FORM
(MARK ONE)
For the quarter ended
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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As of August 14 2024, there were
TABLE OF CONTENTS
1
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
ISRAEL ACQUISITIONS CORP
CONDENSED BALANCE SHEETS
(UNAUDITED)
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
ASSETS | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Prepaid expenses |
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Cash and Marketable Securities held in Trust Account |
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Total Current Assets |
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Total Assets | $ | | $ | | ||
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | ||||||
Current liabilities: |
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Accrued expenses | $ | | $ | | ||
Accounts payable |
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Deferred underwriting commissions | | | ||||
Total Current Liabilities | | | ||||
Total Liabilities |
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Commitments and Contingencies (Note 5) |
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Class A ordinary shares subject to possible redemption, $ | | | ||||
Shareholders’ Deficit |
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Preference shares, $ |
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Class A ordinary shares, $ |
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Class B ordinary shares, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total Shareholders’ Deficit |
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TOTAL LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ISRAEL ACQUISITIONS CORP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three | For the Three | For the Six | For the Six | |||||||||
Months Ended | Months Ended | Months Ended | Months Ended | |||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Marketing and advertising expense | $ | — | $ | — | $ | — | $ | | ||||
Administrative expense | | | | | ||||||||
Administrative expense – related party | | | | | ||||||||
Legal and accounting expense | | | | | ||||||||
Dues and subscriptions expense | | | | | ||||||||
Listing fee expense | | | | | ||||||||
Insurance expense | | | | | ||||||||
Loss from operations | ( | ( | ( | ( | ||||||||
Other income: | ||||||||||||
Unrealized gain on marketable securities held in Trust Account | — | | — | | ||||||||
Dividend income on marketable securities held in Trust Account | | | | | ||||||||
Dividend income | | | | | ||||||||
Interest income | | | | | ||||||||
Other income, net | | | | | ||||||||
Net income | $ | | $ | | $ | | $ | | ||||
Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption |
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Basic and diluted net income per share, Class A ordinary shares subject to possible redemption | $ | | $ | | $ | | $ | | ||||
Basic and diluted weighted average shares outstanding, non-redeemable Class A ordinary shares | | | | | ||||||||
Basic and diluted net loss per share, non-redeemable Class A ordinary shares | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted weighted average shares outstanding, non-redeemable Class B ordinary shares | | | | | ||||||||
Basic and diluted net loss per share, non-redeemable Class B ordinary shares | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ISRAEL ACQUISITIONS CORP
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
Class A |
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Ordinary Shares Subject to Possible | Class A | Class B | Additional | Total | |||||||||||||||||||||
Redemption | Ordinary Shares | Ordinary Shares | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance – December 31, 2023 |
| | $ | |
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| | $ | | $ | — | $ | ( | $ | ( | |||||||
Remeasurement of Class A ordinary shares to redemption value |
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| ( |
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Redemption of Class A ordinary shares | ( | ( | — | — | — | — | — | — | — | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance - March 31, 2024 | |
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| | $ | |
| | $ | | $ | — | $ | ( | $ | ( | ||||||||
Remeasurement of Class A ordinary shares to redemption value | — | | — | — | — | — | — | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance – June 30, 2024 |
| | | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||||
Class A |
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Ordinary Shares Subject to Possible | Class A | Class B | Additional | Total | |||||||||||||||||||||
Redemption | Ordinary Shares | Ordinary Shares | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance – December 31, 2022 |
| — | $ | — |
| — | $ | — |
| | $ | | $ | | $ | ( | $ | ( | |||||||
Issuance of Class A ordinary shares in initial public offering | | | — | — | — | — | | — | | ||||||||||||||||
Sale of private placement units |
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Remeasurement of Class A ordinary shares to redemption value | — | | — | — | — | — | ( | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance - March 31, 2023 | | | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||||||
Transfer of Founder Shares | — | — | — | — | — | — | | — | | ||||||||||||||||
Remeasurement of Class A ordinary shares to redemption value | — | | — | — | — | — | ( | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance – June 30, 2023 | | | | $ | | | $ | | $ | — | $ | ( | $ | ( | |||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ISRAEL ACQUISITIONS CORP
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Six Months | Six Months | |||||
Ended | Ended | |||||
June 30, | June 30, | |||||
| 2024 |
| 2023 | |||
Cash Flows from Operating Activities: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Unrealized gain on marketable securities held in Trust Account |
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Excess fair value of transfer of Founder Shares | — | | ||||
Changes in operating assets and liabilities: |
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Prepaid expenses |
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Due to related party | ( | | ||||
Accounts payable | | | ||||
Accrued expenses | | ( | ||||
Net cash provided by (used in) operating activities |
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Cash Flows from Investing Activities: | ||||||
Purchase and reinvestment of marketable securities held in Trust Account | ( | ( | ||||
Proceeds from redemption of marketable securities held in Trust Account | | — | ||||
Net cash provided by (used in) investing activities | | ( | ||||
