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. On March 11, 2021, we consummated our Initial Public Offering of 49,590,908 units, including 6,090,908 additional units to partially cover over-allotments, 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.

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 9,078,788 warrants, at a price of $1.50 per private placement warrant with the sponsor, generating gross proceeds of approximately $13.6 million.

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 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 Going Concern

As of March 31, 2022, we had approximately $1.1 million in our operating bank account, and working capital of approximately $1.6 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, 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. 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. To date, there are no working capital loans outstanding.

Until consummation of our business combination, we intend to use our cash held outside the trust account, and, if necessary, Working Capital Loans from the Company's officers and directors, and initial shareholders, 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 Business Combination.



We have until March 11, 2023 to consummate a Business Combination. It is
uncertain that the Company will be able to consummate a Business Combination by
this time. If a Business Combination is not consummated by this date, there will
be a mandatory liquidation and subsequent dissolution of the Company. In
connection with the Company's assessment of going concern considerations, in
accordance with the Financial Accounting Standards Board's ("FASB") Accounting
Standards Codification ("ASC") Topic
205-40,
"Presentation of Financial Statements - Going Concern," management determined
that the mandatory liquidation and subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. The condensed
financial statements do not include any adjustment that might be necessary if
the Company is unable to continue as a going concern.

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 condensed financial statements. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed financial statements. The specific impact on our financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.

Results of Operations

Our entire activity since inception up to March 31, 2022 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We will not be generating any operating revenues until the closing and completion of our initial Business Combination, at the earliest.


For the three months ended March 31, 2022, we had a net income of approximately
$7.8 million, which consisted approximately $50,000 in interest income from
investments held in the trust account,
non-operating
income of approximately $8.2 million resulting from changes in fair value of
derivative warrant liabilities, offset by approximately $363,000 in general and
administrative expenses and $30,000 in administrative expenses - related party.

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For the three months ended March 31, 2021, we had a net income of approximately $2.3 million, which consisted of approximately $100,000 in general and administrative expenses, $7,000 in administrative expenses - related party, approximately $634,000 in financing costs - derivative warrant liabilities, offset by approximately $3.0 million in change in fair value of derivative warrant liabilities, and approximately $5,000 in interest income from investments held in Trust Account.

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. 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. Also in March 2021, our sponsor transferred 25,000 founder shares to each of our independent directors, as well as another transferee (which amounts have been adjusted for the share issuance of 1,006,250 ordinary shares, as well as transfers back to our sponsor by our independent directors and such other transferee of 2,187 ordinary shares each, which they received as a result of the share issuance). 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 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. 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 March 31, 2022 and December 31, 2021, we had no borrowings under the working capital loans.


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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 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 months ended March 31, 2022 and 2021, we incurred approximately
$30,000 and $7,000, respectively, in expenses for these services, which is
included in administrative expenses-related party on the accompanying condensed
statements of operations. As of March 31, 2022 and December 31, 2021, we had
approximately
-0-
and $7,000, respectively, included in accounts payable on the condensed balance
sheets related to these expenses.

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 the final 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


The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. A summary of our significant accounting policies is
included in Note 2 to our condensed financial statements in Part I, Item 1 of
this Quarterly Report on Form
10-Q.
Certain of our accounting policies are considered critical, as these policies
are the most important to the depiction of our condensed financial statements
and require significant, difficult or complex judgments, often employing the use
of estimates about the effects of matters that are inherently uncertain. Such
policies are summarized in the Management's Discussion and Analysis of Financial
Condition and Results of Operations section in our 2021 Annual Report on Form
10-K
filed with the SEC on April 15, 2022. There have been no significant changes in
the application of our critical accounting policies during the three months
ended March 31, 2022.

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Recent Accounting Pronouncements



See Note 2 to the unaudited condensed financial statements included in Part I,
Item 1 of this Quarterly Report on Form
10-Q
for a discussion of recent accounting pronouncements.

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 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 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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