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery, or (4) action asserting a claim against us governed by the internal affairs doctrine (the “Delaware Exclusive Forum Provision”).
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) 34 Table of Contents derivative action or proceeding brought on behalf of us, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of ours to us or our stockholders, (3) action arising pursuant to any provision of the DGCL or our Certificate of Incorporation or our Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery, or (4) action asserting a claim against us governed by the internal affairs doctrine (the “Delaware Exclusive Forum Provision”).
Such customers have in the past, and may in the future, vary order levels significantly from period to period, request postponements of scheduled delivery dates, modify their orders or reduce lead times. This is particularly common during periods of low demand. This can make managing business difficult, as it limits the predictability of future revenue.
Such customers have in the past, and may in the future, vary order levels significantly from period to period, including order cancellations, request postponements of scheduled delivery dates, modify their orders or reduce lead times. This is particularly common during periods of low demand. This can make managing business difficult, as it limits the predictability of future revenue.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to otherwise settlenance the 2027 Notes will depend on the capital markets and our financial condition at such time.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to otherwise settle the 2027 Notes will depend on the capital markets and our financial condition at such time.
Any acquisitions or investments we undertake involve risks and uncertainties, including but not limited to: • Difficulties integrating the operations, employees, technologies or products of acquired companies or working with third parties with which we may partner on joint development or collaboration relationships; • Inaccuracies in our estimates and assumptions used to assess a transaction may result in us not realizing the expected financial or strategic benefits of any such transaction; • Disruption of our ongoing business and diversion of our management’s attention; • Our inability to retain key personnel of acquired businesses; • Claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; • Dilution of the ownership of our existing stockholders in connection with any equity or debt securities issued in connection with financing any such transaction; and • U.S. and foreign regulatory approvals required in connection with an acquisition or investment may take longer than anticipated to obtain, may not be forthcoming or may contain burdensome conditions, which may jeopardize, delay or reduce the anticipated benefits to us of the transaction.
Any acquisitions or investments we undertake involve risks and uncertainties, including but not limited to: • Difficulties and expense associated with integrating the operations, employees, technologies or products of acquired businesses or working with third parties with which we may partner on joint development or collaboration relationships; • Inaccuracies in our estimates and assumptions used to assess a transaction may result in us not realizing, or taking longer to realize, the expected financial or strategic benefits of any such transaction; • Disruption of our ongoing business and diversion of our management’s attention; • Our inability to retain key personnel of acquired businesses; • Claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; • Dilution of the ownership of our existing stockholders in connection with any equity or debt securities issued in connection with financing any such transaction; and • U.S. and foreign regulatory approvals required in connection with an acquisition or investment may take longer than anticipated to obtain, may not be forthcoming or may contain burdensome conditions, which may jeopardize, delay or reduce the anticipated benefits to us of the transaction.
Risks Related to Regulatory Compliance and Legal Matters • If we or our customers fail to comply with a large body of laws and regulations, our business and reputation could be adversely affected. • We may be adversely affected by product defects and product liability or warranty claims. • Significant litigation and stockholder activism could impair our reputation and adversely affect our business. • We are subject to export restrictions and laws affecting trade and investments which could materially and adversely affect our business and results of operations. • Changes in tax rates or laws or additional tax liabilities could adversely affect our business. • Failure to comply with anti-corruption laws or our ethics policies could adversely affect our business.
Risks Related to Regulatory Compliance and Legal Matters • If we or our customers fail to comply with a large body of laws and regulations, our business and reputation could be adversely affected. • We may be adversely affected by product defects and product liability or warranty claims. • Significant litigation and stockholder activism could impair our reputation and adversely affect our business. • We are subject to export restrictions and laws affecting trade and investments which could materially and adversely affect our business and results of operations. 14 Table of Contents • Changes in tax rates or laws or additional tax liabilities could adversely affect our business. • Failure to comply with anti-corruption laws or our ethics policies could adversely affect our business.
To the extent that we do not distribute such excess cash as dividends on Class A common stock or otherwise undertake ameliorative actions between ADK LLC units and shares of Class A common stock and instead, for example, hold such cash balances, holders of ADK LLC units that held interests in ADK LLC pre-Transaction may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following an exchange of their ADK LLC units, notwithstanding that such holders may previously have participated as holders of ADK LLC units in distributions by ADK LLC that resulted in such excess cash balances held by us.
To the extent that we do 22 Table of Contents not distribute such excess cash as dividends on Class A common stock or otherwise undertake ameliorative actions between ADK LLC units and shares of Class A common stock and instead, for example, hold such cash balances, holders of ADK LLC units that held interests in ADK LLC pre-Transaction may benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following an exchange of their ADK LLC units, notwithstanding that such holders may previously have participated as holders of ADK LLC units in distributions by ADK LLC that resulted in such excess cash balances held by us.
Sales to Aptiv, a leading Tier 1 automotive supplier, represented approximately 37% and 39% of our total revenue for the years ended December 31, 2022 and 2021, respectively. The loss of this customer would have a material adverse impact on our consolidated financial results.
Sales to Aptiv, a leading Tier 1 automotive supplier, represented approximately 15%, 37% and 39% of our total revenue for the years ended December 31, 2023, 2022 and 2021, respectively. The loss of this customer would have a material adverse impact on our consolidated financial results.
We may become party to intellectual property claims or litigation that could cause us to incur substantial costs, pay substantial damages or prohibit us from selling our products. 24 Table of Contents The semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights.
We may become party to intellectual property claims or litigation that could cause us to incur substantial costs, pay substantial damages or prohibit us from selling our products. 25 Table of Contents The semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights.
The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of existing products. Interruptions in our computer systems, networks or information technology systems, including attempted security breaches and other cybersecurity incidents, could adversely affect our business.
The loss of these licenses or the inability to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of existing products. Interruptions in our information systems or networks, including attempted security breaches and other cybersecurity incidents, could adversely affect our business.
In addition, upon conversion of the 2027 Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2027 Notes being converted.
In addition, upon conversion of the 2027 Notes, unless we elect to deliver solely shares of our Class A common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2027 Notes being converted.
The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board and the securities exchanges, impose additional reporting and other obligations on public companies.
The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board and the securities exchanges, impose various reporting and other obligations on public companies.
Our tax filings are subject to review or audit by the U.S. Internal Revenue Service (the “IRS”) and state, local and foreign taxing authorities. We exercise significant judgment in determining our worldwide provision for taxes and, in the ordinary course of business, there may be transactions and calculations where the proper tax treatment is uncertain.
Our tax filings are subject to review or audit by the U.S. Internal Revenue Service (the “IRS”) and state, local and foreign taxing authorities. We exercise significant judgment in determining our worldwide provision for taxes and, in the ordinary 28 Table of Contents course of business, there may be transactions and calculations where the proper tax treatment is uncertain.
We may be party to various lawsuits and claims arising in the ordinary course of business, including claims relating to intellectual property, customer contracts, employment matters, third-party manufacturers or subcontractors, or other aspects of our business. Litigation, regardless of outcome, could result in substantial costs, reputational harm and a diversion of management’s attention and resources.
We may be party to various lawsuits and claims arising in the ordinary course of business, including claims relating to intellectual property, customer contracts, employment matters, third-party manufacturers or subcontractors, or other aspects of our business. Litigation, regardless of outcome, could result in substantial costs, reputational harm and a diversion of 27 Table of Contents management’s attention and resources.
In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped-up scrutiny of major outbound capital movement. More restrictions and 29 Table of Contents substantial vetting processes are put in place by SAFE to regulate cross-border transactions falling under the capital account.
In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped-up scrutiny of major outbound capital movement. More restrictions and substantial vetting processes are put in place by SAFE to regulate cross-border transactions falling under the capital account.
We have experienced, and expect to continue to experience, disruption to parts of our global semiconductor supply chain and disruptions in commercial transportation infrastructure that have resulted in increased customer order lead times as a result of the COVID-19 pandemic, and future public heath crises could have a similar impact on our operations.
We experienced disruption to parts of our global semiconductor supply chain and disruptions in commercial transportation infrastructure that resulted in increased customer order lead times as a result of the COVID-19 pandemic, and future public heath crises could have a similar impact on our operations.
In turn, demand for older technology falls, causing the price at which such products can be sold to drop, in some cases precipitously. In order to continue profitably supplying these products, continuous development of new technology, processes and product innovations is necessary.
In turn, demand for older technology falls, causing the price at which such products can be sold to drop, in some cases precipitously. 17 Table of Contents In order to continue profitably supplying these products, continuous development of new technology, processes and product innovations is necessary.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or 29 Table of Contents tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.
If additional funds are raised through the issuance of equity or debt securities, our existing stockholders could 18 Table of Contents suffer meaningful dilution, and such securities may have rights, preferences or privileges senior to those of the holders of our Class A common stock.
If additional funds are raised through the issuance of equity or debt securities, our existing stockholders could suffer meaningful dilution, and such securities may have rights, preferences or privileges senior to those of the holders of our Class A common stock.
We rely on third-party vendors to provide critical services and to adequately address cyber security threats to their own systems. Any failure of third-party systems and services to operate effectively could disrupt our operations and could have a material adverse effect on our business, financial condition and results of operations.
We rely on third-party vendors to provide critical services and to adequately address cybersecurity threats to their own systems. Any failure of third-party systems and services to operate effectively could disrupt our operations and could have a material adverse effect on our business, financial condition and results of operations.
Although we are currently in compliance with such listing standards, we may in the future fall out of compliance with such standards. If we are unable to maintain compliance with these Nasdaq requirements, our Class A common stock and public warrants will be delisted from Nasdaq.
Although we are currently in compliance with such listing standards, we may in the future fall out of compliance with such standards. If we are unable to maintain compliance with these Nasdaq requirements, our Class A common stock will be delisted from Nasdaq.
In periods of shortages impacting the semiconductor industry or limited supply or capacity in our supply chain, as we have experienced in the past, the lead time on our orders for certain supply could become extended, heightening these risks.
In periods of shortages impacting the semiconductor industry or limited supply or capacity in our 16 Table of Contents supply chain, as we have experienced in the past, the lead time on our orders for certain supply could become extended, heightening these risks.
In the event any tax benefits initially claimed by us are disallowed, the indie Equity Holders will not be required to reimburse us for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing 22 Table of Contents authorities.