Cash Flows from Financing Activities: |
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Proceeds from issuance of ordinary shares |
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Proceeds from sale of private placement units |
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Payment of promissory note – related party | — | ( | ||||
Payment of offering costs | — | ( | ||||
Proceeds from promissory note – related party | | — | ||||
Redemptions of Class A ordinary shares subject to redemption | ( | — | ||||
Net cash (used in) provided by financing activities |
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Net Change in Cash and Cash Equivalents |
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Cash and Cash Equivalents - Beginning |
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Cash and Cash Equivalents - Ending | $ | | $ | | ||
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Non-Cash Investing and Financing Activities: |
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Remeasurement of Class A ordinary shares subject to possible redemption | $ | | $ | | ||
Deferred underwriter fee payable | $ | — | $ | | ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
ISRAEL ACQUISITIONS CORP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Description of Organization, Business Operations and Liquidity and Capital Resources
Israel Acquisitions Corp (the “Company”) was incorporated as a blank check company in the Cayman Islands on August 24, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
As of June 30, 2024, the Company had not commenced any operations. All activity for the period from August 24, 2021 (inception) through June 30, 2024 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and, since the completion of the Initial Public Offering, a search for a target to consummate a Business Combination. The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company will generate non-operating income in the form of gains on marketable securities held in the Trust Account, as well as interest and dividend income on cash and cash equivalents from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on January 12, 2023 (the “Registration Statement”). On January 18, 2023, the Company consummated its Initial Public Offering of
Following the closing of the Initial Public Offering on January 18, 2023, $
On January 8, 2024, by special resolution and at an extraordinary general meeting of shareholders, the Company (i) entered into an amendment (the “Trust Agreement Amendment”) to the Invest Management Trust Agreement dated as of January 12, 2023 (the “Trust Agreement”), with Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company) (the “Trustee”) and (ii) amended the Company’s Second Amended and Restated Memorandum and Articles of Association, in its entirety, by adopting the Company’s Third Amended and Restated Memorandum and Articles of Association, pursuant to which the Company may extend the date by which the Company must consummate an initial business combination (the “Termination Date”) from
6
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 Units, although substantially all of the net proceeds are intended to be applied generally toward consummating an initial business combination. There is no assurance that the Company will be able to complete an initial business combination successfully. The Company must complete an initial business combination having an aggregate fair market value of at least
The Company will provide its holders of the outstanding Public Shares (the “public shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of an initial business combination either (i) in connection with a shareholder meeting called to approve the initial business combination or (ii) by means of a tender offer. Except as required by law or the rules of Nasdaq, the decision as to whether the Company will seek shareholder approval of an initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account. There will be no redemption rights upon the completion of an initial business combination with respect to the Company’s warrants.
The Company will proceed with an initial business combination if the Company has net tangible assets of at least $
The Sponsor and our executive officers and directors have agreed (a) to waive their respective redemption rights with respect to any Founder Shares, Private Shares, or Public Shares held by them in connection with the completion of an initial business combination, (b) to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Shares if the Company fails to consummate an initial business combination, and (c) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association that would affect a public shareholders’ ability to convert or sell their Public Shares to the Company in connection with an initial business combination or affect the substance or timing of the Company’s obligation to redeem
If the Company is unable to complete an initial 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 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 earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors (the “Board”), dissolve and liquidate, 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. There will be no redemption rights or liquidating distributions with respect to the Company’s Public Warrants or Private Warrants, which will expire worthless if the Company fails to complete an initial business combination within the Combination Period.
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In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor 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 $
Business Combination Agreement
On January 2, 2024, the Company entered into a business combination agreement with Pomvom Ltd., a company organized under the laws of Israel (“Pomvom,” and such agreement, the “Business Combination Agreement”), pursuant to which, among other things and subject to the terms and conditions contained therein (i) Pomvom will cause a company organized under the laws of the State of Israel and wholly owned by a trustee (the “NewPubCo”) to be formed, (ii) Pomvom will cause a Cayman Islands exempted company and wholly owned, direct subsidiary of NewPubco (“Merger Sub”) to be formed, (iii) Pomvom will cause NewPubCo and Merger Sub to become a party to the Business Combination Agreement by delivering a joinder to the Business Combination Agreement, (iv) Pomvom will effect the Share Split (as defined therein), (v) NewPubco, the shareholders of Pomvom and the holders of equity awards of Pomvom will effect the Equity Exchange (as defined therein), and (vi) Merger Sub will merge with and into the Company, with the Company surviving the merger as a direct wholly owned subsidiary of NewPubCo (the “Merger”).
