indie Semiconductor (INDI) 10-Q 2022 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-40481

___________________________________________________________________

INDIE SEMICONDUCTOR, INC.

___________________________________________________________________

(Exact name of registrant as specified in its charter)

Delaware	87-0913788
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
32 Journey Aliso Viejo, California	92656
(Address of Principal Executive Offices)	(Zip Code)

(949) 608-0854

Registrant’s telephone number, including area code

___________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	INDI	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock for $11.50 per share	INDIW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   o     No  x

The number of shares outstanding of the registrant’s Class A and Class V common stock as of November 8, 2022 was 125,131,743 (excluding 1,725,000 Class A shares held in escrow and 774,047 Class A shares subject to restricted stock awards) and 23,349,672, respectively.

INDIE SEMICONDUCTOR, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022

Table of Contents

		Page
Part I. Financial Information		2
Item 1.	Condensed Consolidated Financial Statements as of September 30, 2022 and December 31, 2021 and for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) and Noncontrolling Interest	6
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
Part II. Other Information		46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	46
Signatures		48

1

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” (within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended). Such statements include, but are not limited to, statements regarding the Company’s future business and financial performance and prospects, and other statements identified by words such as “will likely result,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “plan,” “project,” “outlook,” “should,” “could,” “may” or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of the Company’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the anticipated results or other expectations expressed in such forward-looking statements as a result of various factors, including, among others, the following: downturns or volatility in general economic conditions; the impact of the COVID-19 pandemic or a similar public health crisis; the impact of Russia’s invasion of Ukraine; the Company’s reliance on contract manufacturing and outsourced supply chain and the availability of semiconductors and manufacturing capacity; competitive products and pricing pressures; the Company’s ability to win competitive bid selection processes and achieve additional design wins; the impact of any acquisitions the Company may make, including its ability to successfully integrate acquired businesses and risks that the anticipated benefits of any acquisitions may not be fully realized or take longer to realize than expected; management’s ability to develop, market and gain acceptance for new and enhanced products and expand into new technologies and markets; trade restrictions and trade tensions; and political or economic instability in the Company’s target markets; and additional factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (“SEC”) on April 11, 2022 (including those identified under “Risk Factors” therein), as such risk factors may be amended, supplemented or superseded from time to time in the Company’s other public reports filed with the SEC. indie cautions that the foregoing list of factors is not exclusive.

All information set forth herein speaks only as of the date hereof, and the Company disclaims any intention or obligation to update any forward-looking statements made in this report or in its other public filings, whether as a result of new information, future events or otherwise, except as required by law.

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	150,388	$	219,081
Restricted cash	383		383
Accounts receivable, net of allowance for doubtful accounts of $46 as of September 30, 2022 and $27 as of December 31, 2021	22,422		13,842
Inventory, net	11,579		9,080
Prepaid expenses and other current assets	9,507		5,648
Total current assets	194,279		248,034
Property and equipment, net	12,509		11,090
Intangible assets, net	60,864		96,285
Goodwill	142,038		115,206
Operating lease right-of-use assets	9,839		—
Other assets and deposits	1,874		270
Total assets	$	421,403	$	470,885
Liabilities and stockholders' equity
Accounts payable	$	8,473	$	5,441
Accrued payroll liabilities	8,566		4,021
Accrued expenses and other current liabilities	15,585		14,622
Intangible asset contract liability	7,973		5,516
Deferred revenue	1,627		1,840
Current debt obligations	13,082		2,275
Total current liabilities	55,306		33,715
Long-term debt, net of current portion	4,170		5,618
Warrant liability	51,872		100,467
Intangible asset contract liability, net of current portion	6,517		12,452
Deferred tax liabilities, non-current	11,885		21,164
Operating lease liability, non-current	7,879		—
Other long-term liabilities	7,425		5,612
Total liabilities	145,054		179,028
Commitments and contingencies (Note 17)
Stockholders' equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued or outstanding	—		—
Class A common stock, $0.0001 par value, 250,000,000 shares authorized, 126,516,947 and 111,260,962 shares issued, 123,973,300 and 108,181,781 shares outstanding as of September 30, 2022 and December 31, 2021, respectively.	13		11
Class V common stock, $0.0001 par value, 40,000,000 shares authorized, 23,749,676 and 30,448,081 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.	3		3
Additional paid-in capital	544,997		514,891
Accumulated deficit	(231,425)		(200,416)

2

Accumulated other comprehensive loss	(18,261)		(1,443)
indie's stockholders' equity	295,327		313,046
Noncontrolling interest	(18,978)		(21,189)
Total stockholders' equity	276,349		291,857
Total liabilities and stockholders' equity	$	421,403	$	470,885

See accompanying notes to the condensed consolidated financial statements.

3

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue:
Product revenue	$	24,425	$	11,099	$	62,963	$	27,470
Contract revenue	5,591		1,058		14,807		1,981
Total revenue	30,016		12,157		77,770		29,451
Operating expenses:
Cost of goods sold	14,970		6,930		44,340		17,097
Research and development	30,229		15,043		88,195		37,206
Selling, general, and administrative	10,676		11,442		35,403		23,015
Total operating expenses	55,875		33,415		167,938		77,318
Loss from operations	(25,859)		(21,258)		(90,168)		(47,867)
Other income (expense), net:
Interest income	612		16		820		36
Interest expense	(166)		(25)		(491)		(1,175)
Gain from change in fair value of SAFEs	—		—		—		21,600
Gain (loss) from change in fair value of warrants	(19,059)		(40,401)		48,595		(29,085)
Loss from change in fair value of earn-out liabilities	—		(45,496)		—		(27,557)
Gain (loss) from change in fair value of contingent considerations	(121)		(20)		3,546		(120)
Gain from extinguishment of debt	—		—		—		304
Other income (expense)	24		(1,013)		3		(914)
Total other income (expense), net	(18,710)		(86,939)		52,473		(36,911)
Net loss before income taxes	(44,569)		(108,197)		(37,695)		(84,778)
Income tax benefit (expense)	(863)		36		665		(34)
Net loss	(45,432)		(108,161)		(37,030)		(84,812)
Less: Net loss attributable to noncontrolling interest	(7,825)		(28,512)		(6,022)		(22,127)
Net loss attributable to indie Semiconductor, Inc.	$	(37,607)	$	(79,649)	$	(31,008)	$	(62,685)
Net loss attributable to common shares — basic	$	(37,607)	$	(79,649)	$	(31,008)	$	(62,685)
Net loss attributable to common shares — diluted	$	(37,607)	$	(79,649)	$	(31,008)	$	(62,685)
Net loss per share attributable to common shares — basic	$	(0.31)	$	(0.83)	$	(0.27)	$	(1.07)
Net loss per share attributable to common shares — diluted	$	(0.31)	$	(0.83)	$	(0.27)	$	(1.07)
Weighted average common shares outstanding — basic	120,507,152		96,368,379		116,272,459		58,791,245
Weighted average common shares outstanding — diluted	120,507,152		96,368,379		116,272,459		58,791,245

See accompanying notes to the condensed consolidated financial statements.

4

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(45,432)	$	(108,161)	$	(37,030)	$	(84,812)
Other comprehensive loss:
Foreign currency translation adjustments	(9,809)		172		(16,818)		230
Comprehensive loss	(55,241)		(107,989)		(53,848)		(84,582)
Less: Comprehensive loss attributable to noncontrolling interest	(7,727)		(28,514)		(5,784)		(22,127)
Comprehensive loss attributable to indie Semiconductor, Inc.	$	(47,514)	$	(79,475)	$	(48,064)	$	(62,455)

See accompanying notes to the condensed consolidated financial statements.

5

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) AND NONCONTROLLING INTEREST

(Amounts in thousands, except unit and share amounts)

(Unaudited)

	Common Stock Class A		Common Stock Class V			Additional Paid-in Capital			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity (Deficit) Attributable to indie Semiconductor, Inc.		Noncontrolling Interest		Total Stockholders' Equity (Deficit)
		Shares (1)	Amount		Shares (1)			Amount
Balance as of December 31, 2020		—	$	—	—	$	—		$	982	$	(153,264)	$	(209)	$	(110,312)	$	8,820	$	(101,492)
Retroactive application of recapitalization		34,413,634	3		33,373,294	3			42,173		—		—		—		—		—
Balance as of December 31, 2020		34,413,634	$	3	33,373,294	$	3		$	43,155	$	(153,264)	$	(209)	$	(110,312)	$	8,820	$	(101,492)
Vesting of equity awards		631,121	—		—	—			—		—		—		—		—		—
Net income		—	—		—	—			—		10,815		—		10,815		(454)		10,361
Foreign currency translation adjustment		—	—		—	—			—		—		(88)		(88)		36		(52)
Balance as of March 31, 2021		35,044,755	$	3	33,373,294	$	3		$	43,155	$	(142,449)	$	(297)	$	(99,585)	$	8,402	$	(91,183)
Vesting of equity awards		1,133,889	—		—	—			—		—		—		—		—		—
Share-based compensation		—	—		—	—			7,968		—		—		7,968		—		7,968
Net loss through June 10, 2021		—	—		—	—			—		(13,434)		—		(13,434)		(132)		(13,566)
Reverse recapitalization on June 10, 2021		60,441,289	6		454,077	—			250,129		—		—		250,135		—		250,135
Reverse recapitalization: ADK Minority Holders interest on June 10, 2021		(378,605)	—		—	—			(36,831)		40,892		40		4,101		(4,101)		—
Net income after June 10, 2021		—	—		—	—			—		19,584		—		19,584		6,971		26,555
Foreign currency translation adjustment		—	—		—	—			—		—		146		146		(34)		112
Balance as of June 30, 2021		96,241,328	$	9	33,827,371	$	3		$	264,421	$	(95,407)	$	(111)	$	168,915	$	11,106	$	180,021
Vesting of equity awards		187,205	—		—	—			—		—		—		—		—		—
Share-based compensation		—	—		—	—			6,217		—		—		6,217		—		6,217
Reverse recapitalization adjustment		—	—		—	—			1,100		—		—		1,100		—		1,100
Net loss		—	—		—	—			—		(79,649)		—		(79,649)		(28,512)		(108,161)
Foreign currency translation adjustment		—	—		—	—			—		—		172		172		(2)		170

6

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) AND NONCONTROLLING INTEREST

(Amounts in thousands, except unit and share amounts)

(Unaudited)

Balance as of September 30, 2021 96,428,533  $ 9  33,827,371  $ 3  $ 271,738  $ (175,056) $ 61  $ 96,755  $ (17,408) $ 79,347 

(1) Retroactively restated to give effect to the reverse recapitalization.

	Common Stock Class A		Common Stock Class V			Additional Paid-in Capital			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity Attributable to indie Semiconductor, Inc.		Noncontrolling Interest		Total Stockholders' Equity
		Shares	Amount		Shares			Amount
Balance as of December 31, 2021		108,181,781	$	11	30,448,081	$	3		$	514,891	$	(200,416)	$	(1,443)	$	313,046	$	(21,189)	$	291,857
Vesting of equity awards		250,378	—		—	—			—		—		—		—		—		—
Issuance per net settlement of equity awards and cash exercise of stock options		1,250,878	—		—	—			(188)		—		—		(188)		259		71
Issuance per Exchange of Class V to Class A		2,224,148	—		(2,224,148)	—			(2,345)		—		—		(2,345)		2,345		—
Issuance on earn out awards		3,070,494	—		1,895,879	—			872		—		—		872		(872)		—
Share-based compensation		—	—		—	—			10,742		—		—		10,742		—		10,742
Net income		—	—		—	—			—		10,833		—		10,833		2,873		13,706
Foreign currency translation adjustment		—	—		—	—			—		—		863		863		21		884
Balance as of March 31, 2022		114,977,679	$	11	30,119,812	$	3		$	523,972	$	(189,583)	$	(580)	$	333,823	$	(16,563)	$	317,260
Vesting of equity awards		136,306	—		—	—			—		—		—		—		—		—
Issuance per net settlement of equity awards and cash exercise of stock options		443,160	—		—	—			(204)		—		—		(204)		205		1
Share-based compensation		—	—		—	—			7,093		—		—		7,093		—		7,093
Issuance per Exchange of Class V to Class A		3,737,109	1		(3,737,109)	—			(3,054)		—		—		(3,053)		3,054		1
Issuance per Exchange of ADK LLC units to Class A		29,358	—		—	—			—		—		—		—		—		—
Net loss		—	—		—	—			—		(4,235)		—		(4,235)		(1,070)		(5,305)
Foreign currency translation adjustment		—	—		—	—			—		—		(7,872)		(7,872)		119		(7,753)

7

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) AND NONCONTROLLING INTEREST

(Amounts in thousands, except unit and share amounts)

(Unaudited)

Balance as of June 30, 2022	119,323,612	$	12	26,382,703	$	3	$	527,807	$	(193,818)	$	(8,452)	$	325,552	$	(14,255)	$	311,297
Vesting of equity awards	196,630	—		—	—		—		—		—		—		—		—
Issuance per net settlement of equity awards and cash exercise of stock options	275,934	—		—	—		(615)		—		—		(615)		643		28
Share-based compensation	—	—		—	—		7,893		—		—		7,893		—		7,893
Issuance per Exchange of Class V to Class A	2,633,027	1		(2,633,027)	—		(2,361)		—		—		(2,360)		2,361		1
Issuance per Exchange of ADK LLC units to Class A	37,205	—		—	—		—		—		—		—		—		—
Issuance in connection with At-The-Market equity offering	1,506,892	—		—	—		12,273		—		—		12,273		—		12,273
Net loss	—	—		—	—		—		(37,607)		—		(37,607)		(7,825)		(45,432)
Foreign currency translation adjustment	—	—		—	—		—		—		(9,809)		(9,809)		98		(9,711)
Balance as of September 30, 2022	123,973,300	$	13	23,749,676	$	3	$	544,997	$	(231,425)	$	(18,261)	$	295,327	$	(18,978)	$	276,349

See accompanying notes to the condensed consolidated financial statements.

