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Business Combinations | 6 Months Ended
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Jun. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations The Company acquired TERAXION Inc. (“TeraXion”) and ON Design Israel Ltd. (“ON Design Israel”) in October 2021, Symeo in January 2022, Silicon Radar in February 2023, and GEO in March 2023. 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 final allocation of the purchase consideration to the assets acquired and liabilities assumed for TeraXion, ON Design Israel and Symeo were presented within the most recent Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 28, 2023. The following presents the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed for Silicon Radar and GEO as of June 30, 2023:
|  | Silicon Radar |  | GEO |  |  |  |  |  |
Purchase price - cash consideration paid |  | $ | 8,653 |  |  | $ | 91,076 |  |  |  |  |  |  |
Purchase price - cash consideration accrued |  | 800 |  |  | 3,464 |  |  |  |  |  |  |
Less: cash acquired |  | (208) |  |  | (1,092) |  |  |  |  |  |  |
Net cash consideration |  | $ | 9,245 |  |  | $ | 93,448 |  |  |  |  |  |  |
Purchase price - equity consideration issued and issuable (common stock) |  | $ | 9,834 |  |  | $ | 96,535 |  |  |  |  |  |  |
Total equity consideration |  | $ | 9,834 |  |  | $ | 96,535 |  |  |  |  |  |  |
Contingent consideration |  | $ | 9,979 |  |  | $ | 63,093 |  |  |  |  |  |  |
Net consideration |  | $ | 29,058 |  |  | $ | 253,076 |  |  |  |  |  |  |
Estimated fair value of net assets and liabilities assumed: |  |  |  |  |  |  |  |  |  |
Current assets other than cash |  | $ | 3,146 |  |  | $ | 19,560 |  |  |  |  |  |  |
Property and equipment |  | 2,351 |  |  | 178 |  |  |  |  |  |  |
Developed technology |  | 4,795 |  |  | 61,522 |  |  |  |  |  |  |
In-process research & development |  | 4,795 |  |  | 14,943 |  |  |  |  |  |  |
Customer relationships |  | 3,425 |  |  | 31,847 |  |  |  |  |  |  |
Backlog |  | 411 |  |  | 3,010 |  |  |  |  |  |  |
Trade name |  | 2,055 |  |  | 3,990 |  |  |  |  |  |  |
Other non-current assets |  | 17 |  |  | 10 |  |  |  |  |  |  |
Current liabilities |  | (1,585) |  |  | (6,084) |  |  |  |  |  |  |
Deferred revenue |  | (512) |  |  | — |  |  |  |  |  |  |
Deferred tax liabilities, non-current |  | (2,689) |  |  | (3,672) |  |  |  |  |  |  |
Other non-current liabilities |  | (682) |  |  | (711) |  |  |  |  |  |  |
Total fair value of net assets acquired |  | $ | 15,527 |  |  | $ | 124,593 |  |  |  |  |  |  |
Goodwill |  | $ | 13,531 |  |  | $ | 128,483 |  |  |  |  |  |  |
Changes in the estimated fair values of the net assets recorded for the business combination of Silicon Radar and GEO 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. 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 both GEO and Silicon Radar acquisitions, trade receivables and payables, as well as other current and non-current assets and liabilities and deferred revenue, 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. Because the acquisitions related to Silicon Radar and GEO occurred relatively recently, and in light of the magnitude of the transactions, the significant information to be obtained and analyzed and the fact that Silicon Radar resides in foreign jurisdiction, 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 August 11, 2023, the Company had not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to, inventory, 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 and deferred tax. Acquisition of Silicon Radar GmbH On February 21, 2023, Symeo, a wholly-owned subsidiary of the Company, completed its acquisition of all of the outstanding capital stock of Silicon Radar. The acquisition was consummated pursuant to a Share Purchase Agreement by and among Symeo, the Company and the holders of the outstanding capital stock of Silicon Radar. The closing consideration consisted of (i) $9,245 in cash (including accrued cash consideration at closing and net of cash acquired), (ii) approximately 982,445 shares of Class A common stock, par value $0.0001 per share of the Company, with a fair value of $9,834, and (iii) a contingent consideration payable in cash or in Class A common stock subject to Silicon Radar’s achievement of certain revenue-based milestones through February 21, 2025. The fair value of this contingent consideration was $9,979 on February 21, 2023. The purchase price is subject to working capital and other adjustments as provided in the merger agreement. 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, which is expected to expand 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. indie incurred various acquisition-related costs, which were primarily legal expense and recorded as part of the S elling, General and Administrative expenses. Total costs incurred are $707 as of June 30, 2023. The Company maintains an adjustment holdback for the purpose of providing security against any adjustment to the amounts at closing. The holdback period extends for 12 months from the closing date and will be settled by cash. Total purchase consideration transferred at closing also included contingent consideration that had a fair value of $9,979 as of the acquisition date. 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, both subject to Silicon Radar achieving certain revenue targets. Both tranches are payable, up to a maximum of $9,000, upon the achievement of revenue threshold of $5,000 for the twelve-month period ending on February 21, 2024 and the achievement of revenue threshold of $7,000 for the twelve-month period ending on February 21, 2025, respectively. Both tranches are payable in cash or common stock, at indie’s election. Should indie elect to pay in common stock, the number of shares issuable through a payment in common stock equals to earnout divided by a volume-weighted-average-price (“VWAP”) for 20 days ending prior to the due date for payment. 