indie Semiconductor Inc

Previous wording

We maintain design centers for our semiconductor engineers and designers in the United States, Argentina, Canada, Hungary, Germany, Scotland, Morocco, Israel, Switzerland and China. We engage subcontractors to manufacture our products. These subcontractors, as well as the majority of our customers’ locations, are primarily in Asia. For the three months ended March 31, 2024 and 2023, approximately 66% and 65%, respectively, of our product revenues were recognized for shipments to customer locations in Asia.

Current wording

We maintain design centers for our semiconductor engineers and designers in the United States, Argentina, Canada, Hungary, Germany, Scotland, Morocco, Israel, Switzerland and China. We engage subcontractors to manufacture our products. These subcontractors, as well as the majority of our customers’ locations, are primarily in Asia. For the six months ended June 30, 2024 and 2023, approximately 65% and 63%, respectively, of our product revenues were recognized for shipments to customer locations in Asia.

Previous wording

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”). 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 flexibility that it provides to the capital markets and to best time our equity capital needs. As of March 31, 2024, 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. For the three months ended March 31, 2023 we incurred total issuance costs of $0.8 million. There was no activity during the three months ended March 31, 2024.

Current wording

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”). 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 flexibility that it provides to the capital markets and to best time our equity capital needs. As of June 30, 2024, we had raised gross proceeds of $72.7 million and issued 7,696,311 shares of Class A common stock at an average per-share sales price of $9.45 through this program. During the six months ended June 30, 2024 we raised gross proceeds of $2.4 million and issued 345,052 shares of Class A common stock at an average per-share sales price of $6.87. During the six months ended June 30, 2023, we 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. For the three months ended June 30, 2024 and 2023, indie incurred total issuance costs of $0.1 million and $0.4 million, respectively. For the six months ended June 30, 2024 and 2023, indie incurred total issuance costs of $0.1 million and $1.1 million, respectively.

Previous wording

On January 25, 2024 (the “Deal Closing Date”), indie and ADK LLC completed its acquisition of Kinetic Technologies, LLC (“Kinetic”). The acquisition was consummated pursuant to 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. The closing consideration consisted of (i) $3.2 million in cash as the initial cash consideration, net of an adjustment holdback amount of $0.5 million and an indemnity holdback amount of $0.8 million, (ii) $2.3 million of contingent consideration, 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) $2.3 million of contingent consideration, payable in cash or Class A common stock, subject to achievement of a revenue based milestone 12 months after the Deal Closing Date. The purchase price is subject to working capital and other adjustments as provided the APA.

Current wording

On January 25, 2024 (the “Deal Closing Date”), indie and ADK LLC completed its acquisition of Kinetic Technologies, LLC (“Kinetic”). The acquisition was consummated pursuant to 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. The closing consideration consisted of (i) $3.2 million in cash as the initial cash consideration, net of an adjustment holdback amount of $0.5 million and an indemnity holdback amount of $0.8 million, (ii) $2.3 million of contingent consideration, 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) $2.3 million of contingent consideration, payable in cash or Class A common stock, subject to achievement of a revenue based milestone 12 months after the Deal Closing Date. The purchase price is subject to working capital and other adjustments as provided in the APA.

Previous wording

Interest income for the three months ended March 31, 2024 was $1.3 million, compared to $2.4 million for the three months ended March 31, 2023. Interest income decreased in the current period primarily as a result of lower cash balances due to multiple acquisitions in 2023 and the first quarter of 2024.

Current wording

Interest income for the three months ended June 30, 2024 was $1.1 million, compared to $1.9 million for the three months ended June 30, 2023. Interest income decreased in the current period primarily as a result of lower cash balances due to multiple acquisitions in 2023 and the first quarter of 2024.

Previous wording

Interest expense for the three months ended March 31, 2024 remained consistent at $2.1 million for both the three months ended March 31, 2024 and 2023.

Current wording

Interest expense for the three months ended June 30, 2024 remained consistent at $2.1 million for both the three months ended June 30, 2024 and 2023, respectively.