8

INDIE SEMICONDUCTOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(37,030)	$	(84,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	11,170		2,397
Inventory impairment charges	1,192		78
Share-based compensation	30,845		14,185
Amortization of discount of debt	226		198
Bad debts	24		125
Gain from change in fair value remeasurement of SAFEs	—		(21,600)
(Gain) loss from change in fair value of warrants	(48,595)		29,085
Loss from change in fair value of earn-out liabilities	—		27,557
(Gain) loss from change in fair value of contingent considerations	(3,546)		120
(Gain) loss from change in fair value of currency forward contract	(211)		1,200
Gain from extinguishment of debt	—		(304)
Deferred City Semi compensation	203		375
Deferred tax liabilities	1,532		—
Amortization of right-of-use assets	1,463		—
Changes in operating assets and liabilities:
Accounts receivable	(8,854)		(3,047)
Inventory	(2,406)		(2,730)
Accounts payable	2,945		625
Accrued expenses and other current liabilities	1,587		2,578
Accrued payroll liabilities	(843)		236
Deferred revenue	93		(1,113)
Prepaid and other current assets	(6,129)		(2,848)
Operating lease liabilities	(1,159)		—
Other long-term liabilities	(1,322)		782
Net cash used in operating activities	(58,815)		(36,913)
Cash flows from investing activities:
Purchases of property and equipment	(4,508)		(1,668)
Purchases of intangible assets	—		(784)
Business combinations, net of cash	(8,705)		—
Net cash used in investing activities	(13,213)		(2,452)
Cash flows from financing activities:
Proceeds from issuance of SAFEs	—		5,000
Proceeds from issuance of common stock/At-the-market offering	12,273		—
Offering costs for the issuance of common stock/At-the-market offering	(273)		—
Proceeds from issuance of debt obligations	1,059		155
Proceeds from reverse recapitalization	—		377,663
Issuance costs related to reverse recapitalization	—		(19,902)
Payments on debt obligations	(1,404)		(15,008)
Payments on financed software	(3,224)		(2,270)

9

Redemption of Class H units	—		(900)
Payments on business combination	(5,000)		—
Payments of City Semi deferred compensation	(1,000)		(399)
Proceeds from exercise of stock options	100		—
Net cash provided by financing activities	2,531		344,339
Effect of exchange rate changes on cash and cash equivalents	804		193
Net increase (decrease) in cash and cash equivalents	(68,693)		305,167
Cash, cash equivalents and restricted cash at beginning of period	219,464		18,698
Cash, cash equivalents and restricted cash at end of period	$	150,771	$	323,865
Supplemental disclosure of cash flow information:
Cash paid for interest	$	218	$	1,188
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	$	275	$	206
Conversion of historical members' equity	$	—	$	41,278
Class G warrants cashless exchange	$	—	$	407
Conversion of SAFEs	$	—	$	86,100
Conversion of Embry Notes	$	—	$	4,119
Recognition of earn-out considerations	$	—	$	119,759
Accrual for purchases of intangible assets	$	—	$	12,198
Recognition of warrant liabilities	$	—	$	74,408
Contingent consideration for business combination	$	8,204	$	—
Accrual for purchase consideration for business combination	$	9,674	$	—

See accompanying notes to the condensed consolidated financial statements.

10

INDIE SEMICONDUCTOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except unit and share amounts and per unit and per share amounts)

(Unaudited)

1.    Nature of the Business and Basis of Presentation

indie Semiconductor, Inc. (“indie”) and its predecessor for accounting purposes, Ay Dee Kay, LLC, a California limited liability company (“ADK LLC”) and its subsidiaries are collectively referred to herein as the “Company.” The Company offers highly innovative automotive semiconductors and software solutions for Advanced Driver Assistance Systems (“ADAS”), autonomous vehicle, connected car, user experience and electrification applications. The Company focuses on edge sensors across multiple modalities spanning LiDAR, radar, ultrasound and computer vision. These functions represent the core underpinnings of both electric and autonomous vehicles, while the advanced user interfaces are transforming the in-cabin experience to mirror and seamlessly connect to the mobile platforms people rely on every day. indie is an approved vendor to Tier 1 automotive suppliers and its platforms can be found in marquee automotive manufacturers around the world. 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 and Munich, Germany; Cambridge, England; Edinburgh, Scotland; Rabat, Morocco; Haifa, Israel; Quebec City, Canada; Seoul, South Korea; Tokyo, Japan and several locations throughout China. The Company engages subcontractors to manufacture its products. The majority of these subcontractors are located in Asia.

Execution of At-The-Market Agreement

On August 26, 2022, the Company 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 its Class A common stock, par value $0.0001 per share. In accordance with the terms of the Sales Agreement, the Company may offer and sell shares of its Class A common stock having an aggregate offering price of up to $150,000 from time to time through the Sales Agents, acting as the Company’s agent or principal. The Company implemented this program for the flexibility that it provides to the capital markets and to best time its equity capital needs. As of September 30, 2022, indie has raised gross proceeds of $12,273 and issued 1,506,892 shares of Class A common stock at an averaged per-share sales price of $8.14 through this program and had approximately $137,727 available for future issuances under the ATM Agreement. For the three months ended September 30, 2022, indie incurred total issuances costs of $273.

Recent Acquisitions

On October 21, 2021, indie entered into a definitive agreement with Analog Devices (“ADI”) to acquire Symeo GmbH (“Symeo”). The acquisition was approved by the German government on January 4, 2022 and closed on the same day. The total consideration paid for this acquisition consisted of (i) $8,705 in cash at closing, net of cash acquired; (ii) a $10,000 promissory note payable in January 2023 with a fair market value of $9,674 on January 4, 2022; 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 fair market value of this equity-based earn-out was $8,204 on January 4, 2022.

See Note 2 - Business Combinations for additional description of this acquisition.

Reverse Recapitalization with Thunder Bridge Acquisition II

On June 10, 2021, Thunder Bridge Acquisition II, Ltd. (“TB2”), consummated a series of transactions that resulted in the combination (the “Transaction”) of TB2 with ADK LLC pursuant to the Master Transactions Agreement dated December 14, 2020, as amended on May 3, 2021 (the “MTA”) by and among TB2, Thunder Bridge II Surviving Pubco, Inc., a Delaware corporation (“Surviving Pubco”), ADK LLC, and the other parties named therein. In connection with the Transaction, Surviving Pubco was formed to be the successor public company to TB2, TB2 was domesticated into a Delaware corporation and merged with and into and a merger subsidiary of Surviving Pubco, with Surviving Pubco continuing as the successor company, and a merger subsidiary of Surviving Pubco merged with and into ADK LLC, with ADK LLC continuing as the surviving limited liability company. On the same day, Surviving Pubco changed its name to indie Semiconductor, Inc., and listed shares of Class A common stock, par value $0.0001 per share on The Nasdaq Stock Market LLC under the symbol “INDI.”

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Impact of COVID-19 and Macroeconomic Conditions

The impact of the COVID-19 pandemic as well as macroeconomic conditions, including rising interest rates, inflationary pressures, and volatility in the global financial markets, have affected business conditions in our industry. The duration, severity, and future impact of these conditions cannot be predicted; therefore the full extent to which these conditions will directly or indirectly impact the Company’s business operations, results of operations and financial condition is uncertain. Furthermore, like many companies in the semiconductor industry, we are experiencing various supply constraints, including global supply imbalances. While we are working with our global supply chain partners to mitigate this risk, the duration and extent of the supply chain disruptions remain uncertain. Refer to Part I, Item 1A of our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021 under the heading “Risk Factors” for more information.

Basis of Presentation

The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and the Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements include the condensed consolidated accounts of the Company’s majority-owned subsidiary, ADK LLC, of which 84% was owned by indie as of September 30, 2022. ADK LLC’s condensed consolidated financial statements include its wholly-owned subsidiaries Indie Services Corporation, indie LLC and Indie City LLC, all California entities, Ay Dee Kay Limited, a private limited company incorporated under the laws of Scotland, indie GmbH and Symeo GmbH, both of which are private limited liability companies incorporated under the laws of Germany, indie Kft, a limited liability company incorporated under the laws of Hungary, TeraXion Inc., a company incorporated under the laws of Canada, indie Semiconductor Israel Ltd., a private limited company incorporated under the laws of Israel, Ay Dee Kay S.A., a limited liability company incorporated under the laws of Argentina, indie Semiconductor Morocco, a limited liability company under the laws of Morocco, indie Semiconductor Japan KK, a limited liability company under the laws of Japan, Wuxi indie Microelectronics (“Wuxi”), a Chinese entity with 64% voting controlled and 44% owned by the Company as of September 30, 2022 and Wuxi’s wholly-owned subsidiaries, indie Semiconductor Japan, indie Semiconductor HK, Ltd and Shanghai Ziying Microelectronics Co., Ltd.

All significant intercompany accounts and transactions of the subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. The noncontrolling interest attributable to the Company’s less-than-wholly-owned subsidiary is presented as a separate component from stockholders’ equity (deficit) in the condensed consolidated balance sheets, and a noncontrolling interest in the condensed consolidated statements of operations and condensed consolidated statements of stockholders’ equity (deficit) and noncontrolling interest.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial reporting. Certain information and footnote disclosures, normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted pursuant to those rules and regulations. However, in management’s opinion, the financial information reflects all adjustments, including those of a normal recurring nature, necessary to present fairly the results of operations, financial position, and cash flows of the Company for the periods presented. The results of operations, financial position, and cash flows for the Company during the interim periods are not necessarily indicative of those expected for the full year. This information should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on April 11, 2022.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. indie is an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the

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consummation of the Transaction, the Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of the Company’s common stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which the Company achieves total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which the Company issues more than $1 billion in non-convertible debt in the prior three-year period or (iv) December 31, 2024. The Company expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare the Company’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021. Other than the accounting policies discussed in Note 16, Leases, related to the adoption of ASC 842, Leases, there has been no material change to the Company’s significant accounting policies during the nine months ended September 30, 2022.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. This ASU requires entities to measure the impairment of certain financial instruments, including accounts receivable, based on expected losses rather than incurred losses. This ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023. The Company is currently evaluating the impact of the new standard on the Company’s condensed consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), whereby lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the condensed consolidated financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. The FASB issued ASU 2019-10-Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates in November 2019 and ASU 2020-05-Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities in June 2020. The ASUs change some effective dates for ASU 2016-02 on leasing. After applying ASU 2019-10 and 2020-05, ASU 2016-02 is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2021.

The Company applied the transition requirements on the adoption date of January 1, 2022, rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effect adjustment in the period of adoption, and prior periods will not be restated. In addition, the Company elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. The Company also elected to use the hindsight practical expedient to consider any facts or circumstances that have changed through the January 1, 2022 adoption date that may affect the lease term due to renewal options and assess the impairment of the right-of-use asset. As an accounting policy election, the Company also excluded short-term leases (term of 12 months or less) from the balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component for certain asset classes. Effective January 1, 2022, the Company recorded the impact on its condensed consolidated balance sheet from the recognition of ROU asset and lease liability of $10,344. The impact to its condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows is not material. See Note 16, Leases, for additional details.

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In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, Income Taxes. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 (and December 15, 2021 for nonpublic companies) and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective, or prospective basis. The Company adopted ASU 2019-12 as of January 1, 2022 on a prospective basis. The standard had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company early adopted this update on January 1, 2022 using the modified retrospective method of transition and the impact to its condensed consolidated financial statements was not material.

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2.    Business Combinations

The Company acquired TeraXion, Inc. (“TeraXion”) and ON Design Israel Ltd. (“ON Design Israel”) in October 2021 and Symeo GmbH (“Symeo”) in January 2022. These acquisitions were recorded by allocating the purchase consideration to the net assets acquired based on their estimated fair values at the acquisition date. The excess of the purchase consideration for the acquisition over the fair value of the net assets acquired is recorded as goodwill. The fair values were based on management’s analysis, including work performed by third-party valuation specialists. The following presents the final allocation of the purchase consideration to the assets acquired and liabilities assumed for TeraXion and ON Design Israel, and the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed for Symeo as of September 30, 2022:

	Symeo GmbH		TeraXion		ON Design Israel
Purchase price - cash consideration	$	10,000	$	74,050	$	6,107
Purchase price - cash consideration (Accrual)	9,674		—		7,500
Add: debt paid at closing	—		6,857		—
Less: cash acquired	(1,295)		(5,625)		(1,133)
Net cash paid	18,379		75,282		12,474
Purchase price - equity consideration
Common stock	—		65,192		—
Options	—		17,249		—
Total equity consideration	—		82,441		—
Earn out shares	8,204		—		—
Contingent consideration	—		—		4,000
Net consideration	$	26,583	$	157,723	$	16,474
Fair value of net assets and liabilities assumed:
Current assets other than cash	2,857		7,627		119
Property and equipment	1,039		4,992		1,424
Developed technology	6,631		17,305		—
In-progress research & development	2,170		—		10,100
Customer relationships	2,411		13,059		—
Backlog	603		16		—
Trade name	965		6,946		—
Other non-current assets	36		—		66
Current liabilities	(1,461)		(5,840)		(537)
Deferred revenue	—		(1,025)		—
Deferred tax liabilities, non-current	(2,935)		(10,030)		(2,400)
Long-term debt	—		(7,580)		—
Total fair value of net assets acquired	12,316		25,470		8,772
Goodwill	$	14,267	$	132,253	$	7,702

Any changes in the estimated fair values of the net assets recorded for the business combination of Symeo upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction will change the allocation of the purchase price. Any subsequent changes to the purchase allocation during the measurement period that are material will be recorded in the reporting period in which the adjustment amounts are determined.