In the event any tax benefits initially claimed by us are disallowed, the indie Equity Holders will not be required to reimburse us for any excess payments that may previously have been made under the Tax Receivable Agreement, for example, due to adjustments resulting from examinations by taxing authorities.
In the event ADK LLC’s 21 Table of Contents calculations of taxable income are incorrect, its members, including us, in later years may be subject to material liabilities pursuant to this federal legislation and its related guidance.
In the event ADK LLC’s calculations of taxable income are incorrect, its members, including us, in later years may be subject to material liabilities pursuant to this federal legislation and its related guidance.
Some of the more significant challenges and risks relating to an investment in our company include, among other things, the following: Risks Related to Our Operations and Industry • The cyclical nature of the semiconductor industry may limit our net sales and profitability. • If we fail to compete effectively in the highly competitive semiconductor industry, our business could be adversely affected. • Declining average selling prices and price erosion may adversely impact our revenue and profitability. • Failure to win competitive bid selection processes could adversely affect our business. • Decline in demand for our customers’ end products could adversely impact our revenue and profitability. • Any downturn in the automotive market could significantly harm our financial results. • We depend on third parties to manufacture, assemble, test and/or package our products, • We rely on the timely supply of materials that may only be available from a limited number of suppliers. • We must develop new products with acceptable profit margins. • “Strategic backlog” and “design win pipeline” estimations may not result in revenue or profits. • Mergers, acquisitions, investments and joint ventures could adversely affect our results of operations. • Future growth could strain our resources, management, information and telecommunication systems and operating and financial controls. • We may seek additional capital, which may result in dilution to our stockholders. • We may rely on strategic partnerships, joint ventures and alliances, which may fail for reasons outside of our control. • We may not be successful in exiting certain programs or businesses or in restructuring our operations, which could adversely impact our business. • Disruptions in our relationships with any one of our key customers could adversely affect our business. • We have historically incurred losses and may continue to incur losses.
Some of the more significant challenges and risks relating to an investment in our company include, among other things, the following: Risks Related to Our Operations and Industry • The cyclical nature of the semiconductor industry may limit our net sales and profitability. • If we fail to compete effectively in the highly competitive semiconductor industry, our business could be adversely affected. • Declining average selling prices and price erosion may adversely impact our revenue and profitability. • Failure to win competitive bid selection processes could adversely affect our business. • Decline in demand for our customers’ end products could adversely impact our revenue and profitability. • Any downturn in the automotive market could significantly harm our financial results. • We depend on third parties to manufacture, assemble, test and/or package our products. 13 Table of Contents • We rely on the timely supply of materials that may only be available from a limited number of suppliers. • We must develop new products with acceptable profit margins. • “Strategic backlog” and “design win pipeline” estimations may not result in revenue or profits. • Mergers, acquisitions, investments and joint ventures could adversely affect our results of operations. • Future growth could strain our resources, management, information and telecommunication systems and operating and financial controls. • We may seek additional capital, which may result in dilution to our stockholders. • We may rely on strategic partnerships, joint ventures and alliances, which may fail for reasons outside of our control. • We may not be successful in exiting certain programs or businesses or in restructuring our operations, which could adversely impact our business. • Disruptions in our relationships with any one of our key customers could adversely affect our business. • Loss of key management or other highly skilled personnel, or an inability to attract such management and other personnel, could adversely affect our business. • We may experience disruptions in our operations resulting from our enterprise resource planning system initiative. • We have historically incurred losses and may continue to incur losses.
Any significant interruption in these applications, systems or networks, including but not limited to new system implementations, computer viruses, cyberattacks, security breaches, facility issues or energy blackouts, could have a material adverse impact on our business, financial condition and results of operations. Our business also depends on various outsourced IT services.
Any significant interruption in these applications, systems or networks, including but not limited to new system implementations, computer viruses, cybersecurity incidents, facility issues or energy blackouts, could have a material adverse impact on our business, financial condition and results of operations. Our business also depends on various outsourced IT services.
If we raise additional funds by issuing debt, we may be subject to further limitations on our operations and ability to pay dividends due to restrictive covenants. From time to time, we may rely on strategic partnerships, joint ventures and alliances for manufacturing and research and development.
If we raise additional funds by issuing debt, we may be subject to further limitations on our operations and ability to pay dividends due to restrictive covenants. We rely on strategic partnerships, joint ventures and alliances for some of our manufacturing and research and development.
We rely on the efficient and uninterrupted operation of complex information technology applications, systems and networks to operate our business. The reliability and security of information technology infrastructure and software, and our ability to expand and continually update technologies in response to changing needs is critical to our business.
We rely on the efficient and uninterrupted operation of complex information technology applications, including third-party cloud applications, systems and networks to operate our business. The reliability and security of information technology infrastructure and software, and our ability to expand and continually update technologies in response to changing needs is critical to our business.
Risks Related to Ownership of Our Class A Common Stock and Warrants, and Organizational Documents There can be no assurance we will be able to comply with the continued listing standards of Nasdaq for our Class A common stock and public warrants. Our Class A common stock and public warrants are currently listed on the Nasdaq Stock Market.
Risks Related to Ownership of Our Class A Common Stock and Organizational Documents There can be no assurance we will be able to comply with the continued listing standards of Nasdaq for our Class A common stock. Our Class A common stock is currently listed on the Nasdaq Stock Market.
An assessment of 27 Table of Contents additional taxes because of an audit could have a material adverse effect on our business, financial condition, results of operations and cash flows.
An assessment of additional taxes because of an audit could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The degree to which the COVID-19 pandemic or other future public health crises ultimately impacts our business and results of operations depend on many factors beyond our control and cannot be predicted. Risks Related to our Intellectual Property, Technology and Cybersecurity We rely to a significant extent on proprietary intellectual property.
The degree to which future public health crises ultimately impacts our business and results of operations depend on many factors beyond our control and cannot be predicted. Risks Related to Our Intellectual Property, Technology and Cybersecurity We rely to a significant extent on proprietary intellectual property.
In addition, we may be at a 15 Table of Contents competitive disadvantage to our peers if we fail to identify or are unable to finance attractive opportunities to acquire companies to expand our business.
In addition, we may be at a competitive disadvantage to our peers if we fail to identify or are unable to finance attractive opportunities to acquire companies to expand our business.
Risks Related to Regulatory Compliance and Legal Matters Our failure, or the failure of our customers, to comply with the large body of laws and regulations to which we are subject could have a material adverse effect on our business and operations.
Our costs to comply with and implement these measures could be significant. Risks Related to Regulatory Compliance and Legal Matters Our failure, or the failure of our customers, to comply with the large body of laws and regulations to which we are subject could have a material adverse effect on our business and operations.
Additionally, external events, like the conflict between Russia and Ukraine, can increase the likelihood of cyber-attacks. There can be no assurance that any breach or incident will not have a material impact on our operations and financial results.
Additionally, external events, like the conflict between Russia and Ukraine, can increase the likelihood of cybersecurity incidents. There can be no assurance that any cybersecurity incident will not have a material impact on our operations and financial results.
The loss of one or more of our executive officers or key personnel or our inability to locate suitable or qualified replacements could be significantly detrimental to product development efforts and could have a material adverse effect on our business, financial condition and results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
The loss of one or more of our executive officers or key personnel or our inability to locate suitable or qualified replacements could be significantly detrimental to product development efforts and could have a material adverse effect on our business, financial condition and results of operations.
Any Class A common stock that we issue, including under the Equity Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who own shares of Class A common stock. As of December 31, 2022, 129,265,882 shares of Class A common stock have been issued.
Any Class A common stock that we issue, including under the Equity Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who own shares of Class A common stock. As of December 31, 2023, 164,979,958 shares of Class A common stock have been issued.
Accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.
Accounting standards may change 21 Table of Contents in the future in a manner that may adversely affect our diluted earnings per share.
Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it.
Furthermore, if any issues in complying with those requirements are identified (for example, identified material weaknesses or significant deficiencies in our internal control over financial reporting), we have in the past, and could in the future, incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it.
In addition, any disruption in the credit markets, including as a result of geopolitical events, such as the ongoing conflict in Ukraine, volatile macroeconomic conditions, or the COVID-19 pandemic or other public health crises, could impede our access to additional capital.
In addition, any disruption in the credit markets, including as a result of geopolitical events, volatile macroeconomic conditions, or public health crises, could impede our access to additional capital.
Our business may be impacted by natural disasters, labor strikes, terrorism, war, intensified political unrest, or public health crises, which could disrupt our operations, or those of our suppliers or contract manufacturing facilities, disrupt our distribution channels or supply chains, delay new production and shipments of existing products or result in costly repairs, replacements or other costs, all of which would negatively impact our business.
Our worldwide operations are subject to political, economic and health risks and natural disasters which could have a material adverse effect on our business operations. 24 Table of Contents Our business may be impacted by natural disasters, labor strikes, terrorism, war, intensified political unrest, or public health crises, which could disrupt our operations, or those of our suppliers or contract manufacturing facilities, disrupt our distribution channels or supply chains, delay new production and shipments of existing products or result in costly repairs, replacements or other costs, all of which would negatively impact our business.
The semiconductor industry is highly cyclical and is prone to significant downturns from time to time. Cyclical downturns can result in substantial declines in semiconductor demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.
The semiconductor industry is highly cyclical and is prone to significant downturns from time to time. Cyclical downturns can result, and have in the past resulted (including as a result of global and geopolitical events) in substantial declines in semiconductor demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices.
To manage future growth effectively, we must be able to improve and expand our systems and controls, which we may not be able to do in a timely or cost-effective manner.
Future growth could strain our resources, management, information and telecommunication systems and operating and financial controls. To manage future growth effectively, we must be able to improve and expand our systems and controls, which we may not be able to do in a timely or cost-effective manner.
Risks Related to Ownership of Our Class A Common Stock and Warrants, and Organizational Documents • We must comply with the continued listing standards of Nasdaq for our Class A common stock. • We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making such warrants worthless. • Our warrants may have an adverse effect on the market price of our Class A common stock. 14 Table of Contents • An investment in our Class A common stock may be diluted by future issuances of our Class A common stock or ADK LLC units. • There may be sales of a substantial amount of Class A common stock by our stockholders, which could cause the price of our securities to fall. • Provisions in our Certificate of Incorporation and Bylaws limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts. • Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings, which could limit our stockholders’ ability to obtain a favorable judicial forum.
