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indie Semiconductor(INDI) - 2023 Q4 - Annual Report
INDIindie Semiconductor(INDI)2024-02-28 16:00
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Industry Dynamics - The semiconductor industry is cyclical, which may limit the company's ability to maintain or improve net sales and profitability[93]. - The company relies heavily on the automotive market, with significant fluctuations in demand impacting revenue and profitability[101]. - Average selling prices of semiconductor products have historically decreased, which could adversely affect revenue and profit margins[99]. - Significant consolidation in the semiconductor industry may create competitive disadvantages for the company[97]. - The semiconductor industry faces continued price erosion, particularly for older technology products, which may impact product margins[110]. - The semiconductor industry is characterized by frequent litigation regarding intellectual property rights, which could result in substantial costs and impact the company's ability to compete[159]. Financial Performance - Total revenue for 2023 reached 223.169million,asignificantincreaseof101223.169 million, a significant increase of 101% compared to 110.797 million in 2022[358]. - The net loss for 2023 was 128.832million,comparedtoanetlossof128.832 million, compared to a net loss of 52.788 million in 2022, indicating a worsening financial position[360]. - Cash and cash equivalents decreased to 151.678millionfrom151.678 million from 321.629 million in 2022, a decline of 53%[356]. - The company reported a loss from operations of 135.423million,comparedtoalossof135.423 million, compared to a loss of 119.128 million in 2022[358]. - Comprehensive loss attributable to indie Semiconductor, Inc. was 111.506millionfor2023,comparedto111.506 million for 2023, compared to 53.282 million in 2022[360]. Capital and Funding - The company may seek additional capital, which could result in dilution for existing stockholders[89]. - The company may pursue mergers and acquisitions to enhance market coverage, but such transactions carry risks that could adversely affect operations[113]. - The company raised gross proceeds of 53,136,000fromtheissuanceof5,219,500sharesofClassAcommonstockatanaveragepriceof53,136,000 from the issuance of 5,219,500 shares of Class A common stock at an average price of 10.18 per share during 2023[373]. - The company has approximately 79,661,000availableforfutureissuancesundertheAt−The−MarketAgreementasofDecember31,2023[373].OperationalRisks−Thecompanydependsonthirdpartiesformanufacturing,assembly,andtesting,exposingittorisksrelatedtosupplychaindisruptions[106].−Geopoliticaluncertaintiesandmacroeconomicconditionscouldadverselyimpactcustomerdemandanddisruptthesupplychain[89].−Thecompanyfaceschallengesinmanagingfuturegrowth,whichcouldstrainresourcesandsystems[120].−Thelossofkeymanagementorskilledpersonnelcouldmateriallyaffectproductdevelopmentandoverallbusinessperformance[121].−Cybersecurityincidentscouldresultinthemisappropriationofproprietaryinformation,withpotentialsignificantcostsandoperationalconsequences[163].RegulatoryandCompliance−Thecompanyissubjecttovariousregulations,andfailuretocomplycouldresultininvestigations,fines,andadiversionofmanagementresources[168].−ThecompanyisnowrequiredtocomplywiththeauditorattestationrequirementsofSection404oftheSarbanes−OxleyAct,incurringadditionalcompliancecosts[209].−ThecompanyfacesregulatoryuncertaintiesregardingdataprotectionlawsinChina,whichcouldimpactitsoperationsandfinancialresults[202].TaxandFinancialObligations−PaymentsundertheTaxReceivableAgreementwillrequirethecompanytopay8579,661,000 available for future issuances under the At-The-Market Agreement as of December 31, 2023[373]. Operational Risks - The company depends on third parties for manufacturing, assembly, and testing, exposing it to risks related to supply chain disruptions[106]. - Geopolitical uncertainties and macroeconomic conditions could adversely impact customer demand and disrupt the supply chain[89]. - The company faces challenges in managing future growth, which could strain resources and systems[120]. - The loss of key management or skilled personnel could materially affect product development and overall business performance[121]. - Cybersecurity incidents could result in the misappropriation of proprietary information, with potential significant costs and operational consequences[163]. Regulatory and Compliance - The company is subject to various regulations, and failure to comply could result in investigations, fines, and a diversion of management resources[168]. - The company is now required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, incurring additional compliance costs[209]. - The company faces regulatory uncertainties regarding data protection laws in China, which could impact its operations and financial results[202]. Tax and Financial Obligations - Payments under the Tax Receivable Agreement will require the company to pay 85% of tax benefits related to tax depreciation or amortization deductions, which may be substantial[142]. - The company’s ability to declare and pay dividends may be restricted if ADK LLC does not have sufficient funds to make distributions[141]. - The company may not have sufficient funds to settle the 2027 Notes or to repurchase them upon a fundamental change, which could lead to a default under the indenture[131]. Acquisitions and Investments - The company recorded a developed technology intangible asset valued at 69.33 million following the acquisition of GEO Semiconductor Inc. on March 3, 2023[342]. - The acquisition of GEO Semiconductor Inc. involved 93,448incashandtheissuanceof6,868,768sharesofClassAcommonstockvaluedat93,448 in cash and the issuance of 6,868,768 shares of Class A common stock valued at 75,556, with additional contingent consideration based on revenue targets[378]. - The acquisition of Silicon Radar GmbH included 9,245incashand982,445sharesofClassAcommonstockvaluedat9,245 in cash and 982,445 shares of Class A common stock valued at 9,834, with contingent consideration based on revenue milestones[379]. Shareholder Considerations - The weighted average common shares outstanding increased to 145,188,867 from 118,660,785 in 2022, reflecting dilution[358]. - There is a risk that substantial sales of Class A common stock by stockholders could adversely affect the market price of the company's securities[213]. - The company has provisions in its Certificate of Incorporation and Bylaws that may limit stockholders' ability to take certain actions, potentially affecting share price[215].