For all three acquisitions, trade receivables and payables, as well as other current and non-current assets and liabilities, were valued at the existing carrying value as they represented the fair value of those items at the acquisition date, based on

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management’s judgments and estimates. The fair value of property, plant and equipment utilized a replacement cost method incorporating the age, quality and condition of the assets.

Because the acquisition related to Symeo occurred relatively recently, the magnitude of the transaction and the significant information to be obtained and analyzed, some of which resides in foreign jurisdictions, the Company’s fair value estimates for the purchase price allocation are preliminary and may change during the allowable measurement period, which is up to the point the Company obtains and analyzes the information that existed as of the date of the acquisition necessary to determine the fair values of the assets acquired and liabilities assumed, but in no case to exceed more than one year from the date of acquisition. As of November 10, 2022, the Company had not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to, property, plant and equipment, identifiable intangible assets, other assets, deferred taxes, goodwill, tax uncertainties, income taxes payable, and other liabilities. Specifically for the valuation of intangibles assets acquired, the Company used publicly available benchmarking information, as well as a variety of other assumptions, including market participant assumptions to determine the preliminary values. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in material adjustments to goodwill.

Acquisition of TERAXION INC

On August 27, 2021, indie entered into a Share Purchase Agreement (the “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.

The aggregate purchase price of this acquisition was CAD $200,000 (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. Upon completion of the transaction, the total consideration paid for this acquisition consisted of (i) approximately $75,282 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 $65,192 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 $17,249.

TeraXion is a market leader in the design and manufacture of innovative photonic components. The Company 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. The goodwill is not expected to be deductible for tax purposes.

As of September 30, 2022, the Company finalized the opening net assets acquired and goodwill as follows:

	Preliminary Valuation		Adjustments		Final Valuation
Property and equipment	$	6,009	$	(1,017)	$	4,992
Developed technology	43,594		(26,289)		17,305
In-progress research & development	10,304		(10,304)		—
Customer relationships	12,682		377		13,059
Backlog	2,378		(2,362)		16
Trade name	6,125		821		6,946
Deferred tax liabilities, non-current	(20,272)		10,242		(10,030)
Goodwill	103,721		28,532		132,253

Changes in fair value of fixed assets and deferred tax liabilities, non-current were a result of gathering additional information during the measurement period. The Company also revised the initial values of intangible assets as a result of switching from utilizing publicly available benchmarking information to determine the fair value of the intangible assets to primarily utilizing an income method based on forecasts of expected future cash flows. As a result, the Company recorded an adjustment to the amortization of intangible assets of $2,491 in the condensed consolidated statement of operations during the three and nine

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months ended September 30, 2022 that would have been recorded during the prior periods if the adjustment to the intangible assets had been recognized as of the date of the acquisition.

The fair value of property, plant and equipment utilized a replacement cost method incorporating the age, quality and condition of the assets.

Developed technology relates to various laser systems, optical sensing and optical communication products offered by TeraXion at the time of the acquisition. Developed technology was valued using relief from royalty of the income approach. The selected royalty rate was determined based on an analysis of licensing agreements related to similar technologies and was further adjusted to reflect the maintenance R&D expenses associated with sustaining the technology. The economic useful life was determined to be four years based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.

Customer relationships represents the fair value of future projected revenue that will be derived from sales of products to existing customers of TeraXion. The fair value was determined by applying the excess earnings method of the income approach. The economic useful life was determined to be ten years.

Backlog relates to various purchase orders in place with TeraXion’s customers at the time of the acquisition. The fair value was determined by applying the excess earnings method of the income approach. The economic useful life was determined to be two years was determined.

Trade name relates to the “TeraXion” trade name. The fair value was determined by applying the relief from royalty of the income approach. The selected royalty rate was determined based on an analysis of licensing agreements related to similar brand names. The economic useful life was determined to be seven years.

Under both the relief from royalty and multi-period excess earnings methods, the fair value models incorporated estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. Because the estimates and assumptions made by management at the time of the acquisitions are unobservable and significant to the overall fair value measurement of these acquired identifiable intangible assets, the corresponding fair values are classified as Level 3 fair value hierarchy measurements.

As of September 30, 2022, indie incurred approximately $1,674 of acquisition-related costs, which were primarily legal expenses and recorded as part of the Selling, General and Administrative expenses.

There are no amounts of revenue and earnings of TeraXion included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

The unaudited pro forma financial information shown below summarizes the combined results of operations for the Company and TeraXion as if the closing of the acquisition had occurred on January 1, 2021:

	Three months ended		Nine months ended
	September 30, 2021		September 30, 2021
Combined revenue	$	17,875	$	47,374
Combined net loss before income taxes	(108,776)		(86,638)

The unaudited pro forma financial information includes adjustments that are directly attributable to the business combination and are factually supportable. Pro forma information reflects adjustments that are expected to have a continuing impact on the Company’s results of operations and are directly attributable to the acquisition. The unaudited pro forma results include adjustments to reflect, among other things, direct transaction costs relating to the acquisition, the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable intangible asset, and to eliminate a portion of the interest expense related to legacy TeraXion’s former loans, which were repaid upon completion of the acquisition. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been realized if the acquisition had taken place on January 1, 2021.

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Acquisition of ON Design Israel Ltd.

On October 1, 2021, indie entered into a definitive agreement and completed its acquisition of ON Design Israel Ltd. for $4,974 in cash paid upon close (net of cash acquired), $7,500 is to be paid in 2022 of which $5,000 was paid as of September 30, 2022. The remaining balance of $2,500 is reflected in Accrued expenses and other current liabilities and was paid in October 2022. Lastly, up to $7,500 would become payable upon achievement of certain milestones. Upon completion of the acquisition, ON Design Israel was renamed to indie Semiconductor Design Israel Ltd and became a wholly-owned subsidiary of the Company.

The Company paid a premium (i.e. goodwill) over the fair value of the net tangible and identified intangible assets acquired as this acquisition brings the Company an engineering development team with broad experience in radar system implementation, which will accelerate indie’s entry into the radar market and enable the Company to capture strategic opportunities among Tier 1 customers. The goodwill is not expected to be deductible for tax purposes.

As of September 30, 2022, the Company finalized the opening net assets acquired and goodwill as follows:

	Preliminary Valuation		Adjustment		Final Valuation
Property and equipment	$	1,315	$	109	$	1,424
Developed technology	5,077		(5,077)		—
In-progress research & development	1,562		8,538		10,100
Current liabilities	(754)		217		(537)
Deferred tax liabilities, non-current	(1,578)		(822)		(2,400)
Goodwill	10,667		(2,965)		7,702

Changes in fair value of fixed assets and deferred tax liabilities, non-current were a result of gathering additional information during the measurement period. The Company also revised the initial values of intangible assets as a result of switching from utilizing publicly available benchmarking information to determine the fair value of the intangible assets to primarily utilizing an income method based on forecasts of expected future cash flows. As a result, the Company recorded an adjustment to the amortization of intangible assets of $169 in the condensed consolidated statement of operations during the three and nine months ended September 30, 2022 that would have been recorded during the prior periods if the adjustment to the intangible assets had been recognized as of the date of the acquisition.

The fair value of in-process research and development (“IPR&D”), was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D, less charges representing the contribution of other assets to those cash flows. Under the multi-period excess earnings method, the fair value models incorporated estimates of future cash flows, estimates of allocations of certain assets and cash flows, estimates of future growth rates and management’s judgment regarding the applicable discount rates to use to discount such estimates of cash flows. Because the estimates and assumptions made by management at the time of the acquisitions are unobservable and significant to the overall fair value measurement of these acquired identifiable intangible assets, the corresponding fair values are classified as Level 3 fair value hierarchy measurements.

As of September 30, 2022, indie incurred approximately $392 of acquisition-related costs, which were primarily legal expenses and recorded as part of the Selling, General and Administrative expenses.

Total purchase consideration transferred at closing also included contingent consideration that had a fair value of $4,000 as of the acquisition date. The maximum contingent consideration payable in connection with the acquisition is $7,500. The acquisition date fair value of the contingent considerations was determined based on the Company’s assessment of the probability of achieving the performance targets that ultimately obligate the Company to transfer additional consideration to the seller. The contingent consideration is comprised of two tranches. The first tranche (“Tapeout”) is payable, up to a maximum of $2,500, upon the achievement of tapeout of certain product designs acquired from the seller within 30 months of the acquisition. The second tranche (“Design Win”) is payable, up to a maximum of $5,000, upon indie’s achievement of a design win related to certain acquired product designs within 36 months of the acquisition. The fair value of any outstanding contingent consideration liabilities will be remeasured as of the end of each reporting period with any resulting remeasurement gains or losses recognized in the condensed consolidated statement of operations. During the six months ended June 30, 2022, management determined that the product designs specified in the contingent consideration arrangement would be replaced with a new product design that is better aligned with customer requirements and which will not be eligible for either of the

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contingent considerations. Accordingly, the fair value of Tapeout and Design Win contingent consideration liabilities were reduced to zero during the three months ended June 30, 2022.

Pro forma financial information for the three and nine months ended September 30, 2021 for ON Design Israel is not disclosed as the results are not material to the Company’s condensed consolidated financial statements.

Acquisition of Symeo GmbH

On October 21, 2021, indie entered into a definitive agreement with ADI to acquire Symeo. The acquisition was approved by the German government on January 4, 2022 and closed on the same day. The total consideration paid for this acquisition consisted of (i) $8,705 in cash at closing, net of cash acquired; (ii) a $10,000 promissory note payable in January 2023 with a fair market value of $9,674; 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 fair market value of this equity-based earn-out was $8,204 on January 4, 2022. The acquisition date fair value of the equity-based earn-out was determined based on the Company’s assessment of the probability of achieving the performance targets that ultimately obligate the Company to transfer additional consideration to the seller. This earn-out has two tranches. Both tranches are payable upon Symeo achieving a revenue threshold of $5,000 by March 31, 2023, another revenue threshold of $6,000 by March 31, 2024 and annual gross margin of Symeo for each period of greater than 65%. The fair value of any outstanding contingent consideration liabilities will be remeasured as of the end of each reporting period with any resulting remeasurement gains or losses recognized in the condensed consolidated statements of operations. The fair value of these contingent consideration liabilities was $4,330 and $4,007, respectively, as of September 30, 2022. The first tranche of this earn-out liability is reflected in Accrued expense and other current liabilities and the second tranche is reflected in Other long-term liabilities in the condensed consolidated balance sheet as of September 30, 2022.

indie incurred various acquisition-related costs, which were primarily legal expenses and recorded as part of the Selling, General and Administrative expenses. Total costs incurred is de minimis as of September 30, 2022.

Pro forma financial information for the three and nine months ended September 30, 2021 for Symeo is not disclosed as the results are not material to the Company’s condensed consolidated financial statements.

3.    Inventory, Net

Inventory, net consists of the following:

	September 30, 2022		December 31, 2021
Raw materials	$	4,241	$	2,380
Work-in-process	5,264		6,301
Finished goods	4,069		2,151
Inventory, gross	13,574		10,832
Less: Inventory reserves	1,995		1,752
Inventory, net	$	11,579	$	9,080

During the three months ended September 30, 2022 and 2021, the Company recognized write-downs in the value of inventory of $485 and $13, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized write-downs in the value of inventory of $1,192 and $78, respectively.

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4.    Property and Equipment, Net

Property and equipment, net consists of the following:

	Useful life (in years)	September 30, 2022		December 31, 2021
Production tooling	4	$	10,055	$	10,158
Lab equipment	4	5,484		4,489
Office equipment	3 - 7	3,460		1,893
Leasehold improvements	*	702		395
Construction in progress		1,111		256
Property and equipment, gross		20,812		17,191
Less: Accumulated depreciation		8,303		6,101
Property and equipment, net		$	12,509	$	11,090

*Leasehold improvements are amortized over the shorter of the remaining lease term or estimated useful life of the leasehold improvement.

The Company recognized depreciation expense of $753 and $254 for the three months ended September 30, 2022 and 2021, respectively. The Company recognized depreciation expense of $2,311 and $685 for the nine months ended September 30, 2022 and 2021, respectively.

Fixed assets not yet in service consist primarily of capitalized internal-use software and certain tooling and other equipment that have not been placed into service.