On April 22, 2024, we entered into an amendment with Pomvom (the “Amendment”) to the Business Combination Agreement. Pursuant to the Amendment, the we agreed with Pomvom to (i) extend the date by which all members of the board of directors of the post-combination company shall be agreed determined from April 30, 2024, to June 30, 2024, (ii) extend the date by which an independent compensation consultant shall present a benchmark analysis of the compensation packages for officers and directors of public market companies that are comparable to Pomvom and recommendations for officer and director compensation packages to the Pomvom’s compensation committee and board of directors in connection with their review and approval of such packages from April 30, 2024, to June 30, 2024, and (iii) extend the Minimum Equity Financing Proceeds Termination Date (as defined in the Business Combination Agreement) from June 30, 2024, to August 31, 2024.
Liquidity Capital Resources and Going Concern
As of June 30, 2024, the Company had $
The Company’s liquidity needs through June 30, 2024 had been satisfied through a payment from the Sponsor of $
8
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Although no formal agreement exists, the Sponsor is committed to extend Working Capital Loans as needed (defined in Note 4 below). Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that (i) new financing will be available to it on commercially acceptable terms, if at all, or (ii) that its plans to consummate an initial business combination will be successful. In addition, management is currently evaluating the impact of the invasion of Ukraine by Russia, the increased rate of inflation in the United States and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) on the industry and its effect on the Company’s financial position, results of its operations and/or search for a target company.
We may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account, or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such initial business combination. If we have not consummated our initial business combination within the Combination Period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern one year from the date the financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and/or search for a target company is also not determinable as of the date of these financial statements.
In October 2023, Hamas conducted several terrorist attacks in Israel resulting in ongoing war across the country, forcing the closure of many businesses in Israel for several days. In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon and Hamas in the Gaza Strip, both of which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities. In early 2023, there were a number of changes proposed to the political system in Israel by the current government which, if implemented as planned, could lead to large-scale protests and additional uncertainty, negatively impacting the operating environment in Israel. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and/or search for a target company is also not determinable as of the date of these financial statements.
The specific impact of these ongoing events is not readily determinable as of the date of these financial statements and these financial statements do not include any adjustments that may result from the outcomes of these uncertainties.
Note 2 - 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 Securities and Exchange Commission. 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, the financial statements do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
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The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2023 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim 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.
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 statement in conformity with U.S. 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 statement and the reported amounts of 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.
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 and cash equivalents. As of June 30, 2024 and December 31, 2023, the Company had $
Cash and Marketable Securities held in Trust Account
Following the closing of the Initial Public Offering on January 18, 2023, an amount of $
10
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At June 30, 2024 and December 31, 2023, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
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 ASC 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) is classified as a liability instrument and is 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) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2024,
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A ordinary shares to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional paid-in capital, in accumulated deficit.
The Class A ordinary shares subject to possible redemption is reflected on the balance sheet at June 30, 2024 as follows:
Gross proceeds from Initial Public Offering |
| $ | |
Less: |
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Proceeds allocated to public warrants |
| ( | |
Offering costs allocated to Class A ordinary shares subject to possible redemption |
| ( | |
Plus: |
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Accretion of Class A ordinary shares subject to possible redemption |
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Class A ordinary shares subject to possible redemption at December 31, 2023 | | ||
Redemption of Class A ordinary shares | ( | ||
Re-measurement of Class A ordinary shares subject to possible redemption | | ||
Class A ordinary shares subject to possible redemption at June 30, 2024 | $ | |
Offering Costs associated with the Initial Public Offering
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”. Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. The Company incurred offering costs from the Initial Public Offering of $
Fair Value Measurements
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the amount that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants. Fair value measurements are classified on a three-tier hierarchy as follows:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
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| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. ln those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. |
The fair value of the Company’s assets and liabilities that qualify as financial instruments under ASC 820 approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Financial Instruments
The fair value of the Company’s assets and liabilities which qualify as financial instruments under ASC 820 approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Derivative Financial Instruments
The Company accounts for derivative financial instruments in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance and remeasured at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative financial instruments is evaluated at the end of each reporting period. There were no derivative financial instruments accounted for as liabilities as of June 30, 2024 and December 31, 2023.
Warrants
The Company accounts for the public and private warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). Pursuant to the Company’s evaluation, the Company concluded that the public and private do not meet the criteria to be accounted for as liability under ASC 480. The Company further evaluated the public and private warrants and rights under “ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity” (“ASC 815-40”) and concluded that the public warrants, private placement warrants are indexed to the Company’s own stock and meet the criteria to be classified in shareholders’ equity.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” (“ASC 740”) 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 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. There were
12
There is currently no taxation imposed by the government of the Cayman Islands. The Company has 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. Consequently, income taxes are not reflected in the Company’s financial statement.
