NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
ION Acquisition Corp. 3 Ltd. (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on February 4, 2021. The Company was formed for the purpose
of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more
businesses or entities (a “Business Combination”).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such,
the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from February 4, 2021 (inception) through September 30, 2021 relates to the Company’s
formation and the initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after
the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from
the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s
Initial Public Offering was declared effective on April 29, 2021. On May 4, 2021, the Company consummated the Initial Public Offering
of 25,300,000 Class A ordinary shares (the “Public Shares”), which gives effect to the full exercise by the underwriters of
their over-allotment option in the amount of 3,300,000 Public Shares, at $10.00 per Public Share, generating gross proceeds of $253,000,000
which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 756,000 Class A ordinary shares (the “Private Placement Shares”) at a
price of $10.00 per Private Placement Share in a private placement to ION Holdings 3, LP (the “Sponsor”), generating gross
proceeds of $7,560,000, which is described in Note 4.
Transaction costs amounted to $14,457,724, consisting
of $5,060,000 of underwriting fees, $8,855,000 of deferred underwriting fees and $542,724 of other offering costs.
Following the closing of the Initial Public Offering
on May 4, 2021, an amount of $253,000,000 ($10.00 per Public Share) from the net proceeds of the sale of the Public Shares in the Initial
Public Offering and the sale of the Private Placement Shares was placed in a trust account (the “Trust Account”), and invested
in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds
itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company,
until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account
to the Company’s shareholders, as described below, except that the interest earned on the Trust Account can be released to the Company
to pay its tax obligations.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Shares,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The stock
exchange listing rules require that the Business Combination must be with one or more operating businesses or assets with a fair market
value equal to at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable
on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-Business Combination company
owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest
in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. There
is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide the holders of the Public
Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion
of the Business Combination, either (i) in connection with a general meeting called to approve the Business Combination or (ii) by
means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a
tender offer will be made by the Company, solely in its discretion.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Public Shareholders will be entitled to redeem
their Public Shares, for an amount equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days
prior to the consummation of the Business Combination, including any interest (which interest shall be net of taxes payable), divided
by the number of then issued and outstanding Public Shares, subject to certain limitations as described in the prospectus. Such amount
is $10.00 per Public Share. The per-share amount to be distributed to the Public Shareholders who properly redeem their shares
will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). The Class A
ordinary shares that are subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion
of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.”
The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, it receives an ordinary
resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders
who attend and vote at a general meeting of the Company. If a shareholder vote is not required and the Company decides not to hold a shareholder
vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association,
conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender
offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing
a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to
vote its Founder Shares (as defined in Note 5), private placement shares and any Public Shares purchased during or after the Initial Public
Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares,
without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
Notwithstanding the foregoing, if the Company
seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules,
a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert
or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% of the Public Shares without
the Company’s prior written consent.
Prior to the Public Offering, the Sponsor (a) has
agreed to waive its redemption rights with respect to any Founder Shares, Private Placement Shares, and Public Shares held by it in connection
with the completion of a Business Combination, (b) has agreed to waive its rights to liquidating distributions from the Trust Account
with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within the Combination
Period and (c) has agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to
modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business
Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period
(as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination
activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest
(which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares. However, if the Sponsor
or any of its affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account
if the Company fails to complete a Business Combination within the Combination Period.
The Company will have until May 4, 2023 to consummate
a Business Combination (the “Combination Period”). However, if the Company has not completed a Business Combination within
the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than 10 business days thereafter, redeem 100% of 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 (less up to $100,000 of interest to pay dissolution
expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which
redemption will completely extinguish the rights of the Public Shareholders as shareholders (including the right to receive further liquidating
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining Public Shareholders and its Board of Directors, liquidate and dissolve, subject, in each case, to the Company’s obligations
under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Sponsor has agreed to waive their rights to
liquidating distributions from the Trust Account with respect to the Founder Shares and Private Placement Shares if the Company fails
to complete a Business Combination within the Combination Period. For the avoidance of doubt, there will be no redemption rights granted
to the private placement shares or liquidating distributions rights from the trust account with respect to the Company’s private
placement shares if the Company fails to complete the initial business combination within the Combination Period. However, if the Sponsor
or any of its affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account
if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights
to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Period, and in such event, such amounts will be included with the other funds held in the Trust Account
that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share
value of the assets remaining available for distribution will be less than the Initial Public Offering price per Public Share ($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor will agree that it will be liable to the Company if and to the extent any claims by a third party (other than the
Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account
to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Account as of
the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of trust assets, less taxes
payable; provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies
held in the Trust Account.