Risks Related to Ownership of Our Class A Common Stock and Organizational Documents • We must comply with the continued listing standards of Nasdaq for our Class A common stock. • An investment in our Class A common stock may be diluted by future issuances of our Class A common stock or ADK LLC units. • There may be sales of a substantial amount of Class A common stock by our stockholders, which could cause the price of our securities to fall. • Provisions in our Certificate of Incorporation and Bylaws limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts. • Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings, which could limit our stockholders’ ability to obtain a favorable judicial forum.
Risks Related to Financial Reporting, Internal Controls and Being a Public Company • We may not be able to timely and effectively implement and maintain controls and procedures required by Section 404 of the Sarbanes-Oxley Act that is applicable to us, which could result in materially misstated financial reporting. • Increased expenses and administrative burdens as a public company could have a material adverse effect on our business. • Use of exemptions available to emerging growth companies could make our securities less attractive to investors and may make it difficult to compare our performance to that of other public companies.
Risks Related to Financial Reporting, Internal Controls and Being a Public Company • We may not be able to timely and effectively implement and maintain controls and procedures required by Section 404 of the Sarbanes-Oxley Act that is applicable to us, which could result in materially misstated financial reporting. • Significant expenses and administrative burdens as a public company could have a material adverse effect on our business.
In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error.
There are many evolving risks to cybersecurity, data protection and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error.
Environmental and occupational health and safety laws and regulations have tended to become more stringent over time, causing a need to redesign technologies, imposing greater compliance costs and increasing risks and penalties associated with violations, which could seriously harm business.
Environmental and occupational health and safety laws and regulations have tended to become more stringent over time, causing a need to redesign technologies, imposing greater compliance costs and increasing risks and penalties associated with violations, which could seriously harm business. Additionally, companies across many industries are facing increasing attention on environmental, social, and governance (“ESG”) matters.
These increased costs, which may include expanding our employee base and hiring additional employees to support our operations as a public company, will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives.
These increased costs, which have included expanding our employee base and hiring additional employees to support our operations as a public company, require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. It is also expensive to maintain director and officer liability insurance.
We have and will continue to incur significantly increased expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition and results of operations. We face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company.
We incur significant expenses and administrative burdens as a public company, which could have a material adverse effect on our business, financial condition and results of operations. As a public company, we incur significant legal, accounting, administrative and other costs and expenses.
The vast majority of our revenue is derived from sales to manufacturers in the automotive industry. Demand in this market fluctuates significantly, driven by consumer spending, consumer preferences, the development of new technologies and prevailing economic conditions.
The vast majority of our revenue is derived from sales to manufacturers in the automotive industry. Demand in this market fluctuates significantly, driven by consumer spending, consumer preferences, seasonality within the automotive industry, the development of new technologies and prevailing economic conditions. Many of the factors that create and affect quarterly demands with our customers are beyond our control.
A failure to manage any growth we may experience or improve or expand our existing systems and controls, or unexpected difficulties in doing so, could harm our business and results of operations.
A failure to manage any growth we may experience or improve or expand our existing systems and controls, or unexpected difficulties in doing so, could harm our business and results of operations. Loss of key management or other highly skilled personnel, or an inability to attract such management and other personnel, could adversely affect our business.
In addition, the PRC tax and other authorities may require Wuxi to adjust its taxable income in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us. Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of our securities.
In addition, the PRC tax and other authorities may require Wuxi to adjust its taxable income in a manner that would materially and adversely affect its ability to pay dividends and other distributions to us.
Should we fail to develop and introduce sufficiently unique products with profit margins similar to or better than what we have experienced in the past or should our product development fail to keep pace with the changing needs of our customers and industry, our business, financial condition and results of operations could be materially and adversely affected. 17 Table of Contents Our strategic backlog and design win pipeline are subject to unexpected adjustments and cancellations and may not be a reliable indicator of future revenues or earnings.
Should we fail to develop and introduce sufficiently unique products with profit margins similar to or better than what we have experienced in the past or should our product development fail to keep pace with the changing needs of our customers and industry, our business, financial condition and results of operations could be materially and adversely affected.
Accordingly, the success of our business depends, to a large extent, on our ability to meet evolving industry requirements, introduce new products and technologies designed to satisfy those evolving requirements, and see our products and technologies accepted in the marketplace, both in a timely manner and at prices that are acceptable to customers.
Accordingly, the success of our business depends, to a large extent, on our ability to meet evolving industry requirements, introduce new products and technologies designed to satisfy those evolving requirements, and see our products and technologies accepted in the marketplace, both in a timely manner and at prices that are acceptable to customers. 15 Table of Contents Moreover, the costs related to the research and development necessary to develop new technologies and products are significant and some of our competitors may have greater resources than us.
We may be subject to debt covenants and payment obligations that may limit our ability to operate our business.
We may also incur additional indebtedness to meet future financing needs. We may be subject to debt covenants and payment obligations that may limit our ability to operate our business.
As of December 31, 2022, we have 250,000,000 shares of Class A common stock authorized, including 21,381,476 shares of Class A common stock issuable upon exchange of ADK LLC units that are held by certain indie Equity Holders, 27,400,000 shares of Class A common stock issuable upon exercise of the warrants, 5,000,000 shares of Class A common stock issuable upon achievement of earn-out and 10,259,207 shares of Class A common stock reserved for issuance under the Equity Incentive Plan as described below.
As of December 31, 2023, we have 400,000,000 shares of Class A common stock authorized, including 18,694,332 shares of Class A common stock issuable upon exchange of ADK LLC units that are held by certain indie Equity Holders, 5,000,000 shares of Class A common stock issuable upon achievement of earn-out, 6,755,699 shares of Class A common stock reserved for issuance under the Equity Incentive Plan and 4,288,027 shares of Class A common stock reserved for issuance under the 2023 Inducement Incentive Plan as described below.
We may seek additional capital to take advantage of business opportunities and support the further expansion of our business, which capital might not be available on acceptable terms, if at all, or may result in dilution to our stockholders.
The occurrence of any of these risks could have a material adverse effect on our business, operating results or financial condition. 18 Table of Contents We may seek additional capital to take advantage of business opportunities and support the further expansion of our business, which capital might not be available on acceptable terms, if at all, or may result in dilution to our stockholders.
However, we do not control these partnerships and joint ventures, and actions taken by any of our partners or the termination of these partnerships or joint ventures could adversely affect our business. As part of our strategy, we may enter into a number of long-term strategic partnerships and alliances, including mergers and acquisitions.
However, we do not control these partnerships and joint ventures, and actions taken by any of our partners or the termination of these partnerships or joint ventures could adversely affect our business.
The outcome of litigation is often difficult to predict, and any litigation may have a material adverse effect on our business, financial condition, results of operations and cash flows. 26 Table of Contents Our business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy and impact our stock price.
Our business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy and impact our stock price.
Sales of substantial amounts of our Class A common stock in the public market, or the perception that such sales will occur, could adversely affect the market price of our Class A common stock and make it difficult for us to raise funds through securities offerings in the future.
These parties may sell large amounts of our Class A common stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the share price of Class A common stock or putting significant downward pressure on the price of our Class A common stock. 33 Table of Contents Sales of substantial amounts of our Class A common stock in the public market, or the perception that such sales will occur, could adversely affect the market price of our Class A common stock and make it difficult for us to raise funds through securities offerings in the future.
The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Wuxi receives substantially all of its revenues in RMB.
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of our securities. 30 Table of Contents The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Wuxi receives substantially all of its revenues in RMB.
In the event of such breaches, us, our customers or other third parties could be exposed to potential liability, litigation, and regulatory action, as well as the loss of existing or potential customers, damage to reputation, and other financial loss. In addition, the cost and operational consequences of responding to breaches and implementing remediation measures could be significant.
In the event of a security breach or other cybersecurity incident, we, our customers or other third parties could be exposed to potential liability, litigation, and regulatory action, as well as the loss of existing or potential customers, damage to reputation, and other financial loss.
Although Section 404(b) of the Sarbanes-Oxley Act 30 Table of Contents (“Section 404(b)”) requires our independent registered public accounting firm to issue an annual report that addresses the effectiveness of our internal controls over financial reporting, we have opted to rely on the exemptions provided in the JOBS Act, and consequently will not be required to comply with SEC rules that implement Section 404(b) until such time as we are no longer an “emerging growth company.” In order to comply with these rules, we expect to incur additional expenses and devote increased management effort.
Although Section 404(b) of the Sarbanes-Oxley Act (“Section 404(b)”) requires our independent registered public accounting firm to issue an annual report that addresses the effectiveness of our internal controls over financial reporting, we historically relied on the exemptions provided in the JOBS Act, and consequently were not required to comply with SEC rules that implement Section 404(b).
Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties. 28 Table of Contents From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights, including the legal rights of our China subsidiary.
Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.
Such events may also result in significant increases in the prices of raw materials used for manufacturing processes. Furthermore, any disaster affecting our customers (or their respective customers) may significantly negatively impact the demand for our products and therefore our revenue.
Furthermore, any disaster affecting our customers (or their respective customers) may significantly negatively impact the demand for our products and therefore our revenue.
In connection with our assessment of internal control over financial reporting, we identified certain material weaknesses in our internal control over financial reporting for the years ended December 31, 2022 and 2021 (see Item 9A. Controls and Procedures for additional detail).
In connection with our assessment of internal control over financial reporting, we identified material weaknesses in our internal control over financial reporting as of December 31, 2023 (see Item 9A.
We may pursue mergers, acquisitions, investments and joint ventures, which could adversely affect our results of operations. Our growth strategy includes acquiring or investing in businesses that offer complementary products, services and technologies, or enhance our market coverage or technological capabilities.
Our growth strategy includes acquiring or investing in businesses that offer complementary products, services and technologies, or enhance our market coverage or technological capabilities.
Furthermore, the 2027 Indenture for the 2027 Notes will prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the 2027 Notes.
Furthermore, the 2027 Indenture for the 2027 Notes will prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the 2027 Notes. These and other provisions in the 2027 Notes could deter or prevent a third party from acquiring us even when stockholders may consider the acquisition to be favorable.