5.    Intangible Assets, Net

Intangible assets, net consist of the following:

	September 30, 2022							December 31, 2021
	Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	3.7	$	24,305	$	(4,558)	$	19,747	6.7	$	49,040	$	(1,374)	$	47,666
Software licenses	2.0	23,305		(10,009)		13,296		2.5	23,297		(6,286)		17,011
Customer relationships	8.1	15,470		(1,379)		14,091		6.7	12,682		(365)		12,317
Intellectual property licenses	1.3	1,777		(1,707)		70		1.5	1,736		(1,687)		49
Trade names	5.7	7,911		(967)		6,944		6.7	6,125		(182)		5,943
Backlog	1.3	619		(203)		416		1.8	2,378		(239)		2,139
Effect of exchange rate on gross carrying amount		(4,705)				(4,705)			(631)		—		(631)
Intangible assets with finite lives		68,682		(18,823)		49,859			94,627		(10,133)		84,494
IPR&D		12,270		—		12,270			11,866		—		11,866
Effect of exchange rate on gross carrying amount		(1,265)		—		(1,265)			(75)		—		(75)
Total intangible assets with indefinite lives		11,005		—		11,005			11,791		—		11,791
Total intangible assets		$	79,687	$	(18,823)	$	60,864		$	106,418	$	(10,133)	$	96,285

The Company obtained software licenses, which it uses for its research and development efforts related to its products. In fiscal 2022 and 2021, the Company obtained additional software licenses. Further, the Company has acquired developed technology, customer relationships, trade names, backlog and IPR&D as a result of the business combinations. The change in gross amount

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of intangible assets is related to the business combination valuation for TeraXion and ON Design that was finalized during the three months ended September 30, 2022. See Note 2 - Business Combinations for additional information.

Intangible assets with finite lives are amortized on a straight-line basis over the expected period to be benefited by future cash flows. The Company monitors and assesses these assets for impairment on a periodic basis. As of September 30, 2022, the Company determined that there was no impairment of intangible assets.

Amortization of intangible assets for the three months ended September 30, 2022 and 2021 was $51 and $1,459, respectively. Amortization for the nine months ended September 30, 2022 and 2021 was $8,859 and $2,222, respectively. Amortization of intangible assets is included within Cost of goods sold, Research and development expenses, and Selling, general and administrative expenses based their respective nature, in the condensed consolidated statements of operations.

Based on the amount of definite-lived intangible assets subject to amortization as of September 30, 2022, amortization expense for each of the next five fiscal years is expected to be as follows:

2022 (remaining three months)	$	3,455
2023	14,933
2024	11,806
2025	6,462
2026	3,389
Thereafter	9,814
	$	49,859

6.    Goodwill

The following table sets forth the carrying amount and activity of goodwill as of September 30, 2022:

	Amount
Balance as of December 31, 2021	$	115,206
Acquisitions (Note 2)	14,268
Measurement period adjustment for business combinations from prior year	25,567
Effect of exchange rate on goodwill	(13,003)
Balance as of September 30, 2022	$	142,038

The change in goodwill is primarily driven by $14,268 increase during the nine months ended September 30, 2022 due to acquisition of Symeo that was completed during the period, $25,567 increase related to the finalization of business combination valuations for TeraXion and ON Design and partially offset by $13,003 decrease in value due to effect of exchange rate on goodwill. See Note 2 for a detailed discussion of goodwill acquired as well as adjustments due to finalization of the business combination valuations.

The Company tests its goodwill for impairment annually as of the first day of its fourth fiscal quarter and in interim periods if certain events occur indicating the carrying value of goodwill may be impaired. There were no indicators of impairment noted during the nine months ended September 30, 2022.

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7.    Debt

The following table sets forth the components of debt as of September 30, 2022 and December 31, 2021:

	September 30, 2022						December 31, 2021
	Principal Outstanding		Unamortized Discount and Issuance Cost		Carrying Amount		Principal Outstanding		Unamortized Discount and Issuance Cost		Carrying Amount
Short term loans	$	1,830	$	—	$	1,830	$	810	$	—	$	810
Promissory note	10,000		(100)		9,900		—		—		—
CIBC loan	5,537		(15)		5,522		7,102		(19)		7,083
Total debt	$	17,367	$	(115)	$	17,252	$	7,912	$	(19)	$	7,893

The outstanding debt as of September 30, 2022 and December 31, 2021 is classified in the condensed consolidated balance sheets as follows:

	September 30, 2022		December 31, 2021
Current liabilities - Current debt obligations	$	13,082	$	2,275
Noncurrent liabilities - Long-term debt, net of current maturities	4,170		5,618
Total debt	$	17,252	$	7,893

PacWest Revolving Line of Credit

The Company entered into a loan and security agreement with Pacific Western Bank (“PacWest”) in January 2015, that provided a term loan of up to $10,000 with a maturity date of September 2020. The term loan bore interest equal to the greater of one percent above the prime rate in effect, or 4.5% on outstanding borrowings. In addition, the loan and security agreement provided for a revolving line of credit. The revolving line of credit bore interest equal to the greater of seventy-five basis points above the prime rate in effect, or 4.25% on outstanding borrowings. The terms of the loan and security agreement have been amended from time to time and was most recently amended on November 5, 2021 as described below. The amendments have, among other things, extended the maturity date of the loan and adjusted the financial covenants’ borrowing limits. During 2020, the outstanding balance on the term loan was transferred to the revolving line of credit.

On November 5, 2021, the Company entered into an amendment to the PacWest loan agreement that (i) increased the maximum borrowing capacity under the revolving line of credit to $20,000, (ii) limited the security interests of the bank to the cash collateral set at 102.5% of the drawn amount of the loan, (iii) removed various reporting and restrictive covenants, (iv) extended the maturity date to November 4, 2022 and (iv) reduced the interest rate to 2.1% per annum. In addition, the amendment requires the Company to collateralize a cash balance equal to the total outstanding balance in a cash security account with PacWest. Upon execution of the amendment, the Company repaid the outstanding balance of $1,675 under the original line of credit to this new arrangement.

As of September 30, 2022 and December 31, 2021, there was no outstanding balance on the revolving line of credit. The Company’s borrowings under the revolving line of credit were subject to an aggregate borrowing limit of $20,000 as of September 30, 2022 and December 31, 2021. Total borrowings at any given time under the revolving line of credit are limited to a percentage of domestic accounts receivables less than 90 days past due and other factors.

The revolving line of credit is subject to debt covenants which, if violated, could result in the outstanding balance becoming immediately due. The Company has complied with or obtained waivers for all such covenants as of the date these financial statements were issued.

TeraXion Revolving Credit

In connection with the acquisition of TeraXion on October 12, 2021, the Company assumed a revolving credit with the Canadian Imperial Bank of Commerce (“CIBC”) with a credit limit of CAD9,440 bearing interest at prime rate plus 0.25%, repayable in monthly installments of CAD155 plus interest, maturing in October 2026. The repayment of monthly installments reduces the credit limit over time. As of September 30, 2022 and December 31, 2021 the outstanding principal balance and

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credit limit of the loan was $5,537 and $7,102, or CAD7,583 and CAD8,976, respectively. This loan is secured with an authorized credit facility of CAD7,000 from the bank, bearing interest at prime rate plus 0.25%. This line of credit was unused as of September 30, 2022 and December 31, 2021.

Short Term Loans

Wuxi

On November 13, 2019, Wuxi entered into a short-term loan agreement with CITIC Group Corporation Ltd. with aggregate principal balance of CNY2,000, or approximately $285, and bearing interest of 4.785% per annum. The principal balance is denominated in Chinese Yuan and the outstanding balance is adjusted for changes in foreign currency exchange rates at each reporting period. On November 13, 2020, the terms of the agreement were extended for twelve months, and the principal and interest were due on November 15, 2021. On November 19, 2021, the total outstanding balance with CITIC Group Corporation was fully paid off. On January 19, 2022, Wuxi entered into a short-term loan agreement with CITIC Group Corporation Ltd. with aggregate principal balance of CNY2,000, or approximately $315, and bearing interest of 3.90% per annum. On June 21, 2022, Wuxi increased its short-term loan principal with CITIC by CNY3,000, or approximately $448, and bearing interest of 3.70% per annum. The principal balance is denominated in Chinese Yuan and the outstanding balance is adjusted for changes in foreign currency exchange rates at each reporting period. As of September 30, 2022, the total outstanding short-term loan with CITIC Group Corporation Ltd. was CNY5,000, or approximately $704.

On October 15, 2020, Wuxi entered into a short-term loan agreement with Bank of Ningbo (“NBCB”) with aggregate principal balance of CNY1,000 or approximately $151 and bearing interest of 4.785%. On April 29, 2021, Wuxi increased its short-term loan principal with NBCB by CNY1,000 or approximately $155 to a total principal balance of CNY4,000. On October 14, 2021, the borrowing from October 15, 2020 was fully paid off. On October 18, 2021, Wuxi re-entered into a short-term loan agreement with NBCB for CNY1,000, or approximately $150 and bearing interest of 4.785%. On April 26, 2022, the entire loan balance was paid off, and on April 27, 2022 Wuxi entered into a short-term loan agreement with NBCB with aggregate principal balance of CNY2,000, or approximately $304, and bearing interest of 4.26% per annum. On June 24, 2022, Wuxi increased its principal balance by CNY3,000, or $448, and bearing interest of 3.15% per annum. As of September 30, 2022, the total outstanding short-term loan with NBCB was CNY5,000, or $704. As of December 31, 2021, the total outstanding short-term loan with NBCB was CNY2,000, or $315.

On November 18, 2021, Wuxi also entered into a short-term loan agreement with Bank of Nanjing with aggregate principal balance of CNY3,000, or approximately $453, and bearing interest of 4.00%. As of September 30, 2022, the total outstanding short-term loan with Bank of Nanjing was CNY3,000, or $422. As of December 31, 2021, the total outstanding short-term loan with Bank of Nanjing was CNY3,000, or $472.

Symeo Promissory Note

In connection with the Symeo acquisition on January 4, 2022, the Company issued a short-term interest-free promissory note of $10,000, payable upon its maturity of January 31, 2023. As of September 30, 2022, the outstanding principal balance was $10,000 and the carrying value was $9,900.

The table below sets forth the components of interest expense for the three and nine months ended September 30, 2022 and September 30, 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest expense on debt obligations:
Contractual interest	$	91	$	24	$	265	$	977
Amortization of discount and issuance cost	75		1		226		198
Total interest expense	$	166	$	25	$	491	$	1,175

8.    Warrant Liability

In connection with the June 10, 2021 Transaction, holders of TB2 Class A ordinary shares automatically received Class A common stock of indie, and holders of TB2 warrants automatically received 17,250,000 warrants of indie with substantively identical terms (“Public Warrants”). At the closing of the Transaction, 8,625,000 Class B ordinary shares of TB2 owned by

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Thunder Bridge Acquisition II LLC, a Delaware limited liability company (the “Sponsor”), automatically converted into 8,625,000 shares of indie Class A common stock, and 8,650,000 private placement warrants held by the Sponsor, each exercisable for one Class A ordinary share of TB2 at $11.50 per share, automatically converted into warrants to purchase one share of indie Class A common stock at $11.50 per share with substantively identical terms (the “Private Placement Warrants”). Also at the Closing, TB2 issued 1,500,000 working capital warrants to an affiliate of the Sponsor in satisfaction of a working capital promissory note of $1,500 (the “Working Capital Warrants” and, together with the Private Placement Warrants, the “Private Warrants”). These Working Capital Warrants have substantially identical terms to the Private Placement Warrants.

The warrants may be exercised only during the period commencing on July 10, 2021 (30 days after the closing of the Transaction) through June 10, 2026. The Company may redeem the Public Warrants at a price of $0.01 per warrant upon 30 days’ notice, only in the event that the last sale price of the Class A common stock is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given, provided there is an effective registration statement and current prospectus in effect with respect to the Class A common stock underlying such warrants during the 30 day redemption period. If the Company redeems the warrants as described above, management will have the option to require all holders to exercise warrants on a cashless basis.

In accordance with the warrant agreement relating to the Public Warrants, the Company is required to use its best efforts to maintain the effectiveness of the registration statement covering the warrants. If a registration statement is not effective within 90 days following the consummation of a business combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In the event that a registration statement is not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such warrant shall not be entitled to exercise such warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the warrant exercise.

The terms of the Private Warrants are identical to the Public Warrants as described above, except that the Private Warrants are not redeemable so long as they are held by the Sponsor or its permitted transferees.

The Company has reviewed the terms of warrants to purchase its Class A common stock to determine whether warrants should be classified as liabilities or stockholders’ equity in its condensed consolidated balance sheet. In order for a warrant to be classified in stockholders’ equity, the warrant must be (a) indexed to the Company’s equity and (b) meet the conditions for equity classification in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity. If a warrant does not meet the conditions for equity classification, it is carried on the condensed consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants in Other income (expense), net. The Company determined that all warrants are required to be carried as a liability in the condensed consolidated balance sheet at fair value, with changes in fair value recorded in the condensed consolidated statement of operations (see Note 10). At the closing of the Transaction on June 10, 2021, the warrants had an initial fair value of $74,408, which was recorded as liability and a reduction to additional paid in capital in the condensed consolidated balance sheet.

The following table is a summary of the number of shares of the Company’s Class A common stock issuable upon exercise of warrants outstanding at June 10, 2021:

	Number of Shares	Exercise Price		Redemption Price		Expiration Date	Classification	Initial Fair Value
Public Warrants	17,250,000	$	11.50	$	18.00	June 10, 2026	Liability	$	42,435
Private Warrants	10,150,000	$	11.50	N/A		June 10, 2026	Liability	$	31,973

As of September 30, 2022, there have been no exercises of the warrants and the fair value was $51,872.

