DEFM14A 1 d165766ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

 

Filed by the Registrant ☒                                 Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to § 240.14a-12

Thoma Bravo Advantage

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   

Title of each class of securities to which transaction applies:

 

    (2)   

Aggregate number of securities to which transaction applies:

 

    (3)   

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was determined):

 

    (4)   

Proposed maximum aggregate value of transaction:

 

    (5)   

Total fee paid:

 

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the
date of its filing.
    (1)   

Amount Previously Paid:

 

$143,997.16

    (2)   

Form, Schedule or Registration Statement No.:

 

Form F-4 (File No. 333-254790)

    (3)   

Filing Party:

 

IronSource Ltd.

    (4)   

Date Filed:

 

2021-03-26

 

 

 


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PROXY STATEMENT/PROSPECTUS

 

LOGO   LOGO

PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF

SHAREHOLDERS OF

THOMA BRAVO ADVANTAGE

 

 

PROSPECTUS FOR UP TO 127,400,000 CLASS A ORDINARY SHARES

OF

IRONSOURCE LTD.

 

 

The board of directors of Thoma Bravo Advantage, a Cayman Islands exempted company (“TBA”), has unanimously approved the Agreement and Plan of Merger (“Merger Agreement”), dated as of March 20, 2021, by and among TBA, ironSource Ltd., a company organized under the laws of the State of Israel (the “Company” or “ironSource”), Showtime Cayman, a wholly-owned subsidiary of ironSource (the “Merger Sub”) and Showtime Cayman II, a wholly-owned subsidiary of ironSource (the “Merger Sub II”). Pursuant to the Merger Agreement, (a) Merger Sub will merge with and into TBA (the “First Merger”), with TBA surviving the First Merger as a wholly-owned subsidiary of ironSource (such company, as the surviving entity of the First Merger, the “Surviving Entity”), and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Entity will merge with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger as a wholly-owned subsidiary of ironSource (such company, as the surviving entity of the Second Merger, the “Surviving Company”) (collectively, the “Business Combination”). As a result of the Business Combination, and upon consummation of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Transactions”), Merger Sub II will become a wholly owned subsidiary of the Company, with the shareholders of TBA becoming shareholders of the Company.

Pursuant to the Merger Agreement, at the effective time of the Business Combination (the “Effective Time”), (a) each Class B Ordinary Share of TBA, par value $0.0001 per share (“Class B Share”), outstanding immediately prior to the Effective Time will be automatically converted into one Class A Ordinary Share of TBA, par value $0.0001 per share (“Class A Share,” together with the Class B Shares, the “TBA Ordinary Shares”), and (b) each Class A Share issued and outstanding immediately prior to the Effective Time, including shares issued upon the automatic conversion of Class B Shares described above (but other than certain excluded shares), will be converted into one Class A ordinary share of ironSource, no par value per share (“ironSource Class A ordinary share”), subject to adjustment as described herein.

Immediately prior to the Effective Time, ironSource will rename each issued and outstanding ordinary share (the “ordinary shares”), including the 2019 ordinary shares issued in connection with the CVC Investment (as defined herein) (the “2019 Ordinary Shares” and, together with the ordinary shares, the “ironSource Ordinary Shares”), an ironSource Class A ordinary share, followed immediately by the distribution of one Class B ordinary share of ironSource, no par value per share (“ironSource Class B ordinary share”) to the holders of each such issued and outstanding ironSource Class A ordinary share (we refer to these adjustments to ironSource’s share capital as the “Class A Renaming” and “Class B Distribution”). ironSource will furthermore effect a stock split of each ironSource Class A ordinary share and each ironSource Class B ordinary share into such number of ironSource Class A ordinary shares and ironSource Class B ordinary shares, in each case, calculated in accordance with the terms of the Merger Agreement, such that each ironSource Class A ordinary share and each ironSource Class B ordinary share will have a value of $10.00 per share after giving effect to such stock split (the “Stock Split”).

Concurrently with the execution of the Merger Agreement, ironSource entered into investment agreements (each, an “Investment Agreement” and collectively, the “Investment Agreements”) with certain investors (each, a “PIPE Investor” and collectively the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to purchase an aggregate of 130,000,000 ironSource Class A ordinary shares (the “PIPE Shares”) in a private placement or secondary sale of shares for $10.00 per share on the terms and subject to the conditions set forth therein. The PIPE Investors include Thoma Bravo Ascension Fund, L.P. (“TB Ascension”), an affiliate of Thoma Bravo, L.P. The purchase by TB Ascension will generally be made on identical terms as the purchases by the other PIPE Investors.

At the discretion of ironSource, such PIPE Shares will either be newly issued by ironSource (“Primary PIPE Shares”) or sold by certain selling shareholders of ironSource, including optionholders who will exercise options, and holders of RSUs whose RSUs will settle (each a “Selling Shareholder” and collectively, the “Selling Shareholders”) (“Secondary PIPE Shares”). The Investment Agreements contain customary representations and warranties of ironSource, on the one hand, and the applicable PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the Transactions. The exact allocation between Secondary PIPE Shares and Primary PIPE Shares under the Investment Agreements will only be determined once the extraordinary general meeting of TBA shareholders that is the subject of this proxy statement/prospectus has taken place, and the extent of any redemption requests for TBA Ordinary Shares pursuant to the Transactions is known. ironSource does not currently intend to allocate the PIPE investment funds towards an investment in Primary PIPE Shares, as it intends to allocate all such funds towards the purchase of Secondary PIPE Shares from the Selling Shareholders. The obligations to consummate the transactions contemplated by the Investment Agreements are conditioned upon, among other matters, the consummation of the Transactions.

If redemptions by TBA’s shareholders in connection with the Transactions exceed $150 million (the amount of such excess redemptions, the “Excess Redemptions”), the Sponsor, at its election, must either (i) procure that affiliates of Thoma Bravo, L.P. (which may include TB Ascension Fund) commit to fund the amount of the Excess Redemptions in cash at closing by purchasing additional ironSource Class A ordinary shares pursuant to an Investment Agreement, (ii) surrender for no consideration a number of Class B ordinary shares of TBA having a value equal to the Excess Redemptions or (iii) a combination of the foregoing; provided that in no event will the Sponsor be required to fund cash in an amount in excess of, or forfeit Class B ordinary shares of TBA having a value in excess of, $250 million.

This proxy statement/prospectus registers the issuance of ironSource Class A ordinary shares to the shareholders of TBA as described above, consisting of an aggregate of 127,400,000 ironSource Class A ordinary shares. We are not registering herein the issuance or resale of ironSource Class A ordinary shares issuable to the PIPE Investors, or the resale of ironSource Class B ordinary shares that will be held by ironSource’s preexisting shareholders upon consummation of the Transactions.

Following the Transactions (including adjustments to ironSource’s preexisting capitalization), ironSource will have two classes of ordinary shares outstanding: ironSource Class A ordinary shares and ironSource Class B ordinary shares. The rights of the holders of ironSource Class A ordinary shares and ironSource Class B ordinary shares will be identical, except with respect to voting and conversion rights. Each ironSource Class A ordinary share will be entitled to one vote per share. Each ironSource Class B ordinary share will be entitled to five votes per share and will be convertible into one ironSource Class A ordinary share. Holders of ironSource Class A ordinary shares and ironSource Class B ordinary shares will vote together as a single class on all matters (including the election of directors) submitted to a vote of ironSource’s shareholders except as otherwise provided in ironSource’s amended and restated articles of association to be effective upon the closing of the Transactions. Those amended and restated articles require a separate vote of holders of ironSource Class B ordinary shares for the full-scale conversion of the entire class of those shares into ironSource Class A ordinary shares (among other means by which the conversion of those shares may occur) and for a modification of the rights of the ironSource Class B ordinary shares. After giving effect to the Transactions, assuming no redemption of TBA Ordinary Shares and assuming that the Secondary PIPE Shares to be sold by the Selling Shareholders will be allocated equally among ironSource Class A ordinary shares and ironSource Class B ordinary shares, ironSource Class A ordinary shares will collectively represent approximately 62.64% of the combined company’s total issued and outstanding shares and 25.11% of the combined company’s voting power attached to all of its issued and outstanding shares, and ironSource Class B ordinary shares will collectively represent approximately 37.36% of the combined company’s total issued and outstanding shares and 74.89% of its voting power attached to all of its issued and outstanding shares.

Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the extraordinary general meeting of TBA shareholders scheduled to be held on June 22, 2021 at 10:00 a.m. Eastern Time.

Although ironSource is not currently a public reporting company, following the effectiveness of the registration statement of which this proxy statement/prospectus is a part and the closing of the Business Combination, ironSource will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). ironSource has applied for listing of the ironSource Class A ordinary shares on the New York Stock Exchange (“NYSE”) under the proposed symbol “IS,” to be effective at the consummation of the Business Combination. It is a condition of the consummation of the Transactions that the ironSource Class A ordinary shares are approved for listing on NYSE (subject only to official notice of issuance thereof). While trading on NYSE is expected to begin on the first business day following the date of completion of the Business Combination, there can be no assurance that ironSource’s securities will be listed on NYSE or that a viable and active trading market will develop. See “Risk Factors” beginning on page 30 for more information.

ironSource is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

ironSource is also a “foreign private issuer” as defined in the Exchange Act, and will be exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, ironSource’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, ironSource will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

The accompanying proxy statement/prospectus provides TBA shareholders with detailed information about the Business Combination and other matters to be considered at the extraordinary general meeting of TBA. We encourage you to read the entire accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 30 of the accompanying proxy statement/prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the Business Combination, or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

 

 

This proxy statement/prospectus is dated May 19, 2021, and is first being mailed to TBA shareholders on or about May 25, 2021.


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LOGO


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LOGO


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Notice of Extraordinary General Meeting of Shareholders

of Thoma Bravo Advantage

To Be Held on June 22, 2021

TO THE SHAREHOLDERS OF THOMA BRAVO ADVANTAGE:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of shareholders of Thoma Bravo Advantage (“TBA”), a Cayman Islands exempted company, will be held at 10:00 a.m. Eastern Time, on June 22, 2021 (the “extraordinary general meeting”) at the offices of Kirkland & Ellis LLP located at 300 N. LaSalle, Chicago, Illinois 60654, or at such other time, on such other date and at such other place to which the meeting may be adjourned. Due to health concerns stemming from the COVID-19 pandemic, and to support the health and well-being of our shareholders, we encourage shareholders to attend the extraordinary general meeting virtually. You are cordially invited to attend and participate in the extraordinary general meeting online by visiting https://www.cstproxy.com/thomabravo/sm2021. The extraordinary general meeting will be held for the following purposes:

 

  1.

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination whereby Merger Sub will merge with and into TBA, with TBA surviving the merger as a wholly owned subsidiary of ironSource, and immediately thereafter and as part of the same overall transaction, the surviving entity will merge with and into Merger Sub II, with Merger Sub II surviving the merger as a wholly-owned subsidiary of ironSource (the “Business Combination Proposal”);

 

  2.

Proposal No. 2—The Merger Proposal—to authorize the Plan of Merger (the “Merger Proposal”); and

 

  3.

Proposal No. 3—The Adjournment Proposal—to consider and vote upon a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination (the “Adjournment Proposal”).

We also will transact any other business as may properly come before the extraordinary general meeting or any adjournment or postponement thereof.

The items of business listed above are more fully described elsewhere in the proxy statement/prospectus. Whether or not you intend to attend the extraordinary general meeting, we urge you to read the attached proxy statement/prospectus in its entirety, including the annexes and accompanying financial statements, before voting. IN PARTICULAR, WE URGE YOU TO CAREFULLY READ THE SECTION IN THE PROXY STATEMENT/PROSPECTUS ENTITLED “RISK FACTORS.”

Only holders of record of TBA Ordinary Shares at the close of business on May 24, 2021 (the “record date”) are entitled to notice of the extraordinary general meeting and to vote and have their votes counted at the extraordinary general meeting and any adjournments or postponements of the extraordinary general meeting.

After careful consideration, TBA’s board of directors has determined that each of the proposals listed is fair to and in the best interests of TBA and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of the proposals set forth above. When you consider the recommendations of TBA’s board of directors, you should keep in mind that TBA’s directors and officers may have interests in the Business Combination that conflict with, or are different from, your interests as a shareholder of TBA. See the section entitled “Proposal One—The Business Combination ProposalInterests of Certain Persons in the Business Combination.”

The closing of the Business Combination is conditioned on approval of the Business Combination Proposal and the Merger Proposal. If either of these proposals is not approved and the applicable closing condition in the Merger Agreement is not waived, the remaining proposals will not be presented


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to shareholders for a vote. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

All TBA shareholders are cordially invited to attend the extraordinary general meeting, which will be held at the offices of Kirkland & Ellis LLP located at 300 N. LaSalle, Chicago, Illinois 60654 and virtually over the Internet at https://www.cstproxy.com/thomabravo/sm2021. To ensure your representation at the extraordinary general meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a holder of record of TBA Ordinary Shares on the record date, you may also cast your vote at the extraordinary general meeting. If your TBA Ordinary Shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the extraordinary general meeting, obtain a proxy from your broker or bank.

A complete list of TBA shareholders of record entitled to vote at the extraordinary general meeting will be available for ten days before the extraordinary general meeting at the principal executive offices of TBA for inspection by shareholders during business hours for any purpose germane to the extraordinary general meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the extraordinary general meeting virtually or not, please complete, sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in street name or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly voted and counted.

If you have any questions or need assistance voting your TBA Ordinary Shares, please contact TBA’s proxy solicitor, Morrow Sodali LLC, at (800) 662-5200 (individuals) or (203) 658-9400 (banks and brokers). Questions can also be sent by email to TBA.info@investor.morrowsodali.com. This notice of extraordinary general meeting is and the proxy statement/prospectus relating to the Business Combination will be available at https://www.cstproxy.com/thomabravo/sm2021.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors

Orlando Bravo

Chairman of the Board of Directors

May 19, 2021

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

ALL HOLDERS (THE “PUBLIC SHAREHOLDERS”) OF CLASS A SHARES ISSUED IN TBA’S INITIAL PUBLIC OFFERING (THE “PUBLIC SHARES”) HAVE THE RIGHT TO HAVE THEIR PUBLIC SHARES REDEEMED FOR CASH IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION. PUBLIC SHAREHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL, TO VOTE ON THE BUSINESS COMBINATION PROPOSAL AT ALL, OR TO BE HOLDERS OF RECORD ON THE RECORD DATE IN ORDER TO HAVE THEIR SHARES REDEEMED FOR CASH.

THIS MEANS THAT ANY PUBLIC SHAREHOLDER HOLDING PUBLIC SHARES MAY EXERCISE REDEMPTION RIGHTS REGARDLESS OF WHETHER THEY ARE EVEN ENTITLED TO VOTE ON THE BUSINESS COMBINATION PROPOSAL.

TO EXERCISE REDEMPTION RIGHTS, HOLDERS MUST TENDER THEIR SHARES TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, TBA’S TRANSFER AGENT, NO LATER


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THAN TWO (2) BUSINESS DAYS PRIOR TO THE EXTRAORDINARY GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “EXTRAORDINARY GENERAL MEETING OF TBA SHAREHOLDERS—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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TABLE OF CONTENTS

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     ii  

MARKET, INDUSTRY AND OTHER DATA

     iii  

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     v  

SELECTED DEFINITIONS

     vi  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORINDARY GENERAL MEETING

     ix  

SUMMARY

     1  

SUMMARY CONSOLIDATED FINANCIAL INFORMATION of IRONSOURCE

     21  

SUMMARY FINANCIAL INFORMATION OF TBA

     25  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION COMPARATIVE PER SHARE DATA

     27  

RISK FACTORS

     30  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET, RANKING AND OTHER INDUSTRY DATA

     92  

EXTRAORDINARY GENERAL MEETING OF TBA SHAREHOLDERS

     94  

PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

     101  

PROPOSAL TWO—THE MERGER PROPOSAL

     120  

PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

     121  

THE MERGER AGREEMENT

     122  

AGREEMENTS ENTERED INTO IN CONNECTION WITH THE MERGER AGREEMENT

     133  

INFORMATION ABOUT THE COMPANIES

     136  

TBA’s BUSINESS

     140  

IRONSOURCE’S BUSINESS

     150  

TBA’s MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     193  

IRONSOURCE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     199  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     226  

DIRECTOR AND EXECUTIVE COMPENSATION

     242  

MANAGEMENT FOLLOWING THE BUSINESS COMBINATION

     244  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     268  

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     274  

CERTAIN MATERIAL ISRAELI TAX CONSIDERATIONS

     287  

DESCRIPTION OF IRONSOURCE’S SHARE CAPITAL AND ARTICLES OF ASSOCIATION

     294  

COMPARISON OF RIGHTS OF IRONSOURCE SHAREHOLDERS AND TBA SHAREHOLDERS

     304  

BENEFICIAL OWNERSHIP OF SECURITIES

     312  

FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS

     318  

APPRAISAL RIGHTS

     319  

SHAREHOLDER COMMUNICATIONS

     320  

LEGAL MATTERS

     321  

EXPERTS

     321  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     321  

ENFORCEABILITY OF CIVIL LIABILITY

     321  

TRANSFER AGENT AND REGISTRAR

     323  

WHERE YOU CAN FIND MORE INFORMATION

     323  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEX A—MERGER AGREEMENT

     A-1  

ANNEX B—FORM OF AMENDED & RESTATED ARTICLES OF ASSOCIATION

     B-1  

ANNEX C—FORM OF PLAN OF MERGER

     C-1  

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms a part of a registration statement on Form F-4 filed with the Securities and Exchange Commission (“SEC”), by ironSource, constitutes a prospectus of ironSource under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the ironSource Class A ordinary shares to be issued to TBA shareholders in connection with the Business Combination. This document also constitutes a proxy statement of TBA under Section 14(a) of the Exchange Act, and the rules thereunder, and a notice of meeting with respect to the extraordinary general meeting of TBA shareholders to consider and vote upon the proposals to adopt the Merger Agreement, to adopt the Merger Proposals (as defined herein) and to adjourn the meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to adopt the Merger Agreement.

Unless otherwise indicated or the context otherwise requires, all references in this proxy statement/prospectus to the terms “ironSource” and the “Company” refer to ironSource Ltd., together with its subsidiaries. All references in this proxy statement/prospectus to “TBA” refer to Thoma Bravo Advantage.

Notice to Investors in Canada

The ironSource Class A ordinary shares may be sold only to Canadian investors purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are Permitted Clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the ironSource Class A ordinary shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable Canadian securities laws.

Securities legislation in certain provinces or territories of Canada may provide an investor with remedies for rescission or damages if this offering document (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the investor within the time limit prescribed by the securities legislation of the investor’s province or territory. The investor should refer to any applicable provisions of the securities legislation of the investor’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3a.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the dealers (if any) are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

 

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MARKET, INDUSTRY AND OTHER DATA

This proxy statement/prospectus contains estimates, projections and other information concerning ironSource’s industry, including market size and growth of the markets in which it participates, that are based on industry publications and reports and forecasts prepared by its management. In some cases, ironSource does not expressly refer to the sources from which these estimates and information are derived. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which ironSource operates is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications and reports.

The sources of certain statistical data, estimates, and forecasts contained in this proxy statement/prospectus include independent industry reports from App Annie, AppsFlyer, Apptopia, Altman Solon, eMarketer, Newzoo, Omdia, Statista and Sensor Tower.

Certain estimates of market opportunity, including internal estimates of the addressable market for the Company and forecasts of market growth included in this proxy statement/prospectus may prove inaccurate. Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. The estimates and forecasts in this proxy statement/prospectus relating to the size of our target market, market demand and adoption, capacity to address this demand, and pricing may prove to be inaccurate. The addressable market ironSource estimates may not materialize for many years, if ever, and even if the markets in which it competes meet the size estimates in this proxy statement/prospectus, ironSource’s business could fail to successfully address or compete in such markets, if at all.

Certain monetary amounts, percentages and other figures included in this proxy statement/prospectus have been subject to rounding adjustments. Certain other amounts that appear in this proxy statement/prospectus may not sum due to rounding. Revenue shown throughout this proxy statement/prospectus is revenue from continuing operations unless otherwise stated.

Other Data

The ironSource platform is defined as the ironSource one comprehensive platform that is the foundation for its Aura and Sonic suites of solutions.

ironSource Aura (“Aura”) is defined as our suite of solutions that ironSource provides to its telecom operators and original equipment manufacturer customers. The solutions that ironSource provides to its telecom operators are device experience management, user engagement and analytics.

ironSource Sonic (“Sonic”) is defined as its suite of solutions that ironSource provides to its customers. The solutions that ironSource provides to its developer customers are user growth, monetization, creative management, analytics and publishing.

ironSource defines a customer as an individual or entity that generated revenue during a certain period of time. A single organization with multiple divisions, segments or subsidiaries is treated as a single customer, even though ironSource may enter into commercial agreements with multiple parties within that organization.

 

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ironSource defines customers contributing more than $100,000 of annual revenue as customers that have contributed more than $100,000 of ironSource’s revenue in the trailing 12 months. ironSource monitors these customers as they represent the majority of its revenue, generate valuable data for us and generally have higher retention rates.

ironSource defines dollar-based net expansion rate as revenue for a certain period of time from a set of customers for that same period divided by revenue from a prior period for the same set of customers.

ironSource defines AppsFlyer’s Power Ranking (“Power Ranking”) as the ranking contained within the AppsFlyer Performance Index that normalizes and combines the number of non-fraudulent installs, the number of apps running with each media source, and a weighted retention score, before factoring in an additional fraud penalty based on the network’s overall fraud rate for the region in question.

 

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

ironSource has proprietary rights to trademarks used in this proxy statement/prospectus that are important to its business, many of which are registered under applicable intellectual property laws. This proxy statement/prospectus also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ®, or SM symbols, but such references are not intended to indicate, in any way, that ironSource will not assert, to the fullest extent permitted under applicable law, its rights or the right of the applicable licensor to these trademarks, trade names and service marks. ironSource does not intend its use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of ironSource by, any other parties.

 

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SELECTED DEFINITIONS

 

Aggregate Transaction Proceeds

means an amount equal to the aggregate amount of freely usable cash proceeds available for release to TBA from TBA’s trust account in connection with the Transactions (after, for the avoidance of doubt, giving effect to all of the TBA Redemptions (as defined herein) and the payment of all fees and expenses of TBA in connection with the consummation of the Transactions (including deferred underwriting fees)) plus the aggregate amount of net cash proceeds that have been funded to, or that will be funded substantially concurrently with the closing of the Transactions (solely to the extent actually funded) pursuant to the Investment Agreements.

 

Ancillary Documents

means the Sponsor Support Agreement (as defined herein), the Investment Agreements (as defined herein), the Secondary Share Purchase Agreements (as defined herein), the Company Shareholder Support Agreements (as defined herein), the joinder to the Shareholders Rights Agreement (as defined herein), the Plan of Merger (as defined herein), the second plan of merger and each other agreement, document, instrument and/or certificate entered into in connection with the Merger Agreement or therewith and any and all exhibits and schedules thereto.

 

Class A Renaming

means the renaming, immediately prior to the Effective Time, of each issued and outstanding ironSource ordinary share, including the 2019 Ordinary Shares issued in connection with the CVC Investment (as defined herein), as an ironSource Class A ordinary share. The Class A Renaming will also apply to ironSource ordinary shares issuable under Company Equity Awards that are outstanding immediately prior to the Effective Time.

 

Class B Distribution

means the distribution, following the Class A Renaming, of one ironSource Class B ordinary share to the holder of each such issued and outstanding ironSource Class ordinary share, at a distribution ratio of one-for-one. The Class B distribution will also apply to ironSource ordinary shares issuable under Company Equity Awards that are outstanding immediately prior to the Effective Time.

 

Companies Law

means the Israeli Companies Law, 5759-1999.

 

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Cayman Companies Law

means the Companies Act (as amended) of the Cayman Islands.

 

Effective Time

means the effective time of the Transactions.

 

Exchange Act

means the Securities Exchange Act of 1934, as amended.

 

Founder Shares

means the 25,000,000 shares of Class B ordinary shares, par value $0.0001 per share, of TBA held by the Sponsor and certain directors of TBA, which were acquired for an aggregate purchase price of $25,000 prior to the TBA IPO.

 

GAAP

means accounting principles generally accepted in the United States of America.

 

Investment Agreements

means the investment agreements entered into by the PIPE Investors providing for the purchase by the PIPE Investors at the Effective Time of PIPE Shares.

 

PCAOB

means the Public Company Accounting Oversight Board.

 

PIPE Investment

means the commitment by the PIPE Investors to purchase the PIPE Shares.

 

PIPE Investors

means certain accredited investors that entered into the Investment Agreements.

 

PIPE Shares

means an aggregate of 130,000,000 ironSource Class A ordinary shares to be purchased by the PIPE Investors pursuant to the Investment Agreements at a price per share of $10.00.

 

Plan of Merger

means the plan of merger pursuant to which Merger Sub will be merged with and into TBA, following which the separate corporate existence of Merger Sub shall cease and TBA shall continue as the surviving entity and as a wholly-owned subsidiary of ironSource.

 

Primary PIPE Shares

means newly issued PIPE Shares (i.e., ironSource Class A ordinary shares) to be purchased by the PIPE Investors from ironSource at the Effective Time following allocation of those shares by ironSource to those PIPE Investors under the Investment Agreements.

 

Secondary PIPE Shares

means PIPE Shares (i.e., ironSource Class A ordinary shares) to be purchased by the PIPE Investors from selling shareholders of ironSource at the Effective Time, following allocation of those Shares by ironSource to those PIPE Investors under the Investment Agreements.

 

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Secondary Share Purchase Agreements

means the purchase and sale agreements pursuant to which PIPE Investors to whom Secondary PIPE Shares have been allocated by ironSource under the Investment Agreements will purchase those shares from existing ironSource shareholders at the Effective Time.

 

Securities Act

means the Securities Act of 1933, as amended.

 

Sponsor

means Thoma Bravo Advantage Sponsor LLC, a Cayman Islands limited liability company.

 

Stock Split

means the stock split to cause the value of the outstanding ironSource Class A ordinary shares and ironSource Class B ordinary shares immediately prior to the Effective Time to equal $10.00 per share (with an assumed ratio of 1:4.99 as calculated as of the date of filing, which is subject to change until the closing of the Business Combination). Unless otherwise indicated, this proxy statement/prospectus does not reflect the Stock Split.

 

TBA Articles

means TBA’s amended and restated memorandum and articles of association.

 

TBA IPO

means the initial public offering of Thoma Bravo Advantage, which was consummated on January 20, 2021.

 

TBA Shareholder Redemptions

means the right of the holders of TBA shares to redeem all or a portion of their shares of TBA (in connection with the Transactions or otherwise) as set forth in the organizational documents of TBA and that certain trust agreement between TBA and Continental Stock Transfer & Trust Company (as trustee), dated as of January 14, 2021.

 

Thoma Bravo

means Thoma Bravo, L.P., a private equity investment firm and an affiliate of the Sponsor.

 

Transactions

means the transactions contemplated by the Merger Agreement and the Ancillary Documents.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND

THE EXTRAORDINARY GENERAL MEETING

The questions and answers below highlight only selected information set forth elsewhere in this proxy statement/prospectus and only briefly address some commonly asked questions about the extraordinary general meeting and the proposals to be presented at the extraordinary general meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that may be important to TBA shareholders. TBA shareholders are urged to carefully read this entire proxy statement/prospectus, including the annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the extraordinary general meeting.

Q: Why am I receiving this proxy statement/prospectus?

A: TBA and ironSource have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A and TBA encourages its shareholders to read it in its entirety. TBA’s shareholders are being asked to consider and vote upon a proposal to approve the Merger Agreement, which, among other things, provides for Merger Sub to be merged with and into TBA with TBA surviving the merger as a wholly-owned subsidiary of ironSource, and immediately thereafter and as part of the same overall transaction, the surviving entity merging with and into Merger Sub II, with Merger Sub II surviving the merger as a wholly-owned subsidiary of ironSource, which will become the parent/public company following the Business Combination, and the other Transactions contemplated by the Merger Agreement. See “Proposal One—The Business Combination Proposal.”