Net Income (Loss) Per Ordinary Share
The statement of operations includes a presentation of income (loss) per Class A redeemable ordinary share and income (loss) per non-redeemable ordinary share following the two-class method of income per ordinary share. In order to determine the net income (loss) attributable to both the Class A redeemable ordinary shares and non-redeemable ordinary shares, the Company first considered the total net 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 Class A ordinary shares subject to possible redemption was treated as dividends paid to the public shareholders.
Net income (loss) per ordinary share is computed by dividing net income (loss) by class by the weighted average number of ordinary shares outstanding during the period. The Company has not considered the effect of the
The following tables reflect the calculation of basic and diluted net income (loss) per ordinary share for the three months ended June 30, 2024 (in dollars, except share amounts):
| Three Months Ended | ||
June 30, 2024 | |||
Net income | $ | | |
Accretion of temporary equity to redemption value |
| ( | |
Net loss including accretion of temporary equity to redemption value | $ | ( | |
Three Months Ended | |||||||||
June 30, 2024 | |||||||||
Class B Non- | |||||||||
| Class A Redeemable |
| Class A Non-redeemable |
| redeemable | ||||
Basic and diluted net income (loss) per share: |
|
|
|
|
|
| |||
Numerator: |
|
|
|
|
|
| |||
Allocation of net income by class | $ | | $ | | $ | | |||
Less: Accretion allocation based on ownership percentage | $ | ( | $ | ( |
| ( | |||
Allocation of accretion of temporary equity to redeemable shares |
| |
| — |
| — | |||
Total net income (loss) by class | $ | | $ | ( |
| ( | |||
Denominator: |
|
|
|
|
|
| |||
Weighted average shares outstanding |
| |
| |
| | |||
Basic and diluted net income (loss) per share | $ | | $ | ( |
| ( | |||
The following tables reflect the calculation of basic and diluted net income (loss) per ordinary share for the six months ended June 30, 2024 (in dollars, except share amounts):
| Six Months Ended | ||
June, 2024 | |||
Net income | $ | | |
Accretion of temporary equity to redemption value |
| ( | |
Net loss including accretion of temporary equity to redemption value | $ | ( | |
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Six Months Ended | |||||||||
June 30, 2024 | |||||||||
Class B Non- | |||||||||
| Class A Redeemable |
| Class A Non-redeemable |
| redeemable | ||||
Basic and diluted net income (loss) per share: |
|
|
|
|
|
| |||
Numerator: |
|
|
|
|
|
| |||
Allocation of net income by class | $ | | $ | | $ | | |||
Less: Accretion allocation based on ownership percentage | $ | ( | $ | ( |
| ( | |||
Allocation of accretion of temporary equity to redeemable shares |
| |
| — |
| — | |||
Total net income (loss) by class | $ | | $ | ( |
| ( | |||
Denominator: |
|
|
|
|
|
| |||
Weighted average shares outstanding |
| |
| |
| | |||
Basic and diluted net income (loss) per share | $ | | $ | ( |
| ( | |||
The following tables reflect the calculation of basic and diluted net income (loss) per ordinary share for the three months ended June 30, 2023 (in dollars, except share amounts):
| Three Months Ended | ||
June 30, 2023 | |||
Net income | $ | | |
Accretion of temporary equity to redemption value |
| ( | |
Net loss including accretion of temporary equity to redemption value | $ | ( | |
Three Months Ended | |||||||||
June 30, 2023 | |||||||||
Class B Non- | |||||||||
| Class A Redeemable |
| Class A Non-redeemable |
| redeemable | ||||
Basic and diluted net income (loss) per share: |
|
|
|
|
|
| |||
Numerator: |
|
|
|
|
|
| |||
Allocation of net income by class | $ | | $ | | $ | | |||
Less: Accretion allocation based on ownership percentage | $ | ( | $ | ( |
| ( | |||
Allocation of accretion of temporary equity to redeemable shares |
| |
| — |
| — | |||
Total net income (loss) by class | $ | | $ | ( |
| ( | |||
Denominator: |
|
|
|
|
|
| |||
Weighted average shares outstanding |
| |
| |
| | |||
Basic and diluted net income per share | $ | | $ | ( |
| ( | |||
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The following tables reflect the calculation of basic and diluted net income (loss) per ordinary share for the six months ended June 30, 2023 (in dollars, except share amounts):
| Six Months Ended | ||
June 30, 2023 | |||
Net loss from beginning on the year to date of initial public offering | $ | ( | |
Net income from date of initial public offering to period end |
| | |
Total income for the three months ended June 30, 2023 |
| | |
Accretion of temporary equity to redemption value |
| ( | |
Net loss including accretion of temporary equity to redemption value | $ | ( | |
| Six Months Ended | ||||||||
June 30, 2023 | |||||||||
Class B Non- | |||||||||
| Class A Redeemable |
| Class A Non-redeemable |
| redeemable | ||||
Basic and diluted net income (loss) per share: |
|
|
|
|
| ||||
Numerator: |
|
|
|
|
| ||||
Allocation of net loss from inception to date of initial public offering | $ | — | $ | — | $ | ( | |||
Allocation of net income from date of initial public offering to period end |
| |
| |
| | |||
Total income allocated by class |
| |
| |
| | |||
Less: Accretion allocation based on ownership percentage | $ | ( | $ | ( | ( | ||||
Allocation of accretion of temporary equity to redeemable shares |
| |
| — |
| — | |||