Previous wording

ii) Contingent considerations and acquisition-related holdbacks: During the three months ended March 31, 2024, we recognized a net unrealized gain from change in fair value of our contingent considerations and acquisition-related holdbacks of $15.4 million, which is primarily attributed to an unrealized gain of $16.2 million and $3.0 million for the contingent considerations and acquisition-related holdbacks related to the GEO and Exalos acquisitions, respectively, offset by an unrealized loss of $3.7 million for the contingent considerations related to the Silicon Radar acquisition. During the three months ended March 31, 2023, we recognized an net unrealized loss from change in fair value of our contingent considerations and acquisition-related holdbacks of $1.6 million which is primarily attributed to an unrealized loss of $1.7 million and $0.1 million for the contingent considerations related to the Symeo and Silicon Radar acquisitions, respectively, offset by a $0.4 million net unrealized gain for the contingent considerations and acquisition-related holdbacks.

Current wording

ii) Contingent considerations and acquisition-related holdbacks: During the three months ended June 30, 2024, we recognized a net unrealized gain from change in fair value of our contingent considerations and acquisition-related holdbacks of $17.3 million, which is primarily attributed to a realized gain of $4.0 million and a realized loss of $3.3 million for the settlement of contingent considerations related to the GEO and Silicon Radar acquisitions, respectively, an unrealized gain of $9.3 million and $6.8 million for the contingent considerations and acquisition-related holdbacks related to the GEO and Silicon Radar acquisitions, respectively, as well as a $0.5 million net unrealized gain for other contingent considerations and acquisition-related holdbacks. During the three months ended June 30, 2023, we recognized an net unrealized gain from change in fair value of our contingent considerations and acquisition-related holdbacks of $2.3 million which is primarily contributed by an unrealized gain of $1.8 million and $0.6 million for the contingent considerations and acquisition-related holdbacks related to the GEO and Symeo acquisitions, respectively, offset by a $0.1 million net unrealized loss for other contingent considerations and acquisition-related holdbacks.

Previous wording

Other expense for the three months ended March 31, 2024 was $0.2 million. Other expense relates primarily to the realized and unrealized foreign currency gains and losses during the period, which was primarily driven by a net loss of $0.6 million related to the change in fair value of our currency forward contracts entered during the period.

Current wording

Other income (expense) for the three months ended June 30, 2024 and 2023 was $(0.6) million and $0.4 million. Other income (expense) relates primarily to the realized and unrealized foreign currency gains and losses during the period, which was primarily driven by a net gain (loss) of $(0.7) million and $(0.3) million related to the change in fair value of our currency forward contracts entered during the periods.

Previous wording

Revenue for the three months ended March 31, 2024 was $52.4 million, compared to $40.5 million for the three months ended March 31, 2023, an increase of $11.9 million or 29%, which was primarily driven by a $14.9 million increase in product revenue and a $3.0 million decrease in contract revenue. 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. The decrease in contract revenue of $3.0 million or 44% was primarily due a large multi-year non-recurring engineering project that commenced in early 2022 and is winding down towards its completion stage.

Current wording

Revenue for the six months ended June 30, 2024 was $104.7 million, compared to $92.6 million for the six months ended June 30, 2023, an increase of $12.1 million or 13%, which was primarily driven by a $18.5 million increase in product revenue, offset by a decrease in contract revenue. 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, offset by a slight change in ASP. The decrease in contract revenue of $6.3 million or 47% was primarily due to a large multi-year non-recurring engineering project that commenced in early 2022 and is winding down towards its completion stage in the current year.

Previous wording

Cost of goods sold for the three months ended March 31, 2024 was $30.1 million, compared to $24.1 million for the three months ended March 31, 2023. The increase of $6.0 million or 25% was primarily due to a $6.5 million increase due to change in product mix, a $2.2 million increase in product shipments in connection with the increase in products sold, as described above, offset by a $2.0 million decrease in product cost.

Current wording

Cost of goods sold for the six months ended June 30, 2024 was $60.3 million, compared to $56.2 million for the six months ended June 30, 2023. The increase of $4.1 million or 7% was primarily due to a $8.0 million increase due to change in product mix, a $4.9 million increase in product shipments in connection with the increase in products sold as described above, offset by a $4.8 million decrease in product cost. Total cost of goods sold for the six months ended June 30, 2023 also included an additional $4.0 million in amortization related to inventory step-up value in connection with the recent acquisitions.

