XML 27 R11.htm IDEA: XBRL DOCUMENT
v3.23.1

Business Combinations | 12 Months Ended
--- | ---
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business CombinationsThe 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 Symeo, TeraXion and ON Design Israel as of December 31, 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 |  | 7,836 |  |  | — |  |  | — |
Contingent consideration |  | — |  |  | — |  |  | 4,000 |
Net consideration |  | $ | 26,215 |  |  | $ | 157,723 |  |  | $ | 16,474 |
Fair value of net assets and liabilities assumed: |  |  |  |  |  |
Current assets other than cash |  | 2,767 |  |  | 7,627 |  |  | 119 |
Property and equipment |  | 1,039 |  |  | 4,992 |  |  | 1,424 |
Developed technology |  | 5,060 |  |  | 17,305 |  |  | — |
In-progress research & development |  | 4,060 |  |  | — |  |  | 10,100 |
Customer relationships |  | 4,510 |  |  | 13,059 |  |  | — |
Backlog |  | 350 |  |  | 16 |  |  | — |
Trade name |  | 2,590 |  |  | 6,946 |  |  | — |
Other non-current assets |  | 36 |  |  | — |  |  | 66 |
Current liabilities |  | (1,461) |  |  | (5,840) |  |  | (537) |
Deferred revenue |  | — |  |  | (1,025) |  |  | — |
Deferred tax liabilities, non-current |  | (1,055) |  |  | (10,030) |  |  | — |
Long-term debt |  | — |  |  | (7,580) |  |  | — |
Total fair value of net assets acquired |  | 17,896 |  |  | 25,470 |  |  | 11,172 |
Goodwill |  | $ | 8,319 |  |  | $ | 132,253 |  |  | $ | 5,302 |
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 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. 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 advanced driver-assistance systems (“ADAS”) and autonomous vehicles. The goodwill is not expected to be deductible for tax purposes. As of December 31, 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 decrease the amortization of intangible assets of $2,491 in the consolidated statement of operations during the three months ended September 30, 2022, of which $617 would have been recorded during the three months ended December 31, 2021 and the remainder during the six months ended June 30, 2022, 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. 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. The amounts of revenue and earnings of TeraXion included in the Company’s consolidated statement of operations from the acquisition date of October 12, 2021 through December 31, 2021 are $6,075 and $(1,474), respectively. For the year ended December 31, 2021, indie incurred approximately $1,640 of acquisition-related costs, which were primarily legal expense and recorded as part of the Selling, General and Administrative expenses. Total acquisition-related costs incurred for the year ended December 31, 2022 was de minimus. 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:
| Year ended
| December 31, 2021
Combined revenue | $ | 66,788 |
Combined net loss before income taxes | (126,350) |
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. 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. (“ON Design Israel”) for $4,974 in cash paid upon close (net of cash acquired), $7,500 was paid in 2022, and up to $7,500 will be paid 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. As of December 31, 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) |
Goodwill | 9,089 |  |  | (3,787) |  |  | 5,302 |
Changes in fair value of fixed assets, current liabilities, deferred tax liabilities and non-current liabilities 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 decrease the amortization of intangible assets of $169 in the consolidated statement of operations during the twelve months ended December 31, 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. For the year ended December 31, 2021, indie incurred approximately $365 of acquisition-related costs, which were primarily legal expenses and recorded as part of the Selling, General and Administrative expenses. Total acquisition-related costs incurred for the year ended December 31, 2022 was de minimus. 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 consideration 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 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 contingent considerations. Accordingly, the fair value of Tapeout and Design Win contingent consideration liabilities were reduced to zero as of December 31, 2022. Pro forma financial information for the year ended December 31, 2021 for ON Design Israel is not disclosed as the results are not material to the Company’s 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 $7,836 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 an 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 consolidated statements of operations. The fair value of these contingent consideration liabilities was $2,000 and $4, respectively, as of December 31, 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 consolidated balance sheet as of December 31, 2022. As of December 31, 2022, the Company finalized the opening net assets acquired and goodwill as follows:
| Preliminary Valuation |  | Adjustment |  | Final Valuation
Purchase price - contingent considerations | $ | 8,204 |  |  | $ | (368) |  |  | $ | 7,836 |
Inventory | 2,020 |  |  | (90) |  |  | 1,930 |
Developed technology | 6,631 |  |  | (1,571) |  |  | 5,060 |
In-progress research & development | 2,170 |  |  | 1,890 |  |  | 4,060 |
Customer relationships | 2,411 |  |  | 2,099 |  |  | 4,510 |
Backlog | 603 |  |  | (253) |  |  | 350 |
Trade name | 965 |  |  | 1,625 |  |  | 2,590 |
Deferred tax liability | (2,935) |  |  | 1,880 |  |  | (1,055) |
Goodwill | 14,267 |  |  | (5,948) |  |  | 8,319 |
Change in the equity-based earn-out was driven by updating the valuation methodology from probability-weighted method to Monte Carlo Simulations analysis. The Company initially used the probability-weighted method to determine the fair value of the equity-based earn out as certain information was not available to conduct the Monte Carlo Simulations analysis. Changes in fair value of inventory, fixed assets and deferred tax liabilities 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 increase the amortization of intangible assets of $271 in the consolidated statement of operations during the three months ended December 31, 2022 that would have been recorded during the first nine months ended September 30, 2022 if the adjustment to the intangible assets had been recognized as of the date of the acquisition. Four separate developed technologies relating to industrial radar distance sensor, automotive radar sensor, telemetry power unit and legacy products offered by Symeo were identified at the time of the acquisition. Developed technologies were each 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 for the identified assets range between three years and seven 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 Symeo. 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 Symeo’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 “Symeo” 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. The fair value of IPR&D, was determined using the 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. 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. 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. 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 for the year ended December 31, 2022. Pro forma financial information for the twelve months ended December 31, 2022 for Symeo is not disclosed as the results are not material to the Company’s consolidated financial statements.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration