References to "we", "us", "our" or the "Company" are to Independence Holdings
Corp., except where the context requires otherwise. The following discussion
should be read in conjunction with our unaudited condensed financial statements
and related notes thereto included elsewhere in this report.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and
Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on December 7, 2020. We were incorporated for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses that we have not yet identified
(herein referred to as the "Initial Business Combination").
Our sponsor is Independence Sponsor LLC, a Cayman Islands limited liability
company (the "Sponsor"). The registration statement for our initial public
offering was declared effective on March 8, 2021 (the "Initial Public
Offering"). On March 11, 2021, we consummated its Initial Public Offering of
49,590,908 units (each, a "Unit" and collectively, the "Units" and, with respect
to the Class A ordinary shares included in the Units being offered, the "Public
Shares"), including 6,090,908 additional Units to partially cover
over-allotments (the "Over-Allotment Units"), at $10.00 per Unit, generating
gross proceeds of approximately $495.9 million, and incurring offering costs of
approximately $28.0 million, of which approximately $17.4 million was for
deferred underwriting commissions (Note 5).
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 9,078,788 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant with the Sponsor, generating
gross proceeds of approximately $13.6 million (Note 4).
Upon the closing of the Initial Public Offering and the Private Placement,
approximately $495.9 million ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement
were placed in a trust account ("Trust Account") with Continental Stock
Transfer & Trust Company acting as trustee and invested in United States
government treasury bills with a maturity of 185 days or less or in money market
funds investing solely in U.S. Treasuries and meeting certain conditions under
Rule
2a-7
under the Investment Company Act of 1940, as amended, or the Investment Company
Act, as determined by us, until the earlier of: (i) the completion of an Initial
Business Combination and (ii) the distribution of the Trust Account as described
below.
Our management has broad discretion with respect to the specific application of
the net proceeds of its Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating an Initial Business Combination. Our
Initial Business Combination must be with one or more operating businesses or
assets with a fair market value equal to at least 80% of the net assets held in
the Trust Account (excluding the deferred underwriting discounts and commissions
and taxes payable on the income earned on the Trust Account) at the time we sign
a definitive agreement in connection with the Initial Business Combination.
However, we will only complete an Initial Business Combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the
target sufficient for it not to be required to register as an investment company
under the Investment Company Act.

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If we are unable to complete an Initial Business Combination within 24 months
from the closing of the Initial Public Offering, or March 11, 2023 (the
"Combination Period"), we will (i) cease all operations except for the purpose
of winding up; (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the Public Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to us to pay our income taxes, if any (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of the
then-outstanding Public Shares, which redemption will completely extinguish
Public Shareholders' rights as shareholders (including the right to receive
further liquidation distributions, if any); and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in each
such case to our obligations under Cayman Islands law to provide for claims of
creditors and the requirements of other applicable law.
Liquidity- and Capital Resources
As of September 30, 2021, we had approximately $1.4 million in our operating
bank account, and working capital of approximately $2.3 million.
Our liquidity needs to date have been satisfied through a payment of $25,000
from the Sponsor to pay for certain offering costs and expenses in exchange for
issuance of the Founder Shares (as defined below), the loan under the Note of
$300,000, and the net proceeds from the consummation of the Private Placement
not held in the Trust Account. In addition, in order to finance transaction
costs in connection with an Initial Business Combination, our officers,
directors and initial shareholders may, but are not obligated to, provide us
Working Capital Loans (as defined below). The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at
the lender's discretion, up to $1,500,000 of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.50 per warrant.
Based on the foregoing, our management believes that we will have sufficient
working capital and borrowing capacity to meet our needs through the earlier of
the consummation of an Initial Business Combination or one year from this
filing. Over this time period, we will be using these funds for paying existing
accounts payable, identifying and evaluating prospective Initial Business
Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the Initial
Business Combination.
Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that, while it is reasonably possible that the virus
could have a negative effect on the Company's financial position, results of its
operations, close of the initial public offering and/or search for a target
company, the specific impact is not readily determinable as of the date of these
financial statement. The unaudited condensed financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Results of Operations
Our entire activity from December 7, 2020 (inception) through September 30,
2021, was in preparation for the Initial Public Offering, and since our Initial
Public Offering, our activity has been limited to the search for a prospective
Initial Business Combination. We will not generate any operating revenues until
the closing and completion of our Initial Business Combination.
For the three months ended September 30, 2021, we had net income of
approximately $837,000, which consisted of approximately $1.1 million in change
in fair value of derivative warrant liabilities, and approximately $6,000 in
interest income from investments held in Trust Account, partially offset by
approximately $279,000 in general and administrative expenses, and $30,000 in
administrative expenses-related party.
For the nine months ended September 30, 2021, we had a net loss of approximately
$192,000, which consisted of approximately $659,000 in general and
administrative expenses, approximately $67,000 in administrative
expenses-related party, and approximately $634,000 in financing costs-derivative
warrant liabilities, offset by approximately $1.1 million in change in fair
value of derivative warrant liabilities, and approximately $29,000 in interest
income from investments held in Trust Account.

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Related Party -Transactions
Founder -Shares
On December 11, 2020, the Sponsor paid an aggregate of $25,000 to cover for
certain expenses on our behalf in exchange for issuance of 11,500,000 Class B
ordinary shares (the "Founder Shares"). In March 2021, we issued to the initial
shareholders an additional 1,006,250 Founder Shares, resulting in the Sponsor
holding an aggregate of 12,506,250 Founder Shares. The holders of the Founder
Shares agreed to forfeit up to an aggregate of 1,631,250 Founder Shares, on a
pro rata basis, to the extent that the option to purchase additional units was
not exercised in full by the underwriters, so that the Founder Shares will
represent 20% of our issued and outstanding shares after the Initial Public
Offering. On March 9, 2021, the underwriters partially exercised the
over-allotment option to purchase an additional 6,090,908 Units; leaving only
108,523 Class B ordinary shares remain subject to forfeiture. On April 22, 2021,
the underwriters' over-allotment option expired, and the Sponsor forfeited
108,523 shares of Class B ordinary shares accordingly.
The Initial Shareholders agreed not to transfer, assign or sell any of their
Founder Shares until the earlier to occur of (A) one year after the completion
of the Initial Business Combination and (B) subsequent to the Initial Business
Combination, (x) if the closing price of the Class A ordinary shares equals or
exceeds $12.00 per share (as adjusted for share subdivisions, share
capitalizations, reorganizations, recapitalizations and the like) for any 20
trading days within any
30-trading
day period commencing at least 150 days after the Initial Business Combination,
or (y) the date on which we complete a liquidation, merger, share exchange or
other similar transaction that results in all of the Public Shareholders having
the right to exchange their ordinary shares for cash, securities or other
property.
Related Party Loans
On December 7, 2020, the Sponsor agreed to loan us up to $300,000 pursuant to a
promissory note (the "Note"). The Note was
non-interest
bearing, unsecured and due upon the closing of the Initial Public Offering. The
Company borrowed approximately $171,000 under the Note and fully repaid the
balance upon closing of the Initial Public Offering.
In addition, in order to finance transaction costs in connection with an Initial
Business Combination, the Sponsor, members of our founding team or any of their
affiliates may, but are not obligated to, loan us funds as may be required
("Working Capital Loans"). If we complete an Initial Business Combination, we
would repay the Working Capital Loans out of the proceeds of the Trust Account
released to us. Otherwise, the Working Capital Loans would be repaid only out of
funds held outside the Trust Account. In the event that an Initial Business
Combination does not close, we may use a portion of proceeds held outside the
Trust Account to repay the Working Capital Loans but no proceeds held in the
Trust Account would be used to repay the Working Capital Loans. The Working
Capital Loans would either be repaid upon consummation of an Initial Business
Combination, without interest, or, at the lenders' discretion, up to $1,500,000
of such Working Capital Loans may be convertible into warrants of the post
Initial Business Combination entity at a price of $1.50 per warrant. The
warrants would be identical to the Private Placement Warrants. Except for the
foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. As of
September 30, 2021, we had no borrowings under the Working Capital Loans.
Administrative Services Agreement
Commencing on the date that our securities were first listed on Nasdaq until the
earlier of our consummation of an Initial Business Combination or our
liquidation, we agreed to pay affiliates of the Sponsor a total of $10,000 per
month, in the aggregate, for office space, secretarial and administrative
services provided to us.
In addition, the Sponsor, executive officers and directors, or their respective
affiliates will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable
Initial Business Combinations. The audit committee will review on a quarterly
basis all payments that were made by us to the Sponsor, executive officers or
directors, or their affiliates. Any such payments prior to an Initial Business
Combination will be made using funds held outside the Trust Account.
During the three and nine months ended September 30, 2021, we incurred $30,000
and approximately $67,000 in expenses for these services, which is included in
administrative expenses-related party on the accompanying statements of
operations. As of September 30, 2021, we had $30,000 included in accrued
expenses on the unaudited condensed balance sheet related to these expenses.