Q: Are there any other matters being presented to shareholders at the meeting?

A: In addition to voting on the Business Combination Proposal, the shareholders of TBA will vote on the following proposals:

 

   

To authorize the Plan of Merger. See the section of this proxy statement/prospectus titled “Proposal Two—the Merger Proposal.

 

   

To consider and vote upon a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination for any reason. See the section of this proxy statement/prospectus titled “Proposal Three—The Adjournment Proposal.”

TBA will hold the extraordinary general meeting of its shareholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders should read it carefully.

The vote of shareholders is important. Regardless of how many shares you own, you are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

Q: Why is TBA providing shareholders with the opportunity to vote on the Business Combination?

A: Pursuant to the TBA Articles, TBA is required to provide shareholders with an opportunity to have their TBA Ordinary Shares redeemed for cash, either through a shareholder meeting or tender offer. Due to the structure of the Transactions, TBA is providing this opportunity through a shareholder vote.

 

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Q: What will happen to TBA’s securities upon consummation of the Business Combination?

A: TBA’s Class A Shares are currently listed on NYSE under the symbol “TBA.” TBA’s securities will cease trading upon consummation of the Business Combination. ironSource has applied for listing of the ironSource Class A ordinary shares on NYSE under the proposed symbol “IS,” to be effective upon the consummation of the Business Combination. While trading on NYSE is expected to begin on the first business day following the consummation of the Business Combination, there can be no assurance that ironSource’s securities will be listed on NYSE or that a viable and active trading market will develop. See “Risk FactorsRisks Related to the Combined Company Following the Business Combination” for more information.

Q: Why is TBA proposing the Business Combination?

A: TBA was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities.

On January 20, 2020, TBA consummated the TBA IPO of 100,000,000 Class A Shares (inclusive of the exercise by the underwriters of the over-allotment in full) at an offering price of $10.00 per share, generating total gross proceeds of $1,000,000,000. Simultaneously with the closing of the TBA IPO, TBA consummated the sale of 2,400,000 Class A Shares at a price of $10.00 per share in a private placement to the Sponsor, generating gross proceeds of $24,000,000. Following the closing of the TBA IPO, an amount equal to $1,000,000,000 from the net proceeds of the sale of the Class A Shares in the TBA IPO and a portion of the proceeds from the sale of the private placement Class A Shares was placed into a trust account (the “Trust Account”). Since the TBA IPO, TBA’s activity has been limited to the evaluation of business combination candidates.

TBA believes ironSource is a company with an appealing market opportunity and growth profile, a strong position in its industry and a compelling valuation. As a result, TBA believes that the Business Combination will provide TBA shareholders with an opportunity to participate in the ownership of a company with significant growth potential. See the section entitled “Proposal One—The Business Combination ProposalTBAs Board of Directors Reasons for the Business Combination and Recommendation of the Board of Directors.”

Q: Did TBA’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

A: No. TBA’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Accordingly, investors will be relying solely on the judgment of TBA’s board of directors, its management team and its advisors in valuing ironSource and will be assuming the risk that the TBA board of directors may not have properly valued the business. However, TBA’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have substantial experience with mergers and acquisitions. Furthermore, in analyzing the Business Combination, TBA’s board of directors conducted significant due diligence on ironSource. TBA also received advice from certain of the underwriters of the TBA IPO as to the valuation of ironSource. Based on the foregoing, TBA’s board of directors concluded that its members’ collective experience and backgrounds, together with the experience and sector expertise of TBA’s advisors, enabled it to make the necessary analyses and determinations regarding the Business Combination, including that the Business Combination was fair from a financial perspective to its shareholders and that ironSource’s fair market value was at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time the Merger Agreement was entered

 

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into with respect to the Business Combination. There can be no assurance, however, that TBA’s board of directors was correct in its assessment of the Business Combination. For a complete discussion of the factors utilized by TBA’s board of directors in approving the Business Combination, see the section entitled “Proposal One—The Business Combination Proposal.”

Q: Do I have redemption rights?

A: If you are a holder of public shares, you have the right to demand that TBA redeem such shares for a pro rata portion of the cash held in TBA’s Trust Account, calculated as of two business days prior to the consummation of the Business Combination. We sometimes refer to these rights to demand redemption of the public shares as “redemption rights.”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to 15% or more of the public shares. Accordingly, all public shares in excess of 15% held by a public shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be converted.

Under the TBA Articles, the Business Combination may not be consummated if TBA has net tangible assets of less than $5,000,001 either immediately prior to or upon consummation of the Business Combination after taking into account the redemption for cash of all public shares properly demanded to be redeemed by holders of public shares.

Q: How do I exercise my redemption rights?

A: A holder of public shares may exercise redemption rights regardless of whether it votes for or against the Business Combination Proposal or does not vote on such proposal at all, or if it is a holder of public shares on the record date. If you are a holder of public shares and wish to exercise your redemption rights, you must demand that TBA convert your public shares into cash and deliver your share certificates (if any) and other redemption forms to TBA’s transfer agent electronically using The Depository Trust Company’s Deposit/Withdrawal at Custodian (“DWAC”) System no later than two (2) business days prior to the extraordinary general meeting. Any holder of public shares seeking redemption will be entitled to a full pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was $1,000,016,414, or $10.00 per share, as of May 17, 2021), less any owed but unpaid taxes on the funds in the Trust Account. Such amount will be paid promptly upon consummation of the Business Combination. There are currently no owed but unpaid income taxes on the funds in the Trust Account.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time prior to the time the vote is taken with respect to the Business Combination Proposal at the extraordinary general meeting. If you deliver your share certificates (if any) and other redemption forms to TBA’s transfer agent and later decide prior to the extraordinary general meeting not to elect redemption, you may request that TBA’s transfer agent return the shares (physically or electronically). You may make such request by contacting TBA’s transfer agent at the address listed at the end of this section.

Any written demand of redemption rights must be received by TBA’s transfer agent at least two (2) business days (which is June 18, 2021) prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No demand for redemption will be honored unless the holder’s share certificates (if any) and other redemption forms have been delivered (either physically or electronically) to the transfer agent.

 

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Q: What are the U.S. federal income tax consequences to me if I exercise my redemption rights?

A: A U.S. Holder (as defined below) who exercises its redemption rights will receive cash in exchange for the tendered shares, and either will be considered for U.S. federal income tax purposes to have made a sale or exchange of the tendered shares, or will be considered for U.S. federal income tax purposes to have received a distribution with respect to such shares that may be treated as (i) dividend income, (ii) a nontaxable recovery of basis in his investment in the tendered shares, or (iii) gain (but not loss) as if the shares with respect to which the distribution was made had been sold. See the section entitled “Certain Material U.S. Federal Income Tax Considerations—U.S. Holders Exercising Redemption Rights with Respect to TBA Ordinary Shares.”

Q: What are the U.S. federal income tax consequences of the Business Combination to me?

A: It is intended that the Business Combination qualify as a “reorganization” within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the “Code”). However, there are significant factual and legal uncertainties as to whether the Business Combination will qualify as a reorganization within the meaning of Section 368(a) of the Code. If, as of the Closing Date, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder of TBA Ordinary Shares may recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the Closing Date) of ironSource Class A ordinary shares received in the Business Combination, over such U.S. Holder’s aggregate tax basis in the corresponding TBA Ordinary Shares surrendered by such U.S. Holder in the Business Combination.

Even if the Business Combination otherwise qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, U.S. Holders may be required to recognize gain (but not loss) on account of the application of the passive foreign investment company (“PFIC”) rules, as described in more detail below under “Certain Material U.S. Federal Income Tax Considerations — Application of the PFIC Rules to the Business Combination.

U.S. Holders of TBA Ordinary Shares are urged to consult their own tax advisors to determine the tax consequences if the Business Combination does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the application of the PFIC rules to their specific situation in connection with the Business Combination.

Q: Do I have appraisal rights if I object to the proposed Business Combination?

A: Under Section 239 of the Cayman Companies Law, the holders of TBA Ordinary Shares will not have appraisal or dissenter rights in connection with the Business Combination. Holders of public shares should consult their Cayman Islands legal counsel regarding their rights under the Cayman Companies Law.

Q: What happens to the funds deposited in the Trust Account after consummation of the Business Combination?

A: The net proceeds of the TBA IPO, together with a portion of the proceeds from the sale of the private placement of Class A Shares to the Sponsor, equal in the aggregate to $1,000,000,000, was placed in the Trust Account immediately following the TBA IPO. After consummation of the Business Combination, the funds in the Trust Account will be used to pay, on a pro rata basis, holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of approximately $35.0 million to the underwriter of the TBA IPO as deferred underwriting commissions), whereas $850,000 will be available for working

 

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capital and general corporate purposes. A portion of the proceeds from the TBA IPO will be used to effect a purchase by TBA of shares from certain of ironSource’s shareholders and option holders immediately prior to the closing of the Transactions, and the foregoing amount to be available for working capital and general corporate purposes following the Transactions gives effect to that purchase.

Q: What happens if a substantial number of public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

A: TBA’s public shareholders may vote in favor of the Business Combination and still exercise their redemption rights, although they are not required to vote in any way to exercise such redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the Trust Account and the number of public shareholders are substantially reduced as a result of redemptions by public shareholders. To the extent that there are fewer public shares and public shareholders, the trading market for the ironSource Class A ordinary shares may be less liquid than the market was for TBA Class A Shares prior to the Transactions, and ironSource may not be able to meet the listing standards of a national securities exchange. In addition, to the extent of any redemptions, fewer funds from the Trust Account would be available to ironSource to be used in its business following the consummation of the Business Combination. Redemptions by TBA’s public shareholders will also potentially reduce the investment amount for the purchase of shares from certain of ironSource’s shareholders and option holders by TBA at the Effective Time.

In addition, if redemptions by TBA’s shareholders in connection with the Transactions exceed $150 million (the amount of such excess redemptions, the “Excess Redemptions”), the Sponsor, at its election, must either (i) procure that affiliates of Thoma Bravo commit to fund the amount of the Excess Redemptions in cash at closing by purchasing additional ironSource Class A ordinary shares pursuant to an Investment Agreement, (ii) surrender for no consideration a number of Class B Shares having a value equal to the Excess Redemptions or (iii) a combination of the foregoing; provided that in no event will the Sponsor be required to fund cash in an amount in excess of, or forfeit Class B ordinary shares of TBA having a value in excess of, $250 million.

Q: What happens if the Business Combination is not consummated?

A: If TBA does not complete the Business Combination with ironSource for whatever reason, TBA would search for another target business with which to complete a business combination. If TBA does not complete the Business Combination with ironSource or another business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding public shares. The Sponsor and TBA’s officers and directors have waived their redemption rights with respect to their Founder Shares in the event a business combination is not effected in the required time period, and, accordingly, their Founder Shares will be worthless.

Q: How do the Sponsor and the officers and directors of TBA intend to vote on the proposals?

The Sponsor, as well as TBA’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately 21.5% of the outstanding TBA Ordinary Shares. These holders have agreed to vote their shares in favor of the Business Combination Proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the

 

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meeting. In addition to the TBA Ordinary Shares held by the Sponsor and TBA’s officers and directors, TBA would need 36,300,001 Class A Shares, or approximately 36.3%, of the 100,000,000 public shares to be voted in favor of the Business Combination Proposal and other proposals in order for them to be approved (assuming all outstanding shares are voted on each proposal). The Sponsor and officers and directors of TBA have agreed, prior to TBA’s initial public offering, to waive their redemption rights.

Q: What interests do the Sponsor and the current officers and directors of TBA have in the Business Combination?

A: In considering the recommendation of TBA’s board of directors to vote in favor of the Business Combination, shareholders should be aware that, aside from their interests as shareholders, the Sponsor and certain of TBA’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of other shareholders generally. TBA’s directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, in recommending to shareholders that they approve the Business Combination and in agreeing to vote their shares in favor of the Business Combination. Shareholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things, the fact that:

 

   

If the Business Combination with ironSource or another business combination is not consummated by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and TBA’s board of directors, dissolving and liquidating. In such event, the Founder Shares held by the Sponsor and certain of TBA’s directors, which were acquired for an aggregate purchase price of $25,000 prior to the TBA IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $253.5 million based upon the closing price of $10.14 per share on NYSE on May 17, 2021. On the other hand, if the Business Combination is consummated, each outstanding TBA Ordinary Share will be converted into one ironSource Class A ordinary share.

 

   

If TBA is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by TBA for services rendered or contracted for or products sold to TBA. If TBA consummates a business combination, on the other hand, TBA will be liable for all such claims.

 

   

The Sponsor and TBA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on TBA’s behalf, such as identifying and investigating possible business targets and business combinations. However, if TBA fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, TBA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the

 

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TBA Articles). As of the date of this proxy statement/prospectus, the Sponsor and TBA’s officers and directors and their affiliates had incurred approximately $5,000 of unpaid reimbursable expenses and may incur additional expenses in the future.

 

   

The Merger Agreement provides for the continued indemnification of TBA’s current directors and officers and the continuation of directors and officers liability insurance covering TBA’s current directors and officers.

 

   

TBA’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to TBA to fund certain capital requirements. On November 6, 2020, the Sponsor agreed to loan TBA an aggregate of up to $400,000 to cover expenses related to the TBA IPO pursuant to a promissory note that was repaid in full on January 20, 2021. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to TBA outside of the Trust Account.

 

   

Orlando Bravo, currently the Chairman of the board of directors of TBA, will be a member of the board of directors of ironSource following the closing of the Business Combination and, therefore, in the future Mr. Bravo will receive any cash fees, stock options or stock awards that ironSource’s board of directors determines to pay to its non-executive directors.

 

   

Thoma Bravo Ascension Fund, L.P. (“TB Ascension”), which is an affiliate of Thoma Bravo, has agreed to purchase ironSource Class A ordinary shares from ironSource and/or its shareholders pursuant to an Investment Agreement on substantially the same terms and conditions as the other PIPE Investors at the closing of the Transactions, and certain of TBA’s directors and officers are affiliated with Thoma Bravo.

Q: When do you expect the Business Combination to be completed?

A: It is currently anticipated that the Business Combination will be consummated promptly following the TBA extraordinary general meeting, which will be held on June 22, 2021; however, such meeting could be adjourned or postponed to a later date, as described above. The Closing is also subject to the approval of the holders of ironSource Class A ordinary shares, as well as other customary closing conditions. For a description of the conditions for the completion of the Business Combination, see the section entitled “The Merger Agreement—Conditions to Closing of the Transactions.”

Q: What do I need to do now?

A: TBA urges you to carefully read and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a shareholder of TBA. Shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

Q: When and where will the extraordinary general meeting take place?

A: The extraordinary general meeting will be held on June 22, 2021, at 10:00 a.m., Eastern Time, at the offices of Kirkland & Ellis LLP located at 300 N. LaSalle, Chicago, Illinois 60654 and over the Internet by means of a live audio webcast. You may attend the extraordinary general meeting webcast by accessing the web portal located at https://www.cstproxy.com/thomabravo/sm2021 and following the instructions set forth below. Shareholders participating in the extraordinary general meeting virtually will be able to listen only and will not be able to speak during the webcast. However, in order to maintain the interactive nature of the extraordinary general meeting, virtual attendees will be able to:

 

   

vote via the web portal during the extraordinary general meeting webcast; and

 

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submit questions or comments to TBA’s directors and officers during the extraordinary general meeting.

Shareholders may submit questions or comments during the meeting through the extraordinary general meeting webcast by typing in the “Submit a question” box.

Q: How do I attend the extraordinary general meeting?

A: Due to health concerns stemming from the COVID-19 pandemic and to support the health and well-being of TBA’s shareholders, you are encouraged to attend the extraordinary general meeting virtually. To register for and attend the extraordinary general meeting virtually, please follow these instructions as applicable to the nature of your ownership of TBA Ordinary Shares:

 

   

Shares Held of Record. If you are a record holder, and you wish to attend the virtual extraordinary general meeting, go to https://www.cstproxy.com/thomabravo/sm2021, enter the control number you received on your proxy card or notice of the meeting and click on the “Click here to register for the online meeting” link at the top of the page. Immediately prior to the start of the extraordinary general meeting, you will need to log back into the meeting site using your control number.

 

   

Shares Held in Street Name. If you hold your shares in “street name”, which means your shares are held of record by a broker, bank or nominee, and you who wish to attend the virtual extraordinary general meeting, you must obtain a legal proxy from the shareholder of record and e-mail a copy (a legible photograph is sufficient) of your proxy to proxy@continentalstock.com no later than 72 hours prior to the extraordinary general meeting. Holders should contact their bank, broker or other nominee for instructions regarding obtaining a proxy. Holders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the extraordinary general meeting. You will receive an e-mail prior to the meeting with a link and instructions for entering the extraordinary general meeting. “Street name” holders should contact Continental Stock Transfer on or before June 18, 2021.

Shareholders will also have the option to listen to the extraordinary general meeting by telephone by calling:

 

   

Within the U.S. and Canada: (888) 965-8995 (toll-free)

 

   

Outside of the U.S. and Canada: +1 (415) 655-0243 (standard rates apply)

The passcode for telephone access: 70949959#. You will not be able to vote or submit questions unless you register for and log in to the extraordinary general meeting webcast as described above.

Q: How do I vote?

A: If you are a holder of record of TBA Ordinary Shares on the record date, you may vote by virtually attending the extraordinary general meeting and submitting a ballot via the extraordinary general meeting webcast or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly voted and counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the virtual extraordinary general meeting and vote through the web portal, obtain a legal proxy from your broker, bank or nominee.

 

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Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

A: Your broker, bank or nominee can vote your shares without receiving your instructions on “routine” proposals only. Your broker, bank or nominee cannot vote your shares with respect to “non-routine” proposals unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

The Business Combination Proposal, the Merger Proposal, and the Adjournment Proposal are non-routine proposals. Accordingly, your broker, bank or nominee may not vote your shares with respect to these proposals unless you provide voting instructions.

Q: May I change my vote after I have mailed my signed proxy card?

A: Yes. Shareholders of record may send a later-dated, signed proxy card to TBA’s transfer agent at the address set forth below so that it is received prior to the vote at the extraordinary general meeting or virtually attend the extraordinary general meeting and submit a ballot through the web portal during the extraordinary general meeting webcast. Shareholders of record also may revoke their proxy by sending a notice of revocation to TBA’s transfer agent, which must be received prior to the vote at the extraordinary general meeting. If you hold your shares in “street name,” you should contact your broker, bank or nominee to change your instructions on how to vote. If you hold your shares in “street name” and wish to virtually attend the extraordinary general meeting and vote through the web portal, you must obtain a legal proxy from your broker, bank or nominee.

Q: What constitutes a quorum for the extraordinary general meeting?

A: A quorum is the minimum number of TBA Ordinary Shares that must be present to hold a valid meeting. A quorum will be present at the TBA extraordinary general meeting if a majority of the voting power of the issued and outstanding TBA Ordinary Shares entitled to vote at the meeting are represented at the virtual extraordinary general meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Shares and Class B Shares are entitled vote together as a single class on all matters to be considered at the extraordinary general meeting.

Q: What shareholder vote thresholds are required for the approval of each proposal brought before the extraordinary general meeting?

 

   

Business Combination Proposal—The approval of the Business Combination Proposal will require an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The Transactions will not be consummated if TBA has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

 

   

Merger Proposal—The authorization of the Plan of Merger will require a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two thirds of TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

   

Adjournment Proposal—The approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the TBA Ordinary Shares present and entitled to vote at the extraordinary general meeting.

 

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Brokers are not entitled to vote on the Business Combination Proposal or the Merger Proposal absent voting instructions from the beneficial holder. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

Q: What happens if I fail to take any action with respect to the extraordinary general meeting?

A: If you fail to take any action with respect to the meeting and the Business Combination is approved by the TBA shareholders and consummated, you will become a shareholder of ironSource.

If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is not approved, you will continue to be a shareholder of TBA, as applicable, and TBA will continue to search for another target business with which to complete an initial business combination. If TBA does not complete an initial business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA must cease all operations except for the purpose of winding up, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the Trust Account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), and as promptly as reasonably possible following such redemption, subject to the approval of TBA’s remaining shareholders and its board of directors, dissolve and liquidate.

Q: What should I do with my share certificates?

A: Shareholders who do not elect to have their TBA Ordinary Shares redeemed for a pro rata share of the Trust Account should wait for instructions from TBA’s transfer agent regarding what to do with their certificates. TBA shareholders who exercise their redemption rights must deliver their share certificates (if any) and other redemption forms to TBA’s transfer agent (either physically or electronically) no later than two (2) business days prior to the extraordinary general meeting as described above.

Q: What should I do if I receive more than one set of voting materials?

A: Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your TBA Ordinary Shares.

Q: Who can help answer my questions?

A: If you have questions about the Business Combination or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitor at:

Morrow Sodali LLC

470 West Avenue

Stamford CT 06902

Individuals call toll-free (800) 662-5200

Banks and brokers call (203) 658-9400

Email: TBA.info@investor.morrowsodali.com

 

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You may also obtain additional information about TBA from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your share certificates (if any) and other redemption documents (either physically or electronically) to TBA’s transfer agent at the address below at least two (2) business days prior to the vote at the extraordinary general meeting. If you have questions regarding the certification of your position or delivery of your share certificates and redemption forms, please contact:

Continental Stock Transfer & Trust Company

1 State Street—30th Floor

New York, New York 10004

Attn: Mark Zimkind

Email: mzimkind@continentalstock.com

 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You should carefully read the entire proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus, including the annexes, to fully understand the Merger Agreement, the Business Combination and the other matters being considered at the extraordinary general meeting of TBA shareholders. For additional information, see “Where You Can Find More Information” on page 323. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

The Parties to the Business Combination

ironSource Ltd.

ironSource is a leading business platform that enables mobile content creators to prosper within the app economy. Before founding ironSource, its founders built consumer web apps. While the apps they built resonated with users, they struggled to efficiently scale their user bases and grow revenue. In building tools to help solve those challenges, ironSource’s founders identified a much larger opportunity and founded ironSource in 2010 with a clear mission: to help developers turn their apps into scalable, successful businesses.

In the years since its founding, mobile app creation has become easier, but app commercialization has become increasingly difficult. The ironSource platform is designed to enable any app or game developer to turn their app into a scalable, successful business by helping them to monetize and analyze their app and grow and engage their users through multiple channels, including unique on-device distribution through partnerships with leading telecom operators and OEMs such as Orange and Samsung. ironSource’s solutions allow its customers to focus on what they do best—creating great apps and user experiences—while ironSource provides the infrastructure for their business expansion in one of the largest and fastest growing markets today: the app economy.

Mobile devices are now ubiquitous, with over 6.7 billion globally in 2020, and have become the de facto standard for communication and media consumption. In addition, apps have now become the primary means for user engagement within the mobile ecosystem. In 2020, the average adult spent 4.3 hours a day consuming media on mobile devices, with 83% of that time spent in apps, according to eMarketer. The number of available apps has also increased significantly, with over 1.8 million apps available worldwide on the Apple App Store alone as of January 2021.

In this mobile app economy, games are the leading category of apps, accounting for the majority of apps in the Apple App Store in 2020 according to Statista. As the mobile gaming category has grown, a new generation of technology platforms has emerged to enable and fuel this growth. ironSource has established a strong leadership position within this category, focusing our product development and innovation on building core infrastructure serving mobile game developers.

The abundance of apps and games in the mobile ecosystem, and the ease with which they can be created, has made business success increasingly dependent on developers’ ability to differentiate their apps, reach the most relevant users, expand their audience cost-efficiently and rapidly commercialize their businesses. These dynamics have created a need for a business platform capable of enabling app discovery, user growth, user engagement and content monetization for game and app developers. ironSource identified this need nearly a decade ago and built a global platform to serve



 

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app developers, and eventually telecom operators, who collectively act as the backbone of the app economy.

The ironSource platform consists of two solution suites: ironSource Sonic (“Sonic”) and ironSource Aura (“Aura”). The Sonic solution suite supports developers as they launch, monetize and scale their apps and games, by providing solutions for app discovery, user growth, content monetization, analytics and publishing. The Aura solution suite allows telecom operators to enrich the device experience by creating new engagement touchpoints that deliver relevant content for their users across the entire lifecycle of the device—from first setup, to in-life engagement and through the replacement cycle. This creates a unique on-device distribution channel for developers to promote their apps as a native part of the device experience. The ironSource team believes the comprehensive nature of each solution suite, coupled with their combination into one platform, drives a unique competitive advantage in the market. As of March 31, 2021, ironSource had over 4,000 customers around the world using its comprehensive set of solutions, with a combined reach of over 2.5 billion monthly active users.

ironSource is a market leader for each of its solution suites, highlighting the business-critical role it plays for mobile game and app developers. Its Sonic solutions were ranked third after Google and Facebook in AppsFlyer’s “Power Ranking” from June 2020 (for more information on Power Rankings, see “Market, Industry and Other Data—Other Data”). In March 2021, 89% of the top 100 mobile games by downloads on the Apple App Store used the ironSource platform. In addition, the Sonic publishing solution, Supersonic Studios (“Supersonic”), which was launched in February 2020, has already been used to publish 25 games which had over 13 million daily active users as of March 31, 2021. In addition, 18 out of the 25 published games using the Supersonic solution were ranked in the top 10 most downloaded on either the Apple App Store or Google Play Store during 2020 or 2021. One of Supersonic’s games—Join Clash—was among the top 10 most-downloaded games for the year ended 2020 according to Apptopia and was the most downloaded game in the world in the first quarter of 2021 according to Sensor Tower and App Annie. Lastly, its Aura solutions are used by some of the world’s leading telecom operators and connected device original equipment manufacturers (“OEMs”), including Boost, Orange, Samsung and Vodafone, and reached over 130 million daily active users as of March 31, 2021.

ironSource customers range from large global enterprises to small and mid-sized businesses across the app economy, including mobile game and app developers, advertising networks, telecom operators and OEMs. The ironSource team defines a customer as an individual or entity that generated revenue for ironSource during a certain period of time. A single organization with multiple divisions, segments or subsidiaries is counted as a single customer, even though ironSource may enter into commercial agreements with multiple parties within that organization.

The nature of the ironSource business model closely aligns ironSource’s success with that of its customers. As a result, ironSource builds strong, long-standing partnerships with its customers and expands their use of ironSource’s solutions over time. As of March 31, 2021, ironSource had a dollar-based net expansion rate of 176% across all customers over the trailing 12-month period and had a gross retention rate of 99% for its customers who generated over $100,000 revenue over the trailing 12-month period. As of March 31, 2021, ironSource had 292 customers who generated over $100,000 revenue over the trailing 12-month period, collectively accounting for 94% of its revenue. See “ironSource’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics and Non-GAAP Financial Metrics.” The ironSource solutions can be used individually or in combination. The ironSource team has seen that as customers benefit from using the ironSource platform—they increase their usage of existing and additional solutions, which in turn,



 

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further accelerates their growth. For the year ended December 31, 2020, 69% of the Sonic customers who contributed over $100,000 of annual revenue used both ironSource’s user growth and monetization solutions, and 13% distributed their apps through on-device placements, benefiting from the inventory generated by its Aura solutions. By reinvesting revenue generated through ironSource’s monetization solutions into user growth, many of its customers benefit from a growth cycle that enables accelerated user and revenue growth.

ironSource’s leadership position in the app economy is enhanced by its scaled, broad and deep dataset built with advanced privacy controls. Sonic’s ad interaction and contextual data and Aura’s user provided data and contextual data are each utilized to deliver highly relevant experiences to users, while respecting privacy restrictions and data separation across our solutions. ironSource uses this data, together with its proprietary, advanced machine learning technology to enable developers to effectively acquire users who generate greater revenue and return on user growth spend.

ironSource’s revenue grew from $181.1 million in 2019 to $331.5 million in 2020, representing year-over- year growth of 83%. Its revenue grew from $61.2 million in the three months ended March 31, 2020 to $119.7 million in the three months ended March 31, 2021, representing year-over-year growth of 96%. Its net income from ironSource’s continuing operations grew from $32.7 million in 2019 to $58.8 million in 2020, representing year-over-year growth of 80%. In the three months ended March 31, 2021 and 2020, ironSource’s income from continuing operations, net of income taxes was $10.2 million and $10.9 million, respectively. Further, ironSource generated Adjusted EBITDA of $74.5 million in 2019 and $103.5 million in 2020, representing year-over-year growth of 39%. It generated Adjusted EBITDA of $39.5 million in the three months ended March 31, 2021 representing year-over-year growth of 93% from its Adjusted EBITDA of $20.5 million for the three months ended March 31, 2020.