NOTE 2. REVISION OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
In connection with the preparation of the Company’s
financial statements as of September 30, 2021, management determined it should revise its previously reported financial statements.
The Company determined that it had improperly valued its Class A ordinary shares subject to possible redemption at the closing of
the Company’s Initial Public Offering. The Company previously determined the Class A ordinary shares subject to possible redemption
to be equal to the redemption value of $10.00 per Class A ordinary share, while also taking into consideration a redemption cannot
result in net tangible assets being less than $5,000,001. Management determined that the Class A ordinary shares issued during the
Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s
control. Therefore, management concluded that the redemption value should include all Class A ordinary shares subject to possible
redemption, resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. In accordance
with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated
the changes and has determined that the related impact was not material to any previously presented financial statements. Therefore,
the Company will present this revision in a prospective manner in all future filings. Under this approach, the previously issued IPO
Balance Sheet and Form 10-Qs will not be amended, but historical amounts presented in the current and future filings will be recast to
be consistent with the current presentation, and an explanatory footnote will be provided. As a result, management has noted a reclassification
adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Class A
ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated
deficit and Class A ordinary shares.
In connection with the change in presentation
for the Class A ordinary shares subject to redemption, the Company also revised its net loss per ordinary share calculation. In order
to determine the net income (loss) attributable to both the redeemable Class A ordinary shares and the non-redeemable Class A shares and
Class B shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated using the total
net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the accretion
to redemption value of the redeemable ordinary shares subject to possible redemption was considered to be dividends paid to the public
shareholders.
There has been no change in the Company’s
total assets, liabilities or operating results.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The impact of the revision on the Company’s
financial statements is reflected in the following table.
|
Balance Sheet as of May 4, 2021 (audited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
241,122,270
|
|
|
$
|
11,877,730
|
|
|
$
|
253,000,000
|
|
|
Class A ordinary shares
|
|
$
|
194
|
|
|
$
|
(118
|
)
|
|
$
|
76
|
|
|
Additional paid-in capital
|
|
$
|
5,004,179
|
|
|
$
|
(5,004,179
|
)
|
|
$
|
—
|
|
|
Accumulated deficit
|
|
$
|
(5,000
|
)
|
|
$
|
(6,873,433
|
)
|
|
$
|
(6,878,433
|
)
|
|
Total shareholders’ equity (deficit)
|
|
$
|
5,000,006
|
|
|
$
|
(11,877,730
|
)
|
|
$
|
(6,877,724
|
)
|
|
Balance Sheet as of June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
240,981,330
|
|
|
$
|
12,018,670
|
|
|
$
|
253,000,000
|
|
|
Class A ordinary shares
|
|
$
|
195
|
|
|
$
|
(119
|
)
|
|
$
|
76
|
|
|
Additional paid-in capital
|
|
$
|
5,145,117
|
|
|
$
|
(5,145,117
|
)
|
|
$
|
—
|
|
|
Accumulated deficit
|
|
$
|
(145,941
|
)
|
|
$
|
(6,873,433
|
)
|
|
$
|
(7,019,374
|
)
|
|
Total shareholders’ equity (deficit)
|
|
$
|
5,000,004
|
|
|
$
|
(12,018,669
|
)
|
|
$
|
(7,018,665
|
)
|
|
Statement
of Operations For the period from February 4, 2021 through June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Weighted average shares outstanding, Redeemable Class A
|
|
|
—
|
|
|
|
11,179,070
|
|
|
|
11,179,070
|
|
|
Basic and diluted net income per Redeemable Class A shares
|
|
$
|
0.00
|
|
|
$
|
1.28
|
|
|
$
|
1.28
|
|
|
Weighted average shares outstanding, Non-Redeemable Class A and Class B
|
|
|
6,723,411
|
|
|
|
(524,830
|
)
|
|
|
6,198,581
|
|
|
Basic and diluted net loss per Non-Redeemable Class A shares and Class B
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.00
|
)
|
|
Statement of Operations For the Three Months ending June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Revised
|
|
|
Weighted average shares outstanding, Redeemable Class A
|
|
|
—
|
|
|
|
25,300,000
|
|
|
|
25,300,000
|
|
|
Basic and diluted net income per Redeemable Class A shares
|
|
$
|
0.00
|
|
|
$
|
0.57
|
|
|
$
|
0.57
|
|
|
Weighted average shares outstanding, Non-Redeemable Class A and Class B
|
|
|
7,234,286
|
|
|
|
(743,989
|
)
|
|
|
6,490,297
|
|
|
Basic and diluted net income (loss) per Non-Redeemable Class A shares
and Class B
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.00
|
|
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations or cash flows.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
In management’s opinion, the Company has
made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its
financial position, results of operations and cash flows.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on
May 3, 2021, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on May 5, 2021 and May 10, 2021. The
interim results for the three months and for the period ended September 30, 2021 are not necessarily indicative of the results to be expected
for the period ending December 31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies, including not being required to comply with the independent registered public accounting firm attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its
periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Offering Costs
Offering costs consisted of legal, accounting and other expenses incurred
through the balance sheet date that were directly related to the Initial Public Offering. Offering costs amounting to $14,457,724 were
initially charged to temporary equity which resulted in accretion of the ordinary shares subject to redemption upon the completion of
the Initial Public Offering to the redemption amount.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of September 30, 2021.