Previous wording

Research and development expense for the three months ended March 31, 2024 was $49.6 million, compared to $36.6 million for the three months ended March 31, 2023. The increase of $13.0 million or 36% was primarily due to a $3.7 million increase in personnel costs to support our continuous growth in research and development needs and a $10.7 million increase in share-based compensation expense. The increase in share-based compensation expenses reflects an increase in headcount and new equity awards granted since the prior year period. These increases are partially offset by a $2.2 million decrease in product development costs due to timing of our project development timeline. We expect research and development expense to continue to increase as we continue to grow our headcount organically to support expanded product development activities.

Current wording

Research and development (“R&D”) expense for the six months ended June 30, 2024 was $90.9 million, compared to $78.6 million for the six months ended June 30, 2023. This increase of $12.3 million or 16% was primarily due to a $3.0 million increase in personnel to support our continuous growth in research and development needs. Research and development expense for the six months ended June 30, 2024 also included an $11.0 million increase in share-based compensation expense. We expect research and development expense to continue to increase as we continue to grow our headcount to support expanded product development activities.

Previous wording

Selling, general and administrative expense for the three months ended March 31, 2024 was $22.3 million, compared to $16.8 million for the three months ended March 31, 2023. The increase of $5.5 million or 33% was primarily due to a $2.3 million increase in personnel costs due to an increase in headcount, a $3.2 million increase in share-based compensation expense and a $0.6 million increase in depreciation and amortization expenses. The increase in share-based compensation expense reflects an increase in headcount and new equity awards granted since the prior year period. The increase in depreciation and amortization expense was primarily driven by additional acquired intangible assets as a result of the recent business combinations. We expect selling, general, and administrative expense to continue to increase as we grow our headcount to support our global expansion and to fulfill our obligations as a publicly traded company.

Current wording

Selling, general and administrative expense for the six months ended June 30, 2024 was $39.8 million, compared to $35.5 million for the six months ended June 30, 2023. The increase of $4.3 million or 12% was primarily due to a $1.6 million increase in personnel costs due to increase in headcounts, and a $2.3 million increase in share-based compensation expense. We expect selling, general, and administrative expense to continue to increase as we grow our headcount to support our global expansion.

Previous wording

i) Warrants: During the three months ended March 31, 2023, we recognized an unrealized loss from change in fair value of our warrants of $47.3 million, which reflected the increase in fair value of our warrant liability, resulting from the increase of the closing price of our Class A common stock listed on the Nasdaq to $10.55 per share on March 31, 2023 from $5.83 per share on December 31, 2022. As of November 9, 2023, we completed our exchange of Warrants. Subsequently there will be no future remeasurement.

Current wording

i) Warrants: During the six months ended June 30, 2023, we recognized an unrealized loss from change in fair value of our warrants of $22.3 million, which reflected the increase in fair value of our warrant liability, resulting from the increase of the closing price of our Class A common stock listed on the Nasdaq to $9.40 per share on June 30, 2023 from $5.83 per share on December 31, 2022. As of November 9, 2023, we completed our exchange of Warrants. Subsequently there will be no future remeasurement.

Previous wording

Income tax benefits for the three months ended March 31, 2024 are primarily related to our foreign operations. Income tax benefits for the three months ended March 31, 2023 are primarily related to the tax effects of our acquisition of GEO and subsequent tax reorganizations.

Current wording

Income tax benefits for the six months ended June 30, 2024 are primarily related to our foreign operations. Income tax benefits for the six months ended June 30, 2023 are primarily related to the tax effects of our acquisition of GEO and subsequent tax reorganizations.

Previous wording

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. 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, available borrowings under our revolving credit facility and the issuance of Class A common stock under the ATM Agreement. We believe these sources of liquidity will be sufficient to meet our working capital needs for at least the next 12 months. 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. 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 May 9, 2024. These cash deposits may exceed the insurance provided on such deposits. As part of our cash management strategy going forward, we concentrate cash deposits with large financial institutions that are subject to regulation and maintain deposits across diverse retail banks.

Current wording

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. 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, available borrowings under our revolving credit facility and the issuance of Class A common stock under the ATM Agreement. We believe these sources of liquidity will be sufficient to meet our needs for at least the next 12 months. 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. 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 August 9, 2024. These cash deposits may exceed the insurance provided on such deposits. As part of our cash management strategy going forward, we concentrate cash deposits with large financial institutions that are subject to regulation and maintain deposits across diverse retail banks.

Previous wording

Historically, we derive liquidity primarily from debt and equity financing activities as we have historically had negative cash flows from operations. As of March 31, 2024, our balance of cash and cash equivalents was $138.2 million.