The mailing address of ironSource’s principal executive office is 121 Menachem Begin Street, Tel Aviv 6701203, Israel and its telephone number is +972-747990001.

Thoma Bravo Advantage

TBA was formed for the purpose of effectuating a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. TBA was incorporated under the laws of the Cayman Islands on November 6, 2020.

TBA’s objective is to identify and work with an existing management team to operate a market-leading, fast-growing software franchise with high-quality and recurring revenue streams in a fragmented market, and that offers attractive organic and inorganic growth opportunities. Through its many successful software investments, Thoma Bravo, which is an affiliate of the Sponsor, has accumulated a robust set of operating best practices through which it can provide a business with the opportunity to accelerate its growth and create significant value in a short time frame. TBA believes it is well-positioned to extend its experience and operating practices to ironSource.

The Sponsor is an affiliate of Thoma Bravo, which is part of one of the longest and most successful stories of private equity investing in the United States, dating back to a predecessor firm founded in 1980. Continuing this history, over the last 20 years, funds largely managed by the current Thoma Bravo managing partners have been amongst the top performing buyout funds of their respective vintage peers. In 2017, 2018 and 2019, the HEC-Dow Jones Private Equity Performance Ranking named Thoma Bravo the top performing buyout firm in terms of aggregate performance, based on all buyout funds raised between 2005 and 2014.



 

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For more than 20 years, the Thoma Bravo managing partners have focused on investing in businesses that provide software products and/or technology-enabled services. Because of the compelling opportunities the firm has found in these sectors, almost all investments made by the Thoma Bravo managing partners during this period have been in software and technology-enabled services, with a total of over 270 acquisitions, including add-ons.

This specialized focus has allowed Thoma Bravo to develop a deep understanding of key business metrics and growth strategies in these businesses, and to collect a great deal of proprietary, operational data to inform its future investment decisions. Thoma Bravo believes it is now well-established as a leading investor in companies operating in the application, infrastructure and security software segments in part because of its success in increasing the growth rate and improving the margins (and hence, value appreciation) of the software companies in which it has invested.

Thoma Bravo and its predecessor firms have invested in a wide range industry sectors over the years, including distribution, education, insurance, finance, communications, media, marketing, consulting, asset management and security services. The firm has increasingly focused on software since 2001, when its research identified software as an area of opportunity. Since then, equity funds managed by Thoma Bravo have made investments in more than 80 software company platforms, representing more than $65 billion of enterprise value, and their portfolio companies have invested in about 195 add-ons to these platform businesses, representing more than $14 billion of additional value, making Thoma Bravo a leading private equity investor in software. With over 20 years of experience investing in the software and technology-enabled services spaces, Thoma Bravo is uniquely positioned with a comprehensive view of the industry, affording our management team the insight and knowledge to identify compelling candidates for a business combination.

Thoma Bravo has an established track record of investing in market leaders, as evidenced by its high-performing past and current portfolio investments. These investments include now-public companies such as Dynatrace and SailPoint, which have significantly increased their revenue and earnings since Thoma Bravo’s initial investment.

Thoma Bravo believes its investment history has created a reputation for the firm as one of a small number of financial partners of choice for management teams seeking to build and grow best in class companies. In addition, the contacts and relationships the firm’s partners have built over many years of activity in the industry provide Thoma Bravo with direct access to leading companies and leading executives, which it believes produces a significant competitive advantage in sourcing and completing an investment.

The mailing address of TBA’s principal executive office is 150 N. Riverside Plaza, Suite 2800, Chicago, Illinois 60606, and its telephone number is (312) 254-3300.

Merger Sub

Showtime Cayman (“Merger Sub”) is a newly formed Cayman Islands exempted company and a wholly owned subsidiary of ironSource. Merger Sub was formed solely for the purpose of effecting the Transactions and has not carried on any activities other than those in connection with the Transactions. The address and telephone number for Merger Sub’s principal executive offices are the same as those for ironSource.

Merger Sub II

Showtime Cayman II (“Merger Sub II”) is a newly formed Cayman Islands exempted company and a wholly owned subsidiary of ironSource. Merger Sub II was formed solely for the purpose of



 

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effecting the Transactions and has not carried on any activities other than those in connection with the Transactions. The address and telephone number for Merger Sub II’s principal executive offices are the same as those for ironSource.

The Merger Agreement (page 122)

The terms and conditions of the merger of the Merger Sub with and into TBA (the “First Merger”), with TBA surviving the First Merger as a wholly owned subsidiary of ironSource (such company, as the surviving entity of the First Merger, the “Surviving Entity”), and the merger of the Surviving Entity with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger as a wholly-owned subsidiary of ironSource (such company, as the surviving entity of the Second Merger, the “Surviving Company”) (collectively, the “Business Combination”) are contained in the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the Business Combination.

Structure of the Business Combination

The following is a depiction of ironSource’s organizational structure and TBA’s organization structure before the consummation of the Business Combination:

LOGO



 

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The following is a depiction of ironSource’s organizational structure after the consummation of the Business Combination, with the approximate percentages of ownership reflected assuming no redemptions by TBA’s public stockholders:

 

 

LOGO

 

(1)

Existing ironSource shareholders holding Class A ordinary shares will hold 37% of the economic interest and 15% of the voting interest assuming no redemptions by TBA’s public shareholders. Existing ironSource shareholders holding Class B ordinary shares will hold 37% of the economic interest and 75% of the voting interest assuming no redemptions by TBA’s public shareholders. Assuming the maximum amount of TBA’s public stockholders redeem their shares, then the existing ironSource shareholders would hold approximately 86% of the economic interest and 95% of the voting interest in the aggregate of ironSource on a pro forma basis. Existing ironSource shareholders holding Class A ordinary shares will hold 43% of the economic interest and 16% of the voting interest assuming the maximum amount of TBA’s public stockholders redeem their shares. Existing ironSource shareholders holding Class B ordinary shares will hold 43% of the economic interest and 79% of the voting interest assuming the maximum amount of TBA’s public stockholders redeem their shares.

(2)

Assuming the maximum amount of TBA’s public stockholders redeem their shares, then the PIPE Investors would hold approximately 14% of the economic interest and 5% of the voting interest of ironSource on a pro forma basis.

(3)

Assuming the maximum amount of TBA’s public stockholders redeem their shares, then TBA’s public stockholders would hold no economic or voting interest in ironSource.

(4)

Assuming the maximum amount of TBA’s public stockholders redeem their shares, then TBA’s Sponsor and related parties would hold approximately 0.25% of the economic interest and 0.1% of the voting interest of ironSource on a pro forma basis.

Merger Consideration

The pro forma equity valuation of the Company upon consummation of the Transactions is estimated to be approximately $11.1 billion. We estimate that, upon consummation of the Transactions (the “Effective Time”), assuming none of TBA’s public shareholders demand redemption (“TBA Redemptions”) pursuant to TBA’s amended and restated memorandum and articles of association (“TBA Articles”), the shareholders of ironSource will own approximately 74% of the outstanding ironSource Class A ordinary shares and current shareholders of TBA (including the Sponsor) would



 

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hold approximately 13% of the issued and outstanding ironSource Class A ordinary shares and certain accredited investors purchasing PIPE Shares will hold approximately 13% of the issued and outstanding ironSource Class A ordinary shares.

Immediately prior to the Effective Time, ironSource will rename each of its issued and outstanding ordinary shares (including ordinary shares issuable under outstanding awards under ironSource’s equity incentive plans (“Company Equity Awards”)) as a Class A ordinary share of ironSource, no par value per share (“ironSource Class A ordinary share”), followed immediately by the distribution of one Class B ordinary share of ironSource, no par value per share (“ironSource Class B ordinary share”) to the holders of each such issued and outstanding ironSource Class A ordinary share (in the case of Company Equity Awards, the ironSource Class B ordinary shares will only be distributed upon issuance of the related ironSource Class A ordinary shares underlying the Company Equity Award). We refer to these adjustments to ironSource’s share capital as the “Class A Renaming” and “Class B Distribution.” ironSource will furthermore effect a stock split of each ironSource Class A ordinary share and each ironSource Class B ordinary share into such number of ironSource Class A ordinary shares and ironSource Class B ordinary shares, in each case, calculated in accordance with the terms of the Merger Agreement, such that each ironSource Class A ordinary share and each ironSource Class B ordinary share will have a value of $10.00 per share after giving effect to such stock split (the “Stock Split”) (with an assumed ratio of 1:4.99 as calculated as of the date of filing, which is subject to change until the closing of the Business Combination). Unless otherwise indicated, this proxy statement/prospectus does not reflect the Stock Split. Corresponding adjustments will be made to the exercise price of, and number of shares issuable under, Company Equity Awards as a result of the stock split.

Pursuant to the Merger Agreement, at the Effective Time (a) each Class B Ordinary Share of TBA, par value $0.0001 per share (“Class B Shares”), outstanding immediately prior to the Effective Time will be automatically converted into one Class A Ordinary Share of TBA, par value $0.0001 per share (“Class A Shares,” together with the Class B Shares, the “TBA Ordinary Shares”) and each Class B Share will no longer be outstanding and will be automatically cancelled and cease to exist and each former holder of Class B Shares will cease to have any rights with respect to such shares, and (b) each Class A Share issued and outstanding immediately prior to the Effective Time (other than certain excluded shares) will be converted into one ironSource Class A ordinary share, subject to adjustment described herein.

Agreements Entered Into in Connection with the Merger Agreement (page 133)

Investment Agreements and Secondary Purchase Agreements

Concurrently with and following the execution of the Merger Agreement, ironSource entered into investment agreements (each, an “Investment Agreement” and collectively, the “Investment Agreements”) with certain investors (each, a “PIPE Investor” and collectively the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to purchase an aggregate of 130,000,000 ironSource Class A ordinary shares (the “PIPE Shares”) in a private placement or secondary sale of shares for $10.00 per share on the terms and subject to the conditions set forth therein.

At the discretion of ironSource, the PIPE Shares will either be newly issued by ironSource (“Primary PIPE Shares”) or sold by certain selling shareholders of ironSource, including optionholders who will exercise options, and holders of RSUs whose RSUs will settle (each, a “Selling Shareholder” and collectively, the “Selling Shareholders”) (“Secondary PIPE Shares”). The Investment Agreements contain customary representations and warranties of ironSource, on the one hand, and the applicable



 

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PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the Transactions. The exact allocation between Secondary PIPE Shares and Primary PIPE Shares under the Investment Agreements will only be determined once the extraordinary general meeting of TBA shareholders that is the subject of this proxy statement/prospectus has taken place, and the extent of any redemption requests for TBA Ordinary Shares pursuant to the Transactions is known. ironSource does not currently intend to allocate the PIPE investment funds towards an investment in Primary PIPE Shares, as it intends to allocate all such funds towards the purchase of Secondary PIPE Shares from the Selling Shareholders. The obligations to consummate the transactions contemplated by the Investment Agreements are conditioned upon, among other matters, the consummation of the Transactions.

Along with the other PIPE Investors, Thoma Bravo Ascension Fund, L.P. (“TB Ascension”), an affiliate of Thoma Bravo, has also entered into an Investment Agreement with ironSource concurrently with the execution of the Merger Agreement. The purchase by TB Ascension of $300 million of PIPE Shares will generally be made on identical terms to the purchases by the PIPE Investors and will close at the Effective Time and is currently expected to be allocated exclusively towards Secondary PIPE Shares. Similar to all other PIPE Investors, TB Ascension will receive registration rights under the Investment Agreements, as described below, upon consummation of its investment. In addition, with respect to the ironSource Class A ordinary shares that it receives pursuant to the Business Combination, the Sponsor will become party to the Second Amended and Restated Shareholders Rights Agreement (the “Shareholders Rights Agreement”) between ironSource and certain of its existing shareholders, including App Investments S.á.r.l., Viola Ventures III, L.P., certain members of ironSource’s management team, Tomer Bar-Zeev, Eyal Milrad, Tamir Carmi and Arnon Harish and certain other minority shareholders of ironSource (the “SRA Parties”), which provides for registration rights for those shareholders of ironSource that are party to the agreement. Please see “—Second Amended and Restated Shareholders Rights Agreement” below.

As of the date of this proxy statement/prospectus, the ironSource Class A ordinary shares to be issued or sold in connection with the Investment Agreements and Secondary Purchase Agreements have not been registered under the Securities Act. ironSource has agreed, within 30 calendar days after the consummation of the Transactions, to file with the SEC a registration statement registering the resale of such ironSource Class A ordinary shares and will use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 90th calendar day following the Closing (or the 120th calendar day if the SEC notifies ironSource (orally or in writing) that it will “review” the registration statement) and (ii) the seventh business day after the date ironSource is notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.

Secondary Share Purchase Agreements

Upon the Effective Time, to the extent that ironSource allocates the PIPE Investors’ investment under the Investment Agreements towards the purchase of Secondary PIPE Shares, the relevant PIPE Investor and the Selling Shareholders will enter into a purchase and sale agreement (each a “Secondary Share Purchase Agreement”), pursuant to which the PIPE Investor will purchase, and the Selling Shareholders will sell to the PIPE Investor, at the Effective Time, ironSource Class A ordinary shares, at a purchase price of $10.00 per share. The obligation to consummate the transactions contemplated by the Secondary Share Purchase Agreement is conditioned upon, among other matters, the closing of the Transactions.



 

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Sponsor Support Agreement

Concurrently with the execution of the Merger Agreement, the Sponsor and certain directors of TBA who hold Class B Shares entered into a letter agreement (the “Sponsor Support Agreement”) in favor of ironSource and TBA, pursuant to which they have agreed to (i) attend the extraordinary general meeting of TBA shareholders relating to the Transactions or otherwise cause all equity securities owned by them to be counted as present thereat, (ii) vote all shares of TBA owned by them in favor of the Transactions, (iii) vote against any business combination proposal besides the Transactions and any other action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions, (iv) vote against any change in business, management or board of directors of TBA (except as contemplated by the Transactions), (v) not to redeem, or seek to redeem, any shares of TBA owned by them prior to the consummation of the Transactions and (vi) not to transfer any shares of TBA prior to the closing of the Transactions or the valid termination of the Merger Agreement pursuant to its terms.

Additionally, the Sponsor and certain directors of TBA agreed to transfer restrictions whereby, for a one year period following the closing of the Transactions, they may not sell or otherwise transfer any ironSource Class A ordinary shares that are issued on account of the Class B Shares of TBA that they hold (the “Sponsor Lock-Up Securities”). One-third of the Sponsor Lock-Up Securities will be released from such lock-up restrictions in the event that the volume-weighted average price of an ironSource Class A ordinary share exceeds $15.00, $17.50 and $20.00 per share, respectively, for 20 trading days within any 30-trading day period commencing at least 150 days after the Closing Date.

If redemptions by TBA’s shareholders in connection with the Transactions exceed $150 million (the amount of such excess redemptions, the “Excess Redemptions”), the Sponsor, at its election, must either (i) procure that affiliates of Thoma Bravo commit to fund the amount of the Excess Redemptions in cash at closing by purchasing additional ironSource Class A ordinary shares pursuant to an Investment Agreement, (ii) surrender for no consideration a number of Class B ordinary shares of TBA having a value equal to the Excess Redemptions or (iii) a combination of the foregoing; provided that in no event will the Sponsor be required to fund cash in an amount in excess of, or forfeit Class B ordinary shares of TBA having a value in excess of, $250 million.

Pursuant to the Sponsor Support Agreement, the Sponsor has the right to designate one individual (whose identity is generally subject to the prior consent of ironSource, other than Orlando Bravo, the Chairman of the board of directors of TBA) to be appointed to ironSource’s board of directors as of the closing of the Transactions.

ironSource Shareholder Support Agreement

Concurrently with the execution of the Merger Agreement, holders representing a majority of the outstanding ironSource ordinary shares (each, an “ironSource Supporting Shareholder” and, collectively, the “ironSource Supporting Shareholders”) entered into a letter agreement (the “Shareholder Support Agreement”) in favor of TBA and ironSource, pursuant to which the ironSource Supporting Shareholders agreed to (i) attend the ironSource extraordinary general meeting or otherwise cause all equity securities owned by it, him or her to be counted as present thereat, (ii) vote all ironSource equity owned by it, him or her in favor of the Transactions and (iii) vote against certain alternate business combinations. The ironSource Supporting Shareholders further agree that prior to the consummation of the Transactions, they will use commercially reasonable efforts to take all actions and do, or cause to be done, all things reasonably necessary under applicable law to consummate the Transactions.



 

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Additionally, the ironSource Supporting Shareholders have agreed to transfer restrictions whereby such ironSource Supporting Shareholders may not sell or otherwise transfer any of the ironSource Class A ordinary shares beneficially held by them following the closing of the Transactions for a six month period following the Closing Date (or, if earlier, the date that the lock-up restrictions governing the Sponsor Lock-Up Securities (as defined and described below) are fully released).

Second Amended and Restated Shareholders Rights Agreement

Upon the consummation of the Mergers, the Sponsor will become a party to the Second Amended and Restated Shareholders Rights Agreement (the “Shareholders Rights Agreement”) by and among ironSource and the SRA Parties pursuant to which the Sponsor will be entitled (as the other shareholders party to the agreement are already entitled) to certain customary registration rights, including, among other things, demand, shelf and piggy-back rights, subject to cut-back provisions. Pursuant to the Shareholders Rights Agreement, the Sponsor will agree (as the other ironSource shareholders have agreed), in connection with the exercise of any registration rights, not to sell, transfer, pledge or otherwise dispose of ironSource ordinary shares or other securities exercisable therefor for certain time periods specified therein. The detailed registration rights provided under the Shareholders Rights Agreement are described in this proxy statement/prospectus under “Certain Relationships and Related Person Transactions—ironSource—Second Amended and Restated Shareholders Rights Agreement.”

The Merger Proposal

The TBA shareholders will vote on a separate proposal to authorize the Plan of Merger. See the section of this proxy statement/prospectus titled “Proposal Two—The Merger Proposal.”

The Adjournment Proposal

If TBA is unable to consummate the Business Combination at the time of the extraordinary general meeting for any reason, the chairman presiding over the extraordinary general meeting may submit a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary. See the section of this proxy statement/prospectus titled “Proposal Three—The Adjournment Proposal.”

Date, Time and Place of Extraordinary General Meeting of TBA’s Shareholders

The extraordinary general meeting will be held at 10:00 a.m, Eastern time, on June 22, 2021, at the offices of Kirkland & Ellis LLP located at 300 N. LaSalle, Chicago, Illinois 60654 and via live webcast at https://www.cstproxy.com/thomabravo/sm2021, or such other date, time and place to which such meeting may be adjourned, to consider and vote upon the proposals.

Voting Power; Record Date

TBA shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned TBA Ordinary Shares at the close of business on May 24, 2021, which is the record date for the extraordinary general meeting. TBA shareholders will have one vote for each TBA Ordinary Share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there are 102,400,000 Class A Shares outstanding and 25,000,000 Class B Shares outstanding, of which 100,000,000 Class A Shares are public shares with the rest being held by the initial shareholders and their respective affiliates (including the Sponsor).



 

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Redemption Rights

Pursuant to the TBA Articles, a holder of public shares may demand that TBA convert such shares into cash if the Business Combination is consummated; provided that TBA may not consummate the Business Combination if it has less than $5,000,001 of net tangible assets either immediately prior to or upon consummation of the Business Combination. Holders of public shares will be entitled to receive cash for these shares only if they deliver their share certificates (if any) and other redemption forms to TBA’s transfer agent no later than two (2) business days prior to the extraordinary general meeting. Holders of public shares do not need to affirmatively vote on the Business Combination Proposal or be a holder of such public shares as of the record date to exercise conversion rights. If the Business Combination is not consummated, these shares will not be converted into cash. If a holder of public shares properly demands conversion, delivers his, her or its share certificates (if any) and other redemption forms to TBA’s transfer agent as described above, and the Business Combination is consummated, TBA convert each public share into a full pro rata portion of the Trust Account, calculated as of two (2) business days prior to the date of the extraordinary general meeting. It is anticipated that this would amount to approximately $10.00 per share. If a holder of public shares exercises his, her or its conversion rights, then it will be exchanging its Class A Shares for cash and will not become a shareholder of ironSource. See the section of this proxy statement/prospectus titled “Extraordinary General Meeting of TBA Shareholders—Conversion Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.

Appraisal Rights

TBA shareholders do not have appraisal or dissenter rights in connection with the Transactions under the Cayman Companies Law. See the section of this proxy statement/prospectus titled “Extraordinary General Meeting of TBA Shareholders—Appraisal Rights.”

TBA’s Board of Directors’ Reasons for the Business Combination

TBA’s board of directors, in evaluating the Business Combination, consulted with TBA’s management and financial and legal advisors. In reaching its unanimous resolution (i) that the Merger Agreement and the transactions contemplated thereby are advisable and in the best interests of TBA and its shareholders and (ii) to recommend that the shareholders adopt the Merger Agreement and approve the Business Combination and the transactions contemplated thereby, TBA’s board of directors considered a range of factors, including, but not limited to, the factors discussed in the section referenced below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, TBA’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. TBA’s board of directors viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of TBA’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

In approving the Business Combination, TBA’s board of directors determined not to obtain a fairness opinion. The officers and directors of TBA have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background and sector expertise enabled them to make the necessary analyses and



 

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determinations regarding the Business Combination. In addition, TBA’s officers and directors have substantial experience with mergers and acquisitions.

TBA’s board of directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Merger Agreement and the transactions contemplated thereby, including but not limited to the following factors:

 

   

Large and Growing Global Market Opportunity. ironSource’s core market opportunity is large and global with strong secular trends that support long-term sustainable growth. ironSource’s core addressable market is projected to grow to as much as $41 billion by 2025 at a forecasted CAGR of 19%. The app economy specifically is one of the fastest-growing markets today, with millions of apps available to billions of users who spend 83% of their time on mobile devices inside apps. Within the app economy, games are the leading category of apps, accounting for the majority of apps in the Apple App Store in 2020 according to Statista, and ironSource has established a strong leadership position within this category, focusing its product development and innovation on building core infrastructure serving mobile game developers. Moreover, there is a growing opportunity to expand the use of the ironSource platform to apps beyond gaming, driving improved revenue, more cost efficient user acquisition and overall business growth for developers of apps in other categories. As of March 31, 2021, over 17% of ironSource’s customers with over $100,000 in trailing 12-month revenue came from industries beyond gaming.

 

   

Comprehensive, Differentiated Platform. The comprehensive nature of Sonic and Aura, coupled with their combination into one platform, serves to differentiate the ironSource platform by providing app developers multiple channels to acquire and engage users, making it the most comprehensive app business platform in the market and underpinning its market leadership. That market leadership makes ironSource an attractive choice for customers looking to grow their app, and the breadth of its solutions means developers of all sizes and at all stages of growth have a way to leverage the platform.

 

   

Track-Record of Innovation. ironSource has demonstrated a track record of innovation. ironSource regularly creates new products to enable it to grow in scale and advance its market leadership. ironSource has been first-to-market with multiple automation and optimization products which have established themselves as the de-facto industry-standard—from ad revenue measurement tools, which connect in-app advertising revenue to marketing spend at a granular level, to a data-science driven cross promotion tool, which allows developers to promote new content to their existing user bases to grow engagement across their portfolio of apps. In February 2020, ironSource launched its Sonic publishing solution, Supersonic, which has already been used to publish 25 games which had over 13 million daily active users as of March 31, 2021. In addition, 18 out of the 25 published games using the Supersonic solution were ranked in the top 10 most downloaded on either the Apple App Store or Google Play Store during 2020 or 2021.

 

   

Significant Scale. ironSource’s scaled base of over 4,000 customers globally provides it with an extensive contextual dataset and a holistic view of the mobile ecosystem, which drives a significant competitive advantage. More data drives better targeting, and its customers provide it with data across over 2.5 billion monthly active users. ironSource powers the business growth of 89% of the top 100 games, and has been ranked multiple times as one of the top 3 platforms for driving both quality and scaled user growth by leading industry indexes. Lastly, the Aura solution suite is used by some of the world’s leading telecom operators and connected device OEMs and reached over 130 million daily active users.



 

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Long-Term, Sticky Customer Relationships. ironSource’s performance-based business model is highly aligned with its customers’ growth, making it intuitive for customers to start working with ironSource and driving long-term customer relationships. In addition, the depth of integration ironSource’s platform has with its customers drives a sticky relationship and high customer retention rate. A developer can only use one mediation product to manage an app’s monetization across multiple advertising networks, and a telecom operator can only integrate one device experience management solution at the system-level into its smartphone network. Switching solution providers not only causes customers to incur switching costs, but also to forego the data insights they would receive while using the platform. In addition, customers who onboard a solution from either the Sonic or Aura solution suites tend to onboard additional, complementary solutions over time, further deepening the relationship and increasing switching costs. The combination of these factors results in ironSource demonstrating industry leading financial metrics including a dollar-based net expansion rate of 176% over the 12-month period as of March 31, 2021 and a gross retention rate of 99% for ironSource’s customers who generated over $100,000 revenue over the trailing 12-month period. As of March 31, 2021, ironSource had 292 customers who generated over $100,000 revenue over the trailing 12-month period, collectively accounting for 94% of its revenue.

 

   

Track Record of Organic and Profitable Growth. ironSource has a strong track record of successfully identifying multiple opportunities in the app economy and leveraging its core capabilities around user growth, content monetization and data to execute on them to build successful, profitable solutions. This is reflected in the company’s rare combination of scale, growth, and profitability, achieving $331.5 million of revenue, 83% growth year-over-year, $58.8 million of income from continuing operations, net of income taxes, 18% income from continuing operations, net of income taxes margin, $103.5 million of Adjusted EBITDA and 31% Adjusted EBITDA Margin in 2020 and $119.7 million of revenue, 96% growth year-over-year, and $10.2 million of income from continuing operations, net of income taxes, 9% income from continuing operations, net of income taxes margin, $39.5 million of Adjusted EBITDA and 33% Adjusted EBITDA Margin in the three months ended March 31, 2021. Also noteworthy is ironSource’s accelerating growth rate through 2020 and 2021, where its fourth quarter 2020 and first quarter 2021 growth was higher than any of the previous three quarters.

 

   

Demonstrated M&A Capabilities. ironSource has demonstrated an ability to augment its growth with strategic M&A that has added to the capabilities and scope of its platform, while also successfully integrating and transforming the growth and profitability profiles of acquired companies. For example, in 2015 ironSource acquired SupersonicAds, which formed the basis of ironSource’s mediation product. Further, in 2021, ironSource also acquired Soomla Inc. ("Soomla") and Luna Labs Limited ("Luna Labs"), which formed the basis of their ad quality product and augmented their creative management solutions respectively.

 

   

Experienced, Founder-Led Management Team with a Proven Track Record of Driving Profitable Growth. ironSource has a unique founder-led culture driven by 8 co-founders and who have worked together for many years. This management team has been the driving force behind the success of the company to date, and is deeply invested in continuing to steer the company towards future growth. The company culture cultivated by the founders empowers and rewards initiative-taking and encourages the surfacing of new ideas and their actualization into actionable growth drivers.