Marketable Securities Held in Trust Account
At September 30, 2021, substantially all of the
assets held in the Trust Account were held in mutual funds which are invested primarily in U.S. Treasury securities.
Class A Ordinary Shares Subject to Possible
Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities
from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable ordinary shares (including 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 the Company’s control)
are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
Class A Public Shares feature certain redemption rights that are considered to be outside of the Company’s control and
subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, Class A ordinary shares subject to possible redemption
are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance
sheet.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each
reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book
value to redemption amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional
paid-in capital and accumulated deficit.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
At September 30, 2021, the Class A ordinary
shares subject to possible redemption and reflected in the condensed balance sheet are reconciled in the following table:
|
Gross proceeds
|
|
$
|
253,000,000
|
|
|
Less:
|
|
|
|
|
|
Class A ordinary shares issuance costs
|
|
|
(14,457,724
|
)
|
|
Plus:
|
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
14,457,724
|
|
|
|
|
|
|
|
|
Class A ordinary shares subject to possible redemption
|
|
$
|
253,000,000
|
|
Income Taxes
The Company accounts for income taxes under ASC
Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets
and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2021, there
were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues
under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Net loss per Ordinary Share
The Company complies with accounting and disclosure requirements of
FASB ASC Topic 260, “Earnings Per Share”.. The condensed consolidated statements of operations include a presentation of income
(loss) per redeemable Class A ordinary share and income (loss) per non-redeemable Class A share and Class B share following the two-class
method of income (loss) per share. In order to determine the net income (loss) attributable to both the redeemable Class A ordinary shares
and the non-redeemable Class A shares and Class B shares, the Company first considered the total income (loss) allocable to both sets
of shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss)
per share, any remeasurement of the accretion to redemption value of the redeemable ordinary shares subject to possible redemption was
considered to be dividends paid to the public shareholders.
The following tables reflect the calculation of
basic and diluted net loss per ordinary share (in dollars, except per share amounts):
|
|
|
Three Months Ended
September 30, 2021
|
|
|
For
the period from
February 4, 2021 through
September 30, 2021
|
|
|
|
|
Redeemable Class A
|
|
|
Non-Redeemable Class A and Class B
|
|
|
Redeemable Class A
|
|
|
Non-Redeemable Class A and Class B
|
|
|
Basic and diluted net loss per ordinary share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net loss
|
|
$
|
(164,766
|
)
|
|
$
|
(46,115
|
)
|
|
$
|
(257,646
|
)
|
|
$
|
(99,176
|
)
|
|
Accretion of temporary equity to redemption value
|
|
|
—
|
|
|
|
—
|
|
|
|
14,457,724
|
|
|
|
—
|
|
|
Allocation of net income (loss), as adjusted
|
|
$
|
(164,766
|
)
|
|
$
|
(46,115
|
)
|
|
$
|
14,200,078
|
|
|
$
|
(99,176
|
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
25,300,000
|
|
|
|
7,081,000
|
|
|
|
17,057,466
|
|
|
|
6,565,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per ordinary share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.83
|
|
|
$
|
(0.02
|
)
|
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
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 financial
statements.