A downturn in the automotive market could delay automakers’ plans to introduce new vehicles with these features, which would negatively impact the demand for products and our ability to grow our business. 16 Table of Contents The automotive industry continues to undergo consolidation and reorganization and, in some cases, suppliers to the automotive industry have entered bankruptcy.
A downturn in the automotive market could delay or cancel automakers’ plans to introduce new vehicles with these features, which previously has, and could in the future, negatively impact the demand for products and our ability to grow our business.
In addition, even inadvertent failure to comply with federal, state, or international privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others. Our costs to comply with and implement these privacy-related and data protection measures could be significant.
Global privacy, data protection and cybersecurity legislation, enforcement, and policy activity are rapidly expanding and creating a complex regulatory compliance environment. In addition, even inadvertent failure to comply with federal, state, or international privacy-related, data protection or cybersecurity laws and regulations could result in proceedings against us by governmental entities or others.
The loss of any key personnel could have a material adverse effect on our business.
We depend on key management to run our business and on development engineers to develop new products and technologies. The loss of any key personnel could have a material adverse effect on our business.
Risks associated with our status as a public company may also make it more difficult to attract and retain qualified persons to serve on the board of directors or as executive officers. Additionally, certain of our executive officers and certain directors have limited experience in the management of a publicly traded company.
Risks associated with our status as a public company may also make it more difficult to attract and retain qualified persons to serve on the Board of Directors or as executive officers. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
Our customers or third-party partners may attempt to renegotiate or terminate their contracts for a number of reasons, including competitor offerings, mergers, changes in their financial condition, or general changes in economic conditions within their industries or geographic locations, we may experience delays in the development or delivery of products or services specified in customer contracts, or we may be unable to win competitive bid selection processes or achieve additional design wins on the timeline currently anticipated or at all.
Our customers or third-party partners may attempt to renegotiate or terminate their contracts for a number of reasons, including competitor offerings, mergers, changes in their financial condition, or general changes in economic conditions within their industries or geographic locations.
For example, commencing in 2020, a variety of factors including the COVID-19 pandemic, ongoing trade disputes between the United States and China, geopolitical factors, such as Russia’s invasion of Ukraine, weakness in demand and pricing for semiconductors across applications, and excess inventory have resulted in downturns in the semiconductor industry.
Uncertain general economic conditions, geopolitical factors, such as ongoing trade disputes between the United States and China, the ongoing conflicts in the Middle East and Ukraine, and public health crises, such as the COVID-19 pandemic, may also cause weakness in demand and pricing for semiconductors across applications, and excess inventory resulting in downturns in the semiconductor industry.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth our principal facilities : Location Square Footage Location Square Footage Aliso Viejo, California 18,000 Quebec City, Canada 50,050 Austin, Texas 5,753 Suzhou, China 6,841 Detroit, Michigan 32,700 Edinburgh, Scotland 5,328 Haifa, Israel 6,641 Shanghai, China 5,162
Biggest changeThe following table sets forth our principal facilities : Location Square Footage Location Square Footage Aliso Viejo, California 18,000 Ontario, Canada 10,377 Austin, Texas 5,753 Quebec City, Canada 50,050 Detroit, Michigan 32,700 Schlieren, Switzerland 11,108 San Jose, California 23,135 Shanghai, China 5,162 Edinburgh, Scotland 5,328 Suzhou, China 6,841 Haifa, Israel 6,641
PROPERTIES We are headquartered in Aliso Viejo, California with design centers and sales offices in Austin, Texas; Boston, Massachusetts; Detroit, Michigan; San Francisco and San Jose, California; Cordoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Cambridge, England; Edinburgh, Scotland; Rabat, Morocco; Haifa, Israel; Quebec City, Canada; Seoul, South Korea; Tokyo, Japan and several locations throughout China.
PROPERTIES We are headquartered in Aliso Viejo, California with design centers and sales offices in Austin, Texas; Boston, Massachusetts; Detroit, Michigan; San Francisco and San Jose, California; Cordoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Edinburgh, Scotland; Schlieren, Switzerland; Rabat, Morocco; Haifa, Israel; Quebec City and Toronto, Canada; Seoul, South Korea; Tokyo, Japan, and several locations throughout China.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are not party to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. The outcome of litigation is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we may be involved in disputes, legal proceedings, governmental actions, or subject to claims incident to the ordinary course of business. The outcome of legal proceedings is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained.
In addition, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 35 Table of Contents PART II
Further, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(d) Issuer Purchases of Equity Securities The following table provides information regarding repurchases of common stock made during the three months ended December 31, 2022 (in thousands except share and per share data): Period Total Number of Shares Purchased Average Price Paid per share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) 10/1/2022 - 10/31/2022 — — — $ 50,000 11/1/2022 - 11/30/2022 1,112,524 $6.65 1,112,524 $ 42,596 12/1/2022 - 12/31/2022 — — — $ 42,596 1,112,524 1,112,524 (1) We announced on November 16, 2022 that our Board of Directors had authorized the repurchase, from time to time, of up to $50,000 of indie’s Class A common stock and/or warrants to purchase common stock.
Biggest change(d) Issuer Purchases of Equity Securities We announced on November 16, 2022 that our Board of Directors had authorized the repurchase, from time to time, of up to $50.0 million of Class A common stock and/or warrants to purchase common stock. There were no repurchases of common stock made during the three months ended December 31, 2023.
The shares of Class A common stock were issued to the three ADK Minority Holders in reliance on the exemption under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
The shares of Class A common stock were issued to the two ADK Minority Holders in reliance on the exemption under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
(e) Unregistered Sales of Equity Securities and Use of Proceeds On various dates between October 27, 2022 and November 11, 2022 the Company issued an aggregate of 2,405,560 shares of its Class A common stock to three ADK Minority Holders in exchange for an equal number of their ADK LLC units.
(e) Unregistered Sales of Equity Securities and Use of Proceeds On various dates between October 2, 2023 and December 15, 2023, the Company issued an aggregate of 346,946 shares of its Class A common stock to three ADK Minority Holders in exchange for an equal number of their ADK LLC units.
(c) Dividends We have not paid any cash dividends on our ordinary shares to date. The payment of any cash dividends will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any share dividends in the foreseeable future.
The payment of any cash dividends will be within the discretion of our Board of Directors at such time. In addition, our Board of Directors is not currently contemplating and does not anticipate declaring any share dividends in the foreseeable future.
In connection with such exchange, 2,368,200 shares of Class V common stock held by the ADK Minority Holders were cancelled and 37,360 shares of ADK LLC units were exchanged for Class A common stock. ITEM 6. [RESERVED]
In connection with such exchange, 300,000 shares of Class V common stock held by the ADK Minority Holders were cancelled and 46,946 shares of ADK LLC units were exchanged for Class A common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information Our Class A Common Stock and redeemable warrants began trading on the Nasdaq Capital Market under the symbols “INDI” and “INDIW”, respectively, on June 10, 2021.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information Our Class A Common Stock is listed on the Nasdaq Capital Market under the symbol “INDI”.
(b) Holders of Common Stock As of March 21, 2023, there were approximately 91 holders of record of our Class A Common Stock and 20 holders of our redeemable warrants, neither of which include the number of shareholders that hold shares in “street name” through banks or broker-dealers.
(b) Holders of Common Stock As of February 26, 2024, there were approximately 169 holders of record of our Class A common stock, which include the number of shareholders that hold shares in “street name” through banks or broker-dealers. (c) Dividends We have not paid any cash dividends on our ordinary shares to date.
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As of December 31, 2023, $42.6 million of the approved balance remains available for future repurchases.
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(f) Performance Graph The following graph and table compare our stock performance to three stock indices since June 10, 2021, our first trading day, assuming $100 investment was made: 37 Table of Contents 6/11/2021 12/31/2021 12/31/2022 12/31/2023 indie Semiconductor, Inc. $ 100 $ 111 $ 54 $ 75 Nasdaq Capital Market Composite $ 100 $ 82 $ 46 $ 41 PHLX Semiconductor Sector $ 100 $ 123 $ 79 $ 130 Past stock price performance is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe total consideration paid for this acquisition consisted of (i) $8.7 million in cash at closing, net of cash acquired; (ii) a $10.0 million promissory note payable in January 2023 with a fair market value of $9.7 million; and (iii) an equity-based earn-out of up to 858,369 shares of indie Class A common stock based on future revenue growth.
Biggest changeThe closing consideration consisted of (i) $93.4 million in cash (including accrued cash considerations at closing and net of cash acquired); (ii) the issuance by indie of 6,868,768 shares of Class A common stock at closing, with a fair value of $75.6 million (iii) 1,907,180 shares of Class A common stock, with a fair value of $21.0 million at closing, payable in the next 24-month period after closing; and (iv) an earn-out with a fair value of $59.3 million at closing payable in cash or in Class A common stock, subject to achieving certain GEO-related revenue targets through September 30, 2024.
On November 29, 2022, Wuxi executed a Capital Increase Agreement to raise CNY300.0 million (approximately $42.0 million) of capital by issuing 371,160 shares of its common stock, which represents 16% of Wuxi’s equity at the time of issuance. As a result, indie’s ownership in Wuxi has reduced from 45% to 38%.
On November 29, 2022, Wuxi executed a Capital Increase Agreement to raise CNY300.0 million (approximately $42.0 million) of capital by issuing 371,160 shares of its common stock, which represents 16% of Wuxi’s equity at the time of issuance. As a result, indie’s ownership in Wuxi has reduced from 45% to 38% in November 2022.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $192.7 million, which was primarily attributed to $160.0 million of proceeds from the issuance of the 2027 Notes, $41.9 million of proceeds related to the Wuxi capital raise and $16.8 million of net proceeds from the issuance of common stock through the ATM.
Net cash provided by financing activities for the year ended December 31, 2022 was $192.7 million, which was primarily attributed to $160.0 million of proceeds from the issuance of the 2027 Notes, $41.9 million of proceeds related to the Wuxi capital raise and $16.8 million of net proceeds from the issuance of common stock through the ATM.
Actual results may differ materially from those contained in any forward-looking statements. OUR COMPANY indie Semiconductor offers highly innovative automotive semiconductors and software solutions for Advanced Driver Assistance Systems (“ADAS”), autonomous vehicle, connected car, user experience and electrification applications. We focus on edge sensors across multiple modalities spanning LiDAR, radar, ultrasound and computer vision.
