EX-99.2 4 indieproformanarrativeq422.htm EX-99.2 Document

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated combined financial statements are provided to aid you in your analysis of the financial aspects of the transaction. The unaudited pro forma condensed consolidated combined financial statements are based on the indie Semiconductor, Inc. (“indie”) historical audited consolidated financial statements and the GEO Semiconductor, Inc. (“GEO”) historical audited consolidated financial statements as adjusted to give effect to the transaction. The unaudited pro forma condensed consolidated combined balance sheet gives pro forma effect to the transaction as if it had been consummated on December 31, 2022. The unaudited pro forma condensed consolidated combined statement of operations for the year ended December 31, 2022 gives effect to the transaction as if it had occurred on January 1, 2022.

The unaudited pro forma condensed consolidated combined financial statements have been derived from and should be read in conjunction with:

•the accompanying notes to the unaudited pro forma condensed consolidated combined financial statements;

•the historical audited consolidated financial statements of GEO as of and for the year ended December 31, 2022, included in Exhibit 99.1 to this Current Report on Form 8-K;

•the historical audited consolidated financial statements of indie as of and for the year ended December 31, 2022; and

•other information relating to GEO and indie included elsewhere or incorporated by reference in this Current Report on Form 8-K.

The unaudited pro forma condensed consolidated combined financial statements are provided for illustrative purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the transaction taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined company.

    1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED BALANCE SHEET AS OF DECEMBER 31, 2022
(in thousands)
 Historical  Transaction Accounting Adjustments  Pro Forma Balance Sheet
 indie  Geo
Assets
Current assets:
Cash and cash equivalents$321,629 $611 $(89,984)5(h)$231,645 
(611)5(l)
Restricted cash250 — — 250 
Accounts receivable, net of allowance for doubtful accounts26,441 7,459 — 33,900 
Inventory, net13,256 7,679 4,883 5(k)25,818 
Prepaid expenses and other current assets12,290 2,443 — 14,733 
Total current assets373,866 18,192 (85,712)306,346 
Property and equipment, net15,829 96 83 5(a)16,008 
Intangible assets, net63,117 — 115,313 5(b)178,430 
Goodwill136,463 — 126,758 5(i)263,221 
Operating lease right-of-use assets12,055 — — 12,055 
Other assets and deposits2,021 10 — 2,031 
Total assets$603,351 $18,298 $156,442 $778,091 
Liabilities and stockholders' equity
Accounts payable$14,186 $2,728 $— $16,914 
Accrued payroll liabilities11,541 — — 11,541 
Accrued expenses and other current liabilities13,159 5,246 (270)5(c)65,965 
(512)5(d)
1,891 5(e)
3,464 5(h)
39,239 5(h)
3,748 5(h)
Liability for outstanding warrants— 530 — 5(h)530 
Intangible asset contract liability9,377 — (530)5(f)8,847 
Current debt obligations15,700 139,151 (139,151)5(c)15,700 
Total current liabilities63,963 147,655 (92,121)119,497 
Long-term debt, net of current portion155,699 — — 155,699 
Warrant liability45,398 — — 45,398 
Intangible asset contract liability, net of current portion4,177 — — 4,177 
Deferred tax liabilities, non-current7,823 — 3,672 5(j)11,495 
Operating lease liability, non-current10,115 — — 10,115 
Other long-term liabilities1,844 784 23,854 5(h)43,713 
17,231 5(h)

    2

Total liabilities289,019 148,439 (47,364)390,094 
Stockholders’ equity
Preferred stock— 5 (5)5(g)— 
Class A common stock13 — 1 5(h)14 
Class V common stock2 — — 2 
Additional paid-in capital568,564 90,272 (90,272)5(g)642,490 
75,555 5(h)
(1,629)5(m)
Accumulated deficit— — 220,046 5(m)218,155 
(1,891)5(g)
Accumulated other comprehensive loss(11,951)(372)372 5(g)(11,951)
indie’s stockholders’ equity312,812 (130,141)202,177 384,848 
Noncontrolling interest1,520 — 1,629 5(m)3,149 
Total stockholders' equity314,332 (130,141)1,629 387,997 
Total liabilities and stockholders' equity$603,351 $18,298 $156,442 $778,091 



