NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(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 June 30, 2022, the Company had not commenced
any operations. All activity for the period from February 4, 2021 (inception) through June 30, 2022 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 on marketable
securities held in the Trust Account (as defined below) 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
JUNE 30, 2022
(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 initially $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 7). 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
JUNE 30, 2022
(Unaudited)
The Sponsor 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. 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. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars and 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.
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 Annual Report on Form 10-K as filed with the SEC on March 30, 2022.
The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for
the period ending December 31, 2022 or for any future periods.
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined
that the mandatory liquidation and subsequent dissolution, should the Company be unable to complete a Business Combination, raises substantial
doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after May 4, 2023.
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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.
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires the Company’s 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. As of June 30, 2022 there were $8,855,000 of deferred offering
cost recorded in the accompanying balance sheet.
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 June 30, 2022 or December 31, 2021.
Marketable Securities Held in Trust Account
At June 30, 2022 and December 31, 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.
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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.” 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 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 June 30, 2022 and December 31, 2021, Class A ordinary shares
subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section
of the Company’s balance sheets.
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.
At June 30, 2022 and December 31, 2021, the Class
A ordinary shares subject to possible redemption and reflected in the condensed balance sheets are reconciled in the following table:
| Gross proceeds | |
$ | 253,000,000 | |
| Less: | |
| | |
| Redeemable 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 at December 31, 2021 | |
$ | 253,000,000 | |
| Plus: | |
| | |
| Accretion of carrying value to redemption value | |
| 279,342 | |
| | |
| | |
| Class A ordinary shares subject to possible redemption at June 30, 2022 | |
$ | 253,279,342 | |
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 June 30, 2022 and December
31, 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
JUNE 30, 2022
(Unaudited)
Net Income (Loss) Per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. The condensed statements of operations include a presentation of
income (loss) per redeemable Class A ordinary share and income (loss) per non-redeemable Class A ordinary share and Class B ordinary
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 ordinary shares and Class B ordinary 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 Class A 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 income (loss) per ordinary share (in dollars, except per share amounts):
| | |
Three Months Ended
June 30, 2022 | | |
Three Months Ended June 30, 2021 | | |
Six Months Ended
June 30, 2022 | | |
For the Period from
February 4, 2021
(inception) through
June 30, 2021 | |
| | |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| Basic and diluted net income (loss) per ordinary share | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Numerator: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Allocation of net income (loss) | |
$ | 108,941 | | |
$ | 30,491 | | |
$ | (112,166 | ) | |
$ | (28,774 | ) | |
$ | (96,682 | ) | |
$ | (27,060 | ) | |
$ | (93,884 | ) | |
$ | (52,057 | ) |
| Adjustment of interest income on trust account attributed to accretion of temporary equity | |
| (218,256 | ) | |
| (61,086 | ) | |
| — | | |
| — | | |
| (218,256 | ) | |
| (61,086 | ) | |
| — | | |
| — | |
| Accretion of temporary equity to redemption value | |
| 279,342 | | |
| — | | |
| 14,457,724 | | |
| — | | |
| 279,342 | | |
| — | | |
| 14,457,724 | | |
| — | |
| Allocation of net income (loss), as adjusted | |
$ | 170,027 | | |
$ | (30,595 | ) | |
$ | 14,345,558 | | |
$ | (28,774 | ) | |
$ | (35,597 | ) | |
$ | (88,146 | ) | |
$ | 14,363,840 | | |
$ | (52,057 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average shares outstanding | |
| 25,300,000 | | |
| 7,081,000 | | |
| 25,300,000 | | |
| 6,490,297 | | |
| 25,300,000 | | |
| 7,081,000 | | |
| 11,179,070 | | |
| 6,198,581 | |
| Basic and diluted net income (loss) per ordinary share | |
$ | 0.01 | | |
$ | (0.00 | ) | |
$ | 0.57 | | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | 1.28 | | |
$ | (0.00 | ) |
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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 Corporation coverage limit 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 sheets, 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 3. 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.
NOTE 4. 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 5. 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. In 2021 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.
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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 June 30, 2022.
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 and six months ended June 30, 2022, the Company incurred $30,000 and $60,000 in fees for these services, of which $10,000
are recorded as accrued expenses in the condensed balance sheets. For the period ended June 30, 2021, the Company incurred $20,000 in
fees for these services, of which $10,000 is included in accounts payable and accrued expense in the accompanying balance sheet.
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., ION Tech Fund Ltd., The Phoenix
Insurance Company Ltd., The Phoenix Insurance Company Ltd. (Nostro) 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 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 June 30, 2022 and December 31, 2021, the Company had no
borrowings under the Promissory Note and the Working Capital Loans.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate 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, the results of its operations, and/or its 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
Pursuant to a side letter agreement entered into
on April 15, 2021, because Third Point purchased approximately 7% of the shares sold in the Initial Public Offering, the Company agreed
to 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.
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
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.
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 7. SHAREHOLDERS’ DEFICIT
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 June 30, 2022 and December 31,
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 June 30, 2022 and December 31, 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 June 30, 2022 and December 31, 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.
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.
ION ACQUISITION CORP 3 LTD.
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS
JUNE 30, 2022
(Unaudited)
NOTE 8. 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 June 30, 2022 and December 31, 2021 which indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| Description | |
Level | | |
June 30, 2022 | | |
December 31,
2021 | |
| Assets: | |
| | |
| | |
| |
| Marketable securities held in Trust Account | |
| 1 | | |
$ | 253,379,342 | | |
$ | 253,012,212 | |
| | |
| | | |
| | | |
| | |