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. 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 June 30, 2023. Pro forma financial information for Silicon Radar is not disclosed as the results are not material to the Company’s condensed consolidated financial statements. Acquisition of GEO Semiconductor Inc. On February 9, 2023, indie entered into an Agreement and Plan of Merger, pursuant to which Gonzaga Merger Sub Inc., a Delaware corporation and indie’s wholly-owned subsidiary, will merge with and into GEO Semiconductor Inc., a Delaware corporation, with GEO surviving as a wholly-owned subsidiary of indie. The aggregate consideration for this transaction consisted of (i) $93,448 in cash (including accrued cash consideration at closing and net of cash acquired); (ii) the issuance by indie of 6,868,768 shares of indie class A common stock, par value $0.0001 per share at closing, with a fair value of $75,556; (iii) 1,907,180 shares of indie Class A common stock, par value $0.0001 per share at closing, with a fair value of $20,979 payable in the next 24 months for the purpose of adjustment and indemnity holdbacks; and (iv) contingent consideration with fair value of $63,093 at closing payable in cash or in indie Class A common stock, par value $0.0001 per share, subject to achieving certain GEO-related revenue targets through September 30, 2024. The purchase price is subject to working capital and other adjustments as provided in the merger agreement. The transaction was completed on March 3, 2023. GEO has programs with major image sensor suppliers and is engaged in multiple EV and autonomous vehicle programs. Its products comprise three generations of application specific camera video processors, including those focused on viewing, where video is projected on a display and viewed by the driver, and sensing, where video is processed using advanced computer vision and machine learning algorithms to assist the driver. The unique ability to support both of these key categories is expected to allow indie to deliver solutions in applications ranging from simple backup cameras to full Autonomous Driving platforms. Accordingly, indie paid a premium (i.e. goodwill) over the fair value of the net tangible and identifiable intangible assets acquired as this acquisition is expected to continue to strengthen indie’s expansion into the ADAS and autonomous vehicles market. The goodwill is not expected to be deductible for tax purposes. indie incurred various acquisition-related costs, which were primarily legal expense and recorded as part of the S elling, General and Administrative expenses. Total costs incurred are $2,492 as of June 30, 2023. The Company maintains an indemnity and adjustment holdback for the purpose of providing security against any adjustment to the amounts at closing. The indemnity holdback period extends for 24 months from the anniversary of the closing date. The indemnity holdback will be settled by transferring up to 1,566,472 shares of the Company’s stock. The fair value of the indemnity holdback was $17,231 as of the acquisition date. The adjustment holdback represents up to 340,708 shares of the Company’s stock and its period extends for 60 days from the closing date. The fair value of the adjustment holdback was $3,748 as of the acquisition date. The fair value of any outstanding 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. The adjustment holdback is reflected in Accrued expense and other current liabilities and the indemnity holdback is reflected in Other long-term liabilities in the condensed consolidated balance sheet as of June 30, 2023. The adjustment holdback was settled in July 2023. Total purchase consideration transferred at closing included contingent consideration that had a fair value of $63,093 as of the acquisition date. 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, both subject to GEO achieving certain GEO-related revenue targets. The first tranche is payable, up to a maximum of $55,000, upon the achievement of revenue threshold of $50,000 for the twelve-month period ending on March 31, 2024. The second tranche payable, up to a maximum of $35,000, upon the achievement of revenue threshold of $30,000 for the six-month period ending on September 30, 2024. Both tranches are payable in cash or common stock, at indie’s election. The number of shares issuable through a payment in common stock equals to earnout value divided by a 20 days VWAP ending on each earnout period and is collared between $8.50 and $11.50 per share (“Earnout Parent Trading Price”). Should the Company elect to pay the earn-out consideration in cash, the amount will be determined by multiplying the number of shares payable by the Earnout Parent Trading Price. 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. 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 June 30, 2023. The unaudited pro forma financial information shown below summarizes the combined results of operations for the Company and GEO as if the closing of the acquisition had occurred on January 1, 2023:
| Three months ended June 30, 2023 |  | Six months ended June 30, 2023
Combined revenue | $ | 52,108 |  |  | $ | 96,230 |
Combined net loss before income taxes | $ | (13,221) |  |  | $ | (108,573) |
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 GEO’s former loans, which were settled 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, 2023.

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- 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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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