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 25,300,000 Public Shares, which gives effect to the full exercise by the underwriters of their over-allotment option in the amount
of 3,300,000 shares, at a purchase price of $10.00 per Public Share.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased 756,000 Private Placement Shares at a price of $10.00 per Private Placement Share, for an aggregate
purchase price of $7,560,000 in a private placement. A portion of the proceeds from the Private Placement Shares were added to the proceeds
from the Initial Public Offering which are held in the Trust Account. If the Company does not complete a Business Combination within the
Combination Period, the proceeds from the sale of the Private Placement Shares will be used to fund the redemption of the Public Shares
(subject to the requirements of applicable law). For the avoidance of doubt, there will be no redemption rights granted to the Private
Placement Shares or liquidating distributions rights from the trust account with respect to the Private Placement Shares if the Company
fails to complete the initial Business Combination within the Combination Period.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
During the period ended March 31, 2021, the Sponsor
paid $25,000 to cover certain offering and formation costs of the Company in consideration for 6,325,000 Class B ordinary shares (the
“Founder Shares”). On April 6, 2021, the Company effected a share capitalization of 862,500 shares, which resulted in 7,187,500
Founder Shares issued and outstanding as of the date thereof. On April 29, 2021, the Sponsor surrendered 862,500 Founder Shares and, as
a result, there are 6,325,000 Founder Shares issued and outstanding. All share and per share amounts have been retroactively restated
to reflect the share capitalization. The Founder Shares included up to 825,000 shares that were subject to forfeiture depending on the
extent to which the underwriters’ over-allotment option was exercised, so that the number of Founder Shares would equal, on an as-converted
basis, approximately 20% of the Company’s issued and outstanding ordinary shares (excluding the Private Placement Shares) after
the Initial Public Offering. Due to exercise of the over-allotment option in full, 825,000 Founder Shares are no longer subject to forfeiture.
The Sponsor agreed, subject to limited exceptions,
not to transfer, assign or sell any of its Founder Shares until the earliest of: (A) one year after the completion of a Business Combination
and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share
(as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes
a liquidation, merger, share exchange or other similar transaction that results in all of the Public Shareholders having the right to
exchange their Class A ordinary shares for cash, securities or other property.
Promissory Note — Related Party
On February 21, 2021, the Company issued an unsecured
promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 31, 2021 and (ii) the
completion of the Initial Public Offering. The outstanding balance under the Promissory Note of $146,100 was repaid at the closing of
the Initial Public Offering. Borrowings under the Promissory Note are no longer available.
Due from Sponsor
A portion of the proceeds from the sale of the
Private Placement Shares in the amount of $1,553,900 to be held outside of the Trust Account for working capital purposes was received
by the Company on August 12, 2021 and no amount is due from the Sponsor as of September 30, 2021.
Administrative Services Agreement
The Company entered into an agreement commencing
on April 29, 2021, pursuant to which it agreed to pay the Sponsor up to $10,000 per month for office space, utilities and administrative
and support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees.
For the three months ended September 30, 2021 and the period from February 4, 2021 (inception) through September 30, 2021, the Company
incurred $30,000 and $50,000, respectively, in fees for these services. As of September 30, 2021, $10,000 of such fees is included in
accounts payable and accrued expense in the accompanying balance sheet.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Forward Purchase Agreements
The Company entered into forward purchase agreements,
pursuant to which the forward purchase investors (ION Crossover Partners LP, ION Asset Management Ltd., The Phoenix Insurance Company
Ltd. and The Phoenix Excellence Pension and Provident Fund Ltd.) agreed to purchase an aggregate of up to 12,000,000 Class A ordinary
shares, at a purchase price of $10.00 per share, or up to $120.0 million in the aggregate, in private placements that will close substantially
concurrently with the closing of the Company's initial Business Combination (the “Forward Purchase Shares”). Any reduction
in the number of Forward Purchase Shares will be made in the Company’s sole discretion. The Forward Purchase Shares will be identical
to the Public Shares, except that the holders thereof will have certain registration rights. The forward purchase agreements and the registration
rights agreement will also provide that the forward purchase investors are entitled to registration rights with respect to the Forward
Purchase Shares. The proceeds from the sale of the Forward Purchase Shares may be used as part of the consideration to the sellers in
a Business Combination, expenses in connection with a Business Combination or for working capital in the post-business combination company.