Actual results may differ materially from those contained in any forward-looking statements. OUR COMPANY indie offers highly innovative automotive semiconductors and software solutions for Advanced Driver Assistance Systems (“ADAS”), autonomous vehicle, connected car, user experience and electrification applications. We focus on edge sensors across multiple modalities spanning LiDAR, radar, ultrasound and computer vision.
Among other provisions, this agreement includes certain liquidation preferences for the investors of this Capital Increase Agreement as well as an ability to exchange their Wuxi shares for up to 6 million shares of indie’s Class A common stock in the event Wuxi does not successfully complete a local initial public offering by December 31, 2027.
Among other provisions, this agreement includes certain liquidation preferences for the investors of this Capital Increase Agreement as well as an ability to exchange their Wuxi shares for up to 6 million shares of indie’s Class A common stock in the event Wuxi does not successfully complete a local initial public offering (“IPO”) by December 31, 2027.
The purchase price is subject to working capital and other adjustments as provided in the merger agreement. The transaction was completed on March 3, 2023. Silicon Radar On February 21, 2023, Symeo GmbH (“Symeo”), one of our wholly-owned subsidiaries, completed its acquisition of all of the outstanding capital stock of Silicon Radar GmbH (“Silicon Radar”).
The purchase price is subject to working capital and other adjustments as provided in the Agreement and Plan of Merger. The transaction was completed on March 3, 2023. Silicon Radar On February 21, 2023, Symeo GmbH (“Symeo”), one of our wholly-owned subsidiaries, completed its acquisition of all of the outstanding capital stock of Silicon Radar GmbH (“Silicon Radar”).
Cost of goods sold also includes compensation related to personnel associated with manufacturing and amortization of certain intangible assets acquired through the business combinations. Cost of goods sold does not include development costs incurred related to servicing our NRE services contracts, which are recorded to research and development and expensed as incurred.
Cost of goods sold also includes compensation related to personnel associated with manufacturing and amortization of certain intangible assets acquired through the business combinations. Cost of goods sold generally does not include development costs incurred related to servicing our NRE services contracts, which are recorded to research and development and expensed as incurred.
In accordance with the terms of the Sales Agreement, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal.
In accordance with the terms of the ATM Agreement, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal.
Throughout this section, unless otherwise noted, “indie” refers to indie Semiconductor and its consolidated subsidiaries. The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.
Throughout this section, unless otherwise noted, “indie” refers to indie Semiconductor, Inc. and its consolidated subsidiaries. The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.
Our revenues fluctuate in response to a combination of factors, including the following: • our overall product mix and sales volumes; • gains and losses in market share and design win traction; • semiconductor content per vehicle; • pace at which technology is adopted in our end markets; • fluctuations in currency exchange rates that affect our prices; • the stage of our products in their respective life cycles; • the effects of competition and competitive pricing strategies; • governmental regulations influencing our markets; and • the global and regional economic cycles.
Our revenues fluctuate in response to a combination of factors, including the following: • our overall product mix and sales volumes; • gains and losses in market share and design win traction; • semiconductor content per vehicle; • pace at which technology is adopted in our end markets; • fluctuations in currency exchange rates that affect our prices; • the stage of our products in their respective life cycles; • the effects of competition and competitive pricing strategies; • governmental regulations influencing our markets; and 41 Table of Contents • the global and regional economic cycles.
The 2027 Notes will be convertible into cash, shares of common stock or a combination of cash and common stock at our election. We used the net proceeds from the 2027 notes to fund the acquisition of GEO and Silicon Radar as well as a stock repurchase program authorized by our Board of Directors in November 2022.
The 2027 Notes will be convertible into cash, shares of common stock or a combination of cash and common stock at our election. We used the net proceeds from the 2027 Notes to fund the acquisitions of GEO and Silicon Radar as well as a stock repurchase program authorized by our Board of Directors in November 2022.
Therefore, the estimated costs of warranty claims are generally accrued as cost of goods sold in the period the related revenue is recorded. Under limited circumstances, we may offer an extended limited warranty to customers for certain products. We accrue for known warranty and indemnification issues if a loss is probable and 39 Table of Contents can be reasonably estimated.
Therefore, the estimated costs of warranty claims are generally accrued as cost of goods sold in the period the related revenue is recorded. Under limited circumstances, we may offer an extended limited warranty to customers for certain products. We accrue for known warranty and indemnification issues if a loss is probable and can be reasonably estimated.
These increases were partially offset by $7.5 million paid to Onsemi as part of the deferred payments in relation to the acquisition of ON Design, $7.4 million paid to repurchase common stock, $5.4 million of costs incurred from the issuance of the 2027 Notes, $4.2 million 45 Table of Contents of payments on financed software and a $1.0 million payment of City Semiconductor acquisition related deferred compensation.
These increases were partially offset by $7.5 million paid to Onsemi as part of the deferred payments in relation to the acquisition of ON Design, $7.4 million paid to repurchase common stock, $5.4 million of costs incurred from the issuance of the 2027 Notes, $4.2 million of payments on financed software and a $1.0 million payment of City Semiconductor acquisition related deferred compensation.
In particular, we enter into engineering services contracts with customers that generally contain only one distinct performance obligation, which is design services for ICs based on agreed-upon specifications. Engineering services contracts typically also include the purchase, at the customer’s option, of ICs at agreed upon prices subsequent to completion of IC design services.
In particular, we enter into engineering services contracts with customers that generally contain only one distinct performance obligation, which is design services for ICs based on agreed-upon specifications. Engineering services contracts typically also 49 Table of Contents include the purchase, at the customer’s option, of ICs at agreed upon prices subsequent to completion of IC design services.
Also on June 10, 2021, Surviving Pubco changed its name to indie Semiconductor, Inc., and listed our shares of Class A common stock, par value $0.0001 per share on The Nasdaq Stock Market LLC under the symbol “INDI.” The most significant change in our reported financial position and results of operations in comparison to the prior year is gross cash proceeds of $399.5 million from the Transaction, which includes $150.0 million in proceeds from the PIPE financing that was consummated in conjunction with the Transaction.
Also on June 10, 2021, Surviving Pubco changed its name to indie Semiconductor, Inc., and listed our shares of Class A common stock on The Nasdaq Stock Market LLC under the symbol “INDI.” The most significant change in our reported financial position and results of operations in comparison to the prior year is gross cash proceeds of $399.5 million from the Transaction, which includes $150.0 million in proceeds from the PIPE financing that was consummated in conjunction with the Transaction.
The increase in cash was offset by transaction costs incurred in connection with the Transaction of approximately $60.6 million plus the retirement of indie’s long-term debt of $15.6 million. Approximately $29.8 million of the transaction costs and all of indie’s long-term debt were paid as of June 30, 2021.
The increase in cash was offset by transaction costs incurred in connection with the Transaction of approximately $43.5 million plus the retirement of indie’s long-term debt of $15.6 million. Approximately $29.8 million of the transaction costs and all of indie’s long-term debt were paid as of June 30, 2021.
For the year ended December 31, 2022, net cash used in operating activities was $76.7 million, which included net loss of $52.8 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash decreases primarily consisted of $64.7 million of net gains resulting from a change in fair value for warrants and contingent considerations.
Cash used in operating activities during the year ended December 31, 2022 was $76.7 million, which included net loss of $52.8 million and was adjusted for certain non-cash items and changes in operating assets and liabilities. Non-cash decreases primarily consisted of $64.7 million of net gains resulting from a change in fair value for warrants and contingent considerations.
A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the consolidated 38 Table of Contents financial statements of legacy ADK LLC in many respects.
A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the consolidated financial statements of legacy ADK LLC in many respects.
Our future capital requirements may vary from those currently planned and will depend on many factors, including our rate of sales growth, the timing and extent of spending on various business initiatives, including potential merger and acquisition activities, our international expansion, the timing of new product introductions, market acceptance of our solutions, and overall economic conditions including the potential impact of global supply imbalances, rising interest rates, inflationary pressures, COVID-19 and volatility in the global financial markets.
Our future capital requirements may vary from those currently planned and will depend on many factors, including our rate of sales growth, the timing and extent of spending on various business initiatives, including potential merger and acquisition activities, our international expansion, the timing of new product introductions, market acceptance of our solutions, and overall economic conditions including the potential impact of global supply imbalances, rising interest rates, inflationary pressures, the impact of the ongoing conflicts in Ukraine and the Middle East, and volatility in the global financial markets.
The stock repurchase program resulted in us repurchasing 1.1 million shares of our outstanding common stock in November at an average cost of $6.65 per share, which amounts for a total cash outflow of $7.4 million in 2022.
The stock repurchase program resulted in us repurchasing 1.1 million shares of our outstanding common stock in November 2022 at an average cost of $6.65 per share, which amounted to a total cash outflow of $7.4 million in 2022.
You should read this discussion and analysis in conjunction with the accompanying audited consolidated financial statements and notes thereto included elsewhere in this 36 Table of Contents Form 10-K. Certain amounts may not foot due to rounding.
You should read this discussion and analysis in conjunction with the accompanying audited consolidated financial statements and notes thereto included elsewhere in this Form 10-K. Certain amounts may not foot due to rounding.
Upon consummation of the Transaction, indie-designated directors were appointed to seven of the nine seats of the combined Company’s board of directors; our Chief Executive Officer and President were appointed as the other two board members; our existing senior management became the senior management of the combined company; and the current stockholders of indie became the owners of approximately 26% of the outstanding shares of Class A common stock of the combined company.
Upon consummation of the Transaction, indie-designated directors were appointed to seven of the nine seats of the combined Company’s Board of Directors; our Chief Executive Officer and President were appointed as the other two board members; our existing senior management became the senior management of the combined company; and the stockholders of indie at the time of the Transaction became the owners of approximately 26% of the outstanding shares of Class A common stock of the 40 Table of Contents combined company.
Refer to Note 19, Income Tax , in our accompanying financial statements for additional detail.
Refer to Note 18 — Income Tax , in our accompanying financial statements for additional detail.
These policies and significant judgments involved are discussed further below. We have other significant accounting policies that do not generally require subjective estimates or judgments or would not have a material impact on our results of operations. Our significant accounting policies and estimates are described in Note 2 to Item 8 of this Annual Report on Form 10-K.
