References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to ION Acquisition Corp 3 Ltd. References to our "management" or
our "management team" refer to our officers and directors. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Form 10-Q including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's final prospectus for its Initial Public Offering filed with the SEC on
May 3, 2021. The Company's securities filings can be accessed on the EDGAR
section of the SEC's website at www.sec.gov. Except as expressly required by
applicable securities law, the Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on February 4,
2021, formed for the purpose of effecting a merger, amalgamation, share
exchange, asset acquisition, share purchase, reorganization or other similar
Business Combination with one or more businesses. We intend to effectuate our
Business Combination using cash derived from the proceeds of the Initial Public
Offering and the sale of the Private Placement Shares, our shares, debt or a
combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through March 31, 2021 were
organizational activities and those necessary to prepare for the Initial Public
Offering, described below. We do not expect to generate any operating revenues
until after the completion of our initial Business Combination. We expect to
generate non-operating income in the form of interest income on marketable
securities held after the Initial Public Offering. We expect that we will incur
increased expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence
expenses in connection with searching for, and completing, a Business
Combination.
For the period from February 4, 2021 (inception) through March 31, 2021, we had
a net loss of $5,000, which consisted of formation and operating expenses.
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Liquidity and Capital Resources
As of March 31, 2021, we had no cash. Until the consummation of the Initial
Public Offering, our only source of liquidity was an initial purchase of
ordinary shares by the Sponsor and a loan from our Sponsor.
Subsequent to the end of the quarterly period covered by this Quarterly Report,
on May 4, 2021, we consummated the Initial Public Offering of 25,300,000 Class A
ordinary shares of the Company, par value $0.0001 per share (the "Shares"), at a
price of $10.00 per Share, which included the full exercise by the underwriters
of their over-allotment option in the amount of 3,300,000 Shares, generating
gross proceeds of $253,000,000. Simultaneously with the closing of the Initial
Public Offering, we consummated the sale of 756,000 Private Placement Shares to
the Sponsor at a price of $10.00 per Private Placement Share, generating gross
proceeds of $7,560,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Shares, a total of $253,000,000
was placed in the Trust Account. We incurred $14,457,724 in transaction costs,
including $5,060,000 of underwriting fees, $8,855,000 of deferred underwriting
fees and $542,724 of other offering costs. As of March 31, 2021, we had zero in
cash and cash equivalents.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account, which
interest shall be net of taxes payable and excluding deferred underwriting
commissions, to complete our Business Combination. We may withdraw interest from
the Trust Account to pay taxes, if any. To the extent that our share capital or
debt is used, in whole or in part, as consideration to complete a Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account primarily to identify
and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a Business Combination, we may
repay such loaned amounts out of the proceeds of the Trust Account released to
us. In the event that a Business Combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from our Trust Account would be used for such
repayment. Upon completion of a business combination, up to $1,500,000 of such
loans may be convertible into private placement shares, at a price of $10.00 per
private placement share, at the option of the lender. The private placement
shares would be identical to the Private Placement Shares.
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We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our initial Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our public shares upon completion of
our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, utilities and administrative and
support services. We began incurring these fees on April 29, 2021 and will
continue to incur these fees monthly until the earlier of the completion of the
Business Combination and our liquidation. The underwriters are entitled to a
deferred fee of $0.35 per 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 we complete a Business Combination, subject to
the terms of the underwriting agreement.
We entered into forward purchase agreements on April 6, 2021, pursuant to which
the forward purchase investors agreed to purchase 12,000,000 Class A ordinary
shares, at a purchase price of $10.00 per share, or up to $120,000,000 in the
aggregate, in private placements that will close substantially concurrently with
the closing of a Business Combination. Any reduction in the number of forward
purchase shares will be made in the Company's sole discretion. The forward
purchase shares are 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 are 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.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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