Warrant Liability

3 Months Ended

Mar. 31, 2024

In connection with the June 10, 2021 Transaction, holders of TB2 Class A ordinary shares automatically received Class A common stock of indie, and holders of TB2 warrants automatically received 17,250,000 warrants of indie with substantively identical terms (“Public Warrants”). At the closing of the Transaction, 8,625,000 Class B ordinary shares of TB2 owned by Thunder Bridge Acquisition II LLC, a Delaware limited liability company (the “Sponsor”), automatically converted into 8,625,000 shares of indie Class A common stock, and 8,650,000 private placement warrants held by the Sponsor, each exercisable for one Class A ordinary share of TB2 at $11.50 per share, automatically converted into warrants to purchase one share of indie Class A common stock at $11.50 per share with substantively identical terms (the “Private Placement Warrants”). Also at the Closing, TB2 issued 1,500,000 working capital warrants to an affiliate of the Sponsor in satisfaction of a working capital promissory note of $1,500 (the “Working Capital Warrants” and, together with the Private Placement Warrants, the “Private Warrants”). These Working Capital Warrants had substantially identical terms to the Private Placement Warrants.

The warrants were exercisable only during the period commencing on July 10, 2021 (30 days after the closing of the Transaction) through June 10, 2026. The Company was permitted to redeem the Public Warrants at a price of $0.01 per warrant upon 30 days’ notice, only in the event that the last sale price of the Class A common stock was at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given, provided there was an effective registration statement and current prospectus in effect with respect to the Class A common stock underlying such warrants during the 30 day redemption period. If the Company redeemed the warrants as described above, management had the option to require all holders to exercise warrants on a “cashless basis.”

In accordance with the warrant agreement relating to the Public Warrants, the Company was required to use its best efforts to maintain the effectiveness of the registration statement covering the warrants. If a registration statement was not effective within 90 days following the consummation of a business combination, warrant holders could have, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercised warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In the event that a registration statement was not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such warrant would not be entitled to exercise such warrant for cash and in no event (whether

in the case of a registration statement being effective or otherwise) would the Company be required to net cash settle the warrant exercise.

The terms of the Private Warrants were identical to the Public Warrants as described above, except that the Private Warrants are not redeemable so long as they are held by the Sponsor or its permitted transferees.

The Company reviewed the terms of warrants to purchase its Class A common stock to determine whether warrants should be classified as liabilities or stockholders’ equity in its condensed consolidated balance sheet. In order for a warrant to be classified as stockholders’ equity, the warrant must be (a) indexed to the Company’s equity and (b) meet the conditions for equity classification in ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity. If a warrant does not meet the conditions for equity classification, it is carried on the condensed consolidated balance sheet as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants in Other income (expense), net. The Company determined that all warrants are required to be carried as a liability in the condensed consolidated balance sheet at fair value, with changes in fair value recorded in the condensed consolidated statement of operations (see Note 10 – Fair Value Measurements). At the closing of the Transaction on June 10, 2021, the warrants had an initial fair value of $74,408, which was recorded as liability and a reduction to additional paid in capital in the condensed consolidated balance sheet.

The following table is a summary of the number of shares of the Company’s Class A common stock issuable upon exercise of warrants outstanding at June 10, 2021:


	Number of Shares	Exercise Price		Redemption Price		Expiration Date	Classification	Initial Fair Value
Public Warrants	17,250,000	$	11.50	$	18.00	June 10, 2026	Liability	$	42,435
Private Warrants	10,150,000	$	11.50	N/A		June 10, 2026	Liability	$	31,973

On September 22, 2023, indie announced the commencement of the Offer and the Consent Solicitation relating to its outstanding Warrants.

The Offer and the Consent Solicitation expired at 11:59 p.m., Eastern Time on October 20, 2023. Upon expiration of the Offer and the Consent Solicitation, 24,658,461 Warrants, or approximately 90.0% of the outstanding Warrants, were tendered. Subsequently, on November 9, 2023, the Company issued 7,027,517 shares of Class A common stock, or an exchange ratio of 0.285, for the Warrants tendered in the Offer on October 25, 2023. Additionally, the Company received the approval of approximately 89.8% of the outstanding Warrants to amend the warrant agreement governing the Warrants (the “Amendment No. 2”), which exceeded the majority of the outstanding warrants required to effect the Amendment No. 2. This amendment permitted the Company to require that each Warrant that remained outstanding upon settlement of the Exchange Offer to be converted into 0.2565 shares of Class A common stock, which was a ratio 10.0% less than the exchange ratio applicable to the Exchange Offer.

The Company completed its exchange of the remaining 2,741,426 untendered Warrants on November 9, 2023 through issuance of 703,175 shares of Class A common stock. As a result of the completion of the Exchange Offer and the exchange for the remaining untendered Warrants, the Warrants were suspended from trading on the Nasdaq Capital Market as of the close of business on November 8, 2023, and delisted.

On November 9, 2023, the Warrants were remeasured to their fair value of $38,331 and reclassified per ASC 815-40 to Additional Paid in Capital in the consolidated balance sheet. The total change in fair value of a $7,066 net gain since December 31, 2022 was recorded to Other income (expense), net in the consolidated statement of operations.

As of December 31, 2023, there was no liability remaining on the balance sheet.

For the three months ended March 31, 2023, the Company recognized a net gain of $47,332 and none was recorded for the three months ended March 31, 2024.