    3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2022
(in thousands, except shares and per share amounts)
Historical
indieGeoTransaction Accounting AdjustmentsPro Forma Statement of Operations
Revenue:
Product revenue$89,457 $49,951 $— $139,408 
Contract revenue21,340 — — 21,340 
Total revenue110,797 49,951 — 160,748 
Operating expenses:
Cost of goods sold60,491 27,065 19,069 6(b)111,536 
28 6(a)
4,883 6(f)
Research and development121,197 22,792 (350)6(h)143,639 
Selling, general, and administrative48,237 5,547 1,891 6(c)55,566 
(109)6(h)
Total operating expenses229,925 55,404 25,521 310,741 
Loss from operations(119,128)(5,453)(25,521)(149,993)
Other income (expense), net:
Interest income2,567 — — 2,567 
Interest expense(1,692)(16,901)16,901 6(d)(1,692)
Gain from change in fair value of warrants55,069 794 (794)6(c)55,069 
Gain from change in fair value of contingent considerations9,468 — — 9,468 
Other expense(107)(308)— (415)
Total other income (expense), net65,305 (16,415)16,107 64,997 
Net loss before income taxes(53,823)(21,868)(9,414)(84,996)
Income tax benefit (expense)1,035 (74)3,672 6(g)4,633 
Net loss(52,788)(21,942)(5,742)(80,363)
Less: Net loss attributable to noncontrolling interest(9,388)— (898)6(i)(10,286)
Net loss attributable to indie Semiconductor, Inc.$(43,400)$(21,942)$(4,844)$(70,077)
Net loss attributable to common shares —basic$(43,400)$(21,942)$(4,844)$(70,077)
Net loss attributable to common shares —diluted$(43,400)$(21,942)$(4,844)$(70,077)
Net loss per share attributable to common shares —basic$(0.37)$(0.57)
Net loss per share attributable to common shares —diluted$(0.37)$(0.57)
Weighted average common shares outstanding—basic118,660,785 123,622,373 6(f)
Weighted average common shares outstanding—diluted118,660,785 123,622,373 


    4

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL STATEMENTS
(amounts in thousands, except unit and share amounts and per unit and per share amounts)
1. Description of the Transaction
Description of the Transaction

On February 9, 2023, indie Semiconductor, Inc (“indie”), Gonzaga Merger Sub Inc., a direct wholly owned subsidiary of indie and entered into a merger agreement with GEO Semiconductor Inc. (“GEO”) to purchase 100% of the equity interests in GEO. Total purchase consideration 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; and (iv) an earnout with fair value of $63,068 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 closed on March 3, 2023, at which time GEO became wholly owned subsidiaries of indie.

2. Basis of Pro Forma Presentation
The unaudited pro forma condensed consolidated combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Management has elected not to present Management’s Adjustments and only presents Transaction Accounting Adjustments in the unaudited pro forma condensed consolidated combined financial information. The adjustments presented in the unaudited pro forma condensed consolidated combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company after the consummation of the transaction.

The unaudited pro forma condensed consolidated combined financial statements are based on the indie historical audited consolidated financial statements and the GEO historical audited consolidated financial statements as adjusted to give effect to the transaction. The unaudited pro forma condensed consolidated combined balance sheet gives pro forma effect to the transaction as if it had been consummated on December 31, 2022. The unaudited pro forma condensed consolidated combined statement of operations for the year ended December 31, 2022 gives effect to the transaction as if it had occurred on January 1, 2022.

The unaudited pro forma condensed consolidated combined financial statements were prepared using the acquisition method of accounting with indie considered the accounting acquirer of GEO. Under the acquisition method of accounting, the purchase price is allocated to the underlying indie assets acquired and liabilities assumed based on their respective fair market values. Any excess of purchase price over the fair value of the net assets acquired was recorded as goodwill. Refer below to Note 3, “Accounting Treatment for the Transaction.”

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. The pro forma adjustments reflecting the transaction are based on certain currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the transaction based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed consolidated combined financial statements.

The unaudited pro forma condensed consolidated combined financial statements do not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the transaction. indie and GEO have not had any historical relationship prior to the transaction. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

3. Accounting Treatment for the Transaction
indie is the legal acquirer of GEO. For accounting purposes, the transaction will be treated as a merger and accounted for using the acquisition method in accordance with Accounting Standards Codification 805, Business Combinations. As such, GEO will be treated as the “acquired” company for accounting purposes. This determination is primarily based on the fact that subsequent to the transaction, indie stockholders will have a majority of the voting power of the combined company, indie will control a majority of the governing body of the combined company, and indie’s senior management will comprise the majority of the senior management of the combined company upon consummation of the transaction.