Total net income (loss) by class | $ | | $ | ( | ( | ||||
Denominator: |
|
|
|
|
|
| |||
Weighted average shares outstanding |
| |
| |
| | |||
Basic and diluted net income per share | $ | | $ | ( | ( | ||||
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items, among others. Disclosure of the reconciling items is subject to a quantitative threshold and disaggregation by nature and jurisdiction. ASU 2023-09 also requires entities to disclose net income taxes paid or received to federal, state and foreign jurisdictions, as well as by individual jurisdiction, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2023-09 would have on its financial position, results of operations or cash flows.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying financial statements.
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Note 3 - Initial Public Offering
On January 18, 2023 the Company sold
An aggregate of $
Note 4 - Related Party Transactions
Founder Shares
On January 26, 2022, the Sponsor purchased
On March 4, 2022, the Company effected a share capitalization with respect to our Class B ordinary shares of
On May 7, 2023, the Sponsor transferred
The Founder Shares will automatically convert into Class A ordinary shares at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions, as described in Note 6. Holders of Founder Shares may also elect to convert their Class B ordinary shares into an equal number of Class A ordinary shares, subject to adjustment, at any time.
Private Placement
The Sponsor, BTIG, LLC, Exos Capital LLC, and JonesTrading Institutional Services LLC purchased an aggregate of
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Related Party Loans
In addition, to finance transaction costs in connection with an initial business combination, the initial shareholders, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes an initial business combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that an initial 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
Promissory Note – Related Party
On January 26, 2022, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $
On January 18, 2024, the Company issued a promissory note in the amount of $
As of June 30, 2024 and December 31, 2023, there was $
Administrative Services Agreement
The Company entered into an Administrative Services Agreement with the Sponsor commencing on the date the securities of the Company are first listed on the Nasdaq Global Market, pursuant to a Registration Statement on Form S-1 filed by the Company with the SEC and continuing until the earlier of the consummation by the Company of an initial business combination or the Company’s liquidation. The Company will pay $
Note 5 – Commitments & Contingencies
Registration and Shareholder Rights
The holders of the Founder Shares, as well as the holders of the Private Units (and the underlying securities) and any units that may be issued in payment of Working Capital Loans made to Company, will be entitled to registration rights. The holders of a majority of these securities are entitled to make up to
17
Underwriting Agreement
The Company granted the underwriters a
Note 6 — Shareholders’ Equity (Deficit)
Preference shares - The Company is authorized to issue
Class A ordinary shares - The Company is authorized to issue
Class B ordinary shares - The Company is authorized to issue
On March 4, 2022, the Company effected a share capitalization with respect to our Class B ordinary shares of
Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a
Warrants - Each whole redeemable warrant entitles the registered holder to purchase one whole Class A ordinary share at a price of $
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The Company agrees that as soon as practicable, but in no event later than
Redemption of Warrants when the Price per Class A Ordinary Share Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem all, but not less than all, of the Public Warrants:
| ● | Not earlier than 90 days after the completion of the initial business combination; |
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | provided that the last reported sale price of the Class A ordinary shares for any 20 days within the 30-trading day period ending on the third trading date prior to the date on which notice of the redemption is given equals or exceeds $ |
| ● | either there is an effective registration statement covering the offer and sale of the issuance of the ordinary shares issuable upon exercise of the Public Warrants, and a current prospectus relating thereto, available throughout the |
| ● | the Company has elected to require the exercise of the Public Warrants on a “cashless basis.” |
If (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of its initial business combination at an issue price or effective issue price of less than $
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The Private Warrants are identical to the Public Warrants underlying the Public Units, except that the Private Warrants may be exercised for cash or on a “cashless basis,” the Private Warrants and the Class A ordinary shares issuable upon exercise of the Private Warrants may be subject to certain transfer restrictions, and the Private Warrants are not redeemable at the option of the Company. The Private Warrants shall not become Public Warrants as a result of any transfer of the Private Warrants, regardless of the transferee.