 

   

Platform for Future Development and Expansion. A public company status, combined with the capital from the Business Combination, is expected to provide ironSource with a strong platform for further developing and expanding its current platform, including through strategic acquisitions.



 

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Shareholder Liquidity. The obligation in the Merger Agreement to have the ironSource Class A ordinary shares issued as consideration listed on the New York Stock Exchange, a major U.S. stock exchange, which TBA’s board of directors believes has the potential to offer shareholders greater liquidity.

 

   

Attractive Valuation. TBA’s board of directors believes ironSource’s implied valuation following the Business Combination relative to the current valuations experienced by comparable publicly traded companies in the software and business enablement technology sector is favorable for TBA and its shareholders.

 

   

Due Diligence. TBA’s due diligence examinations of ironSource, including financial, accounting, tax, legal, industry, and technical due diligence, and discussions with ironSource’s management and financial, legal and other advisors.

 

   

Lock-Up. Certain shareholders of ironSource have agreed to be subject to a 180 day lockup (subject to early release in certain cases) in respect of their ironSource ordinary shares following the closing of the Business Combination.

 

   

Other Alternatives. TBA’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to TBA, that the Business Combination represents the best potential business combination for TBA and the most attractive opportunity for TBA’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential combination targets, and TBA’s board of directors’ belief that such process has not presented a better alternative.

 

   

Negotiated Transaction. The financial and other terms of the Merger Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s-length negotiations between TBA and ironSource.

TBA’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including but not limited to the following:

 

   

Rapidly Evolving Technologies and Markets. ironSource operates in an industry that is characterized by rapid technological change, new features, tools, solutions and strategies, as well as evolving legal and regulatory requirements, changing customer needs and a dynamic competitive market. Failing to adapt as technologies and markets evolve could materially and adversely affect ironSource’s market position and business.

 

   

Dependence on Operating System Providers and App Stores. ironSource’s platform depends upon the effective operation of certain mobile operating systems, networks and standards that are run by operating system providers and app stores. ironSource does not control operating system providers or app stores and as a result, ironSource is subject to risks and uncertainties related to the actions taken, or not taken, by these parties.

 

   

Competition. The markets in which ironSource operates are highly competitive, and a significant number of companies have developed or are developing products and solutions that currently, or in the future may, compete with some or all of ironSource’s individual products or solution suites. Certain of these competitors may have significantly greater resources than ironSource to develop new or innovative solutions.

 

   

Ability to Expand into the Wider App Economy. ironSource’s growth strategy is based, in part, on expanding into industries that go beyond mobile gaming apps into the broader app economy. These industries are still in the early stages of adoption of technologies enabling ad-based monetization and user growth, and its is uncertain whether these types of apps will



 

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provide the opportunities for expansion that ironSource currently expects, as well as how rapidly these opportunities may materialize, if at all.

 

   

Public Company Systems. The need to update ironSource’s financial systems, controls and operations necessary for a public company, including the costs related thereto.

 

   

Increased Regulation. Regulation in ironSource’s industry, particularly with respect to data protection, could increase, which may limit ironSource’s ability to grow or require ironSource to incur significant additional costs to comply.

 

   

Loss of Key Personnel. Key personnel in ironSource’s industry is vital and competition for such personnel is intense. In particular, the founders who are members of the leadership team are critical to ironSource’s overall management, as well as the continued development of its solutions, culture and strategic direction. The loss of any key personnel could be harmful to ironSource’s business.

 

   

Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues.

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.

 

   

Redemption Risk. The potential that a significant number of TBA shareholders elect to redeem their shares prior to the consummation of the Business Combination and pursuant to the TBA Articles, which would potentially make the Business Combination more difficult or impossible to complete.

 

   

Shareholder Vote. The risk that TBA’s shareholders may fail to provide the votes necessary to effect the Business Combination.

 

   

Closing Conditions. The fact that the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within TBA’s control.

 

   

Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

 

   

No Third-Party Valuation. The risk that TBA did not obtain a third-party valuation or fairness opinion in connection with the merger.

 

   

Limitations of Review. Limits of the due diligence performed by TBA’s management and outside advisors and the inherent risk that even a thorough review may not uncover all potential risks of the business, which if realized, may impact the value of the business.

 

   

Liquidation of TBA. The risks and costs to TBA if the Business Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in TBA being unable to effect a business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date).

 

   

TBA Shareholders Receiving Minority Position. The fact that existing TBA shareholders will hold a minority position in the combined company, and that existing ironSource equity holders will own shares that have five (5) votes per share compared to existing TBA shareholders, who will own shares that have one (1) vote per share.

 

   

Fees and Expenses. The fees and expenses associated with completing the Business Combination.



 

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TBA’s board of directors concluded that the potential benefits that it expected TBA and its shareholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, TBA’s board of directors unanimously determined that the Merger Agreement and the Business Combination contemplated therein were advisable, fair to and in the best interests of TBA and its shareholders. See the section of this proxy statement/prospectus titled Proposal One—The Business Combination Proposal—TBA’s Board of Directors’ Reasons for the Business Combination and Recommendation of the Board of Directors.”

Interests of TBA’s Directors and Officers in the Business Combination

In considering the recommendation of TBA’s board of directors to vote in favor of approval of the Business Combination Proposal and the Merger Proposal, shareholders should keep in mind that the Sponsor and TBA’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of TBA’s shareholders generally. In particular:

 

   

If the Business Combination with ironSource or another business combination is not consummated by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and TBA’s board of directors, dissolving and liquidating. In such event, the Founder Shares and Private Placement Shares held by the Sponsor and TBA’s directors and officers, which were acquired prior to and concurrently with the TBA IPO for an aggregate purchase price of $25,000 and $24,000,000, respectively, would be worthless because the holders thereof are not entitled to participate in any redemption or liquidating distribution with respect to such Founder Shares and/or Private Placement Shares. Such shares had an aggregate market value of $277.8 million based upon the closing price of $10.14 per share on the NYSE on May 17, 2021. On the other hand, if the Business Combination is consummated, each outstanding TBA Ordinary Share will be converted into one ironSource Class A ordinary share, subject to adjustment described herein.

 

   

If TBA is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by TBA for services rendered or contracted for or products sold to TBA. If TBA consummates a business combination, on the other hand, TBA will be liable for all such claims.

 

   

The Sponsor and TBA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on TBA’s behalf, such as identifying and investigating possible business targets and business combinations. However, if TBA fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, TBA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles). As of the date of this proxy statement/prospectus, the Sponsor and TBA’s officers and directors and their affiliates had incurred approximately $5,000 of unpaid reimbursable expenses and may incur additional expenses in the future.



 

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The Merger Agreement provides for the continued indemnification of TBA’s current directors and officers and the continuation of directors and officers liability insurance covering TBA’s current directors and officers.

 

   

TBA’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to TBA to fund certain capital requirements. On November 6, 2020, the Sponsor agreed to loan TBA an aggregate of up to $400,000, which loan was repaid in full on January 20, 2021. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to TBA outside of the Trust Account.

 

   

Orlando Bravo will be a member of the board of directors of ironSource following the closing of the Business Combination and, therefore, in the future Mr. Bravo will receive any cash fees, stock options or stock awards that ironSource’s board of directors determines to pay to its non-executive directors.

 

   

TB Ascension, which is an affiliate of Thoma Bravo, will participate in the purchase of PIPE Shares from ironSource and/or its shareholders at the closing of the Transactions, and certain of TBA’s directors and officers are affiliated with Thoma Bravo.

Recommendation to TBA Shareholders

TBA’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of TBA and its shareholders and recommended that TBA shareholders vote “FOR” the Business Combination proposal, “FOR” the Merger Proposal and “FOR” the Adjournment Proposal, if presented.

Certain Material U.S. Federal Income Tax Considerations (page 274)

For a description of certain material U.S. federal income tax consequences of the Business Combination, the exercise of redemption rights in respect of TBA Ordinary Shares and the ownership and disposition of ironSource Class A ordinary shares, please see “Certain Material U.S. Federal Income Tax Considerations” beginning on page 274.

Certain Material Israeli Tax Considerations (page 287)

For a description of certain material Israeli tax consequences of the ownership and disposition of ironSource Class A ordinary shares, please see “Certain Material Israeli Tax Considerations” beginning on page 287.

Anticipated Accounting Treatment

The Transaction is comprised of a series of transactions pursuant to the Merger Agreement, as described elsewhere in this proxy statement/prospectus. For accounting purposes, the Transaction effectuated the following:

 

  1.

The exchange of shares held by ironSource shareholders, which is accounted for as a recapitalization in accordance with U.S. GAAP.

 

  2.

The mergers of TBA with Merger Sub and Merger Sub II, which are not within the scope of ASC 805 (“Business Combinations”) since TBA does not meet the definition of a business in accordance with ASC 805. The term “Business Combination” as used elsewhere in this



 

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  proxy statement / prospectus refers to the business combination defined in the Merger Agreement and is not meant to imply that this transaction constitutes a business combination under ASC 805. Any difference between the fair value of ironSource Class A ordinary shares issued and the fair value of TBA’s identifiable net assets will be recorded against additional paid-in capital. For purposes of the unaudited pro forma condensed combined financial information, it is assumed that the fair value of each ironSource Class A ordinary share issued to TBA shareholders is equal to the fair value of each ironSource Class A ordinary share held by each ironSource shareholder. In the no redemption scenario, the shares acquired by TBA will be accounted for as treasury stock.

 

  3.

The Investment Agreements related to the PIPE, to the extent they are a primary investment in ironSource (in the max redemption scenario) which were executed concurrently with and following the Merger Agreement, will result in the issuance of ironSource Class A ordinary shares (to the extent Primary PIPE Shares are issued and sold in the PIPE), leading to an increase in share capital and share premium.

Comparison of Rights of Shareholders of TBA and Shareholders of ironSource (page 304)

If the Business Combination is successfully completed, holders of TBA Ordinary Shares will become holders of ironSource Class A ordinary shares and their rights as shareholders will be governed by ironSource’s organizational documents. There are also differences between the laws governing TBA, a Cayman Islands exempted company, and ironSource, an Israeli company. Please see “Comparison of Rights of ironSource Shareholders and TBA Shareholders” on page 304 for more information.

Emerging Growth Company

Each of TBA and ironSource is, and consequently, following the Business Combination, the combined company will be, 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”). As such, the combined company will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s securities may be more volatile.

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 combined 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 combined company, as an



 

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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 combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

The combined company will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the combined company’s initial public offering, (b) in which ironSource has total annual gross revenue of at least $1.07 billion, or (c) in which the combined company is deemed to be a large accelerated filer, which means the market value of the combined company’s common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which the combined company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for the filing of required notifications and the expiration or termination of the required waiting periods under the HSR Act and filings with the Cayman Islands necessary to effectuate the Business Combination.

Summary Risk Factors

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 30. Such risks include, but are not limited to:

 

   

ironSource’s markets are rapidly evolving and may decline or experience limited growth;

 

   

ironSource’s reliance on operating system providers and app stores to support its platform;

 

   

ironSource’s ability to compete effectively in the markets in which it operates;

 

   

ironSource’s quarterly results of operations may fluctuate for a variety of reasons;

 

   

failure to maintain and enhance the ironSource brand;

 

   

ironSource’s dependence on its ability to retain and expand its existing customer relationships and attract new customers;

 

   

ironSource’s reliance on its customers that contribute more than $100,000 of annual revenue;

 

   

ironSource’s ability to successfully and efficiently manage its current and potential future growth;

 

   

ironSource’s dependence upon the continued growth of the app economy and the increased usage of smartphones, tablets and other connected devices;

 

   

ironSource’s dependence upon the success of the gaming and mobile app ecosystem and the risks generally associated with the gaming industry;

 

   

ironSource’s, and ironSource’s competitors’, ability to detect or prevent fraud on its platforms;

 

   

failure to prevent security breaches or unauthorized access to ironSource’s or its third-party service providers data;



 

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the global scope of ironSource’s operations, which are subject to laws and regulations worldwide, many of which are unsettled and still developing;

 

   

the rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy, data protection, data security and the protection of children;

 

   

the effects of health epidemics, including the COVID-19 pandemic; and

 

   

the other matters described in the section titled “Risk Factors” beginning on page 30.



 

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF IRONSOURCE

The following tables present our summary consolidated financial data. We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The summary historical consolidated statement of operations for the years ended December 31, 2020 and 2019 and the summary consolidated balance sheet information as of December 31, 2020 and 2019 have been derived from our audited consolidated financial statements, which are included elsewhere in this proxy statement/prospectus. The summary historical consolidated statement of operations for the three months ended March 31, 2021 and 2020 and the summary consolidated balance sheet information as of March 31, 2021 have been derived from our unaudited consolidated financial statements, which are included elsewhere in this proxy statement/prospectus. Our unaudited consolidated financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in our opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for the fair statement of the financial information set forth in those statements. Our historical results for any prior period are not necessarily indicative of results expected in any future period and the results for the three months ended March 31, 2021 or any other interim period are not necessarily indicative of results to be expected for the full year ending December 31, 2021 or any other period.

On December 31, 2020, we completed the Spin-Off of the assets of our Desktop business. The Desktop business is reported in this proxy statement/prospectus as discontinued operations in accordance with Accounting Standards Codification (“ASC”) 205-20 “Presentation of financial statements—Discontinued operations.” See Note 4 to our audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

The financial data set forth below should be read in conjunction with, and is qualified by reference to, “Capitalization,” “ironSource’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus.



 

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Consolidated Statements of Operations Data

 

     Three Months Ended
March 31
     Year Ended December 31,  
     2021      2020      2020      2019  
     (in thousands)  

Revenue

   $ 119,713      $ 61,206      $ 331,519      $ 181,107  

Cost of Revenue

     20,140        11,547        57,825        34,651  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit

     99,573        49,659        273,694        146,456  

Operating expenses:

           

Research and development

     20,410        10,129        51,600        37,547  

Sales and marketing

     48,721        19,172        119,262        37,155  

General and administrative

     15,547        6,702        28,746        28,452  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     84,678        36,003        199,608        103,154  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     14,895        13,656        74,086        43,302  

Financial expenses, net

     1,029        972        4,381        2,741  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations before income taxes

     13,866        12,684        69,705        40,561  

Income taxes

     3,622        1,794        10,896        7,843  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations, net of income taxes

     10,244        10,890        58,809        32,718  

Income from discontinued operations, net of income taxes

     —          12,301        36,480        51,244  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 10,244      $ 23,191      $ 95,289      $ 83,962  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to non-controlling interest (related to discontinued operations)

     —          —          —          67  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to ironSource Ltd. shareholders

     10,244        23,191        95,289        83,895  

Basic net income per ordinary share, attributable to ironSource Ltd. shareholders:

           

Continuing operations

     0.11        0.12        0.66        0.36  

Discontinued operations

     —          0.14        0.41        0.59  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic net income per ordinary share, attributable to ironSource Ltd. shareholders

   $ 0.11      $ 0.26      $ 1.07      $ 0.95  
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average ordinary shares outstanding – basic

     64,637,357        63,487,221        63,751,421        73,146,545  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per ordinary share, attributable to ironSource Ltd. shareholders:

           

Continuing operations

     0.10        0.12        0.62        0.35  

Discontinued operations

     —          0.13        0.38        0.56  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per ordinary share, attributable to ironSource Ltd. shareholders

   $ 0.10      $ 0.25      $ 1.00      $ 0.91  
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average ordinary shares outstanding – diluted

     71,287,454        66,945,012        68,303,985        76,545,898  
  

 

 

    

 

 

    

 

 

    

 

 

 


 

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Consolidated Balance Sheet Data

 

     As of
March 31,
     As of December 31,  
     2021      2020      2019  
     (in thousands)  

Cash and cash equivalents

   $ 127,535      $ 200,672      $ 86,083  

Total Assets

     617,658        535,836        408,764  

Total Liabilities

     312,734        316,390        245,498  
  

 

 

    

 

 

    

 

 

 

Total Shareholders’ Equity

   $ 304,924      $ 219,446      $ 163,266  
  

 

 

    

 

 

    

 

 

 

Other Financial Data(1)

 

     Three months ended
March 31,
    Year ended
December 31,
 
     2021     2020     2020     2019  
     (in thousands, except percentages)  

Income from continuing operations, net of income taxes

   $ 10,244     $ 10,890     $ 58,809     $ 32,718  

Adjusted EBITDA(3)

   $ 39,547     $ 20,489     $ 103,540     $ 74,454  

Income from continuing operations, net of income taxes margin(2)

     9     18     18     18

Adjusted EBITDA Margin(3)

     33     33     31     41

 

(1)

See the definitions of non-GAAP financial metrics in “ironSource’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics and Non-GAAP Financial Metrics.

(2)

Calculated as income from continuing operations, net of income taxes divided by revenue.

(3)

We define Adjusted EBITDA as income from continuing operations, net of income taxes, as adjusted for income taxes, financial expenses, net and depreciation and amortization, further adjusted for assets impairment, share-based compensation expense, fair value adjustment related to contingent consideration, acquisition-related costs and initial public offering costs. We define Adjusted EBITDA Margin as Adjusted EBITDA calculated as a percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are included in this prospectus because they are key metrics used by management and our board of directors to assess our financial performance. Adjusted EBITDA and Adjusted EBITDA Margin are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are appropriate measures of operating performance because they eliminate the impact of expenses that do not relate directly to the performance of the underlying business.

Adjusted EBITDA and Adjusted EBITDA Margin are not GAAP measures of our financial performance or liquidity and should not be considered as alternatives to net loss as a measure of financial performance, as alternatives to cash flows from operations as a measure of liquidity, or as alternatives to any other performance measure derived in accordance with GAAP. Neither Adjusted EBITDA nor Adjusted EBITDA Margin should be construed as an inference that our future results will be unaffected by unusual or other items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect our tax payments and certain other cash costs that may recur in the future, including, among other things, cash requirements for costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA and Adjusted EBITDA Margin as supplemental measures. Our



 

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measures of Adjusted EBITDA and Adjusted EBITDA Margin are not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial performance measures, which are income from continuing operations, net of income taxes and income from continuing operations, net of income taxes margin, respectively:

 

     Three Months Ended
March 31,
    Year Ended
December 31,
 
     2021     2020     2020     2019  
     (in thousands, except percentages)  

Income from continuing operations, net of income taxes

   $ 10,244     $ 10,890     $ 58,809     $ 32,718  

Financial expense, net

     1,029       972       4,381       2,741  

Income taxes

     3,622       1,794       10,896       7,843  

Depreciation and amortization(a)

     5,343       4,001       16,858       17,172  

Assets impairment(b)

     —         —         —         121  

Share-based compensation expense(c)

     15,559       2,832       12,596       15,329  

Fair value adjustment of a contingent consideration(d)

     —         —         —         (1,470

Acquisition-related costs(e)

     2,291       —         —         —    

Initial public offering costs

     1,459       —         —         —    

Adjusted EBITDA

   $ 39,547     $ 20,489     $ 103,540     $ 74,454  
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

   $ 119,713     $ 61,206     $ 331,519     $ 181,107  

Income from continuing operations, net of income taxes margin(f)

     9 %      18 %      18 %      18 % 

Adjusted EBITDA Margin

     33     33     31     41
  

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Represents $1,159, $597, $2,387 and $3,112 in intangible assets amortization, $2,375, $2,049, $8,961 and $8,043 in capitalized software amortization and $349, $349, $1,446 and $1,307 in fixed assets depreciation for the three months ended March 31, 2021 and 2020 and the years ended December 31, 2020 and 2019, respectively. In addition, we adjusted for $1,460 and $1,006, for the three months ended March 31, 2021 and 2020, respectively, and $4,064 and $4,710 for the years ended December 31, 2020 and 2019, respectively, of amortization of certain incentive payments to customers, which we amortize contra revenue over the term we expect to provide services to these customers.

  (b)

Represents impaired capitalized software costs no longer in use.

  (c)

Represents non-cash share-based compensation expenses.

  (d)

Represents fair value adjustment to contingent consideration liability related to acquisitions.

  (e)

Represents costs in connection with the acquisition of Soomla Inc. in January 2021 and Luna Labs Limited in February 2021. These costs include compensation subject to continuing employment and other acquisition-related costs.

  (f)

Represents income from continuing operations, net of income taxes divided by revenue.



 

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SUMMARY FINANCIAL INFORMATION OF TBA

The following tables present TBA’s summary financial data. TBA prepares its financial statements in accordance with GAAP. The summary historical consolidated statement of operations for the period from November 6, 2020 (inception) through December 31, 2020 and the summary balance sheet information as of December 31, 2020 have been derived from TBA’s audited financial statements, which are included elsewhere in this proxy statement/prospectus. TBA’s historical results for any prior period are not necessarily indicative of results expected in any future period. The summary historical consolidated statement of operations for the three months ended March 31, 2021 and the summary balance sheet information as of March 31, 2021 have been derived from TBA’s unaudited financial statements, which are included elsewhere in this proxy statement/prospectus. TBA’s unaudited financial statements were prepared on a basis consistent with its audited financial statements and include, in TBA’s opinion, all adjustments, consisting only of normal recurring adjustments, that TBA considers necessary for the fair statement of the financial information set forth in those statements. TBA’s historical results for any prior period are not necessarily indicative of results expected in any future period and the results for the three months ended March 31, 2021 or any other interim period are not necessarily indicative of results to be expected for the full year ending December 31, 2021 or any other period.

The financial data set forth below should be read in conjunction with, and is qualified by reference to, “TBA’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and TBA’s financial statements and notes thereto included elsewhere in this prospectus.

Statements of Operations Data

 

     For the three
months ended
March 31, 2021
    For the Period from
November 6, 2020
(Inception) through
December 31, 2020
 

General and administrative expenses

   $ 3,322,721     $ 25,208  
  

 

 

   

 

 

 

Interest earned on investments held in Trust Account

     11,490       —    
  

 

 

   

 

 

 

Net loss

     (3,311,231     (25,208
  

 

 

   

 

 

 

Basic and diluted weighted average shares outstanding of Class A and Class B non-redeemable ordinary shares (1) (2)

     26,365,556       22,500,000  
  

 

 

   

 

 

 

Basic and diluted net loss per ordinary share

   $ (0.13   $ (0.00
  

 

 

   

 

 

 

Balance Sheet Data

 

     As of
March 31, 2021
     As of
December 31, 2020
 

Total assets (3)

   $ 1,004,218,419      $ 1,165,929  

Total liabilities

     38,059,286        1,166,137  

Total shareholders’ equity

     5,000,003        (208

 

(1)

The figure for the period from November 6, 2020 through December 31, 2020 excludes up to 2,500,000 Class B Shares subject to forfeiture if the over-allotment option in connection with the TBA IPO was not exercised in full or in part by the underwriters. The underwriters fully exercised the over-allotment option on January 20, 2021; thus, these 2,500,000 Class B ordinary shares are no longer subject to forfeiture.

(2)

Shares and the associated amounts have been retroactively restated to reflect: (i) the surrender of 25,875,000 Class B Shares to TBA for no consideration on November 18, 2020; and (ii) the



 

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  share capitalization of 22,125,000 Class B Shares on December 22, 2020, resulting in 25,000,000 Class B Shares outstanding.
(3)

Comprised of deferred offering costs associated with the TBA IPO.



 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION COMPARATIVE PER SHARE DATA

The following tables set forth the per share data of each of ironSource and TBA on a stand-alone basis and the unaudited pro forma combined per share data for the three months ended March 31, 2021 and the year ended December 31, 2020 after giving effect to the Business Combination and the assumed issuance of shares to the PIPE Investors, assuming the following in the two pro forma scenarios presented:

 

   

Scenario 1—Assuming No Redemptions:    This presentation assumes (i) that no public shareholders of TBA exercise redemption rights with respect to their public shares for a pro rata share of the funds in TBA’s trust account and (ii) an aggregate of $200.0 million of the Trust Account Excess Cash funds (as such term is defined in the Business Combination Agreement) are used by TBA to acquire shares from certain of ironSource’s shareholders immediately prior to the consummation of the Business Combination and (iii) all funds raised in the PIPE are used for secondary acquisition from ironSource shareholders.

 

   

Scenario 2—Assuming Maximum Redemptions:    This presentation assumes that (i) public shareholders of TBA holding 100,000,000 Class A Shares will exercise their redemption rights for approximately $1 billion of funds in TBA’s trust account (ii) $500.0 million of cash funds from the PIPE (assumed a total PIPE of $1.3 billion), will be invested in ironSource against newly- issued ironSource Class A ordinary shares and the remaining PIPE Shares will be sold to PIPE investors by one or more existing holders of ironSource Class A Ordinary Shares and (iii) that TBA will elect pursuant to the Sponsor Support Agreement to surrender for no consideration a number of Class B shares of TBA (founder shares) having a value up to $250.0 million rather than require that affiliates of Thoma Bravo commit to fund up to $250.0 million in cash at closing by purchasing additional ironSource Class A ordinary shares pursuant to an Investment Agreement.

The pro forma earnings information for the three months ended March 31, 2021 and for the year ended December 31, 2020 were computed as if the Business Combination and the assumed issuance of shares to the PIPE Investors had been consummated on January 1, 2020, the beginning of the earliest period presented.

The historical book value per share is computed by dividing total shareholders’ equity (deficit), including shares subject to possible redemption, by the number of shares of TBA’s Class A ordinary shares outstanding at the end of the period. The pro forma combined book value per share of ironSource, Ltd. Class A ordinary shares is computed by dividing total pro forma shareholders’ equity by the pro forma number of ironSource, Ltd. ordinary shares outstanding at the end of the period on a fully diluted net exercise basis. The pro forma earnings per share of the combined company is computed by dividing the pro forma net profit available to the combined company’s shareholders by the pro forma weighted-average number of shares of ironSource Ltd. Class A ordinary shares outstanding over the period on a fully diluted net exercise basis.

You should read the information in the following table in conjunction with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of ironSource and TBA and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited ironSource and TBA pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus. See “Unaudited Pro Forma Condensed Combined Financial Information.”



 

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The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of ironSource and TBA would have been had the companies been combined during the periods presented.

 

     Three Months Ended March 31, 2021  
     TBA
(Historical)
     ironSource
(Historical)
     Pro Forma
Combined
(Assuming No
Redemption)(1)(2)
     Pro Forma
Combined
(Assuming
Max
Redemption)(1)(2)
 

Book value per share(3)

   $ 0.04      $ 0.34      $ 1.01      $ 0.75  

Weighted average number of ironSource shares outstanding - basic

        645,251,683        1,002,280,637        947,280,637  

Weighted average number of ironSource shares outstanding - diluted

        711,637,225        1,068,666,179        1,013,666,179  

Basic net income per ironSource share

      $ 0.01      $ 0.01      $ 0.01  

Diluted net income per ironSource share

      $ 0.01      $ 0.01      $ 0.01  

Weighted average number of TBA redeemable shares outstanding - basic & diluted

     100,000,000           

Weighted average number of TBA non-redeemable shares outstanding - basic & diluted

     26,365,556           

Basic & diluted net income per TBA redeemable share

   $ 0.00           

Basic & diluted net loss per TBA non-redeemable share

   $ (0.13)           

 

(1)

In order to conform the presentation of the figures above to TBA’s and the post merger figures, the amount of share and the per share data are reflected assuming the Class A Renaming and Class B Distribution (effective bonus share distribution, as defined below) and the expected Stock Split of 1:4.99 (as calculated as of the date of filing, subject to changes until closing of the Business Combination). In addition, the ironSource number of shares under the pro forma combined scenarios assumes the conversion of the 2019 Ordinary Shares on January 1, 2020.

(2)

Refer to Note 5 for adjustments made to the weighted average number of shares outstanding, under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

(3)

Calculated based on total shareholder’s equity including shares subject to possible redemption divided by total shares outstanding as of March 31, 2021, assuming that the ironSource 2019 Ordinary Shares are converted to Ordinary shares.