Accordingly, for financial reporting purposes, the assets and liabilities of indie will be stated at historical carrying values and its consolidated financial statements will be presented as the predecessor to the combined company in the historical financial statements following the consummation of the transaction. Furthermore, for accounting purposes, the assets and liabilities of GEO will be recorded at their fair values measured as of the acquisition date, with any excess purchase price over the fair value of the net assets acquired, if any, to be recorded as goodwill. The results of GEO will be presented within the consolidated results of indie from the date of acquisition going forward.
4. Preliminary Estimated Purchase Price and Purchase Price Allocation
Because the acquisition related to GEO occurred relatively recently, the magnitude of the transaction and the significant information to be obtained and analyzed, management performed preliminary fair value estimates for the purchase price allocation as of the date of this Current Report on Form 8-K. These estimates may change during the allowable measurement period, which is up to the point management 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. Specifically for the valuation of intangibles assets acquired, management 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.

Preliminary Estimated Purchase Price
The following table summarizes the preliminary estimate of the purchase price:
indie Class A Common Stock issued at closing6,868,768 
indie Class A Common Stock share price (1)$11.00 
Equity portion of consideration transferred at closing $75,556 
indie Class A Common Stock issuable in the next 60 days after closing of the transaction340,708 
indie Class A Common Stock share price (1)$11.00 
Adjustment holdback liability$3,748 
indie Class A Common Stock issuable in the next 24 months after closing of the transaction1,566,473 
indie Class A Common Stock share price (1)$11.00 
Indemnity holdback liability$17,231 
Cash$89,984 
Accrued expenses$3,464 
Earnout liability (2)$63,093 
Total estimated consideration effectively transferred, net of cash acquired$253,076 

(1)The closing stock price of the Class A Common Stock on the transaction closing date of March 3, 2022.

(2)Upon the close of the transaction, certain GEO stockholders will be entitled to receive up to $90,000 additional consideration in the form of either cash or indie’ Class A common stock (the “Earnout”) if certain earnout milestones are met. The earnout payments do not meet the “owned equity” criteria and are accounted for as liabilities. As liability instruments, the arrangement is recognized at its initial fair

    6

value of $63,093, with remeasurement to fair value reflected in income for each future reporting period.


Preliminary Estimated Purchase Price Allocation
The following table summarizes allocation of the preliminary estimate of the purchase price to the assets acquired and liabilities assumed as if the transaction had been consummated on December 31, 2022:
 Accounts receivable 7,459 
 Prepaid expenses and other current assets 2,443 
 Inventory 12,562 
 Property and equipment 179 
 Intangible assets 115,313 
 Goodwill 126,758 
 Other non-current assets 10 
     Total assets acquired 264,724 
 Accounts payable (2,728)
 Accrued expenses and other current liabilities (4,464)
Deferred tax liabilities, non-current(3,672)
 Other long-term liabilities (784)
     Total liabilities assumed (11,648)
 Total consideration effectively transferred, net of cash acquired$253,076 
5. Adjustments to Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
Pro forma Transaction Accounting Adjustments
(a)Reflects the pro forma adjustments to historical amounts to record the estimated fair value of property, plant and equipment (see Note 6(a) below).
(b)Reflects the pro forma adjustments to historical amounts to record the estimated fair value of intangible assets (see Note 6(b) below). The following table summarizes intangible assets acquired and useful:
 Useful life
(in years) 		 Fair value as of acquisition date
 In process R&D  n/a $14,944 
 Developed technology 561,522 
 Trade name 73,990 
 Backlog 13,010 
 Customer relationships 1031,847 
 Total $115,313 
(c)Reflects a pro forma adjustment to eliminate the debt and accrued interest expense balances since all debt was repaid as of acquisition date (see Note 6(d) below).
(d)Reflects a pro forma adjustment to eliminate the accrued vacation expense for GEO for the U.S. employees that was repaid as part of the consideration transferred.