Current wording

Historically, we derive liquidity primarily from debt and equity financing activities as we have historically had negative cash flows from operations. As of June 30, 2024, our balance of cash and cash equivalents, including restricted cash, was $122.6 million.

Previous wording

The following table summarizes our condensed consolidated cash flows for the three months ended March 31, 2024 and 2023:

Current wording

The following table summarizes our condensed consolidated cash flows for the six months ended June 30, 2024 and 2023:

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities was $9.3 million, which included net loss of $34.2 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash increases primarily consisted of $14.8 million of net losses resulting from a change in fair value for contingent considerations, and currency forward contracts, $25.6 million in share-based compensation expense and $9.6 million in depreciation and amortization. Changes in operating assets and liabilities from operations provided $3.2 million of cash, primarily driven by a decrease in accounts receivable, offset by an increase in prepaid and other current assets and inventory, and a decrease in accrued expenses and other current liabilities and prepaid and other current assets.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities was $29.1 million, which included net loss of $55.2 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash increases primarily consisted of $31.5 million of net losses resulting from a change in fair value for contingent considerations, and currency forward contracts, $37.5 million in share-based compensation expense and $19.2 million in depreciation and amortization. Changes in operating assets and liabilities from operations provided $1.8 million of cash, primarily driven by an increase in accounts payable, and a decrease in accounts receivable, offset by an increase in inventory and a decrease in accrued expenses and other current liabilities.

Previous wording

Cash used in operating activities during the three months ended March 31, 2023 was $32.9 million, which included net loss of $82.0 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash increases primarily consisted of $49.0 million of net losses resulting from a change in fair value for warrants and contingent considerations, $11.4 million in share-based compensation expense and $6.0 million in depreciation and amortization. Changes in operating assets and liabilities from operations used $16.9 million of cash, primarily driven by an increase in inventory, accounts payable, and prepaid and other current assets, offset by a decrease in accounts receivable.

Current wording

Cash used in operating activities during the six months ended June 30, 2023 was $73.1 million, which included net loss of $95.5 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash increases primarily consisted of $21.6 million of net losses resulting from a change in fair value for warrants and contingent considerations, $23.8 million in share-based compensation expense and $16.2 million in depreciation and amortization. Changes in operating assets and liabilities from operations used $42.8 million of cash, primarily driven by an increase in inventory, accounts receivable, prepaid and other current assets, and a decrease in accrued expenses and other current liabilities,

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 and 2023 was $5.5 million and $101.6 million, respectively. During the period ended March 31, 2024, the decrease in cash was primarily due to the acquisition of Kinetic for $3.2 million, net of cash acquired, as well as an increase in cash used of $2.3 million for the purchase of capital expenditures. During the period ended March 31, 2023, the decrease in cash was primarily due to the acquisitions of GEO and Silicon Radar for $98.4 million, net of cash acquired, as well as an increase in cash used of $3.2 million for the purchase of capital expenditures. 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.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 and 2023 was $9.2 million and $105.0 million, respectively. During the period ended June 30, 2024, the decrease in cash was primarily due to the acquisition of Kinetic for $3.2 million, net of cash acquired, as well as an increase in cash used of $6.0 million for the purchase of capital expenditures. During the period ended June 30, 2023, the decrease in cash was primarily due to the acquisitions of GEO and Silicon Radar for $98.4 million, net of cash acquired, as well as an increase in cash used of $6.6 million for the purchase of capital expenditures. 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.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024 was $6.9 million, which was primarily attributed to $10.0 million of net proceeds from the issuance of the line of credit through Wells Fargo, partially offset by $1.5 million payments on debt obligations and $2.3 million of payments on financed software.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024 was $6.6 million, which was primarily attributed to $10.0 million of net proceeds from the issuance of the line of credit through Wells Fargo, and $2.3 million of net proceeds from the issuance of common stocks through the ATM, partially offset by $1.7 million payments on debt obligations and $4.4 million of payments on financed software.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023 was $21.1 million, which was primarily attributed to $34.9 million of net proceeds from the issuance of common stocks through the ATM, partially offset by $11.8 million payments on short-term debt, and $2.1 million of payments on financed software.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2023 was $35.7 million, which was primarily attributed to $52.0 million of net proceeds from the issuance of common stocks through the ATM, partially offset by $12.2 million payments on short-term debt, and $4.1 million of payments on financed software.