We have other significant accounting policies that do not generally require subjective estimates or judgments or would not have a material impact on our results of operations. Our significant accounting policies and estimates are described in Note 2 — Summary of Significant Accounting Policies to Item 8 of this Annual Report on Form 10-K.
We expect research and development expense to continue to increase as we continue to grow our headcount organically to support expanded product development activities. Selling, general and administrative expense for the year ended December 31, 2022 was $48.2 million, compared to $36.4 million for the year ended December 31, 2021.
We expect research and development expense to continue to increase as we continue to grow our headcount organically to support expanded product development activities. Selling, general and administrative expense for the year ended December 31, 2023 was $70.5 million, compared to $48.2 million for the year ended December 31, 2022.
The acquisition of Silicon Radar completed in February 2023 and GEO completed in March 2023, which resulted in us funding a purchase price of approximately $9.0 million and $90 million, respectively.
The acquisition of Silicon Radar completed in February 2023 and GEO completed in March 2023, resulted in us funding the cash consideration portion of the purchase price of approximately $9.0 million and $90 million, respectively.
In addition, from time to time, we use cash to fund our mergers and acquisitions, purchases of various capital and software assets and scheduled repayments for outstanding debt obligations. Our immediate sources of liquidity are cash, cash equivalents and funds anticipated to be generated from our operations.
In addition, from time to time, we use cash to fund our mergers and acquisitions, purchases of various capital, intellectual property and software assets and scheduled repayments for outstanding debt obligations. Our immediate sources of liquidity are cash, cash equivalents and funds anticipated to be generated from our operations and available borrowings under our revolving credit facility.
For the year ended December 31, 2022, we incurred total issuance costs of $0.4 million. On November 21, 2022, we issued $160 million in aggregate principal of our 4.50% convertible senior notes which are due in May 2027 (the “2027 Notes”).
As of December 31, 2023, we have incurred total issuance costs of $1.5 million. On November 21, 2022, we issued $160.0 million in aggregate principal of our 4.50% convertible senior notes which are due in May 2027 (the “2027 Notes”).
See Note 3 — Business Combinations for additional descriptions of these acquisitions Reverse Recapitalization with Thunder Bridge Acquisition II On June 10, 2021, we completed a series of transactions (the “Transaction”) with Thunder Bridge Acquisition II, Ltd (“TB2”) pursuant to the Master Transactions Agreement dated December 14, 2020, as amended on May 3, 2021 (the “MTA”).
Reverse Recapitalization with Thunder Bridge Acquisition II On June 10, 2021, we completed a series of transactions (the “Transaction”) with Thunder Bridge Acquisition II, Ltd (“TB2”) pursuant to the Master Transactions Agreement dated December 14, 2020, as amended on May 3, 2021 (the “MTA”).
In accordance with the terms of the Sales Agreement, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal.
In accordance with the terms of the ATM Agreement, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $150.0 million from time to time through the Sales Agents, acting as our agent or principal. We implemented this program for the flexible access it provides to the capital markets.
We expect to continue to incur net operating losses and negative cash flows from operations. We also expect our research and development expenses, general and administrative expenses and capital expenditures will increase over time as we continue to expand our operations, product offerings and customer base.
We also expect our research and development expenses, general and administrative expenses and capital expenditures will increase over time as we continue to expand our operations, product offerings and customer base.
Research and development expense consists primarily of pre-production costs related to the design and development of our products and technologies, including costs related to NRE services contracts with customers such as employee compensation, benefits and related costs of sustaining our engineering teams, project material costs, third-party fees paid to consultants, prototype development expenses, occupancy costs and related overhead based on headcount, other costs incurred in the product design and development process and amortization expenses for certain intangible assets acquired from the business combinations.
This includes costs with customers such as employee compensation, benefits and related costs of sustaining our engineering teams, project material costs, third-party fees paid to consultants, prototype development expenses, costs related to IP licenses, occupancy costs and related overhead based on headcount, other costs incurred in the product design and development process and amortization expenses for certain intangible assets acquired from the business combinations.
The increase in product revenue consists of higher product volume (units sold) given the continued growth in demand from our customers globally. Change in product mix, and increases in average selling price (“ASP”) also contributed to the increase in product revenue year-over-year.
The increase in product revenue was due primarily to change in product mix as well as higher product volume (units sold) given the continued growth in demand from our customers globally as well as the recent acquisitions. Increases in average selling price (“ASP”) also contributed to the increase in product revenue year-over-year.
As of December 31, 2021, there was no liability remaining on the balance sheet. iv) Contingent considerations: During the year ended December 31, 2022, we recognized a net gain from change in fair value of our contingent considerations of $9.5 million, which is primarily contributed by a realized gain of $5.8 million and $4.0 million for the contingent considerations related to the Symeo and OnDesign acquisition.
During the year ended December 31, 2022, we recognized a net gain from change in fair value of our contingent considerations of $9.5 million, which is primarily contributed by an unrealized gain of $5.8 million and a realized gain of $4.0 million for the contingent considerations related to the Symeo and OnDesign acquisition, respectively.
We implemented this program for the flexibility that it provides to the capital markets and to best time our equity capital needs. As of December 31, 2022, we had raised gross proceeds of $17.2 million and issued 2,131,759 shares of Class A common stock at an average per-share sales price of $8.07 through this program.
We implemented this program for the flexibility that it provides to the capital markets and to best time our equity capital needs. As of December 31, 2023, we had raised gross proceeds of $70.3 million and issued 7,351,259 shares of Class A common stock at an average per-share sales price of $9.57 through this program.
Headquartered in Aliso Viejo, California, indie has design centers and sales offices in Austin, Texas; Boston, Massachusetts; Detroit, Michigan; San Francisco and San Jose, California; Cordoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Cambridge, England; Edinburgh, Scotland; Rabat, Morocco; Haifa, Israel; Quebec City, Canada; Seoul, South Korea; Tokyo, Japan and several locations throughout China.
Headquartered in Aliso Viejo, California, indie has design centers and sales offices in Austin, Texas; Boston, Massachusetts; Detroit, Michigan; San Francisco and San Jose, California; Cordoba, Argentina; Budapest, Hungary; Dresden, Frankfurt an der Oder, Munich and Nuremberg, Germany; Edinburgh, Scotland; Schlieren, Switzerland; Rabat, Morocco; Haifa, Israel; Quebec City and Toronto, Canada; Seoul, South Korea; Tokyo, Japan and several locations throughout China. 38 Table of Contents We maintain design centers for our semiconductor engineers and designers in the United States, Argentina, Canada, Hungary, Germany, Scotland, Morocco, Israel, Switzerland and China.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Recently Issued and Adopted Accounting Standards For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 2 — Summary of Significant Accounting Policies in our accompanying financial statements.
Recently Issued and Adopted Accounting Standards For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 2 — Summary of Significant Accounting Policies in our accompanying financial statements.
The total liability as of November 9, 2021 was reclassified to Additional Paid in Capital in our consolidated balance sheet.
The total liability as of November 9, 2023 was reclassified to Additional Paid in Capital in our consolidated balance sheet. As of December 31, 2023, there was no liability remaining on the balance sheet.
In connection with our acquisitions, we may from time to time be required to make future payments or issue additional shares of our common stock to satisfy our obligations under the acquisition agreements, including to satisfy certain earn-out requirements. In January 2022 we completed the acquisition of Symeo, for which we made an initial cash payment of approximately $10.0 million.
In connection with our acquisitions, we may from time to time be required to make future payments or issue additional shares of our common stock to satisfy our obligations under the acquisition agreements, including to satisfy certain earn-out requirements.
Cash used in operating activities during the year ended December 31, 2021 was $55.8 million, which included net loss of $118.6 million and was adjusted for certain non-cash items and changes in operating assets and liabilities.
For the year ended December 31, 2023, net cash used in operating activities was $104.4 million, which included net loss of $128.8 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities.
No changes in fair value of SAFEs was recorded post 2021 as they were settled as part of the Transaction. ii) Warrants: During the year ended December 31, 2022, we recognized an unrealized gain from change in fair value of our warrants of $55.1 million, which reflected the decrease in fair value of our warrant liability.
During the year ended December 31, 2022, we recognized an unrealized gain from change in fair value of our warrants of $55.1 million, which reflected the decrease in fair value of our warrant liability.
The decrease in fair value of 42 Table of Contents our warrant liability was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq to $5.83 per share on December 31, 2022 from $11.99 per share on December 31, 2021.
The net decrease in fair value was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq to $4.94 per share on November 9, 2023 from $5.83 per share on December 31, 2022.
Changes in operating assets and liabilities from operations used $9.2 million of cash, primarily driven by an increase in accounts receivable, inventory, prepaid and other current assets and a decrease in accounts payable. This was offset by an increase in accrued expenses and other current liabilities.
Changes in operating assets and liabilities from operations used $58.1 million of cash, primarily driven by an increase in accounts receivable, prepaid and other current assets and inventory.
The valuation of intangible assets, in particular, requires that we use valuation techniques such as the market, income and cost approach.
Our valuation of acquired assets and assumed liabilities requires significant estimates, especially with respect to intangible assets. The valuation of intangible assets, in particular, requires that we use valuation techniques such as the market, income and cost approach.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. Historically, we derive liquidity primarily from debt and equity financing activities as we have historically had negative cash flows from operations.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. We have cash deposits with large financial institutions that have stable outlooks and credit ratings as of February 29, 2024.
Other Income (Expense) Other income (expense) primarily comprises the change in the fair value of the warrants and earn-out liabilities issued as a result of the Transaction and contingent considerations issued as a result of the recent business combinations.
Interest Expense Interest expense primarily consists of cash and non-cash interest under our term loan facilities, convertible notes and line of credit. 42 Table of Contents Other Income (Expense) Other income (expense) primarily comprises the change in the fair value of the warrants and earn-out liabilities issued as a result of the Transaction and contingent considerations and holdbacks issued as a result of the recent business combinations.
Riley Securities, Inc., Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC (collectively as “Sales Agents”) relating to shares of our Class A common stock, par value $0.0001 per share.
