indie Semiconductor Inc

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2023 and based on this evaluation, have concluded that, as a result of the material weaknesses in internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2023.

Per Rules 13a-15(e) and 15d-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As of December 31, 2023, our management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer and oversight of the Board of Directors, conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) (the “2013 COSO Framework”). Based on this assessment, the following material weaknesses in internal control over financial reporting were identified as of December 31, 2023:

a. Control Environment: The Company did not have a sufficient number of trained and experienced personnel with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting.

b. Risk Assessment: The Company did not have an effective risk assessment process that defined clear financial reporting objectives and identified and evaluated risks, including fraud risks and risks resulting from changes in the external environment and business operations, at a sufficient level of detail to identify all relevant risks of material misstatement across the Company.

c. Information and Communication: The Company did not have an effective information and communication process that identified and assessed the sources and controls necessary to ensure the reliability of information used in financial reporting and related controls, and that communicates relevant information about roles and responsibilities for internal control over financial reporting.

d. Control Activities: As a consequence of the aforementioned deficiencies, the Company did not have effective general information technology controls and process-level controls across all financial reporting processes.

e. Monitoring Activities: The Company also did not have a comprehensive program in place to monitor the effectiveness of the Company’s internal control over financial reporting, including the continued appropriateness ofcontrol design and level of documentation maintained to support control effectiveness.

The deficiencies above led to certain misstatements which were corrected prior to the issuance of the consolidated financial statements. These deficiencies represent material weaknesses in our internal control over financial reporting as of December 31, 2023 because they create a reasonable possibility that a material misstatement to our consolidated financial statements will not be prevented or detected on a timely basis. Accordingly, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2023.

The Company’s independent registered public accounting firm, KPMG LLP, which audited the 2023 consolidated financial statements included in this Form 10-K, has expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting. KPMG LLP’s report appears on page 53 of this Form 10-K.

Remediation Efforts to Address the Material Weaknesses

The Company’s remediation efforts related to the foregoing material weaknesses, which are largely consistent with the material weaknesses disclosed in the Company’s previous report on Form 10-K for the year ended December 31, 2022, are ongoing, and the Company will continue its initiatives to strengthen the Company’s internal control environment which will require a substantial effort throughout 2024.

During 2023 we performed a full review of our internal control procedures and continue to take steps to remediate the material weaknesses. We hired one qualified personnel with public company and internal controls experience to increase accountability in our structures, authorities, and responsibilities. We implemented a global risk and compliance tool to establish and monitor internal controls and enhance transparency by enabling real-time monitoring of our internal control over financial reporting. Lastly, we continue to transition our business units to a central enterprise resource planning (“ERP”) system capable of automating some of our annual financial reporting processes, enhancing our information technology control environment, and mitigating some of the internal control gaps and limitations that cannot be addressed by current systems. While progress has been made to enhance our internal controls, additional time is required to complete implementation and to assess and ensure the sustainability of any new controls.

To remediate the material weaknesses described above, the Company is pursuing the following remediation steps:

a. Control Environment: We will continue to seek, train, and retain individuals who have appropriate skills and experience related to designing operating, and documenting internal controls over financial reporting, coupled with the addition of finance staff to improve the current segregation of roles and responsibilities;

b. Risk Assessment: We will continue to refine and enhance our risk assessment process to define clear financial reporting objectives and evaluate the related risks at a sufficient level of detail to identify all relevant risks of material misstatement across the Company.

c. Information and Communication: We will continue to migrate our financial reporting locations to the new ERP system. The company-wide initiative will improve the relevance and reliability of our data to support the functioning of internal controls, harmonize our information technology control environment, and mitigate internal control gaps and limitations that cannot be addressed by the current systems;

d. Control Activities: We will continue to develop control activities that contribute to the mitigation of risks to support the achievement of objectives to select and develop control activities to address each risk to acceptable levels; and

e. Monitoring Activities: We will continue to engage third-party professionals to conduct a comprehensive review and perform ongoing evaluations to ensure the components of internal control over financial reporting are present and functioning in accordance with the 2013 COSO Framework.

We believe that our remediation plan will be sufficient to address the identified material weaknesses and strengthen our internal control over financial reporting. The material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. In addition, it is possible that certain controls the Company plans to implement in 2024 will not have operated for a sufficient period of time in 2024 to test their operating effectiveness as part of the Company’s evaluation of internal control over financial reporting as of December 31, 2024 such that remediation of the related control deficiencies may extend to the following year.

As we continue to evaluate and work to improve our internal control over financial reporting, we may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. It cannot be assured, however, when we will remediate such material weaknesses, nor can we be certain whether additional actions will be required. Moreover, it cannot be assured that additional material weaknesses will not arise in the future.

Changes in Internal Control over Financial Reporting

As described above under “Remediation Efforts to Address the Material Weaknesses”, we are taking actions to remediate the material weaknesses in our internal control over financial reporting. Except as described above, there were no changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud due to inherent limitations of internal controls. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.