9.     Contingent and Earn-Out Liabilities

Earn-Out Milestones

Certain of indie’s stockholders are entitled to receive up to 10,000,000 earn-out shares of the Company’s Class A common stock if the earn-out milestones are met. The earn-out milestones represent two independent criteria, each of which entitles the eligible stockholders to 5,000,000 earn-out shares per milestone met. Each earn-out milestone is considered met if at any time following the Transaction and prior to December 31, 2027, the volume weighted average price of indie’s Class A common

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stock is greater than or equal to $12.50 or $15.00 for any twenty trading days within any thirty-trading day period, respectively. Further, the earn-out milestones are also considered to be met if indie undergoes a Sale. A Sale is defined as the occurrence of any of the following for indie: (i) engage in a “going private” transaction pursuant to Rule 13e-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise cease to be subject to reporting obligations under Sections 13 or 15(d) of the Exchange Act; (ii) Class A common stock ceases to be listed on a national securities exchange, other than for the failure to satisfy minimum listing requirements under applicable stock exchange rules; or (iii) change of ownership (including a merger or consolidation) or approval of a plan for complete liquidation or dissolution.

Escrow Shares

3,450,000 Class A common shares of indie were placed in escrow for the potential future release to the Sponsor in the event the earn-out milestones are met. The earn-out milestones for the Escrow Shares are identical to those of the earn-out shares. Achievement of each milestone entitles the shareholders to 50% of the total Escrow Shares. The Escrow Shares have been accounted for as a liability and remeasured to fair value each reporting period.

As of November 9, 2021, the first earn-out milestone was achieved while the second Earn-Out Milestone remains unachieved. The achievement of the first earn-out milestone eliminated the variability in the arrangement that previously prevented this instrument to be equity-classified. As a result, the earn-out liabilities associated with the first Earn-Out Milestone were recorded to Additional paid-in capital in the condensed consolidated balance sheet at its fair value. At the same time, the unearned liabilities associated with the second Earn-Out Milestones were also remeasured to its fair value and reclassified per ASC 815-40 to Additional paid-in capital in the condensed consolidated balance sheet.

As of December 31, 2021, there was no liability remaining on the balance sheet.

Contingent Considerations

On May 13, 2020, in connection with the acquisition of City Semiconductor, Inc. (“City Semi”), the Company recorded contingent consideration as a long-term liability at a fair value of $1,180. The contingent consideration is comprised of two tranches. The first tranche is payable, up to a maximum of $500, upon the achievement of cash collection targets within twelve months of the acquisition, and $456 was achieved in May 2021. The second tranche is payable, up to a maximum of $1,500, upon the shipment of a product incorporating the acquired developed technology. In September 2021, the Company paid off the first tranche of the contingent consideration. The fair value of the second tranche contingent consideration liabilities was $1,340 as of September 30, 2022.

On October 1, 2021, in connection with the acquisition of ON Design Israel, the Company recorded contingent consideration as a long-term liability at a fair value of $4,000. The contingent consideration is comprised of two tranches. The first tranche is payable, up to a maximum of $2,500, upon the achievement of Tapeout of certain product designs acquired from the seller within 30 months of the acquisition. The second tranche is payable, up to a maximum of $5,000, upon indie’s achievement of a Design Win related to certain acquired product designs within 36 months of the acquisition. During the three months ended June 30, 2022, management determined that the product design specified in the contingent consideration provision would be replaced with a new product design that is better aligned with customer requirements and which will not be eligible for either of the contingent considerations. Accordingly, the fair value for both the Tapeout and Design Win were reduced to zero as of June 30, 2022. The change in fair value since the acquisition date is recorded in Other income (expense), net in the condensed consolidated statement of operations for the nine months ended September 30, 2022.

On January 4, 2022, in connection with the acquisition of Symeo, the Company recorded contingent considerations as a current and a long-term liability at a fair value of $4,212 and $3,992, respectively. The contingent consideration is comprised of two tranches. The first tranche is payable upon the achievement of a revenue threshold of $5,000 by December 31, 2022. The second tranche is payable upon Symeo’s achievement of a revenue threshold of $6,000 by December 31, 2023. The fair value of the first and second tranche contingent consideration liabilities as of September 30, 2022 was $4,330 and $4,007, respectively. The change in fair value since the acquisition date is recorded in Other income (expense), net in the condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

10.    Fair Value Measurements

The Company’s debt instruments are recorded at their carrying values in its condensed consolidated balance sheets, which may differ from their respective fair values. The fair values of the Company’s term loans generally approximated their carrying values given their relative shorter-term in nature. The fair value of the promissory note in relation with the Symeo acquisition was determined using valuation inputs categorized as Level 3.

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As of September 30, 2022, the Company held currency forward contracts of $3,550 to sell United States dollars and to buy Canadian dollars at a forward rate. Any changes in the fair value of these contracts are reflected in the condensed consolidated statement of operations. The fair value of the currency forward contracts was determined using valuation inputs categorized as Level 2. The change in fair value the three and nine months ended September 30, 2022 was a gain of $211.

The following table presents the Company’s fair value hierarchy for financial liabilities:

	Fair Value Measurements as of September 30, 2022
	Level 1		Level 2		Level 3		Total
Liabilities:
Private Placement Warrants	$	—	$	—	$	20,994	$	20,994
Public Warrants	$	30,878	$	—	$	—	$	30,878
City Semi Contingent Consideration - Second Tranche	$	—	$	—	$	1,340	$	1,340
Symeo Contingent Consideration - First Tranche	$	—	$	—	$	4,330	$	4,330
Symeo Contingent Consideration - Second Tranche	$	—	$	—	$	4,007	$	4,007
Symeo Promissory Note	$	—	$	—	$	9,674	$	9,674

	Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities:
Private Placement Warrants	$	—	$	—	$	40,092	$	40,092
Public Warrants	$	60,375	$	—	$	—	$	60,375
ON Design Israel Contingent Consideration - Tapeout	$	—	$	—	$	1,817	$	1,817
ON Design Israel Contingent Consideration - Design Win	$	—	$	—	$	2,222	$	2,222
City Semi Contingent Consideration - Second Tranche	$	—	$	—	$	980	$	980

As of September 30, 2022 and December 31, 2021, the Company’s cash and cash equivalents were all held in cash or Level 1 instruments where the fair values approximate the carrying values.

Level 3 Disclosures

Warrants

Warrants were valued using the Black-Scholes-Merton formula and a Monte Carlo Simulations analysis. Calculating the fair value of warrants requires the input of subjective assumptions. Other reasonable assumptions could provide differing results. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value.

Earn-out Liabilities

Earn-out liabilities that are specifically indexed to the Company’s stock price were valued using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the earn-out period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value.

Contingent Considerations

Contingent considerations were valued based on the consideration expected to be transferred. The Company estimated the fair value based on the probability of achievement of various milestones identified within each contingent consideration arrangement, using certain assumptions that require significant judgement and discount rates. The discount rates were based on the estimated cost of debt plus a premium, which included consideration of expected term of the earn-out payment, yield on treasury instruments and an estimated credit rating for the Company.

The following table presents the significant unobservable inputs assumed for each of the fair value measurements:

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	September 30, 2022		December 31, 2021
	Input		Input
Liabilities:
Warrants
Expected volatility	50.50	%	36.00	%
City Semi Contingent Consideration - Second Tranche
Discount rate	10.80	%	10.80	%
ON Design Israel Contingent Consideration - Tapeout
Discount rate	N/A		4.37	%
ON Design Israel Contingent Consideration - Design Win
Discount rate	N/A		4.37	%
Symeo Contingent Consideration - First Tranche
Discount Rate	8.03	%	N/A
Symeo Contingent Consideration - Second Tranche
Discount Rate	8.03	%	N/A
Symeo Promissory Note
Discount rate	3.13	%	N/A

11.    Noncontrolling Interest

In connection with the closing of the Transaction on June 10, 2021, certain members of ADK LLC (the “ADK Minority Holders”) retained an approximate 26% membership interest in ADK LLC. The ADK Minority Holders may from time to time, after December 10, 2021, exchange with indie, such holders’ units in ADK LLC for an equal number of shares of indie’s Class A common stock. As a result, indie’s ownership interest in ADK LLC will increase. The ADK Minority Holders’ ownership interests are accounted for as noncontrolling interests in the Company’s condensed consolidated financial statements. The Company’s ownership of ADK LLC, was approximately 84% as of September 30, 2022.

In connection with the Transaction, the Company issued to ADK Minority Holders an aggregate of 33,827,371 shares of Class V common stock of indie (the “Class V Holders”). The shares of Class V common stock provides no economic rights in indie to the holder thereof; however, each Class V Holder is entitled to vote with the holders of Class A common stock of indie, with each share of Class V common stock entitling the holder to one (1) vote per share of Class V common stock at the time of such vote (subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications). As of September 30, 2022, the Company had an aggregate of 23,749,676 shares of Class V common stock issued and outstanding.

ADK LLC held 64% and 50% voting control and 44% and 50% ownership interest in Wuxi as of September 30, 2022 and December 31, 2021, respectively. From time to time, Wuxi has sold equity ownership and the transactions have reduced ADK LLC’s controlling interest in Wuxi on the condensed consolidated balance sheets. As of September 30, 2022, ADK LLC maintained its controlling ownership in Wuxi. Accordingly, Wuxi’s financial statements are consolidated with those of ADK LLC and its other wholly-owned subsidiaries as of and for the three and nine months ended September 30, 2022 and 2021. Minority interests held in Wuxi are accounted for as non-controlling interests in the Company’s condensed consolidated financial statements.

12.    Revenue

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers by geographic region, as the Company’s management believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

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The following tables present revenue disaggregated by geography of the customer’s shipping location for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
United States	$	11,426	$	2,033	$	26,676	$	5,910
Greater China	10,911		7,591		31,163		17,800
Europe	5,368		711		13,022		1,523
Rest of North America	1,109		1,286		3,440		2,513
Rest of Asia Pacific	881		127		2,442		701
South America	321		409		1,027		1,004
Total revenue	$	30,016	$	12,157	$	77,770	$	29,451

Contract Balances

Certain assets or liabilities are recorded depending on the timing of revenue recognition, billings and cash collections on a contract-by-contract basis. Contract liabilities primarily relate to deferred revenue, including advance consideration received from customers for contracts prior to the transfer of control to the customer, and therefore revenue is recognized upon delivery of products and services or as the services are performed. The Company recorded unbilled revenue of $1,851 and $402 as of September 30, 2022 and December 31, 2021, respectively, as part of its Prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

The following table presents the liabilities associated with the engineering services contracts as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
Deferred revenue	$	1,627	$	1,840

As of September 30, 2022 and December 31, 2021, contract liabilities were included as Deferred revenue and classified as current liabilities in the condensed consolidated balance sheets.

During the three months ended September 30, 2022 and 2021, the Company recognized $139 and $206, respectively, of revenue related to amounts that were previously included in deferred revenue at the beginning of the period. During the nine months ended September 30, 2022 and 2021, the Company recognized $1,103 and $819, respectively, of revenue related to amounts that were previously included in deferred revenue at the beginning of the period. Deferred revenue fluctuates over time due to changes in the timing of payments received from customers and revenue recognized for services provided.

Revenue related to remaining performance obligations represents the amount of contracted development arrangements that has not been recognized, which includes deferred revenue on the condensed consolidated balance sheet and unbilled amounts that will be recognized as revenue in future periods. As of September 30, 2022, the amount of performance obligations that have not been recognized as revenue was $39,885, of which approximately 63% is expected to be recognized as revenue over the next twelve months and the remainder thereafter. This amount excludes the value of remaining performance obligations for contracts with an original expected length of one year or less. Variable consideration that has been constrained is excluded from the amount of performance obligations that have not been recognized.

Concentrations

As identified below, some of our customers accounted for more than 10% of the Company’s total revenue for the three and nine months ended September 30, 2022 and 2021:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Customer A	36.7	%	25.7	%	37.3	%	39.3	%
Customer B	—	%	12.9	%	—	%	5.4	%

The loss of these customers would have a material impact on the Company’s condensed consolidated financial results.

The largest customer represented 27% of accounts receivable as of September 30, 2022 and the one largest customer represented 31% of accounts receivable as of December 31, 2021. No other individual customer represented more than 10% of accounts receivable at either September 30, 2022 or December 31, 2021.

13.    Share-Based Compensation

Stock compensation expense is recorded in cost of goods sold, research and development, and general and administrative expenses based on the classification of the work performed by the grantees.

The following table sets forth the share-based compensation for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of goods sold	$	68	$	—	$	81	$	—
Research and development	7,048		2,588		21,112		5,185
Selling, general, and administrative	2,547		3,629		9,652		9,000
Total	$	9,663	$	6,217	$	30,845	$	14,185

Stock compensation expense for the three and nine months ended September 30, 2022 included $1,770 and $5,117, respectively, which represents liability classified awards for the Company’s 2022 annual incentive plan accrual.