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Contractual Obligations
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants
that may be issued upon conversion of Working Capital Loans (and any Class A
ordinary shares issuable upon the exercise of the Private Placement Warrants or
warrants issued upon conversion of the Working Capital Loans and upon conversion
of the Founder Shares) were entitled to registration rights pursuant to a
registration and shareholder rights agreement signed upon the effective date of
the Initial Public Offering. The holders of these securities were entitled to
make up to three demands, excluding short form demands, that we register such
securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to the
completion of the Initial Business Combination. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a
45-day
option from the date of this prospectus to purchase up to 6,525,000 additional
Units at the Initial Public Offering price less the underwriting discounts and
commissions. On March 9, 2021, the underwriters partially exercised the
over-allotment option to purchase an additional 6,090,908 Units.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
approximately $9.9 million in the aggregate, paid upon the closing of the
Initial Public Offering. The underwriters were entitled to a deferred
underwriting commission of $0.35 per unit, or approximately $17.4 million. The
deferred fee will become payable to the underwriters from the amounts held in
the Trust Account solely in the event that we complete an Initial Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these unaudited condensed
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities in our unaudited condensed
financial statements. On an ongoing basis, we evaluate our estimates and
judgments, including those related to fair value of financial instruments and
accrued expenses. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. We have identified the following as our critical
accounting policies:
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to Accounting
Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from
Equity" ("ASC Topic 480") and ASC Topic
815-15
"Derivatives and Hedging-Embedded Derivatives." The classification of derivative
instruments, including whether such instruments should be recorded as
liabilities or as equity, is reassessed at the end of each reporting period.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC Topic 480 and FASB ASC Topic 815,
"Derivatives and Hedging" ("ASC 815"). Accordingly, we recognize the warrant
instruments as liabilities at fair value and adjusts the instruments to fair
value at each reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our condensed statement of operations. The fair value of the
Public Warrants issued in connection with the Initial Public Offering and
Private Placement Warrants were initially measured at fair value using a Monte
Carlo simulation model. The fair value of Public Warrants issued in connection
with the Initial Public Offering have subsequently been measured based on the
listed market price of such warrants. Subsequently, the fair value of the
Private Placement Warrants has been estimated by reference to the trading price
of the Public Warrants. Derivative warrant liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use
of current assets or require the creation of current liabilities.

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Class A Ordinary Shares subject to possible redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480. Class A ordinary shares subject
to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Conditionally redeemable Class A ordinary shares
(including Class A ordinary shares that feature redemption rights that are
either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within our control) are classified as
temporary equity. At all other times, Class A ordinary shares are classified as
shareholders' equity. Our Class A ordinary shares feature certain redemption
rights that are considered to be outside of our control and subject to the
occurrence of uncertain future events. Accordingly, as of September 30, 2021,
49,590,908 Class A ordinary shares subject to possible redemption are presented
as temporary equity outside of the shareholders' equity section of our balance
sheet. There were no Class A ordinary shares issued or outstanding at
December 31, 2020.
Effective with the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount, which resulted in
charges against additional
paid-in
capital (to the extent available) and accumulated deficit.
Net income (loss) per ordinary share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of shares, which are referred to as
Class A ordinary shares and Class B ordinary shares. Income and losses are
shared pro rata between the two classes of shares. Net income per ordinary share
is calculated by dividing the net income by the weighted average shares of
ordinary shares outstanding for the respective period.
The calculation of diluted net income does not consider the effect of the
warrants underlying the Units sold in the Initial Public Offering and the
private placement warrants to purchase an aggregate of 18,996,970 shares of
Class A ordinary shares in the calculation of diluted income (loss) per share,
because their exercise is contingent upon future events. Accretion associated
with the redeemable Class A ordinary shares is excluded from earnings per share
as the redemption value approximates fair value.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of September 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K
and did not have any commitments or contractual obligations.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We
will qualify as an "emerging growth company" and under the JOBS Act will be
allowed to comply with new or revised accounting pronouncements based on the
effective date for private (not publicly traded) companies. We are electing to
delay the adoption of new or revised accounting standards, and as a result, we
may not comply with new or revised accounting standards on the relevant dates on
which adoption of such standards is required for
non-emerging
growth companies. As such, our unaudited condensed financial statements may not
be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the unaudited
condensed financial statements (auditor discussion and analysis) and
(iv) disclose certain executive compensation related items such as the
correlation between executive compensation and performance and comparisons of
the Chief Executive Officer's compensation to median employee compensation.

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Table of Contents These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever is earlier.

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