Execution of At-The-Market Agreement On August 26, 2022, we entered into an At Market Issuance Agreement (“ATM Agreement”) with B. Riley Securities, Inc., Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC (collectively as “Sales Agents”) relating to shares of our Class A common stock, par value $0.0001 per share (the “Class A common stock”).
As of December 31, 2022, we have raised gross proceeds of $17.2 million and issued 2,131,759 shares of Class A common stock at an averaged per-share sales price of $8.07 through this program and had approximately $132.8 million available for future issuances under the ATM Agreement.
As of December 31, 2023, and since the inception of the program we have raised gross proceeds of $70.3 million and issued 7,351,259 shares of Class A common stock at an average per-share sales price of $9.57 and had approximately $79.7 million available for future issuances under the ATM Agreement.
The increase of $31.8 million or 111% was primarily due to a $15.7 million increase in product shipments in connection with the increase in products sold as described above, a $6.9 million increase due to an increase in product cost, 41 Table of Contents and a $5.3 million increase due to a change in product mix.
The increase of $73.1 million or 121% was primarily due to a $27.4 million increase in product shipments in connection with the increase in products sold as described above, a $21.5 million increase due to change in product mix, and a $8.2 million increase in product cost.
The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values.
Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.
Our acquired intangible assets with definite lives are amortized from the date of acquisition over periods ranging from two to seven years. Interest Expense Interest expense primarily consists of cash and non-cash interest under our term loan facilities, convertible notes and line of credit.
Our acquired intangible assets with definite lives are amortized from the date of acquisition over periods ranging from two to seven years.
Investing Activities Net cash used in investing activities for the year ended December 31, 2022 and 2021 was $16.3 million and $84.3 million, respectively.
Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $107.7 million.
We expect that we will make additional capital expenditures in the future, including licenses to various intangible assets, in order to support the future growth of our business.
We expect that we will make additional capital expenditures in the future, including licenses to various intangible assets, in order to support the future growth of our business. 48 Table of Contents Net cash used in investing activities for the year ended December 31, 2022 was $16.3 million.
Interest income increased primarily as a result of increases in interest rates associated with the money market funds and marketable securities. Interest expense for the year ended December 31, 2022 was $1.7 million, compared to $1.2 million for the year ended December 31, 2021. Interest expense relates to the routine cash and non-cash interest expenses on outstanding debt obligations.
Interest expense for the year ended December 31, 2023 was $8.7 million, compared to $1.7 million for the year ended December 31, 2022. Interest expense relates to the routine cash and non-cash interest expenses on outstanding debt obligations.
During the year ended December 31, 2021, the decrease in cash was primarily due to the acquisition of TeraXion and OnDesign Israel for $75.3 million and $5.0 million, net of cash acquired, respectively, as well as cash used of $2.7 million for capital expenditures.
During the year ended December 31, 2023, the decrease in cash was primarily due to the acquisitions of Exalos, GEO and Silicon Radar for $95.0 million, net of cash acquired, as well as cash used of $12.8 million for the purchase of capital expenditures.
Future Cash Obligations Following is a summary of our contractual cash obligations as of December 31, 2022: Future Estimated Cash Payments Due by Period Contractual Obligations Less than 1 year 1 - 3 years 3-5 years >5 years Total Debt obligations $ 16,697 $ — $ 160,000 $ — $ 176,697 Interest on debt obligations 7,300 14,620 13,680 — 35,600 Operating leases 2,551 4,231 3,539 4,117 14,438 Total contractual obligations $ 26,548 $ 18,851 $ 177,219 $ 4,117 $ 226,735 Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”).
Future Estimated Cash Payments Due by Period Contractual Obligations Less than 1 year 1 - 3 years 3-5 years >5 years Total Debt obligations $ 5,142 $ — $ 160,000 $ — $ 165,142 Interest on debt obligations 7,200 14,400 6,300 — 27,900 Operating leases 3,357 5,076 4,048 3,560 16,041 Total contractual obligations $ 15,699 $ 19,476 $ 170,348 $ 3,560 $ 209,083 Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”).
Our historical operations and statements of assets and liabilities may not be comparable to the operations and statements of assets and liabilities of the combined company as a result of the Transaction. Impact of COVID-19 The COVID-19 pandemic (the “Pandemic”) and efforts to control its spread have significantly curtailed the movement of people, goods, and services worldwide.
Our historical operations and statements of assets and liabilities may not be comparable to the operations and statements of assets and liabilities of the combined company as a result of the Transaction.
The closing consideration consisted of (i) $9.0 million in cash, (ii) approximately 980,000 shares of our Class A common stock, par value $0.0001 per share and (iii) a contingent consideration payable in cash or in our Class A common stock subject to Silicon Radar’s achievement of certain revenue-based and design-win milestones through December 31, 2024.
The closing consideration consisted of (i) $9.2 million in cash (including debt payable at closing and net of cash acquired), (ii) the issuance by indie of 982,445 shares of Class A common stock at closing, with a fair value of $9.8 million; and (iii) a contingent consideration with fair value of $9.2 million at closing, payable in cash or in Class A common stock subject to Silicon Radar’s achievement of certain revenue-based and design-win milestones through February 21, 2025.
Research and Development Expense Costs related to research, design, and development of our products are expensed as incurred.
Research and Development Expense Costs related to research, design, and development of our products are expensed as incurred. Research and development expense consists primarily of pre-production costs related to the design and development of our products and technologies, including costs related to developing products subsidized by NRE services contracts.
Additionally, in February, 2023, we acquired Silicon Radar GmbH, for approximately $9.0 million in cash, and approximately 980,000 shares of Class A common stock with an earn-out consideration payable in cash or in Class A common stock subject to Silicon Radar’s achievement of certain revenue-based and design-win milestones through December 31, 2024.
Additionally, in February, 2023, we acquired Silicon Radar, for approximately (i) $9.2 million in cash (including debt payable at closing and net of cash acquired), (ii) the issuance by indie of 982,445 shares of Class A common stock at closing, with a fair value of $9.8 million; and (iii) a contingent consideration with fair value of $9.2 million at closing, payable in cash or in Class A common stock subject to Silicon Radar’s achievement of certain revenue-based and design-win milestones through February 21, 2025.
Comparison of the Years Ended December 31, 2022 and 2021 Revenue Fiscal Years Ended 2022 2021 (in thousands) $ % of Revenue $ % of Revenue $ Change % Change Revenue: Product revenue $ 89,457 81 % $ 43,796 90 % $ 45,661 104 % Contract revenue 21,340 19 % 4,616 10 % 16,724 362 % Total revenue $ 110,797 100 % $ 48,412 100 % $ 62,385 129 % Revenue for the year ended December 31, 2022 was $110.8 million, compared to $48.4 million for the year ended December 31, 2021, an increase of $62.4 million or 129%, which was driven by a $45.7 million increase in product revenue and a $16.7 million increase in contract revenue.
Comparison of the Years Ended December 31, 2023 and 2022 Revenue Fiscal Years Ended 2023 2022 (in thousands) $ % of Revenue $ % of Revenue $ Change % Change Revenue: Product revenue $ 195,624 88 % $ 89,457 81 % $ 106,167 119 % Contract revenue 27,545 12 % 21,340 19 % 6,205 29 % Total revenue $ 223,169 100 % $ 110,797 100 % $ 112,372 101 % Revenue for the year ended December 31, 2023 was $223.2 million, compared to $110.8 million for the year ended December 31, 2022, an increase of $112.4 million or 101%, which was driven by a $106.2 million increase in product revenue and a $6.2 million increase in contract revenue.
Our revenue represents both non-recurring engineering (“NRE”) fees for the development of ICs and prototypes and product sales, the sale of semiconductors under separate commercial supply arrangements.
Revenue We design, develop and manufacture primarily analog, digital and mixed-signal integrated circuits (“ICs”) together with software running on the embedded processors in the majority of the ICs. Our revenue represents both (i) non-recurring engineering (“NRE”) fees for the development of ICs and prototypes and (ii) product sales, the sale of semiconductors under separate commercial supply arrangements.
The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter.
IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life.
Operating expenses Fiscal Years Ended 2022 2021 (in thousands) $ % of Revenue $ % of Revenue $ Change % Change Operating expenses: Cost of goods sold $ 60,491 55 % $ 28,703 59 % $ 31,788 111 % Research and development 121,197 109 % 58,117 120 % 63,080 109 % Selling, general, and administrative 48,237 44 % 36,384 75 % 11,853 33 % Total operating expenses $ 229,925 208 % $ 123,204 254 % $ 106,721 87 % Cost of goods sold for the year ended December 31, 2022 was $60.5 million, compared to $28.7 million for the year ended December 31, 2021.
Operating Expenses Fiscal Years Ended 2023 2022 (in thousands) $ % of Revenue $ % of Revenue $ Change % Change Operating expenses: Cost of goods sold $ 133,606 60 % $ 60,491 55 % $ 73,115 121 % Research and development 154,507 69 % 121,197 109 % 33,310 27 % Selling, general, and administrative 70,479 32 % 48,237 44 % 22,242 46 % Total operating expenses $ 358,592 161 % $ 229,925 208 % $ 128,667 56 % Cost of goods sold for the year ended December 31, 2023 was $133.6 million, compared to $60.5 million for the year ended December 31, 2022.
For the year ended December 31, 2022, we incurred total issuance costs of $0.4 million. Recent Acquisitions GEO Semiconductor Inc.
For the years ended December 31, 2023 and December 31, 2022, we incurred total issuance costs of $1.1 million and $0.4 million, respectively, in connection with the ATM Agreement.
For the years ended December 31, 2022 and 2021, approximately 54% and 62%, respectively, of our product revenues were recognized for shipments to customer locations in Asia. Execution of At-The-Market Agreement On August 26, 2022, we entered into an At Market Issuance Agreement (“ATM Agreement”) with B.
We engage subcontractors to manufacture our products. These subcontractors, as well as the majority of our customers’ locations, are primarily in Asia. For the years ended December 31, 2023, 2022 and 2021 approximately 63%, 54% and 62%, respectively, of our product revenues were recognized for shipments to customer locations in Asia.
Based on this definition, our most critical accounting estimates include revenue recognition, which impacts the recording of net revenue; inventory valuation, which impacts the cost of goods sold and gross margin; business combinations, which impacts the fair value of acquired assets and assumed liabilities; goodwill and long-lived assets, which impacts the fair value of goodwill and intangible assets; warrants and earn-out liabilities valuations, which impacts the fair value of these financial instruments; and income taxes, which impacts the income tax provision.