14.    Net Loss per Common Share

Basic and diluted net loss per common share was calculated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(45,432)	$	(108,161)	$	(37,030)	$	(84,812)
Less: Net loss attributable to noncontrolling interest	(7,825)		(28,512)		(6,022)		(22,127)
Net loss attributable to indie Semiconductor, Inc.	$	(37,607)	$	(79,649)	$	(31,008)	$	(62,685)
Net loss attributable to common shareholders - dilutive	$	(37,607)	$	(79,649)	$	(31,008)	$	(62,685)
Denominator:
Weighted average shares outstanding - basic	120,507,152		96,368,379		116,272,459		58,791,245
Weighted average common shares outstanding—diluted	120,507,152		96,368,379		116,272,459		58,791,245
Net loss per share attributable to common shares— basic	$	(0.31)	$	(0.83)	$	(0.27)	$	(1.07)
Net loss per share attributable to common shares— diluted	$	(0.31)	$	(0.83)	$	(0.27)	$	(1.07)

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The Company’s potentially dilutive securities, which include SAFEs, unvested Class B units, unvested phantom units, unvested restricted stock units, convertible Class V common shares, warrants for Class A units (public and private), unexercised options, earn-out shares and escrow shares, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to shareholders for the periods indicated as their inclusion would have had an antidilutive effect:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
SAFEs	—	—	—	7,651,982
Unvested Class B units	—	—	—	1,817,375
Unvested Phantom units	1,060,119	1,727,730	1,060,119	1,727,730
Unvested Restricted stock units	8,248,983	3,437,188	8,248,983	3,437,188
Convertible Class V common shares	23,749,676	33,827,371	23,749,676	33,827,371
Public warrants for the purchase of Class A common shares	17,250,000	17,250,000	17,250,000	17,250,000
Private warrants for the purchase of Class A common shares	10,150,000	10,150,000	10,150,000	10,150,000
Unexercised options	368,875	—	368,875	—
Earn-out Shares	5,262,657	10,000,000	5,262,657	10,000,000
Escrow Shares	1,725,000	3,450,000	1,725,000	3,450,000
	67,815,310	79,842,289	67,815,310	89,311,646

15.    Income Taxes

We are subject to U.S. federal and state taxes with respect to our allocable share of any taxable income or loss of ADK, LLC, as well as any stand-alone income or loss we generate. ADK, LLC is treated as a partnership for U.S. income tax purposes and for most applicable state and local income tax purposes and generally does not pay income taxes in most jurisdictions. Instead, ADK, LLC’s taxable income or loss is passed through to its members, including us. Despite its status as a partnership in the United States, ADK, LLC’s foreign subsidiaries are taxable entities operating in foreign jurisdictions. As such, these foreign subsidiaries record a tax expense or benefit in jurisdictions where a valuation allowance has not been recorded.

Our effective tax rate in 2022 will differ from the U.S. federal statutory rate primarily due to changes in valuation allowance, tax expense or benefit in foreign jurisdictions taxed at different tax rates and foreign research and development tax credits and incentives, and changes in non-controlling interest.

Based primarily on our limited operating history and ADK LLC’s historical domestic losses, we believe there is a significant uncertainty as to when we will be able to use our domestic, federal and state, deferred tax assets (“DTAs”). Therefore, we have recorded a valuation allowance against these DTAs for which we have concluded that it is not more likely than not that these will be realized.

As part of reverse capitalization, the Company entered into Tax Receivable Agreements (“TRAs”) with certain shareholders that will represent approximately 85% of the calculated tax savings based on the portion of basis adjustments on future exchanges of ADK, LLC units and other carryforward attributes assumed that we anticipate to be able to utilize in future years. Through September 30, 2022, there have been exchanges of units that would generate a DTA; however, as there is a full valuation allowance on the related DTA, we have not recorded a liability under the TRAs.

The Company recorded a benefit (provision) for income taxes of $(863) and $36 for the three months ended September 30, 2022 and 2021, respectively. The Company recorded a benefit (provision) for income taxes of $665 and $(34) for the nine months ended September 30, 2022 and 2021, respectively. Income tax expense and benefits are primarily related to the Company’s operations in Canada and Europe.

Recent Change in U.S. Tax Law

Prior to 2022, IRC Section 174 allowed taxpayers to deduct “research or experimental” (“R&E”) expenditures in the year in which they were incurred.

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The 2017 tax reform act amended Section 174, effective for amounts paid or incurred in tax years beginning after December 31, 2021, to require taxpayers to charge their R&E expenditures to a capital account. Capitalized costs are required to be amortized over five years (15 years for expenditures attributable to foreign research).

Due to the Company’s significant R&E expenses the impact of this law change will mean that a significant portion of the Company’s total operating expenses will be taken as a deduction over a 5-year period rather than be currently deductible. The Company does not expect to pay cash taxes as a result of this change as its remaining forecasted operating expenses after excluding R&E expenses are sufficiently significant for the Company to remain in a taxable loss for 2022.

16. Leases

The Company’s lease arrangements consist primarily of corporate and manufacturing facility agreements. The leases expire at various dates through 2028, some of which include options to extend the lease term. The options with the longest potential total lease term consist of options for extension of up to five years following expiration of the original lease term. All of the leases are operating leases. The Company is headquartered in Aliso Viejo, California and has various research and design centers, sales support offices, and manufacturing facilities throughout the world. The key lease terms for the principal locations are summarized below:

In July 2015, the Company entered into a five-year operating lease for its 14,881 square foot headquarters in Aliso Viejo, California, which is payable monthly with periodic rent adjustments over the lease term. The lease requires a security deposit of $30, which is recorded in other assets on the Company’s condensed consolidated balance sheets as well as a tiered, time-based letter of credit that has now reached its lowest tier of $200. Subsequently, the rentable area was expanded to 18,000 square feet and the lease was extended through the end of June 2023. Rent expense is approximately $38 per month.

In October 2015, the Company entered into a five-year operating lease for its Scotland Design Center in Edinburgh, Scotland, which is payable monthly with periodic rent adjustments over the lease term. The lease expired in October 2020. During 2019, the Company entered into a sub-lease agreement with a third party for the Scotland Design Center facility. Separately, effective January 2020, the Company entered into a lease for a property in Scotland. The lease agreement has a term through June 2024 and monthly rent of approximately $16 per month.

In October 2017, the Company entered into a 26-month operating lease for its Wuxi sales and design center. Rent for the associated office is payable monthly with periodic rent adjustments over the lease term. The lease was subsequently extended through December 2022. Rent expense is approximately $8 per month.

In May 2021, the Company entered into a seven-year operating lease for a location in Detroit, Michigan, which is payable monthly with periodic rent adjustments over the lease term. The lease will expire in 2028 with an initial monthly rent of approximately $22 per month.

In October 2021, the Company entered into a five-year operating lease for its design center in Austin, Texas. Rent for the associated office is payable monthly with periodic rent adjustments over the lease term, which expires in October 2026. Rent expense is approximately $13 per month.

In October 2021, the Company acquired TeraXion and assumed its existing operating lease for an office building and a warehouse in Quebec City, Canada. Rent for the associated office is payable at approximately $38 per month. The lease will expire on May 31, 2028. Rent for the associate warehouse is at approximately $3 per month. This lease will expire on November 30, 2023.

In February 2022, the Company entered into a two-year operating lease for its design center in Boston, Massachusetts, which is payable monthly with periodic rent adjustments over the lease term. The lease will expire March 31, 2024.

The total monthly rent for the remaining locations of the Company around the world is not material.

ASC 842 Adoption

The Company adopted ASC 842 using the modified retrospective method on January 1, 2022. The Company determines if an arrangement is a lease at its inception. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised,

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and excludes termination options. To the extent that the Company’s agreements have variable lease payments, the Company includes variable lease payments that depend on an index or a rate and excludes those that depend on facts or circumstances occurring after the commencement date, other than the passage of time. Lease expense for these leases is recognized on a straight-line basis over the lease term. The Company has elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, the Company also excluded short-term leases (term of 12 months or less) from the balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component for certain asset classes. Effective January 1, 2022, the Company recorded the impact on its condensed consolidated balance sheet from the recognition of ROU asset and lease liability of $10,344.

The Company’s facility leases have remaining lease terms ranging from less than one year to six years, some of which include options to extend the lease term for up to six years.

The table below represents lease-related assets and liabilities recorded on the condensed consolidated balance sheet:

	Balance Sheet Classification	September 30, 2022
Assets
Operating lease right-of-use assets	Operating lease right-of-use assets	$	9,839
Liabilities
Operating lease liabilities (current)	Accrued expenses and other current liabilities	$	1,632
Operating lease liabilities (noncurrent)	Operating lease liabilities	7,879
Total lease liabilities		$	9,511

Lease Costs

The following lease costs were included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022:

	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Operating lease cost	$	607	$	1,824
Short-term lease cost	11		114
Variable lease cost	43		140
Total lease cost	$	661	$	2,078

Supplemental Information

The table below presents supplemental information related to operating leases as of September 30, 2022:

Cash paid for amounts included in the measurement of operating lease liabilities	$	533
Right-of-use assets obtained in exchange for new operating lease liabilities	$	909
Weighted average remaining lease term	7.37 years
Weighted average discount rate	4.78		%

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as September 30, 2022:

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2022 (remaining three months)	$	530
2023	1,947
2024	1,431
2025	1,310
2026	1,308
Thereafter	4,819
Total minimum lease payments	11,345
Less imputed interest	(1,834)
Present value of future minimum lease payments	9,511
Less current obligations under leases	(1,632)
Long-term lease obligations	$	7,879

Disclosures related to Periods Prior to Adoption of New Lease Standard

Minimum lease payments under operating leases with non-cancelable terms in excess of one year as of December 31, 2021, were as follows:

2022	$	1,869
2023	1,674
2024	1,303
2025	1,177
2026	1,201
Thereafter	1,686
Total minimum lease payments	$	8,910

17.    Commitments and Contingencies

Litigation

The Company may be a party to routine claims or litigation incidental to its business. The Company does not believe that it is a party to any pending legal proceeding that is likely to have a material adverse effect on its business, financial condition, results of operations or cash flows.

Royalty Agreement

The Company has entered into license agreements to use certain technology in its design and manufacture of its products. The agreements require royalty fees for each semiconductor sold using the licensed technology. Total royalty expense incurred in connection with these contracts during the three months ended September 30, 2022 and 2021 was $368 and $221, respectively. Total royalty expense incurred in connection with these contracts during the nine months ended September 30, 2022 and 2021 was $872 and $561, respectively. These expenses are included in cost of goods sold in the condensed consolidated statements of operations. Accrued royalties of $933 and $264 are included in accrued expenses in the Company’s condensed consolidated balance sheets as of September 30, 2022 and consolidated balance sheets as of December 31, 2021, respectively.

Tax Distributions

To the extent the Company has funds legally available, the board of directors will approve distributions to each member of ADK LLC, prior to March 15 of each year, in an amount per unit that, when added to all other distributions made to such member with respect to the previous calendar year, equals the estimated federal and state income tax liabilities applicable to such member as the result of its, his or her ownership of the units and the associated net taxable income allocated with respect to such units for the previous calendar year. There were no distributions approved by the board of directors or paid by the Company during the nine months ended September 30, 2022 and 2021.

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18. Supplemental Financial Information

Accrued expenses and other current liabilities consist of the following:

	September 30, 2022		December 31, 2021
Accrued purchase consideration from business combinations	$	2,500	$	7,500
City Semi deferred compensation	—		833
Contingent consideration	4,830		—
Operating lease liabilities, current	1,632		—
Accrued royalties	933		264
Other (1)	5,690		6,025
Accrued expenses and other current liabilities	$	15,585	$	14,622

(1) Amount represents accruals for various operating expenses such as professional fees, open purchase orders, current lease liabilities and other estimates that are expected to be paid within the next 12 months.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF INDIE

Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us, or “our” refer to the business of indie and its subsidiaries prior to the consummation of the Transaction. 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. You should read this discussion and analysis in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q. Certain amounts may not foot due to rounding. This discussion and analysis contains forward-looking statements. See “Forward Looking Statements.” We urge you to consider the risks and uncertainties discussed in this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2021, under the heading “Risk Factors” and in the other documents we have filed with the SEC in evaluating our forward-looking statements. We assume no obligation to update any of these forward-looking statements except as required by law. 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. These functions represent the core underpinnings of both electric and autonomous vehicles, while the advanced user interfaces are transforming the in-cabin experience to mirror and seamlessly connect to the mobile platforms we rely on every day. We are an approved vendor to Tier 1 automotive suppliers and our platforms can be found in marquee automotive manufacturers around the world. 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 and Munich, Germany; Cambridge, England; Edinburgh, Scotland; Rabat, Morocco; Haifa, Israel; Quebec City, Canada; Seoul, South Korea; Tokyo, Japan and several locations throughout China.

We maintain design centers for our semiconductor engineers and designers in the United States, Argentina, Hungary, Germany, Scotland, Morocco, Israel, 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 nine months ended September 30, 2022 and 2021, approximately 53% and 67%, 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. 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. 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. We implemented this program for the flexibility that it provides to the capital markets and to best time its equity capital needs. As of September 30, 2022, we have raised gross proceeds of $12.3 million and issued 1,506,892 shares of Class A common stock at an averaged per-share sales price of $8.14 through this program. For the three months ended September 30, 2022, we incurred total issuances costs of $0.3 million.

Recent Acquisitions

Symeo GmbH

On October 21, 2021, we entered into a definitive agreement with Analog Devices (“ADI”) to acquire Symeo GmbH (“Symeo”). The acquisition was approved by the German government on January 4, 2022 and closed on the same day. 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 fair market value of this equity-based earn-out was $8.2 million on January 4, 2022.

See Note 2 - Business Combinations for additional description of this acquisition.

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Impact of COVID-19 and Macroeconomic Conditions

The impact of the COVID-19 pandemic as well as macroeconomic conditions, including rising interest rates, inflationary pressures, and volatility in the global financial markets have affected business conditions in our industry. The duration, severity, and future impact of these conditions cannot be predicted; therefore the full extent to which these conditions will directly or indirectly impact the Company’s business operations, results of operations and financial condition is uncertain. Furthermore, like many companies in the semiconductor industry, we are experiencing various supply constraints, including global supply imbalances. While we are working with our global supply chain partners to mitigate this risk, the duration and extent of the supply chain disruptions remain uncertain. Refer to Part I, Item 1A of our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021 under the heading “Risk Factors” for more information.