 

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    Year Ended December 31, 2020  
    TBA
(Historical)
    ironSource
(Historical)(1)
    Pro Forma
Combined
(Assuming No
Redemption)(1)(2)
     Pro Forma
Combined
(Assuming
Max
Redemption)(1)(2)
 

Book value per share(3)

  $ (0.00   $ 0.25     $ 0.93      $ 0.67  

Weighted average number of ironSource shares outstanding - basic

      636,407,699       993,436,654        938,436,654  

Weighted average number of ironSource shares outstanding - diluted

      681,854,322       1,038,883,277        983,883,277  

Basic net income per ironSource share

    $ 0.07     $ 0.06      $ 0.06  

Diluted net income per ironSource share

    $ 0.06     $ 0.06      $ 0.06  

Weighted average number of TBA redeemable shares outstanding - basic & diluted

    —           

Weighted average number of TBA non-redeemable shares outstanding - basic & diluted

    22,500,0000         

Basic & diluted net loss per TBA redeemable share

    —           

Basic & diluted net loss per TBA non-redeemable share

  $ (0.00       

 

(1)

In order to conform the presentation of the figures above to TBA’s and the post merger figures, the amount of share and the per share data are reflected assuming the Class A Renaming and Class B Distribution (effective bonus share distribution, as defined below) and the expected Stock Split of 1:4.99 (as calculated as of the date of filing, subject to changes until closing of the Business Combination). In addition, the ironSource number of shares under the pro forma combined scenarios assumes the conversion of the 2019 Ordinary Shares on January 1, 2020.

(2)

Refer to Note 5 for adjustments made to the weighted average number of shares outstanding, under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

(3)

Calculated based on total shareholder’s equity divided by total shares outstanding as of December 31, 2020, assuming that the ironSource 2019 Ordinary Shares are converted to Ordinary shares



 

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RISK FACTORS

If the Business Combination is completed, the combined company will operate in a market environment that is difficult to predict and that involves significant risks, many of which will be beyond its control. You should carefully consider the risks described below before voting your shares. Additional risks and uncertainties not presently known to ironSource and TBA or that they do not currently believe are important to an investor, if they materialize, also may adversely affect the Business Combination. If any of the events, contingencies, circumstances or conditions described in the following risks actually occur, the combined company’s business, financial condition or results of operations could be seriously harmed. If that happens, the trading price of ironSource Class A ordinary shares or, if the Business Combination is not consummated, TBA’s Class A Shares could decline, and you may lose part or all of the value of any ironSource Class A ordinary shares or, if the Business Combination is not consummated, you may lose part or all of the value of any shares of TBA’s Class A Shares that you hold.

Risks Related to ironSource’s Business and Industry

In this section “we,” “us” and “our” refer to ironSource.

The markets for our solution suites are rapidly evolving and may decline or experience limited growth.

The industry in which we operate is characterized by rapid technological change, new features, tools, solutions and strategies, evolving legal and regulatory requirements, changing customer needs and a dynamic competitive market. Our future success will depend in large part on the continued growth of our markets and our ability to improve and expand our solutions to respond quickly and effectively to this growth.

The opportunities provided by apps, mobile gaming, mobile advertising and other engagement touchpoints in mobile devices are still relatively new, and our customers, who include mobile game and app developers, advertising networks, telecom operators and OEMs, may not recognize the need for, or benefits of, some or all of our solution suites. Moreover, they may decide to adopt alternative products and services to satisfy some portion of their business needs.

If we fail to deliver timely releases of our products that are ready for use, release a new version, service, tool or update, or respond to new offerings by our competitors, or if new technologies emerge that are able to deliver competitive products more efficiently, more conveniently or more securely than our products, then our position in our markets could be harmed, and we could lose customers, which would adversely affect our business and results of operations.

Further, we must be able to keep pace with rapid regulatory changes in order to compete successfully in our markets. Our revenue growth depends on our ability to respond to frequently changing data protection regulations, policies and user demands and expectations, which will require us to incur additional costs to implement. The regulatory landscape in this industry is rapidly shifting, and we may become subject to new regulations that restrict our operations or materially and adversely affect our business, financial condition, and results of operations. For more information on our risks related to regulatory changes, see “—Risks Related to ironSource’s Regulation—We are subject to rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy, data protection, data security and the protection of children. The restrictions and costs imposed by these requirements, or our actual or perceived failure to comply with them, could harm our business.”

 

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Our ability to succeed within the markets that our solution suites address and continue to be profitable in the future depends upon a number of factors, including the cost, performance and perceived value associated with our individual products and solutions. Significant time, resources and expertise are required in order to build the technology that can deliver automated, high-quality user growth and monetization, while meeting user expectations for tailored experiences and relevant advertising. The trust and reputation we have built with our customers, who leverage our business platform to better scale and monetize their apps and further engage with their users, must constantly be maintained with technological improvements, operational excellence and the ability to predict and adapt to the needs of our customers. If we fail to maintain that trust and reputation, our ability to grow our business may be materially and adversely impacted.

The markets for our solution suites could fail to grow significantly or there could be a reduction in demand for our products or solutions as a result of a lack of customer acceptance, technological challenges, competing products and services, decreases in spending by current and prospective customers, weakening economic conditions and other causes. If our markets do not continue to experience growth or if the demand for our products and solutions decreases, then we may not be as profitable as we have been in the past, and our business, financial condition and results of operations could be materially and adversely affected.

We rely on operating system providers and app stores to support our platform, and any disruption, deterioration or change in their services, policies, practices, guidelines and/or terms of service could have a material adverse effect on our reputation, business, financial condition and results of operations.

The success of our platform depends upon the effective operation of certain mobile operating systems, networks and standards that are run by operating system providers and app stores (which we collectively refer to as “Providers”). We do not control these Providers and as a result, we are subject to risks and uncertainties related to the actions taken, or not taken, by these Providers. We largely utilize Android-based and iOS-based technology, and in some cases, these Providers include companies that we also regard as our competitors.

The Providers that control these operating systems frequently introduce new technology, and from time to time, they may introduce new operating systems or modify existing ones. Further, we and our customers are also subject to the policies, practices, guidelines, certifications and terms of service of Providers’ platforms on which we and our customers create, run and monetize applications and content. These policies, guidelines and terms of service govern the promotion, distribution, content and operation generally of applications and content available through such Providers. Each Provider has broad discretion to change and interpret its terms of service, guidelines and policies, and those changes may have an adverse effect on us or our customers’ ability to use our platform. A Provider may also change its fee structure, add fees associated with access to and use of its platform or app store, alter how customers are able to advertise and monetize on their platform, change how the personal or other information of its users is made available to application developers on their platform, limit the use of personal information and other data for advertising purposes or restrict how users can share information on their platform or across other platforms. If we or our customers were to violate a Provider’s terms of service, guidelines, certifications or policies, or if a Provider believes that we or our customers have violated, its terms of service, guidelines, certifications or policies, then that Provider could limit or discontinue our or our customers’ access to its platform or app store. In some cases, these requirements may not be clear and our interpretation of the requirements may not align with the interpretation of the Provider, which could lead to inconsistent enforcement of these terms of service or policies against us or our customers and could also result in the Provider limiting or discontinuing access to its platform or app store. If our platform was unable to work effectively on these operating systems, either because of technological constraints or because the Provider impairs our ability to

 

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operate on their platform, this would have a material adverse effect on our business, financial condition and results of operations.

We also utilize operating systems from Providers to enable certain of our business operations, including our organization email services, and we expect that we will continue to rely on these systems going forward. Our reliance on operating systems reduces our control over quality of service and exposes us to potential service outages. If any problems occur with these operating systems, it may cause errors or poor quality communications with our platform, and we could encounter difficulty identifying the source of the problems. The occurrence of errors or poor quality communications with our platform, whether caused by our platform or an operating system platform, may result in the loss of our existing customers or the delay of adoption of our products by potential customers and may materially and adversely affect our business, financial condition and results of operations.

Providers, such as Apple or Google, could also change their technical requirements, guidelines or policies in a manner that materially and adversely impacts the way in which we or our customers collect, use and share data from user devices, including restricting our ability to use or read device identifiers, other tracking features or other device data. Our ability to provide our customers with our user growth and monetization solutions relies on access to and collection of certain data, including resettable device identifiers and interactions with advertisements served by our monetization solutions for purposes such as serving advertisements, limiting the number of advertisements served to a specific device, detecting and preventing advertisement fraud, creating reports for customers, providing support to customers and measuring the effectiveness of advertisements. Without such data, we may not be able to serve such advertisements effectively, provide our products and solutions to customers, improve our products and solutions and remain competitive. There also is the risk that a Provider could limit or discontinue our access to its platform or app store if it establishes more favorable relationships with one or more of our competitors or it determines that it is in their business interests to do so, and we would have no recourse against any such Provider, which could have a material adverse effect on our business, financial condition and results of operations.

Further, at any time, these Providers can change their policies on how our customers or we operate on their platform or in their app stores by, for example, applying content moderation for apps and advertising or imposing technical or code requirements. Actions by Providers may affect the manner in which we or our customers collect, use and share data from user devices, which could have a material adverse effect on our and our customers’ businesses. In addition, if any of our customers have apps removed from app stores as a result of their use of our products, we may be forced to change our individual products, solution suites, practices or business, and we could be exposed to legal risk and lose customers.

For example, from April 26, 2021, Apple requires apps using its mobile operating system, iOS, to affirmatively (on an opt-in basis) obtain a user’s permission to “track them across apps or websites owned by other companies,” including for accessing their device’s advertising identifier. In June 2020, Apple announced that these changes would occur, and it was expected they would occur on or about this time. In anticipation of these changes, we invested resources, and may be required to invest additional resources, in order to implement certain changes in our data collection and use practices. The effect of these changes will depend on various factors, including our ability to measure the effectiveness of ads, and the reaction by the industry to these changes, and may result in a material adverse effect on our business, financial condition and results of operations. We will have no recourse against Apple if these changes negatively impact our business, and we can provide no reassurance that other Providers, such as Google, which uses a similar advertising identifier, will not adopt similar measures in the future. Sonic’s publishing solution, which relies on a number of networks in addition to Sonic’s network, may be more affected by these changes when working with networks that are dependent on more personalized targeting.

 

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If any Providers, including either Android or iOS stop providing us with access to their platform or infrastructure, fail to provide reliable access, cease operations, modify or introduce new systems or otherwise terminate services, the delay caused by qualifying and switching to other operating systems could be time consuming and costly and could materially and adversely affect our business, financial condition and results of operations. Any limitation on or discontinuation of our or our customers’ access to any Provider’s platform or app store could materially and adversely affect our business, financial condition, results of operations or otherwise require us to change the way we conduct our business.

The markets in which we operate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed.

The markets in which we operate are highly competitive. A significant number of companies have developed or are developing products and solutions that currently, or in the future may, compete with some or all of our individual products or solution suites. As we look to market and sell our solution suites and individual products to potential customers who use our existing products, we must convince their internal stakeholders that our solution suites are superior and/or more cost-effective to their current products and solutions.

We primarily compete with other technology platforms and digital content monetization services. Broadly, our competitors include well-established technology platforms that vary in size and compete with us primarily with their mobile monetization, growth and user acquisition solutions and services. These competitors include Google Admob, Facebook Audience Network, Unity Software, MoPub by Twitter, AppLovin and Digital Turbine. We believe that our ability to compete effectively for customers depends upon many factors, including, but not limited to: providing a comprehensive set of solutions; increasing the volume depth of and ability to leverage data and analytics, while respecting privacy restrictions; the pace and quality of innovation; providing high-quality solution capabilities, including performance, scalability, security and reliability; effective advertising solutions; ability to drive business value for customers; strong brand reputation and recognition; ease of deployment, implementation and use of solutions; optimized price-performance benefits; and the quality of service and customer satisfaction. Our inability to compete favorably with respect to these factors could materially and adversely impact our business.

Our competitors vary in size and in the breadth and scope of the products or services offered. Some of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships, larger marketing budgets and greater financial and operational resources than we do. Further, other potential competitors not currently offering competing products or services may expand their offerings to compete with our products or solution suites or enter the markets through acquisitions, partnerships or strategic relationships. Certain competitors may choose to limit working with us, or cease working with us completely with respect to certain products or solution suites that we offer now or in the future, if such competitors provide competing products or solutions. In addition, our current and potential competitors may establish, or may have already established, cooperative relationships among themselves or with our customers or other third parties that may further enhance their resources and offerings in our addressable markets. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards and customer requirements. An existing competitor or new entrant could introduce new technology that is perceived to be easier to use or otherwise favorable to ours, which could reduce demand for our solution suites or individual products.

Further, some of our competitors may be acquired by other larger enterprises and or may make acquisitions, or enter into partnerships or other strategic relationships, that may provide more comprehensive offerings than they individually had offered, or may achieve greater economies of scale than us.

 

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In addition to platform and technology competition, we face pricing competition. Some of our competitors offer competing products, which may be on more favorable terms, and has resulted in, and may continue to result in, pricing pressures. In addition, some of our competitors may offer more favorable payment terms to our customers compared to what we currently offer. We cannot assure you that we will not be forced to engage in price-cutting or revenue limiting initiatives, change payment terms or increase our advertising and other expenses to attract and retain customers in response to competitive pressures.

For all of these reasons, we may not be able to compete successfully against our current or future competitors, which could result in the failure of our solutions to continue to achieve or maintain customer and market acceptance, which would harm our business, financial condition and results of operations.

Our quarterly results of operations may fluctuate for a variety of reasons, and these fluctuations make it difficult for us to forecast our future results of operations and could result in our failure to meet our operating plan or the expectations of investors or analysts for any period.

Our results of operations have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance. In particular, our sales cycle can last several months for certain clients, and this sales cycle can be even longer, less predictable and more resource-intensive for larger enterprise customers. As a result, the timing of individual sales can be difficult to predict. In some cases, sales have occurred in a quarter subsequent to those we anticipated, or have not occurred at all, which can significantly impact our quarterly results and make it more difficult to meet market expectations.

In addition, our results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:

 

   

our ability to attract new customers and retain existing customers;

 

   

changes in the mix of solutions we sell to current customers;

 

   

our ability to price our solutions effectively;

 

   

the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape, including consolidation among our customers or competitors;

 

   

fluctuations in the demand for our gaming customers’ products and their ability to monetize those products, particularly given the relative uncertain in consumer behavior during and after the COVID-19 pandemic;

 

   

unpredictability related to the costs that we incur in order to comply with rapidly changing regulatory or legal requirements, especially with respect to privacy and security matters;

 

   

changes in customers’ budgets and in the timing of their budget cycles;

 

   

our ability to successfully expand our business globally or into nongaming advertising;

 

   

seasonality;

 

   

changes in our pricing policies or those of our competitors;

 

   

investments in new features and functionality of our solutions;

 

   

general economic conditions in our markets;

 

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future accounting pronouncements or changes in our accounting policies or practices;

 

   

the amount and timing of our operating costs, including amount and timing of costs associated with recruiting, training and integrating new employees and retaining and motivating existing employees;

 

   

significant security breaches of, technical difficulties with or interruptions to the delivery and use of our solution suites;

 

   

changes in the competitive dynamics of our markets, including consolidation among competitors or customers;

 

   

timing of acquisitions and costs associated with integrating acquired companies; and

 

   

increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.

Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other operating results from period to period. These fluctuations make it difficult for us to forecast our future results of operations and could result in our failure to meet our operating plan or the expectations of investors or analysts for any period. As a result, you should not rely on our results or growth for any prior quarterly or annual periods as any indication of our future results or growth, and you should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by growing companies in rapidly evolving markets. If we fail to meet such expectations for these or other reasons, the market price of our ordinary shares could fall substantially, and we could face costly lawsuits, including securities class action suits.

If we fail to maintain and enhance our brand, our ability to expand our customer base will be impaired, and our business, financial condition and results of operations may suffer.

We believe that maintaining and enhancing our brand reputation is important to expand sales of our products and solution suites to new and existing customers. We also believe that the importance of brand recognition will increase as competition in our markets increases. Successfully maintaining and enhancing our brand will depend largely on the effectiveness of our marketing efforts, our ability to offer reliable products that continue to meet the needs and preferences of our customers at competitive prices, our ability to maintain our customers’ trust, our ability to continue to develop new functionality to address a wide variety of customers’ needs and our ability to successfully differentiate our products from those of our competitors. Our brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand.

Our brand and reputation could also be impacted by the types of content that developers publish using our platform. While we have processes in place to review the content that is published by developers, there can be no assurance that the content posted will follow the rules and not be deemed offensive or controversial, which could adversely affect our brand and reputation if the content was associated with us and our platform. We also rely on Providers, such as Google and Apple, to conduct reviews of the apps that are published on their respective app stores in accordance with the terms of use for their stores. If we or any such Provider fail to prevent any such offensive content, or if the content conflicts with our company values, our reputation may be negatively impacted.

Further, our brand may be impacted by things that are outside of our control, such as the actions taken by others in our industry or by independent third-parties, such as researchers, journalists, self- regulatory bodies and consumer groups, that could impact our industry as a whole. Researchers or consumer groups might undertake studies that cover our industry or our activity, as has occurred in the

 

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past, and such studies may result in negative publicity, or other actions taken by third parties that could damage our reputation or brand. Further, we conducted the Spin-Off (as defined below) of the assets of our Desktop business, and there can be no assurance that our brand would not suffer harm as a result of any claims that may arise in connection with the business that was spun off. If we fail to successfully promote and maintain our brand, our business, financial condition and results of operations may suffer.

Our business depends on our ability to retain and expand our existing customer relationships and attract new customers.

An important component of our future success is to retain and expand our relationships with existing customers and attract new customers. In order for us to maintain or improve our results of operations, it is important that we maintain positive relationships with our existing customers and that they are satisfied with the products and services we provide. We invest in targeted sales and account- based marketing efforts to identify opportunities to grow the use of our solution suites and products within and across our customer base, and we implement customer service strategies to identify opportunities to increase and sustain our customer base. We currently have a strong customer base within the mobile gaming markets, but are aiming to expand in both our current markets and new markets and there can be no assurance that our efforts will be successful. Further, there is ongoing customer consolidation and concentration within our markets, which could impair our ability to expand the customer base of our platform.

Our customer retention rates may decline or fluctuate as a result of a number of factors, some of which may be outside our control, such as the performance and perceived value associated with our platform, including their perception of our continued development of products that are important to them, the business strength or weakness of our customers, the success of our customers’ games and apps and their ability to monetize, the entry and success of competitive products and overall general economic conditions in the geographic regions in which we operate. However, our efforts may not be successful despite the resources we devote to them, and our customers may choose to switch to one of our competitors or choose to replace our products with similar technology that the customer creates internally.

Our telecom operator customers use our Aura solution suite to manage the device experience for their users, which helps them to manage both third-party and owned and operated services. To perform these services, we rely on the policies and procedures of telecom operators and OEMs and should those change, there could be an adverse impact on our products. For example, certain device OEMs have started to move towards issuing a single SKU, which may limit the functionality or create technical limitations on preloaded software or customizable features on such devices, based on criteria determined by the OEM. For instance, if an OEM determines that it will only support the installation of preloads following the completion of a device’s initial setup, we would only be able to provide the onboarding experience after the initial setup experience was completed and not as an integral part of the setup experience, resulting in less installs, which would affect our revenues. There can be no assurance that if more device OEMs choose to issue single SKUs in their devices, that we will be able to maintain the functionality that we provide to our Aura customers, which could adversely affect our business, financial condition and results of operations.

Similarly, our sales efforts could be adversely impacted if customers and their users perceive that features incorporated into competitive platforms or their own technologies reduce the relevance or attractiveness of our solution suites. Gaming companies may choose to invest significant efforts in their own internally-generated technologies and replace certain of our products with their own technologies unless they perceive our solution suites as offering significant incremental long-term benefits. Any decrease in user satisfaction with our platform or customer support would also harm our brand and

 

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word-of-mouth referrals, which, in turn, would hamper our ability to attract new customers. It is also an important part of our strategy to expand our customers’ use of our platform by cross-selling our products and solution suites. While we believe there are significant cross-selling opportunities between our solution suites and products, we cannot be sure that our efforts will be successful.

Our customers range from large global enterprises to mid-sized, small and independent businesses and individuals, and as such, our agreements with each customer type vary in length and terms. Many of our agreements allow customers to terminate the agreement at their convenience and do not provide for minimum usage or guaranteed scale. There can be no assurance that we will be able to successfully negotiate new agreements with these customers when the existing agreements end.

If we do not retain our existing customers, attract new customers or if our customers do not expand their use of our platform and purchase additional solutions from us, our revenue may not increase or may decline and our business, financial condition and results of operations may be harmed.

We rely on our customers that contribute more than $100,000 of annual revenue, and sales to these customers require a stronger sales team as compared to other customers.

One of the factors affecting our growth and financial performance is the continued use of our solution suites by customers contributing more than $100,000 of annual revenue. As of March 31, 2021, these 292 customers represented 94% of our total revenue. While we believe that our relationships with these customers are strong, there can be no assurance that we will be able to maintain or expand these existing relationships, which could have a material adverse effect on our business, financial condition and results of operations.

In order to increase the adoption of our products and solution suites by customers that we believe can contribute more than $100,000 of revenue over a 12-month period and to expand into new industries where potential customers are typically large organizations, we rely on our direct sales team. Although our direct sales team is working to expand into industries beyond gaming we have relatively limited experience selling our solutions in industries outside gaming apps, and there can be no assurance that our direct sales team will be effective in attracting customers in industries beyond gaming in line with our growth strategies.

In addition, sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller customers, such as longer sales cycles that average between four and six months but can extend up to twelve months for certain of our customers, more complex customer requirements, substantial upfront sales costs and less predictability in completing some of our sales. For example, large customers may require considerable time to evaluate and test our solutions and those of our competitors prior to making a decision or may have specific compliance and product requirements that we may not meet. A number of factors influence the length and variability of our sales cycle, including the competitive nature of evaluation and approval processes, extensive tests and review of our technology capabilities, examination of our data security measurements and adherence with security requirements. As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large customers typically taking longer to complete. Moreover, larger customers often begin to deploy our solution suites on a limited basis, but nevertheless may demand development and integration services, which increase our upfront investment in the sales effort with no guarantee that these customers will deploy our solutions widely enough across their organization to justify our substantial upfront investment. If we fail to increase adoption of our solutions by larger customers, our growth could be impaired.

 

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If we do not successfully and efficiently manage our current and potential future growth, our business, financial condition and results of operations could be harmed.

In recent years, we have significantly grown the scale of our business, and the growth and expansion of our business places significant strain on our management and our operational and financial resources. As usage of our platform grows, we will need to devote additional resources to improving its capabilities, features and functionality, and scaling our business, IT, financial, operating and administrative systems. There can be no assurance that we will appropriately allocate our resources in a manner that results in increased revenue or other growth in our business. Any failure of or delay in these efforts could result in impaired performance and reduced customer satisfaction, resulting in decreased sales to new customers or lower dollar-based net expansion rates (as defined in “ironSource’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics and Non-GAAP Financial Metrics”), which would hurt our revenue growth and our reputation. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. Even if we are successful in our expansion efforts, they will be expensive and complex and require the dedication of significant management time and attention. We may also suffer inefficiencies or service disruptions as a result of our efforts to scale our internal infrastructure. We cannot be sure that the expansion of and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could harm our business, financial condition and results of operations.

Our business growth is dependent upon the continued growth of the app economy and the increased usage of smartphones, tablets and other connected devices.

Our business growth depends on the continued proliferation of mobile connected devices, such as smartphones and tablets, which can connect to the Internet over a cellular, wireless or other network, as well as the increased consumption of content through those devices. Consumer usage of these mobile connected devices may be inhibited for a number of reasons, such as:

 

   

inadequate network infrastructure to support advanced features beyond just mobile web access;

 

   

users’ concerns about the security of these devices;

 

   

inconsistent quality of cellular or wireless connections;

 

   

unavailability of cost-effective, high-speed Internet services;

 

   

changes in network carrier pricing plans that charge device users based on the amount of data consumed; and

 

   

new technology which is not compatible with our platform.

In particular, the increased usage of smartphones, tablets and other mobile connected devices is dependent upon user sentiment and the increased availability of such devices. Public opinion towards mobile connected devices and other similar technological advancements is rapidly evolving, and as such, our industries have faced criticism in the past. We cannot be certain that the public will continue to support new technologies, such as app-based gaming and advertising. If we lose public interest and support for mobile gaming and apps, it could have a material adverse effect on our business, financial condition and results of operation.

We saw a moderate increase in demand for certain of our products and solution suites following the implementation of shelter-in-place orders, as we believe these restrictions provided individuals more time to spend online and higher levels of user engagement within the mobile ecosystem. Although we are seeing an increase in time that users spend playing games, which results in more

 

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engagement with ads and has led to an increase in the use of our platform, there can be no assurance that this increase will continue once global shelter-in-place restrictions are lifted and the COVID-19 pandemic has subsided. Furthermore, while our financial condition and results of operations were not negatively impacted by the COVID-19 pandemic, its impact on our future growth and our results of operations is unknown, and we are unable to accurately predict any future impacts. There can be no assurance that the increases we have seen this year will continue over time whether during or after the COVID-19 pandemic.

In addition, the Internet infrastructure that we and our customers rely on in any particular geographic area may be unable to support the demands placed upon it, which could interfere with the speed and availability of our platform. As a result, we could lose customers if the infrastructure is unable to support our platform or solution suites, which could have a material adverse effect on our business, financial condition and results of operations.

For any of these reasons, users of mobile connected devices may limit the amount of time they spend on these devices and the number of applications or amount of content they download on these devices. If user adoption of mobile connected devices and user consumption of content on those devices do not continue to grow, our total addressable market size may be significantly limited, which could compromise our ability to increase our revenue and our ability to become profitable.

If we are unable to further expand into the wider app economy or if our solutions for industries beyond gaming fail to achieve market acceptance, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.

Our growth strategy is based, in part, on expanding into industries that go beyond mobile gaming apps into the broader app economy. These industries are still in the early stages of development, and it is uncertain whether these types of apps will provide the opportunities for expansion that we currently expect, as well as how rapidly these opportunities may materialize, if at all.

Our success in expanding into these industries will depend, to a substantial extent, on our ability to scale our business to tailor our existing solution suites and products to these different types of apps, provide new and improve existing products to our new and existing customers and enable these customers to further monetize their apps across the ecosystem. Market acceptance of our solution suites and products for new customers outside of mobile gaming may not grow as we expect as a result of a number of factors, including the cost, performance and perceived value associated with our products and our ability to adapt to the differing sales and marketing requirements appropriate to most effectively address these industries. In addition, our ability to achieve widespread adoption of our products by new customers in industries beyond gaming may be affected by the entry and success of competitive products, including from larger competitors with greater resources that have historically addressed these industries with legacy products, and accordingly, have more brand recognition in these industries. If our products do not achieve widespread adoption in these other markets, our ability to grow our revenue may suffer.

We are dependent on the success of the gaming and mobile app ecosystem. Adverse events relating to this ecosystem, including events related to our customers or their apps, could have a negative impact on our business.

We are dependent on the success of the gaming and mobile app ecosystems to sustain and increase our business, including the success of our customers and their apps. Our customers are game and app developers, advertising networks, telecom operators, OEMs and others who use our solution suites to control their advertisements, publish their apps and games and monetize and generate growth of use of their apps and increase engagement with their users. As a result, our

 

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success depends in part on the gaming and mobile app ecosystem, which includes our current and potential new customers creating new apps and then using our products to market, sell and scale their apps, and then continue to use our products to further grow and monetize their apps as their apps continue to gain popularity. If a significant amount of our customers’ marketing and advertising efforts are unsuccessful or if a large amount of our customers experience a decrease in demand for their apps, our revenue could be reduced. The gaming and mobile app ecosystem is characterized by intense competition, rapid technological change and economic uncertainty and, as such, there is no guarantee that any of our customers’ apps will gain any meaningful traction with users. In addition, some of our solution suites are more reliant on certain customers and their ability to continue to use our solutions to engage with their users. While our large and diverse customer portfolio has helped to reduce the fluctuations in our revenue as a whole, we cannot assure you that the size and diversification of our customer portfolio will sufficiently mitigate this risk. If our customers fail to market and monetize their apps or devices using our solutions, and we are not able to maintain a diversified portfolio of customers, our business, financial condition and results of operations may be materially and adversely affected.