Based on this definition, our most critical accounting estimates include revenue recognition, which impacts the recording of net revenue; business combinations, which impacts the fair value of acquired assets and assumed liabilities; and contingent considerations, which impact the fair value of assumed liabilities and the recording of other income (expense). These policies and significant judgments involved are discussed further below.
An additional $10.0 million was paid in January 2023, as well as an equity based earn out of shares of indie Class A common stock based on future revenue growth. 44 Table of Contents In February 2023, we entered into an agreement to acquire GEO Semiconductor, Inc. and completed the transaction on March 3, 2023.
In January 2022 we completed the acquisition of Symeo, for which we made an initial cash payment of approximately $10.0 million, and an additional $10.0 million was paid in January 2023. We are still subject to an equity based earn out of Class A common stock based on Symeo’s future revenue growth.
We believe that our existing cash and cash equivalents, funds anticipated to be 43 Table of Contents generated from our operations, and available borrowing on our revolving credit facility will be sufficient to meet our working capital needs for at least the next 12 months.
We believe these sources of liquidity will be sufficient to meet our working capital needs for at least the next 12 months.
The increase of $11.9 million or 33% was primarily due to a $6.4 million increase in personnel costs due to increase in headcount, a $3.0 million increase in intangible asset amortization from business combinations and a $0.4 million increase in outside professional fees.
The increase of $22.2 million or 46% was primarily due to a $8.6 million increase in personnel costs due to increase in headcount, a $4.2 million increase in share-based compensation expense, and a $3.9 million increase in professional and outside services expenses. Both the increase in personnel costs and share-based compensation expense are primarily driven by increase in headcounts.
This increase of $63.1 million or 109% was primarily due to $23.4 million increase in personnel costs as we increased the number of employees working on product development, a $15.9 million increase in product development costs as we continue to expand product development activities, a $18.6 million increase in share-based compensation expense and a $2.6 million increase in amortization expense related to R&D project licenses and acquired intangible assets from business combinations.
The increase in R&D expense year-over-year also included a $1.9 million increase in amortization expense related to R&D project licenses and acquired intangible assets from business combinations and offset by a $2.6 million decrease in share-based compensation expense.
Total cost of goods sold for the year ended December 31, 2022 also included $4.0 million in amortization related to acquired intangible assets as a result of the recent business combinations. Research and development (“R&D”) expense for the year ended December 31, 2022 was $121.2 million, compared to $58.1 million for the year ended December 31, 2021.
Total cost of goods sold for the year ended December 31, 2023 also included an additional $8.7 million increase due to amortization for inventory step-up value and a $6.9 million in amortization related to acquired intangible assets, both in connection with the recent business combinations.
We did not extend this line of credit upon its maturity on November 4, 2022. On August 26, 2022, we entered into the ATM Agreement with the Sales Agents relating to shares of our Class A common stock.
Historically, we derive liquidity primarily from debt and equity financing activities as we have historically had negative cash flows from operations. On August 26, 2022, we entered into the ATM Agreement with the Sales Agents relating to shares of our Class A common stock.
Non-cash increases primarily consisted of $43.3 million loss from change in fair value of SAFEs, warrants, earn-out liabilities, and contingent considerations, $22.9 million in share-based compensation expense and $6.0 million in depreciation and amortization.
Non-cash adjustments primarily consisted of (i) $43.7 million in share-based compensation expense and $31.8 million in depreciation and amortization, which are partially offset by (ii) $3.2 million of net gains resulting from a change in fair value for warrants, contingent considerations, and currency forward contracts.
The increase was primarily driven by the issuance of the 4.50% convertible notes with principal balance of $160.0 million issued in November 2022 (the “2027 Notes”). For the years ended December 31, 2022 and 2021, we recognized gains (losses) from fair value remeasurement for SAFEs, warrants, earn-out liabilities, and contingent considerations.
The increase was primarily driven by recognizing 12 months of interest expenses in 2023 compared to a partial year in 2022 related to the 2027 Notes. For the years ended December 31, 2023 and 2022, we recognized gains (losses) from change from change in fair value for warrants, contingent considerations and acquisition-related holdbacks.
The aggregate consideration for the Merger is up to $270.0 million, consisting of (i) $90.0 million payable in cash at closing, (ii) $90.0 million payable in indie shares of Class A common stock, par value $0.0001 per share (the “Common Stock”) at closing, and (iii) up to $90.0 million of contingent consideration payable in cash or Common Stock subject to achieving certain GEO-related revenue targets.
The aggregate consideration for this transaction consisted of (i) $93.4 million in cash (including accrued cash consideration at closing and net of cash acquired); (ii) the issuance by indie of 6,868,768 shares of Class A common stock at closing, with a fair value of $75.6 million; (iii) 1,907,180 shares of Class A common stock at closing, with a fair value of $21.0 million payable in the next 24-month period after closing; and (iv) contingent considerations with fair value of $59.3 million at closing payable in cash or in Class A common stock, subject to achieving certain GEO-related revenue targets through September 30, 2024.
The increase in contract revenue was primarily due to commencement of a multi-year non-recurring engineering project with a top customer in the current year.
The increase in contract revenue of $6.2 million or 29% was primarily due to a higher percentage of completion in the 43 Table of Contents current period as we continue to make progress in the large multi-year non-recurring engineering project that commenced in early 2022.
Net Cash provided by financing activities for the year ended December 31, 2021 was $340.6 million, which was primarily attributed to $377.7 million net cash acquired from TB2 as we closed the Transaction on June 10, 2021 and $5.0 million of proceeds from issuance of SAFEs in April 2021.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $43.6 million, which was primarily attributed to $52.0 million of net proceeds from the issuance of common stock through the ATM and $12.3 million of proceeds related to the Wuxi EIP capital contribution, partially offset by $12.8 million payments on debt obligations and $9.1 million of payments on financed software.
The funds raised are intended to promote Wuxi’s business development and strengthen its capabilities. As of December 31, 2022, our balance of cash and cash equivalents was $321.6 million. Acquisitions Since the closing of the Transaction, we have completed multiple acquisitions.
The funds will be used by Wuxi for general corporate purposes. Wuxi does not have an obligation to repay the collected capital to its employees in the case of an unsuccessful IPO. As of December 31, 2023, our balance of cash and cash equivalents was $151.7 million. Acquisitions Since the closing of the Transaction, we have completed multiple acquisitions.
The following table summarizes our consolidated cash flows for the years ended December 31, 2022 and 2021: Fiscal Years Ended Change Change 2022 2021 $ % Net cash used in operating activities $ (76,745) $ (55,819) $ (20,926) 37 % Net cash used in investing activities (16,273) (84,326) 68,053 (81) % Net cash provided by financing activities 192,659 340,646 (147,987) (43) % Operating Activities Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, working capital requirements related to inventory, accounts payable and general and administrative expenditures.
Operating Activities Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, working capital requirements related to inventory, accounts payable and general and administrative expenditures.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe aggregate foreign currency translation exchange rate loss included in determining loss before income taxes was $10.6 million and $1.3 million for the year ended December 31, 2022 and 2021, respectively.
Biggest changeForeign exchange gains and losses that resulted from our international operations are included in the determination of Net income (loss) . The foreign currency translation exchange loss included in determining loss before income taxes was $1.2 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively.
Given the objectives of our investment activities, and the relatively low interest income generated from our cash, cash equivalents, and other investments, we do not believe that investment or interest rate risks currently pose material exposures to our business or results of operations even in the current environment of rising interest rates. 48 Table of Contents
Given the objectives of our investment activities, and the relatively low interest income generated from our cash, cash equivalents, and other investments, we do not believe that investment or interest rate risks currently pose material exposures to our business or results of operations even in the current environment of rising interest rates. 51 Table of Contents
A cumulative foreign currency translation loss of $12.0 million and $1.4 million related to our foreign subsidiaries is included in “ Accumulated other comprehensive loss ” within the Stockholders' Equity section of the consolidated balance sheet at December 31, 2022 and 2021, respectively.
A cumulative foreign currency translation loss of $6.2 million and $12.0 million related to our foreign subsidiaries is included in “ Accumulated other comprehensive loss ” within the Stockholders' Equity section of the consolidated balance sheet at December 31, 2023 and 2022, respectively.
Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Credit risk associated with our investments is not material because our investments are diversified across securities with high credit ratings.
The main objectives of our investment activities are liquidity and preservation of capital. Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Credit risk associated with our investments is not material because our investments are diversified across securities with high credit ratings.
The year-over-year change was driven by the cumulative foreign currency translation loss recorded in relation to permanently invested intercompany loans as of December 31, 2022 as the U.S. dollar strengthened against foreign currencies.
The year-over-year change was primarily driven by the cumulative foreign currency translation loss recorded in relation to permanently invested intercompany loans as of December 31, 2023 as the exchange rate for U.S. dollar fluctuates against foreign currencies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Risk We have international operations, giving rise to exposure to market risks from changes in currency exchange rates. Our primary foreign currency exposures are the Canadian dollar, Chinese yuan/renminbi and Israeli New Shekel. We have intercompany loans with certain of our foreign subsidiaries that are long-term in nature.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Risk We have international operations, giving rise to exposure to market risks from changes in currency exchange rates. Our primary foreign currency exposures are the Canadian dollar, Chinese yuan/renminbi, Euro, British pound sterling and Israeli New Shekel.
Investment and Interest Rate Risk Our exposure to interest rate and general market risks relates principally to our investment portfolio, which consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that totals approximately $321.6 million as of December 31, 2022. 47 Table of Contents The main objectives of our investment activities are liquidity and preservation of capital.
Investment and Interest Rate Risk Our exposure to interest rate and general market risks relates principally to our investment portfolio, which consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that totals approximately $151.7 million as of December 31, 2023.
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The year-over-year change was primarily related to the change in fair value of our currency forward contracts entered into during 2023.
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The aggregate foreign currency translation exchange rate loss included in determining loss before income taxes for the year ended December 31, 2021 was de minimis. 50 Table of Contents We also have intercompany loans with certain of our foreign subsidiaries that are long-term in nature.

Other INDI 10-K year-over-year comparisons