Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
The management of ION Acquisition Corp 3 Ltd. (the "Company") has re-evaluated
the Company's application of ASC 480-10-S99-3A to its accounting classification
of the redeemable Class A ordinary shares, par value $0.0001 per share (the
"Public Shares"), issued in the Company's initial public offering (the "IPO") on
May 4, 2021. Historically, a portion of the Public Shares were classified as
permanent equity to maintain stockholders' equity greater than $5 million on the
basis that the Company will not redeem its Public Shares in an amount that would
cause its net tangible assets to be less than $5,000,001, as described in the
Company's amended and restated memorandum and articles of association (the
"Charter"). Pursuant to such re-evaluation, the Company's management has
determined that the Public Shares include certain provisions that require
classification of all of the Public Shares as temporary equity regardless of the
net tangible assets redemption limitation contained in the Charter. In addition,
in connection with the change in presentation for the Public Shares, the Company
also revised its net loss per ordinary share calculation.
Therefore, on December 9, 2021, the Company's management, together with the
Audit Committee of the Board of Directors of the Company (the "Audit
Committee"), concluded that the Company's previously issued (i) audited balance
sheet as of May 4, 2021, as filed in Form 8-K with the U.S. Securities and
Exchange Commission (the "SEC") on May 10, 2021 and (ii) unaudited interim
financial statements for the three months ended June 30, 2021 and for the
period from February 4, 2021 (Inception) through June 30, 2021, filed with the
SEC on August 11, 2021 (collectively, the "Affected Periods"), should be
restated to report all Public Shares as temporary equity and should no longer be
relied upon. As such, the Company is restating its financial statements for the
Affected Periods in an Amendment No. 1 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2021, to be filed with the SEC
(the "Q3 Form 10-Q/A").
The restatement does not have an impact on the Company's cash position.
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting and that the Company's disclosure controls and
procedures were not effective. The Company's remediation plan with respect to
such material weakness will be described in more detail in the Q3 Form 10-Q/A.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with the
Company's independent registered public accounting firm.
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