If a tender offer, exchange or redemption offer shall have been made to and accepted by the holders of the Class A ordinary shares and upon completion of such offer, the offeror owns beneficially more than
Note 7 — Fair Value Measurements
At June 30, 2024 and December 31, 2023, the Company’s cash and marketable securities held in the Trust Account were valued at $
The following table presents the fair value information, as of June 30, 2024 and December 31 2023, of the Company’s financial assets that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. The Company’s cash and marketable securities held in the Trust Account are based on dividend and interest income and market fluctuations in the value of invested marketable securities, which are considered observable. The fair value of the marketable securities held in trust is classified within Level 1 of the fair value hierarchy.
The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value on a recurring basis:
June 30,2024 | |||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets |
|
|
|
|
|
| |||
Cash equivalents(1) | $ | | $ | — | $ | — | |||
Cash and marketable securities held in Trust Account(2) | $ | | $ | — | $ | — | |||
| December 31, 2023 | ||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Assets |
|
|
|
|
| ||||
Cash equivalents(1) | $ | | $ | — | $ | — | |||
Cash and marketable securities held in Trust Account(2) | $ | | $ | — | $ | — | |||
| (1) | The fair value of money market funds have been measured on a recurring basis using Level 1 inputs, which are based on unadjusted quoted market prices within active markets. |
| (2) | The fair value of the marketable securities held in the Trust Account approximates the carrying amount primarily due to their short-term nature. |
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Measurement
The Company established the initial fair value for the cash and marketable securities held in the Trust Account on January 18, 2023, the date of the consummation of the Company’s Initial Public Offering. As the cash was transferred to the Trust Account on January 18, 2023, the value at that date is the value of the cash transferred. Changes in fair value will result from dividend and interest income and market fluctuations in the value of invested marketable securities which will be reflected on each month end bank statement.
Note 8 — Subsequent Events
On July 17, 2024, the Company drew an additional $
Additionally, on July 17, 2024, the Company issued an unsecured promissory note to the Sponsor (the “July Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
We refer to this report as our “Quarterly Report on Form 10-Q” and references to “we,” “us” or the “Company” herein reference Israel Acquisitions Corp, a Cayman Islands exempted company. Reference to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Israel Acquisitions Sponsor LLC, a Delaware limited liability company. 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 on Form 10-Q. 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 on Form 10-Q 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 completion of a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”), 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, including that the conditions of an initial business combination are not satisfied. 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 in Item 1A. to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (our “Annual Report”), filed with the U.S. Securities and Exchange Commission (the “SEC”). 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 newly organized blank check company incorporated on August 24, 2021, as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar combination with one or more businesses or assets, which we refer to throughout this Quarterly Report on Form 10-Q as our initial business combination. We have generated no revenues to date, and we do not expect that we will generate operating revenues at the earliest until we consummate our initial business combination. While we may pursue an initial business combination target in any industry or sector, we intend to focus our search on high-growth technology companies that are domiciled in Israel, that carry out all or a substantial portion of their activities in Israel, or that have some other significant Israeli connection.
Recent Developments
On January 2, 2024, we entered into the Business Combination Agreement with Pomvom Ltd. (“Pomvom”), pursuant to which, among other things and subject to the terms and conditions contained therein (i) Pomvom will cause a company organized under the laws of the State of Israel and wholly owned by a trustee (the “NewPubco”) to be formed, (ii) Pomvom will cause a Cayman Islands exempted company and wholly owned, direct subsidiary of NewPubco (“Merger Sub”) to be formed, (iii) Pomvom will cause NewPubco and Merger Sub to become a party to the Business Combination Agreement by delivering a joinder to the Business Combination Agreement, (iv) Pomvom will effect the Share Split (as defined below), (v) NewPubco, the shareholders of Pomvom and the holders of equity awards of Pomvom will effect the Equity Exchange (as defined below), and (vi) Merger Sub will merge with and into the Company, with the Company surviving the merger as a direct wholly owned subsidiary of NewPubCo (the “Merger”). The collective transactions referenced in (i)-(vi) are hereinafter referred to as the “Transactions”. The terms of the Business Combination Agreement, which contain customary representations and warranties, covenants, closing conditions, termination provisions, and other terms relating to the Merger, are summarized in the Recent Developments section in Item 2 to Part I of our Annual Report.