    7

(e)Reflects a pro forma adjustment of $1,891 of indie estimated transaction costs to be incurred consisting of advisory, legal, accounting and auditing fees and other professional fees. The adjustment has been recorded as an increase to accrued expenses and increase to accumulated deficit (see Note 6(c) below).
(f)Reflects a pro forma adjustment to eliminate liability for outstanding warrants (see Note 6(e) below).
(g)Reflects a pro forma adjustment to eliminate the GEO's historical accumulated deficit, preferred stock, additional paid-in capital and accumulated other comprehensive loss.
(h)Reflects a pro forma adjustment to record consideration effectively transferred in amount of $253,076 that consists of:
•6,868,768 shares of indie class A common stock, par value $0.0001 per share issued at closing, with a fair value of $75,556;

•340,708 shares of indie class A common stock, par value $0.0001 per share issuable in the next 60 days after closing in connection with Adjustment Holdback, with a fair value of $3,748;

•1,566,473 shares of indie class A common stock, par value $0.0001 per share issuable in the next 24 months after closing in connection with Indemnity Holdback, with a fair value of $17,231;

•$93,448 in cash (including accrued cash consideration at closing and net of cash acquired);

•earnout 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. Current and non-current portions of the earnout liability were $39,239 and $23,854, respectively
(i)Reflects a pro forma adjustment to record a goodwill of $126,801 that represents the excess purchase price over the fair value of the net assets acquired.
(j)Reflects a pro forma adjustment to record a reduction to deferred tax liability of $3,672 related to the fair value adjustments to GEO’ assets.
(k)Reflects the pro forma adjustments to historical amounts to record the estimated fair value of inventory (see Note 6(f) below).

(l)Reflects a pro forma adjustment to eliminate GEO's cash and cash equivalents balance as of the closing date since the acquisition of GEO was net of cash.

(m)Reflects a pro forma adjustment to remeasure noncontrolling interest as a result of the issuance of shares for the equity portion of the consideration transferred and resulting change in ownership percentage of indie's operating subsidiary, Ay Dee Kay, LLC.
6. Adjustments to Unaudited Pro Forma Condensed Consolidated Combined Statement of Operations
The pro forma adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
Pro forma Transaction Accounting Adjustments
(a)Reflects the pro forma adjustments to eliminate historical depreciation and record depreciation expense based on the fair value of the property plant and equipment based on the estimated remaining useful lives (see Note 5(a) above).
(b)Reflects the pro forma adjustments to record amortization expense based on the fair value of the acquired intangible assets based on the estimated useful lives (see Notes 5(b) above).
(c)Reflects a pro forma adjustment to record indie’ estimated transaction costs to be incurred of $1,891 (see Note 5(e) above).
(d)Reflects the pro forma adjustments to eliminate interest expense (see Note 5(c) above).

    8

(e)Reflects a pro forma adjustment to eliminate historical gain from change in fair value of warrants (see Note 5(f) above).
(f)Reflects the pro forma adjustment to record cost of goods sold based on the fair value of inventory and inventory cycling period less than 12 months (see Note 6(k) above).

(g)Reflects the pro forma adjustments to expense the deferred tax liability as a result of the tax reorganization immediately subsequent the GEO acquisition.

(h)As the Company has historically been loss making, any deferred tax assets created as a result of net operating losses would be offset by a full valuation allowance result in no income tax expense adjustments to be presented in the unaudited pro forma condensed combined statement of operations. This adjustment reflects the pro forma adjustment to recognize the tax benefit of the tax reorganization immediately subsequent the GEO acquisition.

(i)Reflects a pro forma adjustment to recalculate the net loss attributable to noncontrolling interest. As a result of the issuance of shares for the equity portion of the consideration transferred, the noncontrolling interest in indie’s operating subsidiary, Ay Dee Kay, LLC, is 12.8%.

(j)The pro forma basic and diluted number of shares presented in the unaudited pro forma condensed consolidated combined statement of operations are based upon the number of GEO’s shares outstanding as if the transaction occurred on January 1, 2022. The calculation of weighted average shares outstanding for pro forma basic and diluted net income per share assumes that the shares issuable in connection with the transaction have been outstanding for the entirety of the period presented.
Pro forma weighted average common shares outstanding presented in the unaudited pro forma condensed consolidated combined statement of operations for the year ended December 31, 2022 - basic and diluted are calculated as follows:
Weighted average common shares outstanding118,660,785 
Number of indie Class A common stock issued and issuable to GEO in connection with Business Combination6,868,768 
Stock issuable post-holdback period (1)(1,907,180)
Total numbers of shares123,622,373 
(1) indie retained the adjustment holdback amount (340,708 shares) and indemnity holdback amount (1,566,472 shares) as partial security for the obligations and indemnification obligations in accordance with the merger agreement. The adjustment holdback amount equals to $3,263 divided by $9.58 (Parent Trading Price) and indemnity holdback amount equals to $15,000 divided by the Parent Trading Price.

    9