Our business is subject to risks generally associated with the mobile gaming industry.

81.6% of our 2020 revenue was derived from customers in the mobile gaming industry, and we rely to a significant extent on the health of the mobile gaming industry and the success of our customers’ games to maintain and increase our revenue. Accordingly, we are especially susceptible to market conditions and risks associated with the mobile gaming industry, including the popularity, price and timing of release of games, changes in consumer demographics, the availability and popularity of other forms of entertainment and public tastes and preferences, all of which are difficult to predict and are beyond our control. In order to be successful, our customers must also develop effective marketing strategies for games; expand and enhance games after their initial release; attract experienced game designers, product managers and engineers; and adapt to an increasingly diverse set of mobile devices, including various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes.

In addition, users may view games as a discretionary purchase. Although in periods of economic downturn time spent on gaming typically increases, if we experience a prolonged downturn as a result of the effects of COVID-19 or otherwise, users may reduce their discretionary spending on games, and our customers, in turn, may see an adverse effect on their business and reduce their usage of or lower their spending on our solution suites, which would adversely impact our revenue and financial condition. Economic conditions that negatively impact discretionary consumer spending, including inflation, slower growth, unemployment levels, tax rates, interest rates, energy prices, declining consumer confidence, recession and other macroeconomic conditions, including those resulting from COVID-19 and from geopolitical issues and uncertainty, could have a material adverse impact on our business, financial condition and results of operations.

If we or our competitors fail to detect or prevent fraud on our respective platforms, or malware intrusion into the systems or devices of customers and their users, customers could lose confidence in our or our competitors’ platforms, and we could face legal claims that could materially and adversely affect our reputation, business, financial condition and results of operations.

We and our competitors may be subject to fraudulent or malicious activities undertaken by persons or third parties seeking to use our or our competitors’ platforms for improper purposes. For example, someone may attempt to divert or artificially inflate mobile apps users’ actions recorded in our platform or to disrupt or manipulate the operation of the systems and devices of our customers and their users in order to misappropriate information, generate fraudulent billings or stage cyberattacks or

 

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for other illicit purposes. Bad actors may also introduce malware through our or our competitors’ platforms in order to commandeer or gain access to information of our customers or partners. For example, sophisticated bot-nets and other complex forms of “click fraud” might be used to generate fraudulent impressions and divert advertising revenue from the legitimate apps of our customers.

We may also be subject to fraud and other types of malicious activity by competitors for the purpose of manipulating the allocation of advertising budgets across our, or our competitors’ platforms. If we fail to detect such activity, this could divert advertising revenue from us to our competitors. We use third-party tools and proprietary technology to identify non-human traffic and malware, and we may reduce or terminate relationships with customers or partners that we find to be engaging in any such activities, which could adversely affect our revenue and harm our relationships with our other customers or partners. Although we continuously assess the quality and performance of advertising on customers’ digital media properties, it may be difficult to detect fraudulent or malicious activity, and we rely on our own and third-party tools, as well as the controls of our customers. Further, perpetrators of fraudulent impressions and malware frequently change their tactics and may become more sophisticated over time, requiring both us and our competitors or others in our industry to improve processes for assessing the quality of customers’ inventory and controlling fraudulent activity. If we or our competitors fail to detect or prevent fraudulent or malicious activity of this sort, our reputation, or the broader reputation of our industry, could be damaged, and our customers may contest payment, demand refunds or fail to give us future business, or we could face legal claims from our customers. Even if we are not directly involved in fraud or malicious activity, any sustained failures of others in our industry to adequately detect and prevent fraud could materially and adversely affect the industry and its reputation, which would have a material adverse effect on our business, financial condition and results of operations.

If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our customers’ data, our data or our platform, then our platform may be perceived as not secure, and our reputation may be harmed, our business operations may be disrupted, demand for our solution suites may be reduced and we may incur significant liabilities.

Operating our business platform involves the collection, storage and transmission of proprietary and confidential information, including personal information of our employees, customers and users of our customers’ products, our proprietary and confidential information and the confidential information we receive from our partners, customers and users. Our internal computer systems and those of our current and any future strategic collaborators, vendors and other contractors or consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, cybersecurity threats, terrorism, war, telecommunication, and electrical failures. The security measures we take to protect this information may be breached as a result of cyber-attacks, computer malware, viruses, unauthorized access, natural disasters, cybersecurity threats, terrorism, war, telecommunication, electrical failures, social engineering (including, but not limited to, spear phishing and ransomware attacks), hacking and other efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, organized crime, other criminal enterprises, individual actors and/or advanced persistent threat groups. In addition, we may experience intrusions on our physical premises by any of these threat actors.

Cyber incidents have become more prevalent in recent years and been increasing in sophistication and frequency. Incidents may include third parties attempting to gain access to employee or customer data using stolen or inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware, card skimming code and other deliberate attacks and attempts to gain unauthorized access. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our network security or our website change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques.

 

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For example, attempts by malicious actors to frequently induce our personnel into disclosing usernames, passwords or other information that can be used to access our systems have increased and could be successful. Our security measures could also be compromised by personnel, theft or errors or be insufficient to prevent harm resulting from security vulnerabilities in software or systems on which we rely. Such incidents may occur in the future, resulting in unauthorized, unlawful or inappropriate access to, inability to access, disclosure of or loss of the sensitive, proprietary and confidential information that we handle. Security incidents could also damage our IT systems and our ability to make the financial reports and other public disclosures required of public companies.

We rely on third-party service providers to provide critical services that help us maintain, develop and deliver our solutions and operate our business. In the course of providing their services, these providers may support or operate critical business systems for us or store or process personal information and any of the same proprietary and confidential information that we handle. These service providers may not have adequate security measures and could experience a security incident that compromises the confidentiality, integrity or availability of the systems they operate for us or the information they process on our behalf. Such occurrences could materially and adversely affect our business to the same degree as if we had experienced these occurrences directly, and we may not have recourse, or have limited recourse, from the responsible third-party service providers for the resulting liability we incur.

Because there are many different cybercrime and hacking techniques and such techniques continue to evolve, we may be unable to anticipate attempted security breaches, react in a timely manner or implement adequate preventative measures. While we have developed and implemented systems and processes designed to protect the integrity, confidentiality and security of our customers’ and their users’ confidential and personal information under our control, we cannot guarantee that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. A security breach or other security incident, or the perception that one has occurred, could result in a loss of customer confidence in the security of our platform and damage to our reputation and brand, loss or unavailability of data which we may not be able to effectively restore, reduce demand for our products, disrupt normal business operations, require us to incur material costs to investigate and remedy the incident, recover data if possible, and prevent recurrence, expose us to litigation, regulatory enforcement action, fines, penalties and damages and materially and adversely affect our business, financial condition and results of operations. These risks are likely to increase as we continue to grow and process, store and transmit an increasingly large volume of data.

We have contractual and legal obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. In addition, our agreements with certain customers and third-party partners may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity and may cause our customers to lose confidence in the effectiveness of our security measures.

A security breach could lead to claims by our customers, their users or other relevant parties that we have failed to comply with contractual obligations to implement specified security measures. As a result, we could be subject to legal action or our customers could end their relationships with us. We cannot assure you that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages. Pursuant to the California Consumer Privacy Act (the “CCPA”) (and the forthcoming California Privacy Rights Act (the “CPRA”)), if we experience a security breach, California consumers could bring a private right of action claiming the breach was the result of our violation of the duty to implement and maintain reasonable security procedures and practices, which could be costly and cause reputational harm. Similarly, there is an increasing risk of

 

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class actions in the United Kingdom and Europe. Security breaches could also result in enforcement actions by government or regulatory authorities alleging that we have violated laws that require us to maintain reasonable security measures and comply with mandatory disclosure requirements.

While we do have coverage for cybersecurity attacks, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.

In addition, we continue to expend significant costs to seek to protect our platform and to introduce additional security features for our customers, and we expect to continue to have to expend significant costs in the future. For example, some of our products are SOC 2 compliant, in order to meet the standards that our telecom operator customers require to prevent a security breach, and we may be requested by clients in the future to obtain SOC 2 compliance for additional products. Any increase in these costs will adversely affect our business, financial condition and results of operations.

Interruptions, performance problems or defects associated with our platform could diminish our brand, subject us to liability and may materially and adversely affect our business, financial condition and results of operations.

Our reputation and ability to attract and retain customers and grow our business depends in part on our ability to operate our platform at high levels of reliability, scalability and performance, including the ability of our existing and potential customers to access our platform at any time and within an acceptable amount of time. Interruptions in the performance of our solution suites or any of our individual products, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the availability of our solution suites, our data or any of our individual products. We may experience disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of customers accessing our platform simultaneously, denial of service attacks or other security-related incidents.

It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our customer base grows and our platform becomes more complex. If our platform is unavailable or if our customers are unable to access our products within a reasonable amount of time or at all, we may experience a loss of customers, lost or delayed market acceptance of our solution suites, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, significant costs of remedying these problems, significant costs of compensating customers to maintain our relationships and the diversion of our resources. In particular, certain of our customers, such as our telecom operator customers, rely on our platform to provide services to their users, and if there was any interruption, disruption, security breach or similar event, this could have a negative effect on our telecom operator customers’ reputations with their users, which would materially harm our relationships with these customers and could lead to us losing some, or all, of these customers, which would have a material adverse effect on our business, financial condition and results of operations. In addition, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition and results of operations, as well as our reputation, may be materially and adversely affected.

 

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Further, the technology underlying our platform is inherently complex and may contain material defects or errors, particularly when new products are first introduced or when new features or capabilities are released. We have from time to time found defects or errors in our platform, and new defects or errors in our existing products or new products may be detected in the future by us or our users. We cannot assure you that our existing products and new products will not contain defects. Any such defects could result in loss of revenue and loss of customer confidence in our platform, even if only one of our products contained defects. Any real or perceived errors, failures, vulnerabilities or bugs in our solution suites or individual products could result in negative publicity or lead to data security, access, retention or other performance issues, all of which could harm our business. The costs incurred in correcting such defects or errors may be substantial and could harm our business. Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could similarly harm our business. If any of the foregoing occurred, it could have a material adverse effect on our business, financial condition and results of operations.

We rely on the performance of, and we face stark competition for, highly skilled personnel, including our management, other key employees and qualified employees, and the loss of one or more of such personnel or of a significant number of our team members or the inability to attract and retain executives and qualified employees we need to support our operations and growth, could harm our business.

Our success and future growth depend upon the continued services of our management team and other key employees. In particular, the founders who are members of our leadership team are critical to our overall management, as well as the continued development of our solutions, our culture and our strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. We also are dependent on the continued service of our existing engineering team because of the complexity of our platform. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause, subject only to the notice periods prescribed by their respective agreements if done without cause. The loss of one or more members of our senior management or key employees could harm our business, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or key employees.

In addition, to execute our growth plan, we must attract and retain highly qualified personnel. We have had difficulty quickly filling certain open positions in the past, and we expect to have significant future hiring needs. Competition is intense, particularly in Israel and other areas in which we have offices, for data scientists, engineers experienced in designing and developing cloud-based platform products, research and development specialists and experienced sales professionals. In order to continue to access top talent, we will likely continue to grow our footprint of office locations, which may add to the complexity and costs of our business operations. From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached their legal obligations, resulting in a diversion of our time and resources. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, experiences significant volatility or increases such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.

 

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We generally enter into non-competition agreements with our employees. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work, and it may be difficult for us to restrict our competitors from benefiting from the expertise our former employees developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer that have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property.

Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, financial condition and results of operations could be harmed.

We have experienced and may continue to experience rapid expansion in the number of our employees. We believe our corporate culture has been a key element of our success. However, as our organization grows, it may be difficult to maintain our culture, which could reduce our ability to innovate and operate effectively. The failure to maintain the key aspects of our culture as our organization grows could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and could compromise the quality of our customer service, all of which are important to our success and to the effective execution of our business strategy. In the event we are unable to maintain our corporate culture as we grow to scale, our business, financial condition and results of operations could be materially and adversely affected.

We rely upon third-party data centers and providers of cloud-based infrastructure to host our platform. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could materially and adversely affect our business, financial condition and results of operations.

We currently serve our customers from data centers in the United States and Ireland and other locations worldwide, which are operated by a third-party cloud hosting provider. We use various third- party cloud hosting providers, such as Amazon Web Services (“AWS”), to provide cloud infrastructure for our platform. Our platform relies on the operations of this infrastructure. Customers need to be able to access, send requests and receive communication from our platform at any time, without interruption or degradation of performance, and we provide some customers with service-level commitments with respect to uptime. In addition, our platform depends on the ability of these data centers and cloud infrastructure to allow for our customers’ configuration, architecture, features and interconnection specifications and to secure the information stored in these data centers. Any limitation on the capacity of our data centers or cloud infrastructure could impede our ability to onboard new customers or expand the usage of our existing customers, host our platform or serve our customers, which could materially and adversely affect our business, financial condition and results of operations. In addition, any incident affecting our data centers or cloud infrastructure that may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, outbreaks of contagious diseases, telecommunications failures, terrorist or other attacks and other similar events beyond our control could negatively affect the cloud-based portion of our platform. A prolonged service disruption affecting our data centers or cloud-based services for any of the foregoing reasons would negatively impact our ability to serve our customers and could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers or incur additional costs under our customer and partner agreements or otherwise harm our business. We may also incur significant costs for using alternative providers or taking other actions in preparation for, or in response to, events that damage the third-party hosting services we use.

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of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform, loss of revenue from revenue-share and usage-based solutions, as well as significant delays and additional expense in arranging or creating new facilities and services or re-architecting our platform for deployment on a different data center provider or cloud infrastructure service provider, which could materially and adversely affect our business, financial condition and results of operations.

Health epidemics, including the current COVID-19 pandemic, could in the future have an adverse impact on our business, operations and the markets and communities in which we, our partners and customers operate.

Our business and operations could be materially and adversely affected by health epidemics, including the current COVID-19 pandemic, impacting the markets and communities in which we and our customers operate. The COVID-19 pandemic has caused, and continues to cause, significant business and financial markets disruption worldwide, and there is significant uncertainty around the duration of this disruption on a global level, as well as the ongoing effects on our business.

We saw a moderate increase in demand for certain of our products and solution suites following the implementation of shelter-in-place orders. There can be no assurance that this increase will continue over time whether during or after the COVID-19 pandemic. While our financial condition and results of operations were not negatively impacted by the COVID-19 pandemic, the full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, and we may be unable to accurately forecast our revenue or financial results.

Further, as certain of our customers experience downturns or uncertainty in their own business operations or revenue resulting from the spread of COVID-19, they may decrease or delay their spending, request pricing concessions or seek renegotiations of their contracts and decrease their use of our products, any of which could have a material adverse effect on us. The COVID-19 pandemic has resulted in a dramatic increase in unemployment that could lead to users having less discretionary income to spend on games, which could have a negative impact on the mobile app industry. In addition, we may experience customer losses, including due to bankruptcy or our customers ceasing operations, which may result in an inability to collect receivables from these parties. A decline in revenue or the collectability of our receivables could harm our business.

In addition, as the Israeli and other governments around the world imposed shelter-in-place and other restrictive measures, we transitioned many of our employees to remote working arrangements and temporarily closed our offices in Israel, the United States, China and other jurisdictions as required by applicable local authorities from time to time. We have gradually reopened certain of our offices in accordance with the lifting of certain shelter-in-place measures and in accordance with measures that provide additional safeguards that we believe are in the best interests of our employees and customers. While our employees have been gradually allowed to return to our offices in accordance with the applicable local laws, we also have provided the flexibility to our employees to continue to work remotely as the COVID-19 pandemic wears on. We implemented further safeguards in the interest of the health and safety of our employees and customers, and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and partners. Although our employees have continued to perform well despite working remotely, there is no guarantee that we will continue to be as effective while working remotely because our team is dispersed, employees may have less capacity to work due to increased personal obligations (such as childcare, eldercare or caring for family members who become sick), may become sick themselves and be unable to work or may be otherwise negatively affected, mentally or physically, by the COVID-19 pandemic and prolonged social distancing. Decreased effectiveness and availability

 

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of our team could adversely affect our results due to slowdowns in our sales cycles and recruiting efforts, delays in our entry into customer contracts, delays in addressing performance issues, delays in product development, delays and inefficiencies among various operational aspects of our business, including our financial organization, or other decreases in productivity that could seriously harm our business.

Furthermore, we may decide to postpone or cancel planned investments in our business in response to changes in our business as a result of the spread of COVID-19, which may impact our ability to attract and retain customers and our rate of innovation, either of which could harm our business. In addition, our facilities’ needs could evolve based on continuing changes and impact on work environments as a result of the COVID-19 pandemic, and we may not be able to alter our contractual commitments to accommodate such changes, which could cause us to incur additional costs or otherwise harm our business. More generally, the COVID-19 pandemic has materially and adversely affected economies and financial markets globally, which could decrease technology spending and materially and adversely affect demand for our platform.

The global impact of the COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the situation and the effects on our business and operations closely. We do not yet know the full extent of potential impacts on our business, operations or the global economy as a whole, particularly if the COVID-19 pandemic and related public health measures persist for an extended period of time. Given the uncertainty, we cannot reasonably estimate the impact on our future results of operations, cash flows or financial condition. While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could harm our business.

If our customers do not obtain necessary and requisite consents from users for us to process their personal data, we could be subject to fines and liability.

Because we do not have direct relationships with users of some of our products, we rely on our customers to obtain the consent of the user on our behalf to process their data, and to implement any notice or choice mechanisms required under applicable laws, but if our customers do not follow this process (and in any event, as the legal requirements in this area continue to evolve and develop), we could be subject to fines and liability. We may not have adequate insurance or contractual indemnity arrangements to protect us against any such claims and losses.

The estimates of our market opportunity and forecasts of market growth included in this proxy statement/prospectus may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at a similar rate, if at all.

The estimates of our market opportunity and forecasts of market growth included in this proxy statement/prospectus may prove to be inaccurate. Market opportunity estimates and growth forecasts included in this proxy statement/prospectus, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that affect the calculation of our market opportunity are also subject to change over time.

Our expectations regarding potential future market opportunities are subject to even greater uncertainty. For example, our expectations regarding future market opportunities depend, among other things, on the extent to which we are able to develop new products and features that expand the applicability of our individual products and/or our solution suites. In addition, our expectations regarding future market opportunities are subject to uncertainties. Our ability to address those opportunities will

 

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depend on our developing solutions that are responsive to those particular industries’ and customers’ needs.

In addition, any expansion in our markets depends on a number of factors, including the cost, performance and perceived value associated with our products and those of our competitors. Even if the markets in which we compete meet the size estimates and growth forecasted in this proxy statement/prospectus, our business could fail to achieve a substantial share of these markets or grow at a similar rate, if at all. Our growth is subject to many risks and uncertainties. Accordingly, the estimates of market opportunity or forecasts of market growth included in this proxy statement/prospectus should not be taken as indicative of our future growth.

The Spin-Off of the assets of our Desktop business from ironSource Ltd. prior to the Transactions may give rise to potential liabilities for us in the event of a breach of our or our shareholders’ obligations under the agreements related to the Spin-Off or tax liabilities caused by the Spin-Off.

On December 31, 2020, we completed the spin-off of the assets of our Desktop business to TypeA Holdings Ltd., a newly formed company incorporated under the laws of Israel, (the “Spin-Off”) which is owned by our shareholders on a pro rata basis as of the date of the Spin-Off. The Spin-Off was effected through an asset transfer agreement in which each party undertook certain obligations with respect to tax caused by the Spin-Off and other liabilities of the other party. In connection with the Spin-Off, we obtained a ruling from the Israeli Tax Authority in accordance with Section 104B(f) of the Israeli Income Tax Ordinance (New Version), 5721 – 1961 (the “Ordinance”), in which the Israeli Tax Authority agreed that the transfer of the assets of our Desktop business to TypeA is not taxable to us as of the date of transfer (collectively, the “Spin-Off Ruling”). The Spin-Off Ruling is subject to our and our shareholders’ compliance with Section 104B(f) of the Ordinance, which includes a requirement that shareholders of ironSource Ltd. as of the date of the Spin-Off continue to hold at least 25% of the share capital of each of ironSource Ltd. and TypeA until December 31, 2022 (the “25% Requirement”). The 25% Requirement may be breached if, either as a result of transfers of shares by our shareholders of record as of the Spin-Off, or as a result of issuances of new shares by ironSource Ltd. or TypeA, our shareholders of record as of the spin-off hold less than 25% of our or TypeA’s share capital. Certain of our shareholders holding together approximately 81.7% of our ordinary shares (based on our outstanding share capital immediately prior to the Transactions) entered into a lock-up agreement restricting each such shareholder from transferring more than 50% of its shares in ironSource Ltd. or TypeA immediately after the Spin-Off until December 31, 2022 (the “Spin-Off Lockup”).

Under the terms of the Spin-Off Lockup, our shareholders that entered into the Spin-Off Lockup are permitted to transfer shares that exceed the 50% restriction contained in the Spin-Off Lockup in ironSource Ltd. or TypeA if they receive written consent from Tomer Bar-Zeev, in his capacity as a shareholder, and App Investments S.á.r.l. (the “CVC Vehicle”). Since we are not a party to the Spin-Off Lockup, we would not be able to prevent our shareholders from violating the terms of the 25% Requirement if they received consent to transfer their shares in excess of the 50% restriction. Should any shareholder obtain consent to transfer shares that exceed the 50% restriction, this could violate the terms of the 25% Requirement and subject us and our shareholders of record as of the date of the Spin-Off to a significant tax liability.

We cannot be certain that the applicable shareholders will comply with the Spin-Off Lockup or that the 25% Requirement will be otherwise complied with. In the event that either we or our shareholders of record as of the Spin-Off fail to comply with the Spin-Off Ruling, including the 25% Requirement, we may be subject to a significant tax liability arising from the Spin-Off, which would adversely affect our results of operations. Similarly, despite the Spin-Off, we may still be liable for events and circumstances occurring prior to the Spin-Off, which may have an adverse impact on our business, financial condition and results of operations.

 

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Indemnity provisions in various agreements to which we are a party potentially expose us to substantial liability for infringement, misappropriation or other violation of intellectual property rights, data protection and other losses.

Our agreements with our customers and other third parties may include indemnification provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of infringement, misappropriation or other violation of intellectual property rights, data protection or other data rights, damages caused by us to property or persons, or other liabilities relating to or arising from our software, technology, platform, our acts or omissions under such agreements or other contractual obligations. Some of our agreements, and renewals of such agreements, provide for uncapped liability or incorporate carve outs for certain obligations and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments would harm our business, financial condition and results of operations. Although we attempt to contractually limit our liability with respect to such indemnity obligations, in some cases, the liability is not limited given other strategic facets of the relationship and we may still incur substantial liability related to such agreements, and we may be required to cease providing certain functions or features on our platform as a result of any such claims. Even if we succeed in contractually limiting our liability, such limitations may not always be enforceable. Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with such customer or other third party and other existing or prospective customers, reduce demand for our platform and materially and adversely affect our business, financial condition and results of operations. In addition, although we carry general liability insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed on us or otherwise protect us from liabilities or damages with respect to claims, including clams on such matters as alleged compromises of customer data, which may be substantial. Any such coverage may not continue to be available to us on acceptable terms or at all.

Acquisitions, strategic investments, partnerships and alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute shareholder value and adversely affect our business, financial condition and results of operations.

We operate in a highly competitive environment for mergers and acquisitions. We have in the past, and may in the future, seek to acquire or invest in businesses, joint ventures or technologies that we believe could complement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. Although the significant majority of our revenue growth has been organic, we have completed several acquisitions since the year ended December 31, 2011, including the acquisition of Soomla Inc. in January 2021, and the acquisition of Luna Labs Limited in February 2021, among others, to further our goal of expanding our platform and abilities. Any such acquisition or investment may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, data, solutions, personnel or operations of any acquired companies, particularly if the key personnel of an acquired company choose not to work for us or face cultural challenges integrating with our company, or if their software or technology is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.

We could also face risks related to liability for activities of the acquired company as conducted before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities and litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, users, former shareholders or other third parties, and our efforts to limit such liabilities

 

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could be unsuccessful. These transactions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existing business. Any such transactions that we are able to complete may not result in any synergies or other benefits we had expected to achieve, which could result in impairment charges that could be substantial. In addition, we may not be able to find and identify desirable acquisition targets or business opportunities or be successful in entering into an agreement with any particular strategic partner. These transactions could also result in dilutive issuances of equity securities or the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the impairment of goodwill, any of which could materially and adversely affect our results of operations. Any such dilutive issuances of equity securities may also draw us closer to violating the 25% Requirement for us or our shareholders as of the Spin-Off under the Spin-Off Ruling (see “—The Spin-Off of the assets of our Desktop business from ironSource Ltd. prior to the Transactions may give rise to potential liabilities for us in the event of a breach of our or our shareholders’ obligations under the agreements related to the Spin-Off or tax liabilities caused by the Spin-Off.”). In addition, if the resulting business from such a transaction fails to meet our expectations, our business, financial condition and results of operations may be materially and adversely affected or we may be exposed to unknown risks or liabilities.

Our operations are global in scope, creating a variety of operational and regulatory challenges.

Our operations are global in scope, with operations in Israel, the United States, the United Kingdom, China, South Korea, Japan and India, in addition to a sales presence and customers in multiple other countries. We are continuing to adapt to and develop strategies to address global markets, but we cannot assure you that such efforts will be successful. We expect that our global activities will continue to grow for the foreseeable future as we continue to pursue opportunities in existing and new global industries, which will require the dedication of management attention and financial resources.

Our current and future global business and operations involve a variety of risks, including:

 

   

slower than anticipated availability and adoption of our solutions by content creators, developers and telecom operators outside our core markets;

 

   

changes or instability in a specific country’s or region’s political, social or economic conditions, including in the United Kingdom as a result of its exit from the European Union;

 

   

the need to adapt and localize our platform for specific countries;

 

   

maintaining our company culture across all of our offices globally;

 

   

greater difficulty collecting accounts receivable and potential for longer payment cycles;

 

   

burdens of complying with a variety of foreign laws, including costs associated with legal structures, accounting, statutory filings and tax liabilities;

 

   

differing and potentially more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information;

 

   

differing and potentially more onerous labor regulations and practices, especially in Europe and Israel, where labor laws are generally more advantageous to employees as compared to the United States including deemed hourly wage and overtime regulations in these locations or the existence of workers’ councils and labor unions;

 

   

challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, statutory equity requirements and compliance programs that are specific to each jurisdiction;

 

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unexpected changes in trade relations, regulations, laws or enforcement;

 

   

difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems and regulatory systems;

 

   

increased travel, real estate, infrastructure and legal compliance costs associated with multiple global locations and subsidiaries;

 

   

currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future;

 

   

higher levels of credit risk and payment fraud;

 

   

restrictions on the transfer of funds, such as limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries;

 

   

enhanced difficulties of integrating any foreign acquisitions;

 

   

laws and business practices favoring local competitors or general market preferences for local vendors;

 

   

reduced or uncertain intellectual property protection or difficulties obtaining, maintaining, protecting or enforcing our intellectual property rights, including our trademarks and patents;

 

   

foreign government interference with our intellectual property that resides outside of Israel or the United States, such as the risk of changes in foreign laws that could restrict our ability to use our intellectual property outside of the foreign jurisdiction in which we developed it;

 

   

political instability, hostilities, war or terrorist activities;

 

   

exposure to liabilities under anti-corruption and anti-money laundering laws in the jurisdictions in which we operate; and

 

   

adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash.

If we invest substantial time and resources to further expand our operations and are unable to do so successfully and in a timely manner, our business and results of operations will suffer.