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On January 18, 2024, the Company issued an unsecured promissory note to the Sponsor, to pay for up to twelve additional one-month extension payments (the “Extension Note”). On each of January 16, 2024, February 15, 2024, March 11, 2024, April 15, 2024, May 17, 2024, and June 14, 2024, the Company drew $50,000, $300,000 in the aggregate, against the Extension Note to pay for each additional one-month extension. The Extension Note bears no interest and is repayable in full (subject to amendment or waiver) upon the earlier of (a) the date of the consummation of the Company’s initial business combination, or (b) the date of the Company’s liquidation.
On April 22, 2024, we entered into an amendment with Pomvom (the “Amendment”) to the Business Combination Agreement. Pursuant to the Amendment, the we agreed with Pomvom to (i) extend the date by which all members of the board of directors of the post-combination company shall be agreed determined from April 30, 2024, to June 30, 2024, (ii) extend the date by which an independent compensation consultant shall present a benchmark analysis of the compensation packages for officers and directors of public market companies that are comparable to Pomvom and recommendations for officer and director compensation packages to the Pomvom’s compensation committee and board of directors in connection with their review and approval of such packages from April 30, 2024, to June 30, 2024, and (iii) extend the Minimum Equity Financing Proceeds Termination Date (as defined in the Business Combination Agreement) from June 30, 2024, to August 31, 2024.
On July 17, 2024, the Company issued an unsecured promissory note to the Sponsor (the “July Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $1,500,000. The July Promissory Note bears no interest and is repayable in full (subject to amendment or waiver) upon the earlier of (i) the date of the consummation of the Company's initial business combination, or (ii) the date of the Company's liquidation. As of August 14, 2024, there was $150,000 outstanding under the July Promissory Note.
Results of Operations
As of June 30, 2024, we had not commenced any operations. All activity from inception through June 30, 2024, relates to our formation and initial public offering (the “Initial Public Offering”), and, since the completion of the Initial Public Offering, our search for a target to consummate a business combination. We will not generate any operating revenues until after the completion of an initial business combination, at the earliest. We will generate non-operating income in the form of interest and dividend income from the proceeds derived from the Initial Public Offering and placed in a U.S.-based trust account (the “Trust Account”). We expect to 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.
For the three months ended June 30, 2024, we had net income of $738,891, which consisted of listing expenses of $4,425, administrative expenses of $36,004, legal and accounting expenses of $151,845, dues and subscriptions expense of $37,240, and insurance expense of $64,167, offset by dividends income on marketable securities held in the Trust Account of $1,031,091, and dividends and interest on cash and cash equivalents of $1,481. For the three months ended June 30, 2023, we had net income of $1,435,806, which consisted of listing expenses of $5,550, administrative expenses of $129,963, legal and accounting expenses of $115,887, dues and subscriptions expense of $3,198, and insurance expense of $64,167, offset by an unrealized gain and dividend income on marketable securities held in the Trust Account of $1,743,579, dividends and interest on cash and cash equivalents of $10,992.
For the six months ended June 30, 2024, we had net income of $1,314,747, which consisted of listing expenses of $121,889, administrative expenses of $73,033, legal and accounting expenses of $530,425, dues and subscriptions expense of $71,775, and insurance expenses of $128,334, offset by dividend income on marketable securities held in the Trust Account of $2,232,923, dividends and interest on cash and cash equivalents of $7,280. For the six months ended June 30, 2023, we had net income of $2,579,771, which consisted of listing expenses of $10,763, administrative expenses of $160,848, legal and accounting expenses of $244,071, marketing and advertising expense of $3,732, dues and subscriptions expense of $5,848, and insurance expense of $120,054, offset by an unrealized gain and dividend income on marketable securities held in the Trust Account of $3,102,894, dividends and interest on cash and cash equivalents of $22,193.
Liquidity, Capital Resources and Going Concern
As of June 30, 2024, we had $66,926 in cash and cash equivalents held outside of the Trust Account and a working capital deficit of $663,702 (excluding cash and marketable securities held in the Trust Account and the deferred underwriter fee payable).
23
Until the consummation of the Initial Public Offering, our only source of liquidity was from the $25,000 of proceeds from our sponsor’s purchase of Class B ordinary shares, par value $0.0001 per share, and a loan of $237,234 from our sponsor pursuant to a promissory note to cover certain expenses. The promissory note was repaid in full on January 18, 2023.
Following our Initial Public Offering and the sale of Private Placement Units (the “Private Units”) to the sponsor, a total of $146,625,000 was placed in the Trust Account.
For the six months ended June 30, 2024, net cash provided by operating activities was $1,628,221. Net income of $1,314,747 was adjusted by $313,474 changes in operating assets and liabilities. Net cash provided by investing activities was $73,388,235 related to proceeds from redemption of marketable securities held in Trust Account of $75,921,158, offset by the purchase of marketable securities held in Trust Account of $250,249, as well as dividends received from and reinvestment of marketable securities of $2,282,674. Net cash used in financing activities was $75,621,158 related to payment of redemptions on Class A ordinary shares subject to redemption of $75,921,158, offset by $300,000 of payments made by the Sponsor for Trust extension fees.