The forward purchases will be required to be made regardless of whether any Class A ordinary shares are redeemed by the Public Shareholders
and are intended to provide the Company with a minimum funding level for a Business Combination. No forward purchase investor will have
the ability to approve the Business Combination prior to the signing of a material definitive agreement. The Forward Purchase Shares will
be issued only in connection with the closing of a Business Combination.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans
would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the
lender’s discretion, up to $1,500,000 of notes may be converted upon completion of a Business Combination into shares at a price
of $10.00 per share. Such shares would be identical to the Private Placement Shares. In the event that a Business Combination does not
close, the Company 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. As of September 30, 2021, the Company had no borrowings under the
Promissory Note and the Working Capital Loans.
NOTE 7. COMMITMENTS
Risks and Uncertainties
Management has evaluated the impact of the COVID-19
pandemic on the industry 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, and/or search for a target company, the specific impact is not readily determinable as
of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Third Point Side Letter Agreement
On April 15, 2021, the Company entered into a
side letter agreement with Third Point, pursuant to which if Third Point purchases more than 5% of the shares sold in the Initial Public
Offering then the Company will use commercially reasonable efforts to provide Third Point the opportunity to purchase at least 10% of
the shares issued by the Company or its business combination target, as the case may be, in a private offering in order to facilitate
the Initial Business Combination.
Registration Rights
Pursuant to a registration rights agreement entered
into on April 29, 2021, the holders of the Founder Shares, Private Placement Shares, Forward Purchase Shares, and any Private Placement
Shares that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the conversion of the
Founder Shares) will be entitled to registration rights requiring the Company to register a sale of any of the Company’s securities
held by them pursuant to a registration rights agreement. The holders of these securities will be entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The registration
rights agreement will not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s
securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Underwriting Agreement
The underwriters were provided a cash underwriting
discount of $0.20 per Public Share, or $5,060,000 in the aggregate, payable upon the closing of the Initial Public Offering. In addition,
the underwriters are entitled to a deferred fee of $0.35 per Public Share, or $8,855,000 in the aggregate. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
NOTE 8. SHAREHOLDER’S EQUITY
Preference Shares — The Company
is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other rights
and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2021, there were
no preference shares issued or outstanding.
Class A Ordinary Shares —
The Company is authorized to issue 500,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary
shares are entitled to one vote for each share. At September 30, 2021, there were 756,000 Class A ordinary shares issued or outstanding,
excluding 25,300,000 Class A ordinary shares subject to possible redemption which are presented as temporary equity.
Class B Ordinary Shares —
The Company is authorized to issue 50,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary
shares are entitled to one vote for each share. At September 30, 2021, there were 6,325,000 Class B ordinary shares issued and outstanding.
Only holders of Class B ordinary shares will be
entitled to vote on the appointment of directors in any election held prior to or in connection with the completion of the Business Combination.
Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all other matters submitted to
a vote of shareholders, except as required by law.
The Class B ordinary shares will automatically
convert into Class A ordinary shares concurrently with or immediately following the consummation of a Business Combination on a one-for-one
basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like. In the case
that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in connection with a Business Combination,
the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, 20% of the total number
of Class A ordinary shares outstanding (excluding the Private Placement Shares) after such conversion (after giving effect to any redemptions
of Class A ordinary shares by Public Shareholders), including the total number of Class A ordinary shares issued, or deemed issued or
issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with
or in relation to the consummation of a Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable
for or convertible into Class A ordinary shares issued, or to be issued, to any seller in a Business Combination and any Private Placement
Shares issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder
Shares will never occur on a less than one-for-one basis.
ION ACQUISITION CORP 3 LTD
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Private Placement Shares are identical to
the Public Shares, except that the Private Placement Shares are not (i) redeemable by the Company, (ii) transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions, and (iii) are entitled to registration
rights. For the avoidance of doubt, there are no redemption rights granted to the Private Placement Share or liquidating distributions
rights from the trust account with respect to the Private Placement Shares if the Company fails to complete the initial business combination
within the Combination Period.
NOTE 9. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial
assets reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets
or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date.
In connection with measuring the fair value of its assets, the Company seeks to maximize the use of observable inputs (market data obtained
from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price
assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs
and unobservable inputs used in order to value the assets and liabilities:
|
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value.
|
Description
|
|
Level
|
|
September 30,
2021
|
|
|
Assets:
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
1
|
|
$
|
253,006,867
|
|
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review,
the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