We rely on our current understanding of regional regulatory requirements pertaining to the marketing, advertising and promotion of our solution suites, and any material change in such regulations, or a finding that we did not properly understand such regulations, may materially and adversely impact our business, financial condition and results of operations.

Some portions of our business rely extensively on marketing, advertising and promoting our individual products and solution suites requiring us to have an understanding of the local laws and regulations governing our business. In the event that we have relied on inaccurate information or advice, and engage in marketing, advertising or promotional activities that are not permitted, we may be subject to penalties, restricted from engaging in further activities or altogether prohibited from offering our solutions in a particular territory, all or any of which will adversely impact our business, financial condition and results of operations.

We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.

While we have been profitable in the past, we cannot be certain that our operations will continue to generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business and may require additional funds to

 

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respond to business challenges, including the need to develop new solutions or enhance our existing solutions, enhance our operating infrastructure, expand globally and acquire complementary businesses and technologies. Additional financing may not be available on terms favorable to us, if at all. In particular, the current COVID-19 pandemic has caused disruption in the global financial markets, which may reduce our ability to access capital and negatively affect our liquidity in the future. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, financial condition and results or operations. We have entered into a credit facility with Silicon Valley Bank (the “SVB Credit Agreement”) as the issuing lender together with other lenders, and these lenders’ rights will be senior to the rights of our shareholders. If we incur any additional debt, the debt holders would have rights senior to holders of shares to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our shares. Furthermore, if we issue additional equity securities, our shareholders will experience dilution, and the new equity securities could have rights senior to those of our Class A ordinary shares. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities. As a result, our shareholders bear the risk that future issuances of debt or equity securities may reduce the value of our Class A ordinary shares and dilute their interests. Our inability to obtain adequate financing on terms satisfactory to us when we require it could significantly limit our ability to continue to support our business growth, respond to business challenges, expand our operations or otherwise capitalize on our business opportunities due to lack of sufficient capital. Even if we are able to raise such capital, we cannot assure you that it will enable us to achieve better operating results or grow our business.

Fluctuations in currency exchange rates could harm our operating results and financial condition.

We offer our solution suites to customers globally and have operations in Israel, the United States, the United Kingdom, China, South Korea, Japan and India. Although the majority of our cash generated from revenue is denominated in U.S. dollars, most of our operating expenses are incurred in Israel and denominated in Israeli New Shekels (“NIS”). As a result, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as our operating expenses are translated from NIS into U.S. dollars. In particular, for the last two years ended December 31, 2020, there has been a significant decrease in the value of the U.S. dollar relative to the NIS, with the representative exchange rate having dropped from NIS 3.748 per U.S. dollar on December 31, 2018 to NIS 3.456 per U.S. dollar on December 31, 2019 to NIS 3.215 per U.S. dollar on December 31, 2020. If this trend continues, it could increase the U.S. dollar amount of our operating expenses significantly. Our financial results are also subject to changes in exchange rates that impact the settlement of transactions in non-local currencies. Because we conduct business in currencies other than U.S. dollars but report our results of operations in U.S. dollars, we also face remeasurement exposure to fluctuations in currency exchange rates, which could hinder our ability to predict our future results and earnings and could materially and adversely impact our financial condition and results of operations. To date, we have not engaged in currency hedging activities to limit the risk of exchange fluctuations and, as a result, our business, financial condition and results of operations could be materially and adversely affected by such fluctuations.

Seasonality may cause fluctuations in our sales and results of operations.

Our quarterly results of operations may vary significantly as a result of seasonal fluctuations during periods such as holidays, during which users spend increased time on entertainment, including games and mobile applications, which increases our customers’ usage of our advertising network and other solutions and may impact our revenue. We may also experience fluctuations due to factors that may be outside of our control that drive usage up or down. While we believe that this seasonality has

 

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affected and will continue to affect our quarterly results, our rapid growth has largely masked seasonal trends to date.

Our insurance may not provide adequate levels of coverage against claims or we may be unable to find insurance with sufficient coverage at a reasonable cost.

We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Moreover, if we do not make policy payments on a timely basis, we could lose our insurance coverage, or if a loss is incurred that exceeds policy limits, our insurance provider could refuse to cover our claims, which could result in increased costs. If we are unable to make claims on our insurance, then we may be liable for any such claims, which could cause us to incur significant liabilities.

Further, insurance has become more expensive and difficult to find due to changes in the insurance market as well as the COVID-19 pandemic. Although we believe that we have adequate coverage, if we lose our insurance coverage and are unable to find similar coverage elsewhere or if rates continue to increase, it may have an adverse impact on our business, financial condition and results of operations.

Any legal proceedings, investigations or claims against us could be costly and time-consuming to defend and could harm our reputation regardless of the outcome.

We are and may in the future become subject to legal proceedings, investigations and claims, including claims that arise in the ordinary course of business, such as claims brought by our customers or partners in connection with commercial disputes, claims by users, claims or investigations brought by regulators or employment claims made by our current or former employees.

We are not currently a party to any pending or, to our knowledge, threatened litigation that will have a significant effect on our financial position or profitability. Any litigation, investigation or claim, whether meritorious or not, could harm our reputation, will increase our costs and may divert management’s attention, time and resources, which may in turn harm our business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial position and results of operations.

Our business could be disrupted by catastrophic events.

Occurrence of any catastrophic event, including a global pandemic like the ongoing COVID-19 pandemic, earthquake, fire, flood, tsunami or other weather event, power loss, telecommunications failure, software or hardware malfunction, cyber-attack, war or terrorist attack, explosion or pandemic could impact our business. Our insurance coverage may not compensate us for losses that may occur in the event of an earthquake or other significant natural disaster. If any disaster were to occur, our ability to operate our business at our facilities could be impaired and we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume operations. If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster and to execute successfully on those plans in the event of a disaster or emergency, our business would be harmed.

Our global operations may subject us to uncertain adverse tax consequences.

Our corporate structure and associated transfer pricing policies contemplate future growth in global markets, and consider the functions, risks and assets of the various entities involved in

 

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intercompany transactions. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including Israel and the United States, to our global business activities, changes in tax rates, new or revised interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. New or revised tax laws may also impact the amount of taxes we pay in different jurisdictions; for example, possible new standards could be introduced by authorities in the countries in which we operate that place greater emphasis on customer or end-user locations or markets, may potentially result in increased tax liabilities. Furthermore, the tax authorities of jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions or disagree with our determinations as to the income or expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements may fail to reflect adequate reserves to cover such a contingency.

Our SVB Credit Agreement contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations.

The terms of our SVB Credit Agreement include a number of covenants that limit our ability to, among other things, incur additional indebtedness, grant liens, merge or consolidate with other companies or sell substantially all of our assets, pay dividends and make certain distributions, each subject to important and significant exceptions and limitations. On May 4, 2021, we and certain of our subsidiaries entered into an Escrow Agreement with lenders from time to time party thereto, Silicon Valley Bank, as administrative agent and Morrison & Foerster LLP, as escrow agent, pursuant to which we deposited a revolving facility credit agreement (the “RCF”), providing for a $350.0 million revolving commitment and related loan documents into escrow, to be released upon the consummation of the Transactions, payment of fees under the RCF, and the completion of certain ministerial closing conditions. As a condition to the effectiveness of the RCF, the Company will repay the obligations owed under the SVB Credit Agreement.

Our SVB Credit Agreement is secured by and, following its effectiveness, the RCF will be secured by, substantially all of the assets of the Company and its material subsidiaries, and the equity interests therein. The terms of our SVB Credit Agreement and, following its effectiveness, the RCF, may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies which are not subject to such restrictions.

A failure by us to comply with the covenants specified in our SVB Credit Agreement and, following its effectiveness, the RCF, could result in an event of default under the agreement, which would give the lenders the right to terminate their commitments to provide additional loans under our revolving credit facility and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. If the debt under our SVB Credit Agreement and, following its effectiveness, the RCF, were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately materially and adversely affect our business, cash flows, results of operations and financial condition.

Risks Related to ironSource’s Regulation

In this section “we,” “us” and “our” refer to ironSource.

 

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We are subject to rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy, data protection, data security and the protection of children. The restrictions and costs imposed by these requirements, or our actual or perceived failure to comply with them, could harm our business.

Our platform relies on our ability to collect, use and share information of customers, users and others. These activities are regulated by a variety of federal, state, local and international privacy, data protection and data security laws and regulations, which have become increasingly stringent in recent years.

Most jurisdictions in which we or our customers operate have adopted, or are in the process of adopting, privacy, data protection and data security laws. In this regard, it is important to highlight the General Data Protection Regulation 2016/679 (“GDPR”), which went into effect in May 2018. The GDPR regulates the collection, control, processing, sharing, disclosure and other use of data relating to personal data. Further to the UK’s exit from the EU on January 31, 2020, the GDPR ceased to apply in the UK at the end of the transition period on December 31, 2020. However, as of January 1, 2021, the UK’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020, but subject to certain UK specific amendments) into UK law (referred to as the “UK GDPR”). The UK GDPR and the UK Data Protection Act 2018 set out the UK’s data protection regime, which is independent from but aligned to the GDPR. The GDPR, UK GDPR and national implementing legislation in European Economic Area (“EEA”) member states and the UK, impose a strict data protection compliance regime including:

 

   

providing detailed disclosure about how personal data is collected and processed and how data subjects can exercise their rights (in a concise, intelligible and easily accessible form);

 

   

demonstrating that an appropriate legal basis is in place or otherwise exists to justify data processing activities;

 

   

granting new rights for data subjects in regard to their personal data (including the right to be “forgotten” and the right to data portability), as well as enhancing current rights such as data subject access requests;

 

   

introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of personal data breaches that is likely to result in a risk to the rights and freedoms of individuals;

 

   

defining for the first time pseudonymized (key-coded) data;

 

   

imposing limitations on retention of personal data;

 

   

maintaining a record of data processing;

 

   

requiring appropriate technical and organizational measures to be implemented to ensure a level of security appropriate to the level of risk;

 

   

restricting transfers of personal data outside the EEA and UK unless an adequate transfer mechanism has been implemented to legitimize such transfers; and

 

   

complying with the principal of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit.

We are subject to the supervision of local data protection authorities in those EEA and UK jurisdictions where we are established or otherwise subject to the GDPR and the UK GDPR. Fines for certain breaches of the GDPR are significant, including fines up to the greater of 20 million or 4% of global turnover. In addition to the foregoing, a breach of the GDPR and the UK GDPR could result in regulatory investigations, reputational damage, orders to cease or change our processing of data,

 

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enforcement notices or assessment notices for a compulsory audit. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.

The UK GDPR mirrors the fines under the GDPR including fines up to the greater of 20 million (£17.5 million) or 4% of global turnover. These changes will lead to additional costs and increase our overall risk exposure.

As described in “—Risks Related to ironSource’s Regulation—We are subject to laws and regulations worldwide, many of which are unsettled and still developing and which could increase our costs or materially and adversely affect our business.” recent decisions by the Court of Justice of the European Union, recent guidance from European data protection authorities and a new proposed ePrivacy Regulation, may further restrict our use of online tracking technologies which our solutions rely on. We have, at times, been subject to enquiries about our compliance with the GDPR, and we may also be subject to such enquiries and complaints in the future.

U.S. privacy and data security laws are also complex and changing rapidly. Many states have enacted laws regulating the online collection, use and disclosure of personal information and requiring companies implement reasonable data security measures. Laws in all states and U.S. territories also require businesses to notify affected individuals, governmental entities and/or credit reporting agencies of the occurrence of certain security breaches affecting personal information. These laws are not consistent, and compliance with them in the event of a widespread data breach is complex and costly.

States have also begun to introduce more comprehensive privacy legislation. For example, California enacted the CCPA, which took effect on January 1, 2020 and became enforceable by the California Attorney General on July 1, 2020. The CCPA creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of sale of their personal information, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with data breach litigation. In addition to increasing our compliance costs and potential liability, the CCPA created restrictions on “sales” of personal information that may restrict the disclosure of personal information for advertising purposes. Our advertising business relies, in part, on such disclosure and could be materially and adversely affected by the CCPA’s restrictions.

We will also be subject to the forthcoming CPRA, which was passed into law on November 3, 2020 but will not take substantial effect until January 1, 2023. The CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information, such as increasing regulation on online advertising and particularly cross-context behavioral advertising. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The CPRA potentially results in further uncertainty and requires us to incur additional costs and expenses in an effort to comply.

Certain other state laws impose similar privacy obligations. We also expect that more states may enact legislation similar to the CCPA, which provides consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers. The CCPA has prompted a number of proposals for a new federal and state-level privacy legislation. Such proposed legislation, if enacted, may add additional complexity, variation in

 

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requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.

Data privacy legislation restricts the cross-border transfer of personal data and some countries introduced data localization into their laws. Specifically, the GDPR, the UK GDPR and other European and UK data protection laws generally prohibit the transfer of personal data from the EEA, the UK and Switzerland, to the United States and most other countries unless the transfer is to an entity established in a country deemed to be provide adequate protection (such as Israel) or the parties to the transfer have implemented specific safeguards to protect the transferred personal data. Where we transfer personal data outside the EEA or the UK to a country that is not deemed to be “adequate,” we ensure we comply with applicable laws including where we can rely on derogations (e.g. where the transfer is necessary for the performance of a contract) or we may put in place standard contractual clauses. We have previously also relied on relevant third parties’ Privacy Shield certifications.

Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. Most recently, on July 16, 2020, in a case known as Schrems II, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. Use of the standard contractual clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain. The CJEU went on to state that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer.

In response to this decision, the data protection authority in Berlin, Germany has encouraged companies under its supervision to stop transfers of personal data to the United States and switch to service providers based in the European Union or other countries providing adequate data protection. Authorities in the United Kingdom and Switzerland may similarly issue guidance that precludes or complicates our lawful use of the Standard Contractual Clauses. There are few viable alternatives to the Standard Contractual Clauses, and the law in this area remains dynamic. These recent developments will require us to review and may require us to amend the legal mechanisms by which we make and/or receive personal data transfers to/in the United States. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our solutions, the geographical location or segregation of our relevant systems and operations, may reduce demand for our solutions from companies subject to EU data protection laws and could materially and adversely affect our financial results.

Additionally, other countries outside of the EU have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our solutions and operating our business.

 

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In addition, we are also subject to the Israeli Privacy Protection Law 5741-1981 (the “PPL”), and its regulations, including the Israeli Privacy Protection Regulations (Data Security) 2017 (the “Data Security Regulations”), which came into effect in Israel in May 2018 and impose obligations with respect to the manner personal data is processed, maintained, transferred, disclosed, accessed and secured, as well as the guidelines of the Israeli Privacy Protection Authority. In this respect, the Data Security Regulations may require us to adjust our data protection and data security practices, information security measures, certain organizational procedures, applicable positions (such as an information security manager) and other technical and organizational security measures. Failure to comply with the PPL, its regulations and guidelines issued by the Israeli Privacy Protection Authority, may expose us to administrative fines, civil claims (including class actions) and in certain cases criminal liability. Current pending legislation may result in a change of the current enforcement measures and sanctions. The Israeli Privacy Protection Authority may initiate administrative inspection proceedings from time to time without any suspicion of any particular breach of the PPL, as the Israeli Privacy Protection Authority has done in the past with respect to dozens of Israeli companies in various business sectors. In addition, to the extent that any administrative supervision procedure is initiated by the Israeli Privacy Protection Authority that reveals certain irregularities with respect to our compliance with the PPL, we may need to take certain remedial actions to rectify such irregularities, which may increase our costs, but may also be exposed to administrative fines, civil claims (including class actions) and in certain cases, criminal liability.

Children’s privacy has been a focus of recent enforcement activity under longstanding privacy laws as well as privacy and data protection laws enacted in recent years. EU and UK regulators focus, among other things, on the processing of personal data relating to children, with increased enforcement pending as well as additional guidance. The Federal Trade Commission and state attorneys general have, in recent years, increased enforcement of the Children’s Online Privacy Protection Act (“COPPA”), which requires companies to obtain parental consent before collecting personal information from children under the age of 13 for purposes not permitted by COPPA. COPPA also sets forth, among other things, a number of restrictions related to what information may be collected with respect to children under the age of 13. In addition, the GDPR and UK GDPR address the processing of children’s personal data, and specifically require that if processing of personal data of individuals is based on such individuals’ consent, and such individuals are children under the age of 13 to 16 (depending on the specific legislation of the UK or each EU member state), parental consent must be obtained. In addition, the CCPA requires companies to obtain the consent of children in California under 16 (or parental consent for children under 13) before selling their personal information. We have been subject to claims related to the privacy of minors predicated on COPPA and other privacy laws, and we may in the future face claims under COPPA, the GDPR, the UK GDPR, the CCPA or other laws relating to children’s privacy.

Apart from the requirements of privacy, data protection and data security laws, we have obligations relating to privacy, data protection and data security under our published policies and documentation, contracts and applicable industry standards. Although we endeavor to comply with these obligations, we may have failed to do so in the past and may be subject to allegations that we have failed to do so or have otherwise processed data improperly. We could be subject to enforcement action or litigation alleging that our methods of data collection or our other data processing practices violate our published policies, federal or state laws prohibiting unfair or deceptive business practices or other privacy laws.

In response to the increasing restrictions of global privacy and data security laws, our customers have sought and may continue to seek increasingly stringent contractual assurances regarding our handling of personal information, and may adopt internal policies that limit their use of our platform. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards upon which we may be legally or contractually bound. If we fail to

 

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comply with these contractual obligations or standards, we may face substantial contractual liability or fines.

Various jurisdictions around the world continue to propose new laws that regulate the privacy and/or security of certain types of personal data. Complying with these laws, if enacted, would require significant resources and leave us vulnerable to possible fines and penalties if we are unable to comply. Our obligations under privacy and data security laws, our contracts and applicable industry standards (including requirements by operating system platforms or app stores) are increasing, becoming more complex and changing rapidly, which has increased and may continue to increase the cost and effort required to comply with them. The privacy and data security compliance challenges we and our customers face in the EU, the UK, the United States and other jurisdictions may also limit our ability to operate, or offer certain product features, in those jurisdictions, which could reduce demand for our solutions from customers subject to their laws. We may also be required to adapt our solutions in order to comply with changing regulations. Despite our efforts, we may not be successful in achieving compliance with these rapidly evolving requirements. We could be perceived to be in non-compliance with applicable privacy laws, especially when acquiring new companies and before we have completed our gap analysis and remediation. Any actual or perceived non-compliance could result in litigation and proceedings against us by governmental entities, customers, individuals or others; fines and civil, criminal or administrative penalties for us or company officials; obligations to cease offering or to substantially modify our solutions in ways that make them less effective in certain jurisdictions; negative publicity; harm to our brand and reputation and reduced overall demand for our solutions or reduced revenue. Such occurrences could materially and adversely affect our business, financial condition and results of operations.

We are subject to laws and regulations worldwide, many of which are unsettled and still developing and which could increase our costs or materially and adversely affect our business.

We are subject to a variety of laws internationally that affect our business, including laws regarding consumer protection, advertising, electronic marketing, protection of minors, data protection and privacy, data localization requirements, online services, anti-competition, labor, real estate, taxation, intellectual property ownership and infringement, tax, export and national security, tariffs, anti- corruption and telecommunications, all of which are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting and compliance with laws, regulations and similar requirements may be burdensome and expensive. Laws and regulations may be inconsistent from jurisdiction to jurisdiction, which may increase the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could make any of our solutions less attractive to our customers or cause us to change or limit our ability to sell our solutions. We have policies and procedures designed to ensure compliance with applicable laws and regulations, but we cannot assure you that our employees, contractors or agents will not violate such laws and regulations or our policies and procedures.

In particular, as a result of the global and advertising technology focused nature of our business, we are potentially subject to a number of laws and regulations that affect the offering of certain types of content, such as that which depicts violence, many of which are ambiguous, still evolving and could be interpreted in ways that could harm our business or expose us to liability. In addition, there are ongoing academic, political and regulatory discussions in the United States, the EU, the UK, Australia and other jurisdictions regarding whether certain game mechanisms, such as “loot boxes,” and game genres should be subject to a higher level or different type of regulation than other game genres or mechanics to protect consumers, in particular minors and persons susceptible to addiction, and, if so, what such regulation should include. For example, in December 2017, Apple updated its terms of service to require publishers of applications that include loot boxes to disclose the odds of receiving each type of

 

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item within each loot box to customers prior to purchase. Google similarly updated its terms of service in May 2019. In the event that Apple, Google, or any other Provider changes its developer terms of service to include more onerous requirements or if any Provider were to prohibit the use of loot boxes, or similar monetization products, in games distributed in apps, our customers would be required to redesign the economies of their affected games, which would harm our customers and could negatively impact our revenue.

Further, new regulation by the U.S. federal government and its agencies, such as the Federal Trade Commission, U.S. states and state agencies or foreign jurisdictions, interpretations of such regulations and enforcement actions by federal and state agencies which may vary significantly across jurisdictions, could require that certain game content, including advertising, be modified or removed from games, increase the costs of operating our solutions or our customer’s games and apps, impact user engagement and thus the functionality and effectiveness of our solutions or otherwise harm our business performance.

It is difficult to predict how existing or new laws may be applied. If we become liable, directly or indirectly, under these laws or regulations, we could be harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to modify our solutions, which would harm our business, financial condition and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business, financial condition or results of operations.

In addition, in the EU, Directive 2002/58/EC (as amended by Directive 2009/136/EC), commonly referred to as the ePrivacy Directive, directs EU member states to ensure that accessing information stored on an Internet user’s computer or device, such as device identifiers and other similar technologies, is allowed only if the user has been informed about such access and, depending on the nature of the technology, given his or her consent. The ePrivacy Directive has generally been given effect to by national laws in the EU (“EU ePrivacy Laws”). A recent ruling by the CJEU clarified that such consent must be reflected by an affirmative act of the user, and EU and UK regulators are increasingly focusing on compliance with requirements in the online digital advertising ecosystem, as evidenced by recent announcements of significant fines relating to the use of cookies. The GDPR also imposes further conditions on obtaining valid consent, which applies to the processing of personal data. A replacement for the ePrivacy Directive is currently under discussion by EU member states to complement and bring electronic communication services in line with the GDPR and force a harmonized approach across EU member states. Like the GDPR, the proposed ePrivacy Regulation has extra-territorial application as it applies to businesses established outside the EU who provide publicly available electronic communications services to, or gather data from the devices of, users in the EU. Though still subject to debate, the proposed ePrivacy Regulation may further raise the bar for the collection of device identifiers, and the fines and penalties for breach may be significant. We may be required to, or otherwise may determine that it is advisable to, make significant changes in our business operations and platform to obtain user opt-in for the collection of device identifiers or develop or obtain additional tools and technologies to compensate for a lack of device identifiers, in compliance with the ePrivacy Directive. In addition, further to the UK’s exit from the EU on December 31, 2021, access to a user’s technical information (as described above in this paragraph) will be subject to local UK laws (i.e. The Privacy and Electronic Communications Regulations 2003 (“PECR”)). Also, the UK has implemented laws around the collection of user technical information under the UK GDPR which are closely aligned with EU privacy laws.

As the collection and use of data for digital advertising has received media attention over the past several years, some government regulators, such as the U.S. Federal Trade Commission, and privacy

 

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advocates have suggested creating a “Do Not Track” standard that would allow Internet users to express a preference, independent of cookie settings in their browser, not to have their online browsing activities tracked. “Do Not Track” has seen renewed emphasis since passage of the CCPA as its regulations contemplate browser-based or similar “Do Not Sell” signals. If a “Do Not Track,” “Do Not Sell” or similar control is adopted by many Internet users or if a “Do Not Track” standard is imposed by state, federal or foreign legislation, or is agreed upon by standard setting groups, we may have to change our business practices, our clients may reduce their use of our platform, and our business, financial condition and results of operations could be materially and adversely affected. Additionally, once the CPRA is in effect, if consumers increase their usage of “Do Not Sell” signals, this would reduce our ability to use their data for certain advertising purposes, and as a result our clients may reduce their use of our platform, and our business, financial condition and results of operations could be materially and adversely affected.

Increased transparency into the collection and use of data for digital advertising introduced both through features in devices and regulatory requirements, such as the GDPR, UK GDPR, the CCPA and EU ePrivacy laws and the UK’s PECR, as well as compliance with such requirements, may create operational burdens to implement and may lead more users to block the collection and use of data about them.

It is also possible that a number of laws and regulations may be adopted or construed to apply to us or our customers in the United States and elsewhere that could restrict the online and mobile industries, including user privacy, advertising, taxation, content suitability, copyright, distribution and antitrust, and our solutions or components thereof may be deemed or perceived illegal or unfair practices. Furthermore, the growth and development of in-app advertisement and mobile monetization strategies may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as us and our customers conducting business through the Internet and mobile devices. We anticipate that scrutiny and regulation of our industry will increase and we will be required to devote legal and other resources to addressing such regulation. For example, existing laws or new laws regarding the marketing of in-app purchases, labeling of free-to-play games or regulation of currency, banking institutions, unclaimed property or money transmission may be interpreted to cover games made with, or utilizing, our solutions and the revenue that we receive from our solutions. If that were to occur, we may be required to seek licenses, authorizations or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements, and we may be subject to additional regulation and oversight, all of which could significantly increase our operating costs.

In addition, any failure or perceived failure by us to comply with any laws, regulatory requirements, legal obligations, or policies relating to privacy, data protection, data security, or consumer protection may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups, or others, and could result in significant liability and otherwise materially and adversely affect our reputation and business. The cost of compliance with, and other burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our users may limit the adoption and use of, and reduce the demand for, our solutions. Additionally, if third parties we work with violate applicable laws, regulations or contractual obligations, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others, and could result in significant liability and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs

 

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and risks. Any of the foregoing could materially and adversely affect our business, financial condition and results of operations.

Further, governmental agencies in any of the countries in which we, our customers or users are located, such as China, could choose to block access to or require a license for our platform, any of our solutions, our website, our customers’ mobile applications, third-party operating system platforms and app stores that we depend upon to operate our solutions or the Internet generally for a number of reasons, including security, confidentiality or regulatory concerns. Users generally need to access the Internet and also platforms, such as the Apple App Store and the Google Play Store, to play games published or operated using our solutions. In addition, companies may adopt policies that prohibit their employees from accessing our solutions that users need in order to play games created or operated using our platform. If companies or governmental entities block, limit or otherwise restrict customers from accessing our solutions or users from playing games published or advertised on our platform, our business could be negatively impacted, our customers’ users could decline or grow more slowly, and our financial condition and results of operations could be materially and adversely affected.

Adapting to these and similar changes has in the past and may in the future require significant time, resources and expense, which may lessen the growth of mobile apps and gaming, as well as increase our costs of operation or limit our ability to operate or expand our business. Failure to comply with the applicable regulatory requirements could also result in regulatory investigations, reputational damage, orders to cease or change our processing of data, enforcement notices or assessment notices for a compulsory audit. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources and reputational harm, any of which could materially and adversely affect our business, financial condition and results of operations.

We are subject to anti-corruption, anti-bribery, anti-money laundering, economic and trade sanctions and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.

We may be subject to certain economic and trade sanctions laws and regulations, export control and import laws and regulations, including those that are administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant governmental authorities.

We are also subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the United Kingdom Bribery Act 2010, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 57373-1977, the Israeli Prohibition on Money Laundering Law, 5760-2000 and other anti-bribery laws in countries in which we conduct our activities. These laws generally prohibit companies, their employees and third- party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. In addition, the FCPA’s accounting provisions require us to maintain accurate books and records and a system of internal accounting controls. We have policies, procedures, systems, and controls designed to promote compliance with applicable anti-corruption laws.

As we increase our global sales and business, we may engage with business partners and third- party intermediaries to market our solutions and obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our

 

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employees, representatives, contractors, partners and agents, even if we do not authorize such activities.