As of June 30, 2024, we had marketable securities held in the Trust Account of $80,313,771 (including approximately $2,232,923 of gains on marketable securities) consisting of securities held in a money market fund that invests in U.S. Treasury securities with a maturity of 185 days or less. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting fees and income taxes payable), to complete our initial business combination. To the extent that our capital shares or debt is used, in whole or in part, as consideration to complete our initial 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.
As of June 30, 2024, we had cash and cash equivalents of $66,926 held outside the Trust Account. 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, and structure, negotiate and complete a business combination.
We may need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. We expect to incur significant costs related to identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination. These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within one year from the date that the financial statements accompanying this Quarterly Report on Form 10-Q are issued.
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. Up to $1,500,000 of such loans may be convertible into units of the post-business combination entity at a price of $10.00 per unit, at the option of the lender. As of June 30, 2024, we did not have any outstanding working capital loans.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of June 30, 2024.
The underwriters of the Initial Public Offering are entitled to a deferred discount of $0.35 per Unit, or $5,406,250 in the aggregate. The deferred discount 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.
Critical Accounting Estimates
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,
24
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 estimates as of June 30, 2024.
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items, among others. Disclosure of the reconciling items is subject to a quantitative threshold and disaggregation by nature and jurisdiction. ASU 2023-09 also requires entities to disclose net income taxes paid or received to federal, state and foreign jurisdictions, as well as by individual jurisdiction, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2023-09 would have on its financial position, results of operations or cash flows.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information that is required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (who serves as our principal executive officer) and Chief Financial Officer (who serve as our principal financial and accounting officer), to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2024.
The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, management believes that our system of disclosure controls and procedures are designed to provide a reasonable level of assurance that the objectives of the system will be met.
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Remediation of Previously Identified Material Weakness
As previously disclosed in Part II, Item 9A of our Annual Report on Form 10 - K for the year ended December 31, 2023, we identified a material weakness related to the fact that we have not yet designed and maintained effective controls relating to the accounting for offering costs related to the Company’s initial public offering. Specifically, certain accounting costs incurred through December 31, 2022 not directly or incrementally related to the initial public offering were incorrectly recorded as deferred offering costs rather than expensed as incurred. During 2023, we implemented a remediation plan, which included a control that our principal financial officer performing additional post-closing review procedures including consulting with subject matter experts related to the accounting for certain offering expenses. The Company completed testing over the design and operating effectiveness of the relevant control and concluded the material weakness was remediated as reported in the Company’s March 31,2024 Form 10-Q.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2024, covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1.A. Risk Factors
There have been no material changes to the Risk Factors previously disclosed in Item 1A. to Part I of our Annual Report and the Risk Factors previously disclosed in Item 1.A. of our Quarterly Report on Form 10 - Q for the fiscal quarter ended March 31, 2024. The risks described in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
As of the end of the fiscal quarter ended June 30, 2024, no director or officer of the Company
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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2.1 | 8-K | 001-41593 | 2.1 | January 2, 2024 | ||||||
2.2 | Amendment No. 1 to the Business Combination Agreement, dated April 22, 2024, between IAC and Pomvom. | 8-K | 001-41593 | 2.2 | April 24, 2024 | |||||
3.1 | Third Amended and Restated Memorandum and Articles of Association, dated January 8, 2024. | 8-K | 001-41593 | 3.1 | January 11, 2024 | |||||
10.1* | Promissory Note, dated July 17, 2024, between the Company and Israel Acquisitions Sponsor LLC. | |||||||||
31.1* |
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31.2* |
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32.1** |
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32.2** |
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101.INS* | XBRL Instance Document | |||||||||
101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
101.LAB* |
| XBRL Taxonomy Extension Labels Linkbase Document |
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101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
104 | Cover Page Interactive Data File. Formatted in Inline XBRL and contained in exhibit 101. | |||||||||
* | Filed herewith. |
** | Furnished herewith. |
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PART III – SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ISRAEL ACQUISITIONS CORP | ||
Date: August 14, 2024 | By: | /s/ Ziv Elul |
Name: | Ziv Elul | |
Title: | Chief Executive Officer and Director | |
(Principal Executive Officer) | ||
Date: August 14, 2024 | By: | /s/ Sharon Barzik Cohen |
Name: | Sharon Barzik Cohen | |
Title: | Chief Financial Officer and Director | |
(Principal Financial and Accounting Officer) | ||
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