OPERATING RESULTS

Comparison of the Three Months Ended September 30, 2022 and 2021

Revenue

	Three Months Ended September 30,
	2022				2021
(in thousands)	$		% of Revenue		$		% of Revenue		$ Change		% Change
Revenue:
Product revenue	$	24,425	81	%	$	11,099	91	%	$	13,326	120	%
Contract revenue	5,591		19	%	1,058		9	%	4,533		428	%
Total revenue	$	30,016	100	%	$	12,157	100	%	$	17,859	147	%

Revenue for the three months ended September 30, 2022 was $30.0 million, compared to $12.2 million for the three months ended September 30, 2021, an increase of $17.9 million or 147%, which was primarily driven by a $13.3 million increase in product revenue as well as an increase in contract revenue. The increase in product revenue was due primarily to 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 contract revenue of $4.5 million or 428% was primarily due to commencement of a large multi-year non-recurring engineering project with a top customer in the current year.

Operating Expenses

	Three Months Ended September 30,
	2022				2021
(in thousands)	$		% of Revenue		$		% of Revenue		$ Change		% Change
Operating expenses:
Cost of goods sold	$	14,970	50	%	$	6,930	57	%	$	8,040	116	%
Research and development	30,229		101	%	15,043		124	%	15,186		101	%
Selling, general, and administrative	10,676		36	%	11,442		94	%	(766)		(7)	%
Total operating expenses	$	55,875	186	%	$	33,415	275	%	$	22,460	67	%

Cost of goods sold for the three months ended September 30, 2022 was $15.0 million, compared to $6.9 million for the three months ended September 30, 2021. The increase of $8.0 million or 116% was primarily due to a $4.1 million increase in product shipments in connection with the increase in products sold, as described above, a $1.7 million increase due to change in product mix and a $2.6 million increase in product cost. Total cost of goods sold for the three months ended September 30, 2022 also included $1.5 million in amortization related to acquired intangible assets as a result of the recent business combinations.

Research and development expense for the three months ended September 30, 2022 was $30.2 million, compared to $15.0 million for the three months ended September 30, 2021. The increase of $15.2 million or 101% was primarily due to a $6.6

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million increase in personnel costs as we increased the number of employees working on product development, a $6.3 million increase in product development costs, $4.5 million increase in share-based compensation expense. The increase in share-based compensation expense was primarily driven by the additional awards issued since the prior year. 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 three months ended September 30, 2022 was $10.7 million, compared to $11.4 million for the three months ended September 30, 2021. The decrease of $0.8 million or 7% was primarily due to a $0.7 million adjustment recorded to amortization for intangible assets as a result of finalizing the purchase accounting for the business combinations of TeraXion and OnDesign. 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.

Other income (expense), net

	Three Months Ended September 30,
	2022		2021
(in thousands)	$		$		$ Change		% Change
Other income (expense), net:
Interest income	$	612	$	16	$	596	3725	%
Interest expense	(166)		(25)		(141)		564	%
Loss from change in fair value of warrants	(19,059)		(40,401)		21,342		(53)	%
Loss from change in fair value of earn-out liabilities	—		(45,496)		45,496		(100)	%
Loss from change in fair value of contingent considerations	(121)		(20)		(101)		505	%
Other income (expense)	24		(1,013)		1,037		(102)	%
Total other income (expense), net	$	(18,710)	$	(86,939)	$	68,229	(78)	%

Interest income for the three months ended September 30, 2022 was $0.6 million, compared to $16 thousand for the three months ended September 30, 2021. Interest income increased in the current period primarily as a result of increases in interest rates associated with the money market funds and marketable securities.

For the three months ended September 30, 2022 and 2021, we recognized gains (losses) from change in fair value for warrants, earn-out liabilities, and contingent considerations. The gains (losses) recorded for both the three months ended September 30, 2022 and 2021 represent the following:

i) Warrants: During the three months ended September 30, 2022, we recognized an unrealized loss from change in fair value of our warrants of $19.1 million, which reflected the increase in fair value of our warrant liability. The increase in fair value of our warrant liability of $19.1 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq to $7.32 per share on September 30, 2022 from $5.70 per share on June 30, 2022. In the same period in the prior year, the increase in fair value was a result of the closing price our Class A common stock listed on the Nasdaq to $12.31 per share on September 30, 2021 from $9.88 per share on June 30, 2021.

ii) Earn-out liabilities: The increase in fair value of our earn-out liabilities of $45.5 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq to $12.31 per share on September 30, 2021 from $9.88 per share on June 30, 2021. On November 9, 2021, the first earn-out milestone was achieved, which eliminated the variability in the arrangement that previously prevented this instrument to be equity-classified. As a result, the earn-out liabilities were recorded to Additional Paid-in Capital at its fair value in November 2021 and no changes in fair value were recorded going forward.

For the three months ended September 30, 2021, other expense was primarily related to a mark-to-market loss we recorded in relation to a currency forward contract. On September 3, 2021, we entered into a CAD $85 million currency forward contract to hedge against the potential fluctuations in exchange rate between the Canadian dollar and U.S. dollar in preparation for the closing of the TeraXion acquisition in October 2021. This contract’s fair value was remeasured as of period-end, which resulted in an unrealized loss of $1.2 million and represented the change in the exchange rate between the contract issuance date and period-end. This unrealized loss was offset to a de minimis amount in the fourth quarter of 2021 as this currency forward contract was settled upon the completion of the acquisition of TeraXion in October 2021.

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Income Tax Expense

We evaluate our estimated annual effective tax rate (“AETR”) on a quarterly basis based on current and forecasted operating results. The relationship between our income tax provision or benefit and our pretax book income or loss can vary significantly from period to period. This is due to factors such as the overall level of pretax book income or loss, changes in the blend of jurisdictional income or loss that is taxed at different rates, changes in domestic and foreign valuation allowances and changes in non-controlling interest. Consequently, our AETR may fluctuate significantly period to period and may make quarterly comparisons less than meaningful.

Income tax expense for the three months ended September 30, 2022 were due to results of foreign operations. Tax expense recorded for the same period last year was also the result of foreign operations.

Comparison of the Nine Months Ended September 30, 2022 and 2021

Revenue

	Nine Months Ended September 30,
	2022				2021
(in thousands)	$		% of Revenue		$		% of Revenue		$ Change		% Change
Revenue:
Product revenue	$	62,963	81	%	$	27,470	93	%	$	35,493	129	%
Contract revenue	14,807		19	%	1,981		7	%	12,826		647	%
Total revenue	$	77,770	100	%	$	29,451	100	%	$	48,319	164	%

Revenue for the nine months ended September 30, 2022 was $77.8 million, compared to $29.5 million for the nine months ended September 30, 2021, an increase of $48.3 million or 164%, which was primarily driven by a $35.5 million increase in product revenue as well as an increase in contract revenue. The increase in product revenue was due primarily to higher product volume (units sold) given the continued growth in demand from our customers globally. Change in product mix and increases in ASP also contributed to the increase in product revenue year-over-year. The increase in contract revenue of $12.8 million or 647% was primarily due to commencement of a large multi-year non-recurring engineering project with a top customer in the current year.

Operating expenses

	Nine Months Ended September 30,
	2022				2021
(in thousands)	$		% of Revenue		$		% of Revenue		$ Change		% Change
Operating expenses:
Cost of goods sold	$	44,340	57	%	$	17,097	58	%	$	27,243	159	%
Research and development	88,195		113	%	37,206		126	%	50,989		137	%
Selling, general, and administrative	35,403		46	%	23,015		78	%	12,388		54	%
Total operating expenses	$	167,938	216	%	$	77,318	263	%	$	90,620	117	%

Cost of goods sold for the nine months ended September 30, 2022 was $44.3 million, compared to $17.1 million for the nine months ended September 30, 2021. The increase of $27.2 million or 159% was primarily due to a $11.3 million increase in product shipments in connection with the increase in products sold as described above, a $5.3 million increase due to change in product mix and a $5.0 million increase in product cost. Total cost of goods sold for the nine months ended September 30, 2022 also included $5.0 million in amortization related to acquired intangible assets as a result of the recent business combinations.

Research and development (“R&D”) expense for the nine months ended September 30, 2022 was $88.2 million, compared to $37.2 million for the nine months ended September 30, 2021. This increase of $51.0 million or 137% was primarily due to a $18.6 million increase in personnel costs as we increased the number of employees working on product development, a $15.9

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million increase in share-based compensation expense, $12.7 million increase in product development costs and a $2.7 million increase in amortization expense related to R&D project licenses and acquired intangible assets from business combinations. We started recognizing share-based compensation expense in the second quarter of the prior year as it required the consummation of the Transaction in June 2021 and implementation of the 2021 Omnibus Equity Plan in August 2021 to be recognized. 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 nine months ended September 30, 2022 was $35.4 million, compared to $23.0 million for the nine months ended September 30, 2021. The increase of $12.4 million or 54% was primarily due to a a $4.8 million increase in personnel costs due to increase in headcounts, a $2.0 million increase in intangible asset amortization from business combinations, $2.4 million increase in outside professional fees and a $0.7 million increase in share-based compensation expense. We started recognizing share-based compensation expense in the second quarter of the prior year as it required the consummation of the Transaction in June 2021 and implementation of the 2021 Omnibus Equity Plan in August 2021 to be recognized. 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.

	Nine Months Ended September 30,
	2022		2021
(in thousands)	$		$		$ Change		% Change
Other income (expense), net:
Interest income	$	820	$	36	$	784	2178	%
Interest expense	(491)		(1,175)		684		(58)	%
Gain from change in fair value of SAFEs	—		21,600		(21,600)		(100)	%
Gain (loss) from change in fair value of warrants	48,595		(29,085)		77,680		(267)	%
Loss from change in fair value of earn-out liabilities	—		(27,557)		27,557		(100)	%
Gain (loss) from change in fair value of contingent considerations	3,546		(120)		3,666		(3055)	%
Gain from extinguishment of debt	—		304		(304)		(100)	%
Other income (expense)	3		(914)		917		(100)	%
Total other income (expense), net	$	52,473	$	(36,911)	$	89,384	(242)	%

Interest income for the nine months ended September 30, 2022 was $0.8 million, increased by $0.8 million or 2178% from the nine months ended September 30, 2021. The increase was a result of higher cash balances held in interest bearing accounts.

Interest expense for the nine months ended September 30, 2022 was $0.5 million, compared to $1.2 million for the nine months ended September 30, 2021. Interest expense relates to the routine cash and non-cash interest expenses on outstanding debt obligations. The decrease was primarily driven by all historical long-term debts held by indie before the Transaction being paid off as of June 30, 2021 post our consummation of the Transaction.

For the nine months ended September 30, 2022 and 2021, we recognized gains (losses) from change in fair value for simple agreements for future equity (“SAFE’s”), warrants, earn-out liabilities, and contingent considerations. The gains (losses) recorded for the both the nine months ended September 30, 2022 and 2021 represent the following:

i) SAFEs: Upon the closing of the Transaction on June 10, 2021, the SAFE holders converted their SAFEs to Class A common stock of indie. The gain of $21.6 million for the nine months ended September 30, 2021 represents the decrease in fair value in SAFEs from December 31, 2020 to June 10, 2021. No change in fair value of SAFEs is recorded going forward.

ii) Warrants: During the nine months ended September 30, 2022, we recognized an unrealized gain from change in fair value of our warrants of $48.6 million, which reflected the decrease in fair value of our warrant liability. The decrease in fair value of our warrant liability of $48.6 million was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq to $7.32 per share on September 30, 2022 from $11.99 per share on December 31, 2021. In the same period in the prior year, the increase in fair value was a result of the closing price our Class A common stock listed on the Nasdaq to $12.31 per share on September 30, 2021 from $10.87 per share on June 10, 2021.

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iii) Earn-out liabilities: The increase in fair value of our earn-out liabilities of $27.6 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq to $12.31 per share on September 30, 2021 from $10.87 per share on June 10, 2021. On November 9, 2021, the first earn-out milestone was achieved, which eliminated the variability in the arrangement that previously prevented this instrument to be equity-classified. As a result, the earn-out liabilities were recorded to Additional Paid-in Capital at its fair value in November 2021 and no changes in fair value were recorded going forward.

iv) Contingent considerations: During the nine months ended September 30, 2022, we recognized an unrealized net gain from change in fair value of our contingent considerations of $3.5 million. During the nine months ended September 30, 2022, management determined that the product design specified in the contingent consideration arrangement would be replaced with a new product design that is better aligned with customer requirements and which will not be eligible for either of the contingent considerations. Accordingly, the fair value for both the Tapeout and Design Win were reduced to zero, resulting in a gain of $3.9 million.

For the nine months ended September 30, 2021, other expense was primarily related to a currency forward contract executed in preparation for the closing of the TeraXion acquisition in October 2021. At the time, we entered into a CAD $85 million currency forward contract on September 3, 2021 to hedge against the potential fluctuations in exchange rate between the Canadian dollar and U.S. dollar. This contract’s fair value was remeasured as of period-end, which resulted in an unrealized loss of $1.2 million and represented the change in the exchange rate between the contract issuance date and period-end and is recorded as part of Other income (expense) for the nine months ended September 30, 2021. This unrealized loss was offset to a de minimis amount in the fourth quarter of 2021 as this currency forward contract was settled upon the completion of the acquisition of TeraXion in October 2021.

Income Tax Benefits

We evaluate our estimated AETR on a quarterly basis based on current and forecasted operating results. The relationship between our income tax provision or benefit and our pretax book income or loss can vary significantly from period to period. This is due to factors such as the overall level of pretax book income or loss, changes in the blend of jurisdictional income or loss that is taxed at different rates, changes in domestic and foreign valuation allowances and changes in non-controlling interest. Consequently, our AETR may fluctuate significantly period to period and may make quarterly comparisons less than meaningful.

Income tax benefits for the nine months ended September 30, 2022 were due to results of foreign operations. Tax expense recorded for the same period last year was also the result of foreign operations.

JOBS Act

The JOBS Act permits an emerging growth company (“EGC”) such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use the extended transition period under the JOBS Act until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date on which we are deemed to be a “large accelerated filer,” which would occur if the market value of our equity securities held by nonaffiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering, or December 31, 2024.

We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for public companies.

Liquidity and Capital Resources

Historically, we derive liquidity primarily from debt and equity financing activities as we have historically had negative cash flows from operations. On June 10, 2021, we completed the Transaction, which resulted in approximately $341.3 million of net cash proceeds. On November 5, 2021, we also entered into an amendment to the PacWest loan agreement that (i) increased the

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maximum borrowing capacity under the revolving line of credit to $20 million, (ii) limited the security interests of the bank to the cash collateral set at 102.5% of the drawn amount of the loan, (iii) removed various reporting and restrictive covenants, (iv) extended the maturity date to November 4, 2022 and (iv) reduced the interest rate to 2.1% per annum. We currently do not have any outstanding balance under this revolving line of credit.

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 accounts receivable, and general and administrative expenditures. In addition, from time to time, we use cash to fund our mergers and acquisitions as well as for purchases of various capital and software assets. Our immediate sources of liquidity are cash, cash equivalents and our revolving credit facility. We believe that our existing cash and cash equivalents, funds anticipated to be 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. 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. 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.

On August 26, 2022, we entered into the ATM Agreement with the Sales Agents relating to shares of our Class A common stock. 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. We implemented this program for the flexibility that it provides to the capital markets and to best time its equity capital needs. As of September 30, 2022, we have raised gross proceeds of $12.3 million and issued 1,506,892 shares of Class A common stock at an averaged per-share sales price of $8.14 through this program and had approximately $137.7 million available for future issuances under the ATM Agreement. For the three months ended September 30, 2022, indie incurred total issuances costs of $0.3 million.

As of September 30, 2022, our balance of cash and cash equivalents was $150.4 million.

Acquisitions

Since the closing of the Transaction, we have completed multiple acquisitions. We continually assess and plan to selectively pursue inorganic growth opportunities that are complementary to our existing technologies and portfolio of products and/or accelerate our growth initiatives. See Note 2 - Business Combinations for additional information about our recent acquisitions.

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. For example, in January, 2022 we completed the acquisition of Symeo GmbH, for which we made an initial cash payment of approximately $10.0 million. An additional $10.0 million will be due in 2023, as well as an equity based earn out of shares of indie Class A common stock based on future revenue growth. In addition, in October 2021, we acquired ON Design Israel Ltd. for $5.0 million in cash paid upon close (net of cash acquired), $5.0 million paid as of September 30, 2022, and a final payment of $2.5 million was made in October 2022.

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.

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The following table summarizes our condensed consolidated cash flows for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended September 30,				Change		Change
	2022		2021		$		%
Net cash used in operating activities	$	(58,815)	$	(36,913)	$	(21,902)	59	%
Net cash used in investing activities	(13,213)		(2,452)		(10,761)		439	%
Net cash provided by financing activities	2,531		344,339		(341,808)		(99)	%

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.

For the nine months ended September 30, 2022, net cash used in operating activities was $58.8 million, which included net loss of $37.0 million and reflected adjustments for certain non-cash items and changes in operating assets and liabilities. Non-cash decreases primarily consisted of $52.4 million of net gains resulting from a change in fair value for warrants and contingent considerations. These non-cash decreases were partially offset by $30.8 million in share-based compensation expense and $11.2 million in depreciation and amortization. Changes in operating assets and liabilities from operations used $16.1 million of cash, primarily driven by an increase in accounts receivable, inventory and prepaid and other current assets.

Cash used in operating activities during the nine months ended September 30, 2021 was $36.9 million, which included net loss of $84.8 million and was adjusted for certain non-cash items and changes in operating assets and liabilities. Non-cash charges primarily consisted of $36.4 million of gains resulting from a change in fair values for SAFEs, warrants, earn-out liabilities, contingent considerations and currency forward contract, and a $0.3 million net gain from extinguishment of long-term debts and forgiveness from the PPP loan. These non-cash decreases were partially offset by $14.2 million in share-based compensation expense and $2.4 million in depreciation and amortization. Changes in operating assets and liabilities from operations used $5.5 million of cash, primarily driven by an increase in accounts receivable, inventory and prepaid and other current assets.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 was $13.2 million and $2.5 million, respectively. During the period ended September 30, 2022, the decrease in cash was primarily due to the acquisition of Symeo for $8.7 million, net of cash acquired, as well as an increase in cash used of $4.5 million for the purchase of capital expenditures. During the period ended September 30, 2021, our primary investing activities consisted 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.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2022 was $2.5 million, which was primarily attributed to $12.0 million of net proceeds from the issuance of common stocks through the ATM, partially offset by $5.0 million paid to OnSemi as part of the deferred payments in relation to the acquisition of ON Design Israel Ltd, $3.2 million of payments on financed software and a $1.0 million payment of City Semi deferred compensation.

Net cash provided by financing activities for the nine months ended September 30, 2021 of $344.3 million was primarily attributed to $377.7 million of 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. These increases in cash were partially offset by $19.9 million of transaction costs incurred in connection with the Transaction and $15.0 million for the repayment of long-term debt and related termination fees. Total transaction costs incurred in relation to the Transaction was approximately $44.5 million.

Future Material Cash Obligations

Following is a summary of our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, as of September 30, 2022:

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	Future Estimated Cash Payments Due by Period
Contractual Obligations	Less than 1 year		1 - 3 years		3-5 years		>5 years		Total
Debt obligations	$	13,186	$	2,712	$	1,469	$	—	$	17,367
Operating leases	2,053		2,844		2,593		3,855		11,345
Deferred business acquisition payments	2,500		—		—		—		2,500
Total contractual obligations	$	17,739	$	5,556	$	4,062	$	3,855	$	31,212

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments in applying our most critical accounting policies that can have a significant impact on the results we report in our financial statements. The SEC has defined critical accounting estimates as those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on a registrant’s financial condition or results of operations. 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. 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. The Company’s critical accounting policies and estimates are disclosed under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

There have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K filed for the year ended December 31, 2021.

Recently Issued and Adopted Accounting Pronouncements

We describe the recently issued and adopted accounting pronouncements that apply to us in Note 1 - Nature of Business and Basis to our condensed consolidated financial statements presented herein.

ITEM 3. 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. Repayments of such principal amounts are neither planned nor anticipated in the foreseeable future and are therefore treated analogous to equity for accounting purposes. As a result, the foreign exchange gains and losses on these borrowings are excluded from the determination of Net income (loss) and recorded as a component of Accumulated other comprehensive income (loss) in the condensed consolidated balance sheets. A cumulative foreign currency translation loss of $18.3 million as of September 30, 2022 and $61 thousand as of December 31, 2021. The year-over-year change was driven by the cumulative foreign currency translation loss recorded in relation to permanently invested intercompany loans as of September 30, 2022 as the US dollar strengthened against foreign currencies.

As our international operations grow, our risks associated with fluctuation in foreign currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar could increase the costs of our international expansion and operation. To mitigate the risk, we plan to enter into additional foreign currency forward contracts in the foreseeable future.

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Investment and Interest Rate Risk

Our exposure to interest rate and general market risks relates principally to our cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that totals approximately $150.4 million as of September 30, 2022.

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.

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.

ITEM 4. CONTROLS AND PROCEDURES

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 Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2022 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 September 30, 2022.

Per Rule 13a-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.

Material Weaknesses in Internal Control over Financial Reporting and Remediation Plan

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an assessment of our internal control over financial reporting as of December 31, 2021, based on the framework in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 COSO Framework”). As a result of this evaluation, management identified the following material weaknesses in internal control over financial reporting as of December 31, 2021, which remain unremediated as of September 30, 2022:

a.Control Environment: The Company did not have a sufficient number of personnel with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting in accordance with the 2013 COSO Framework.

b.Risk Assessment: The Company did not have an effective risk assessment process that defined clear financial reporting objectives and evaluated risks, including identifying and analyzing risks related to non-routine transactions such as mergers and acquisitions, at a sufficient level of detail to identify all relevant risks of material misstatement across the Company or within each acquired entity.

c.Information and Communication: The Company did not have effective information control processes, including those related to the use of manual spreadsheets, to ensure the reliability of information used in certain computations related to financial reporting.

d.Monitoring Activities: The Company did not have effective monitoring activities to assess the operation of internal control over financial reporting, including the continued appropriateness of control design and level of documentation maintained to support control effectiveness.

e.Control Activities: As a consequence of the aforementioned deficiencies, the Company did not have effective control activities related to the design and operation of process-level controls across certain key financial reporting processes.

The Company’s remediation efforts related to the foregoing material weaknesses are ongoing, and the Company will continue its initiatives to implement and document policies and procedures and strengthen the Company’s internal control environment.

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Remediation of the identified material weaknesses and strengthening the Company’s internal control environment will require a substantial effort throughout 2022 and, possibly, the first quarter of 2023. 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 2022 will not have operated for a sufficient period of time in 2022 to test their operating effectiveness as part of the Company’s evaluation of internal control over financial reporting as of December 31, 2022 and may extend to the following year.

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

i.We will continue to seek, train and retain individuals that 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; and

ii.We have launched a company-wide initiative to implement a new enterprise resource planning (“ERP”) system capable of automating some of our manual financial reporting processes, enhancing our information technology control environment, and mitigating some of the internal control gaps and limitations that cannot be addressed by the current system; and

iii.We have engaged third party specialists to conduct a comprehensive review, update and enhancement of the design and documentation of key business processes to ensure the components of internal control over financial reporting are present and functioning in accordance with the 2013 COSO Framework; and

iv.We are in the process of establishing an internal audit function which will perform routine risk assessments and gap analysis of our control environment and report regularly to the audit committee on the progress and results of our remediation plan, including the identification, status, and resolution of internal control deficiencies.

We believe that our remediation plan will be sufficient to address the identified material weaknesses and strengthen our internal control over financial reporting. 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 “Management's Remediation Plan”, 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 during the three months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. 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. 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 1A. RISK FACTORS

The business, financial condition, and operating results of the Company can be affected by many factors, whether currently known or unknown, including but not limited to those described in Part 1, Item 1A in the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2021 under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past or the anticipated future financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results, and stock price. There have been no material changes to the Company’s risk factors disclosed under the heading “Risk Factors” in Part 1, Item 1A in the Company’s Annual Report on Form 10-K for the Fiscal Year ended December 31, 2021 filed on April 11, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On various dates between July 28, 2022 and September 16, 2022 the Company issued an aggregate of 2,670,232 shares of its Class A common stock to three ADK Minority Holders in exchange for an equal number of their ADK LLC units. 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”). In connection with such exchange, 2,633,027 shares of Class V common stock held by the ADK Minority Holders were cancelled and 37,205 shares of ADK LLC units were exchanged to Class A common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS.

(d) Exhibits

Exhibit Number	Description of Exhibit
2.1	Master Transactions Agreement, dated effective December 14, 2020, by and among Surviving Pubco, Thunder Bridge II, the Merger Subs named therein, indie, the ADK Blocker Group, ADK Service Provider Holdco, and the indie Securityholder Representative named therein, and also included as Annex B-1 to the proxy statement/prospectus (previously filed as Exhibit 2.1 of Form 8-K filed by Thunder Bridge II with the SEC on December 15, 2020).
2.2	Amendment to Master Transactions Agreement, dated effective May 3, 2021, by and among Surviving Pubco, Thunder Bridge II, the Merger Subs named therein, indie, the ADK Blocker Group, ADK Service Provider Holdco, and the indie Securityholder Representative named therein (previously filed by Thunder Bridge II as Exhibit 2.2 of Form S-4/A filed with the SEC on May 4, 2021)
2.3	Share Purchase Agreement, dated as of August 27, 2021, by and among indie, TeraXion, Purchaser and certain stockholders of TeraXion and their ultimate beneficial owners (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by the registrant with the SEC on September 2, 2021)

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3.1	Amended and Restated Certificate of Incorporation of indie Semiconductor, Inc., filed with the Secretary of State of Delaware on June 10, 2021 (incorporated by reference to Exhibit 3.1 of the Form 8-K filed by the registrant with the SEC on June 16, 2021)
3.2	Amended and Restated Bylaws of indie Semiconductor, Inc. (incorporated by reference to Exhibit 3.2 of the Form 8-K filed by the registrant with the SEC on June 16, 2021)
10.1	Sales Agreement, by and among the Registrant and B. Riley Securities, Inc., Craig-Hallum Capital Group LLC and Roth Capital Partners, LLC dated August 6, 2022 (incorporated by reference to Exhibit 1.2 of the Form S-3 filed by the registrant with the SEC on August 26, 2022).
10.2	Amended and restated indie Semiconductor, Inc. 2021 Omnibus Equity Incentive Plan
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 .INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101 .SCH	Inline XBRL Taxonomy Extension Schema Document
101 .CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101 .DEF	Inline XBRL Taxonomy Definition Linkbase Document
101 .LAB	Inline XBRLTaxonomy Extension Label Linkbase Document
101 .PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	INDIE SEMICONDUCTOR, INC.
November 10, 2022	By:	/s/ Thomas Schiller
		Name:	Thomas Schiller
		Title:	Chief Financial Officer & EVP of Strategy (Principal Financial Officer)

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