Our customers may have users in countries that are subject to U.S. economic sanctions laws and regulations administered by OFAC, the Israeli Trade with the Enemy Ordinance, 1939 and sanction laws of the EU and other applicable jurisdictions, which may prohibit the sale of products or provision of services to embargoed jurisdictions (“Sanctioned Countries”) or sanctioned parties. We have taken steps to avoid having customers in Sanctioned Countries and have implemented various control mechanisms designed to prevent unauthorized dealings with Sanctioned Countries or sanctioned parties going forward. Although we have taken precautions to prevent our solutions from being provided, deployed or used in violation of sanctions laws, due to the remote nature of our solutions and the potential for manipulation using VPNs, we cannot assure you that our policies and procedures relating to sanctions compliance will prevent any violations in the future. If we are found to be in violation of any applicable sanctions regulations, it can result in significant fines or penalties and possible incarceration for responsible employees and managers, as well as reputational harm and loss of business.

Despite our compliance efforts and activities, there can be no assurance that our employees or representatives will comply with the relevant laws and we may be held responsible. Non-compliance with anti-corruption, anti-money laundering, export control, economic and trade sanctions and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are initiated, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition and results of operations could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. In addition, regulatory authorities may seek to hold us liable for successor liability for violations committed by companies in which we invest or that we acquire. As a general matter, enforcement actions and sanctions could harm our business, financial condition and results of operations.

Our amended and restated articles of association to be effective upon the closing of the Business Combination provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act, which may limit the ability of our shareholders to initiate litigation against us or increase the cost thereof.

Our amended and restated articles of association to be effective upon the closing of the Business Combination provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions, and accordingly, both state and federal courts have jurisdiction to entertain such claims. While the federal forum provision in our amended and restated articles does not restrict the ability of our shareholders to bring claims under the Securities Act, we recognize that it may limit shareholders’ ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs, which may discourage the filing of claims under the Securities Act against the Company, its directors and officers. However, the enforceability of similar forum provisions (including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts

 

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would enforce the exclusive forum provisions in our amended and restated articles of association. If a court were to find the choice of forum provision contained in our amended and restated articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations.

Risks Related to ironSource’s Intellectual Property

In this section “we,” “us” and “our” refer to ironSource.

If we fail to adequately maintain, protect or enforce our intellectual property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our intellectual property rights, including those in our proprietary know-how and technology. We rely on a combination of copyrights, trade secret and other intellectual property laws as well as contractual restrictions to establish and protect our intellectual property rights. While it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us will be adequate to prevent infringement, misappropriation or other violation of our intellectual property rights.

While software and other of our proprietary works may be protected under copyright law, we have not registered any copyrights in these works, and instead, primarily rely on protecting our software as a trade secret. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited.

Policing unauthorized use of our know-how, technology and intellectual property is difficult, costly, time-consuming and may not be effective. Third parties may knowingly or unknowingly infringe our proprietary rights. In addition, third parties may challenge proprietary rights held by us, and our pending and future trademark and patent applications may not be approved. These claims may result in restrictions on our use of our intellectual property or the conduct of our business. In any of these cases, we may be required to expend significant time and expense to prevent infringement or to enforce our rights.

Although we attempt to protect our intellectual property, technology and confidential information by entering into confidentiality and invention assignment agreements with our employees and consultants and entering into confidentiality agreements with the parties with whom we share our confidential information, these agreements may not effectively grant all necessary rights to any inventions that may have been developed by the employees or consultants party thereto, and may not be effective in controlling access to and distribution of our solutions or technology, and our confidential information or provide an adequate remedy in the event of unauthorized use of our solutions or technology or unauthorized access, use or disclosure of our confidential information. Some of the provisions of our agreements that protect us against unauthorized use, copying, transfer, and disclosure of our solutions, may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to ours. We cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Unauthorized parties may also attempt to copy or obtain and use our technology to develop applications with the same functionality as our solutions. Any unauthorized disclosure or use of our trade secrets or other confidential proprietary information could make it more expensive to do business, thereby harming our operating results.

 

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Circumstances outside our control could also pose a threat to our intellectual property rights. For example, effective intellectual property protection may not be available in the United States or other countries from which our product offerings or platforms are accessible. Changes in the law or adverse court rulings may also negatively affect our ability to prevent others from using our technology. In addition, changes in the law or adverse court rulings in countries where we have outsourced research and development centers may affect our intellectual property rights, including with respect to ownership, distribution and use of such intellectual property.

Any significant impairment of our intellectual property rights could harm our business or our ability to compete. Furthermore, if we are unable to protect our proprietary rights or prevent unauthorized use, infringement or misappropriation by third parties, the value of our brand and other intangible assets may be diminished, and competitors may be able to more effectively mimic our offerings and service. We may be required to incur significant expenses in registering, monitoring and protecting our intellectual property rights. Any litigation could result in significant expense to us, including the diversion of management’s time, and may not ultimately be resolved in our favor. Any of these events could seriously harm our business.

We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

There is considerable intellectual property development and enforcement activity in our industry. We expect that app developers in our industry will increasingly be subject to infringement claims as the number of competitors grows and the functionality of platforms, products and services in different industries overlap. Our future success depends in part on not infringing upon or misappropriating the intellectual property rights of others. There is a risk that our operations, platform or individual solutions, whether created in-house or purchased from time to time through mergers or acquisitions, may infringe or otherwise violate, or be alleged to infringe or otherwise violate, the intellectual property rights of third parties. If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

 

   

require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages;

 

   

require and divert significant management time;

 

   

cause us to enter into unfavorable royalty or license agreements;

 

   

require us to discontinue some or all of the features, integrations, capabilities or games available on our platform;

 

   

require us to indemnify our merchants or third-party service providers; and/or

 

   

require us to expend additional development resources to redesign our platform or individual solutions.

Any of the foregoing could materially and adversely affect our business, prospects, financial condition and results of operations.

Our platform contains third-party open source software components, which may pose particular risks to our proprietary software, technologies and solutions in a manner that could negatively affect our business.

Our platform contains software modules by third-party authors that are publicly available under “open source” licenses, and we expect to use open source software in the future. We have engaged a third-party software solution to assist with managing our use of open source software, including

 

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tracking the use of open source in our platform, monitoring license compliance and compliance with our open source policy. However, we could still be subjected to claims of infringement and other possible action. Use and distribution of open source software may entail greater risks than use of third- party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. To the extent that our platform depends upon the successful operation of open source software, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay introductions of new solutions, result in a failure of any of our solutions and injure our reputation. For example, undetected errors or defects in open source software could render it vulnerable to breaches or security attacks, and, in conjunction, make our systems more vulnerable to data breaches. In addition, the public availability of such software may make it easier for others to compromise our platform.

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use, or grant other licenses to our intellectual property. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. While our open source policy and third-party software solution are meant to prevent such misuse, there can be no assurance that such incidents would not occur. This would allow our competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of our competitive advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software.

Although we monitor our use of open source software to avoid subjecting our platform to conditions we do not intend, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our solutions. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products or platforms. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our platform will be effective. If we are held to have breached or failed to fully comply with all the terms and conditions of an open source software license, we could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing our solutions on terms that are not economically feasible, to re-engineer our solutions, to discontinue or delay the provision of our solutions if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could materially and adversely affect our business, financial condition and results of operations.

Risks Related to ironSource’s Class A Ordinary Shares

In this section “we,” “us” and “our” refer to ironSource.

The price of our Class A ordinary shares may be volatile, and the value of our Class A ordinary shares may decline.

We cannot predict the prices at which our Class A ordinary shares will trade. The price of our Class A ordinary shares may not bear any relationship to the market price at which our Class A ordinary shares will trade after the Transactions or to any other established criteria of the value of our business and prospects, and the market price of our Class A ordinary shares following the Transactions may fluctuate substantially and may be lower than the price agreed by TBA with ironSource in connection with the Transactions. In addition, the trading price of our Class A ordinary

 

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shares following the Transactions is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our Class A ordinary shares as you might be unable to sell your shares at or above the price you paid in the Transactions. Factors that could cause fluctuations in the trading price of our Class A ordinary shares include the following:

 

   

actual or anticipated fluctuations in our financial condition or results of operations;

 

   

variance in our financial performance from expectations of securities analysts;

 

   

changes in the pricing of our solutions;

 

   

changes in our projected operating and financial results;

 

   

changes in laws or regulations applicable to our platform;

 

   

announcements by us or our competitors of significant business developments, acquisitions or new offerings;

 

   

sales of our Class A ordinary shares by us or our shareholders, including any sales of Class B ordinary shares, which will automatically convert into Class A ordinary shares upon transfer;

 

   

significant data breaches, disruptions to or other incidents involving our platform;

 

   

our involvement in litigation;

 

   

conditions or developments affecting the gaming industry;

 

   

future sales of our Class A ordinary shares by us or our shareholders, as well as the anticipation of lock-up releases;

 

   

changes in senior management or key personnel;

 

   

the trading volume of Class A our ordinary shares;

 

   

changes in the anticipated future size and growth rate of our markets;

 

   

publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

 

   

general economic and market conditions; and

 

   

other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.

Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our Class A ordinary shares. In addition, technology stocks have historically experienced high levels of volatility. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

A market for our securities may not develop or be sustained, which would adversely affect the liquidity and price of TBA’s securities.

Following the Business Combination, the price of our securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for our securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of our securities after the Business

 

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Combination can vary due to general economic conditions and forecasts, TBA’s general business condition and the release of TBA’s financial reports. Additionally, if our securities become delisted from NYSE and are quoted on the OTC Bulletin Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange) or the combined company’s securities are not listed on NYSE and are quoted on the OTC Bulletin Board, the liquidity and price of our securities may be more limited than if we were quoted or listed on the NYSE, Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

The dual class structure of our ordinary shares may adversely affect the trading market for our Class A ordinary shares.

We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A ordinary shares or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with dual class or multi-class share structures in certain of their indexes. In July 2017, S&P Dow Jones and FTSE Russell announced changes to their eligibility criteria for the inclusion of shares of public companies on certain indices, including the Russell 2000, the S&P 500, the S&P MidCap 400 and the S&P SmallCap 600, to exclude companies with multiple classes of shares from being added to these indices. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. As a result, our dual class capital structure would make us ineligible for inclusion in any of these indices, and mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in our Class A ordinary shares. These policies are still fairly new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included. Furthermore, we cannot assure you that other stock indices will not take a similar approach to S&P Dow Jones or FTSE Russell in the future. Exclusion from indices could make our Class A ordinary shares less attractive to investors and, as a result, the market price of our Class A ordinary shares could be adversely affected.

The dual class structure of our ordinary shares has the effect of concentrating voting power with our management and other existing shareholders, which will limit your ability to influence the outcome of important transactions, including a change in control.

Our Class B ordinary shares have five votes per share, and our Class A ordinary shares have one vote per share. Upon the closing of the Transactions, and assuming no redemption of TBA ordinary shares, members of our management will collectively hold approximately 33.12% of the voting power of our outstanding ordinary shares, and our other existing shareholders will collectively hold approximately 56.74% of the voting power of our outstanding ordinary shares. Accordingly, although there are no voting agreements among members of our management or between them and other shareholders, upon the closing of the Transactions, our management and other existing shareholders will together hold all of our issued and outstanding Class B ordinary shares and therefore, individually or together, will be able to significantly influence matters submitted to our shareholders for approval, including the election of directors, amendments of our organizational documents and any merger or other major corporate transactions that require shareholder approval. Our management and other existing shareholders, individually or together, may vote in a way with which you disagree and which may be adverse to your interests. This concentrated voting power may have the effect of delaying, preventing or deterring a change in control of our Company, could deprive our shareholders of an

 

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opportunity to receive a premium for their shares as part of a sale of our company and might ultimately materially and adversely affect the market price of our Class A ordinary shares. Future transfers by the holders of Class B ordinary shares will result in those shares converting into Class A ordinary shares, subject to limited exceptions. For information about our dual class structure, see “Description of ironSource’s Share Capital and Articles of Association.”

If we do not meet the expectations of equity research analysts, if they do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our Class A ordinary shares, the price of our Class A ordinary shares could decline.

The trading market for our Class A ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our business. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market analysts and investors, the price of our Class A ordinary shares could decline. Moreover, the price of our Class A ordinary shares could decline if one or more securities analysts downgrade our Class A ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Our issuance of additional share capital in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.

We expect to issue additional share capital in the future that will result in dilution to all other shareholders. We expect to grant equity awards to employees and directors under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the per share value of our Class A ordinary shares to decline.

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A ordinary shares.

We do not intend to pay any cash dividends in the foreseeable future, and any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, you may need to rely on sales of our Class A ordinary shares after price appreciation, which may never occur, as the only way to realize any future gains on your investment.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our Class A ordinary shares less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act (“Section 404”), reduced disclosure obligations regarding executive compensation in our 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. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period to enable us to comply with certain new or revised accounting standards.

 

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We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of the Transactions; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three- year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates.

We cannot predict if investors will find our Class A ordinary shares less attractive if we choose to rely on these exemptions. If some investors find our Class A ordinary shares less attractive as a result, there may be a less active trading market for our Class A ordinary shares, and our share price may be more volatile.

We will be a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the closing of the Transactions, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although we intend to furnish proxy statements and quarterly financial information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of the NYSE. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.

 

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As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of NYSE, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to NYSE rules for shareholder meeting quorums and shareholder approval requirements. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel are not experienced in managing a public company and will be required to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our Class A ordinary shares.

We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of the fiscal year that coincides with the filing of our second annual report on Form 20-F. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company.”

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems and controls to accommodate such changes. Additionally, if these new systems, controls or standards and the associated process changes do not give rise to the benefits that we expect or do not operate as intended, it could materially and adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial reports or the effectiveness of internal control over financial reporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post- implementation issues that may arise.

 

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During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our Class A ordinary shares could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

The growth and expansion of our business places a continuous, significant strain on our operational and financial resources. Further growth of our operations to support our customer base, our platform, solutions and our internal controls and procedures may not be adequate to support our operations. As we continue to grow, we may not be able to successfully implement requisite improvements to these systems, controls and processes, such as system access and change. The growth and expansion of our business places a continuous, significant strain on our operational and financial resources. Further growth of our operations to support our customer base, our information technology systems and our internal controls and procedures may not be adequate to support our operations. As we continue to grow, we may not be able to successfully implement requisite improvements to these systems, controls and processes, such as system access and change management controls, in a timely or efficient manner. Our failure to improve our systems and processes, or their failure to operate in the intended manner, whether as a result of the growth of our business or otherwise, may result in our inability to accurately forecast our revenue and expenses, or to prevent certain losses. Moreover, the failure of our systems and processes could undermine our ability to provide accurate, timely and reliable reports on our financial and operating results and could impact the effectiveness of our internal control over financial reporting. In addition, our systems and processes may not prevent or detect all errors, omissions or fraud.

If a United States person is treated as owning at least 10% by vote or value of our shares, such holder may be subject to adverse U.S. federal income tax consequences.

Because our group consists of one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries will be treated as “controlled foreign corporations,” (“CFCs”) as such term is defined in Section 957 of the Code, regardless of whether or not we are treated as a CFC. If a United States person (as defined in Section 7701(a)(30) of the Code) is treated as owning (directly, indirectly, or constructively) at least 10% of the total combined voting power of all classes of our shares entitled to vote or at least 10% of the total value of shares of all classes of our shares, such person may be treated as a “United States shareholder” with respect to each CFC in our group (if any), which may subject such person to adverse U.S. federal income tax consequences. Specifically, a United States shareholder of a CFC may be required to annually report and include in its U.S. taxable income its pro rata share of such CFC’s “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property, whether or not we make any distributions of profits or income of such CFC to such United States shareholder. If you are treated as a United States shareholder of a CFC, failure to comply with applicable reporting obligations may subject you to significant monetary penalties and may extend the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. Additionally a United States shareholder of a CFC that is an individual would generally be denied certain tax deductions or foreign tax credits in respect of its income that may otherwise be allowable to a United States shareholder that is a U.S. corporation. We cannot provide any assurances that we will

 

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assist holders of our shares in determining whether we or any of our non-U.S. subsidiaries are treated as CFCs or whether any holder of the Class A ordinary shares is treated as a United States shareholder with respect to any such CFC, nor do we expect to furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. The U.S. Internal Revenue Service has provided limited guidance regarding the circumstances in which investors may rely on publicly available information to comply with their reporting and taxpaying obligations with respect to CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our Class A ordinary shares.

If we or any of our subsidiaries are characterized as a PFIC for U.S. federal income tax purposes, U.S. Holders may suffer adverse U.S. federal income tax consequences.

A non-U.S. corporation generally will be treated as a PFIC for U.S. federal income tax purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the 2020 composition of the income, assets and operations of us and our subsidiaries, we do not believe we will be treated as a PFIC for the taxable year that includes the Business Combination, however there can be no assurances in this regard or any assurances that we will not be treated as a PFIC in any future taxable year. Moreover, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that the IRS will not take a contrary position or that a court will not sustain such a challenge by the IRS.

Whether we or any of our subsidiaries are a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of our income and assets, our market value and the market value of our subsidiaries’ shares and assets. Changes in our composition, the composition of our income or the composition of any of our subsidiaries assets may cause us to be or become a PFIC for the current or subsequent taxable years. Whether we are treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to significant uncertainty.

If we are a PFIC for any taxable year, a U.S. Holder of our ordinary shares may be subject to adverse tax consequences and may incur certain information reporting obligations. For a further discussion, see “Certain Material U.S. Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules.” U.S. Holders of our ordinary shares are strongly encouraged to consult their own advisors regarding the potential application of these rules to us and the ownership of our ordinary shares.

Risks Related to ironSource’s Incorporation and Location in Israel

In this section “we,” “us” and “our” refer to ironSource.

Conditions in Israel could materially and adversely affect our business.

Many of our employees, including our founders and certain members of our management team, operate from our headquarters that is located in Tel Aviv, Israel. In addition, a number of our officers and directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business and operations. In recent years, Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran has threatened to attack Israel and

 

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may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being fired from the Gaza Strip, Lebanon and Syria against civilian targets in various parts of Israel, including areas in which our employees are located, which negatively affected business conditions in Israel. Any hostilities involving Israel, regional political instability or the interruption or curtailment of trade between Israel and its trading partners could materially and adversely affect our operations and results of operations.

Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of property damage and certain direct and indirect damages that are caused by terrorist attacks or acts of war, such coverage would likely be limited, may not be applicable to our business (either due to the geographic location of our offices or the type of business that we operate) and may not reinstate our loss of revenue or economic losses more generally. Furthermore, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on the expansion of our business, financial condition and/or our results of operations. In addition, a campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also materially and adversely impact our business.

In addition, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Our operations could be disrupted by such call-ups, particularly if such call-ups include the call-up of members of our management. Such disruption could materially and adversely affect our business, financial condition and results of operations.

The tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced in the future, which could increase our costs and taxes.

We believe that we are eligible for certain tax benefits provided to a “Preferred Technological Enterprise” under the Israeli Law for the Encouragement of Capital Investments, 5719-1959 (the “Investment Law”). In order to remain eligible for the tax benefits provided to a “Preferred Technological Enterprise” we must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these tax benefits are reduced, cancelled or discontinued, our Israeli taxable income from the Preferred Technological Enterprise would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies has been 23% since 2018. Additionally, if we increase our activities outside of Israel through acquisitions, for example, our expanded activities might not be eligible for inclusion in future Israeli tax benefit programs. See “Certain Material Israeli Tax Considerations—Israeli Tax Considerations.”

Our amended and restated articles of association contain a forum selection clause for substantially all disputes between us and our shareholders under the Companies Law and the Israeli Securities Law, which could limit our shareholders’ ability to bring claims and proceedings against us, our directors, officers and other employees. Enforcement of a U.S. judgment against us or our officers and directors in Israel or the United States, or assertion of a

 

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U.S. securities laws claim in Israel or serving process on our officers and directors, may also be difficult.

Under our amended and restated articles of association, to be effective upon the closing of the Transactions, the competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Israeli Companies Law, 5759-1999 (the “Companies Law”), or the Israeli Securities Law, 1968 (the “Israeli Securities Law”). This exclusive forum provision is intended to apply to claims arising under Israeli law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in our amended and restated articles of association will not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us, our directors, officers and employees.

Another obstacle towards assertion of claims against us or our directors or officers is the fact that most of them are not residents of the United States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may therefore be difficult to effect within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing these matters.

Additionally, Israeli courts might not enforce judgments obtained in the United States against us or our non-U.S. directors and executive officers, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors. An Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought. For more information, see “Enforceability of Civil Liability.”

Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

We are incorporated under Israeli law. The rights and responsibilities of holders of our Class A and Class B ordinary shares are governed by our amended and restated articles of association to be effective upon the closing of the Transactions and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical

 

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U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising his, her or its rights and fulfilling his, her or its obligations toward the Company and other shareholders and to refrain from abusing his, her or its power in the Company, including, among other things, in voting at the general meeting of shareholders on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and certain transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the Company or has other powers toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

Provisions of Israeli law and our amended and restated articles of association to be effective upon the closing of the Transactions may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.

Provisions of Israeli law and our amended and restated articles of association to be effective upon the closing of the Transactions could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our Class A ordinary shares. Among other things:

 

   

the Companies Law regulates the methods and processes by which mergers and acquisitions may be consummated and requires tender offers for acquisitions of shares (or separate classes of shares) or voting rights above a specified threshold percentage of shares in a company (subject to certain conditions);

 

   

the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;

 

   

the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

 

   

our amended and restated articles of association to be effective upon the closing of the Transactions divide our directors into three classes, each of which is elected once every three years;

 

   

our amended and restated articles of association to be effective upon the closing of the Transactions generally require a vote of the holders of a majority of our outstanding ordinary shares entitled

 

   

to vote present and voting on the subject matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision dividing our directors into three classes, requires a vote of the holders of at least 65% of the total voting power of our shareholders;

 

   

our dual class ordinary share structure, which provides our management and our existing shareholders, individually or together, with the ability to significantly influence the outcome of matters requiring shareholder approval, even if they own significantly less than a majority of our outstanding Class A ordinary shares and Class B ordinary shares;

 

   

our amended and restated articles of association to be effective upon the closing of the Transactions do not permit a director to be removed except by a vote of the holders of at least

 

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65% of the total voting power of our shareholders and any amendment to such provision shall require the approval of at least 65% of the total voting power of our shareholders; and

 

   

our amended and restated articles of association to be effective upon the closing of the Transactions provide that director vacancies may be filled by our board of directors.

Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a restrictive period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if the shares have not been disposed.

Risks Related to the Business Combination

TBA may not have sufficient funds to consummate the Business Combination.

As of March 22, 2021, TBA had approximately $2.2 million available to it outside the Trust Account to fund its working capital requirements. If TBA is required to seek additional capital, it would need to borrow funds from the Sponsor, its management team or other third parties to operate or it may be forced to liquidate. None of such persons is under any obligation to advance funds to TBA in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or from funds released to TBA upon completion of the Business Combination. If TBA is unable to consummate the Business Combination because it does not have sufficient funds available, TBA will be forced to cease operations and liquidate the Trust Account. Consequently, TBA’s public shareholders may receive less than $10 per share.

If the PIPE Investment is not consummated and ironSource does not waive the minimum Aggregate Transaction Proceeds, the Business Combination may be terminated.

As a condition to closing the Business Combination, the Merger Agreement provides that the Aggregate Transaction Proceeds must equal or exceed $1,300,000,000 (the “Minimum Aggregate Transaction Proceeds Condition”). Since the amount in the trust account is less than $1,300,000,000, the funds from the PIPE Investment is required in order to consummate the Business Combination, unless such condition is waived. While the PIPE Investors have entered into the Investment Agreements to purchase an aggregate of up to approximately $1,300,000,000 immediately prior to the Closing, there can be no assurance that such parties to the Investment Agreements will perform their obligations under the Investment Agreements. If the PIPE Investment is not consummated and ironSource does not waive the Minimum Aggregate Transaction Proceeds Condition, the Business Combination may be terminated.

If TBA’s shareholders fail to properly demand redemption rights, they will not be entitled to convert their TBA Ordinary Shares into a pro rata portion of the Trust Account.

TBA shareholders holding public shares may demand that TBA convert their public shares into a pro rata portion of the Trust Account, calculated as of two (2) business days prior to the extraordinary general meeting. To demand redemption rights, TBA shareholders must deliver their share certificates (if any) and other redemption forms (either physically or electronically) to TBA’s transfer agent no later than two (2) business days prior to the extraordinary general meeting. Any shareholder who fails to

 

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properly demand redemption rights by delivering his, her or its shares will not be entitled to convert his, her or its share certificates (if any) and other redemption forms into a pro rata portion of the Trust Account. See the section of this proxy statement/prospectus titled “Extraordinary General Meeting of TBA Shareholders—Redemption Rights” for the procedures to be followed if you wish to convert your shares to cash.

The Business Combination remains subject to conditions that TBA cannot control and if such conditions are not satisfied or waived, the Business Combination may not be consummated.

The Business Combination is subject to a number of conditions, including the condition that TBA have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-5(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Business Combination, that there is no legal prohibition against consummation of the Business Combination, that the ironSource Class A ordinary shares be approved for listing on NYSE subject only to official notice of issuance thereof, receipt of shareholders approvals, continued effectiveness of the registration statement of which this proxy statement/prospectus is a part, the truth and accuracy of TBA’s and ironSource’s representations and warranties made in the Merger Agreement, the non-termination of the Merger Agreement and consummation of certain ancillary agreements. There are no assurances that all conditions to the Business Combination will be satisfied or that the conditions will be satisfied in the time frame expected.

If the conditions to the Business Combination are not met (and are not waived, to the extent waivable), either TBA or ironSource may, subject to the terms and conditions of the Merger Agreement, terminate the Merger Agreement. See the section of this proxy statement/prospectus titled “The Merger Agreement—Termination.”

The exercise of TBA’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in TBA’s shareholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require TBA to agree to amend the Merger Agreement, to consent to certain actions taken by ironSource or to waive rights that TBA is entitled to under the Merger Agreement. Waivers may arise because of changes in the course of ironSource’s business, a request by ironSource to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on ironSource’s business and would entitle TBA to terminate the Merger Agreement in accordance to its terms. In any of such circumstances, it would be at TBA’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors and officers described in the following risk factors may result in a conflict of interest on the part of one or more of the directors or officers between what he or they may believe is best for TBA and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, TBA does not believe there will be any changes or waivers that TBA’s directors and officers would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, TBA will circulate a new or amended proxy statement/prospectus and resolicit TBA’s shareholders if changes to the terms of the Business Combination that would have a material impact on its shareholders or represent a fundamental change in the proposals being voted upon.

Because TBA is incorporated under the laws of the Cayman Islands and ironSource is incorporated under the laws of the State of Israel, you may face difficulties in protecting your

 

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interests, including in the event the Business Combination is not completed, and your ability to protect your rights through the U.S. federal courts may be limited.

TBA is an exempted company incorporated under the laws of the Cayman Islands and ironSource is a corporation organized under the laws of the State of Israel. As a result, it may be difficult for investors to effect service of process within the United States upon TBA’s and/or ironSource’s directors or officers, or enforce judgments obtained in the United States courts against TBA’s and/or ironSource’s directors or officers.

TBA’s corporate affairs are governed by its amended and restated memorandum and articles of association, the Cayman Companies Law (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. TBA is also subject to the federal securities laws of the United States. The rights of TBA shareholders to take action against TBA’s directors, actions by minority TBA shareholders and the fiduciary responsibilities of TBA’s directors to TBA shareholders under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of TBA shareholders and the fiduciary responsibilities of TBA’s directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.

TBA has been advised by Maples and Calder (Cayman) LLP, TBA’s Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against it judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against it predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

ironSource was incorporated under Israeli law and the rights and responsibilities of our shareholders are governed by ironSource’s amended and restated articles of association (as the same may be supplemented or amended from time to time) and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders of U.S. and other non-Israeli corporations. See “Risk Factors—Risks Relating to ironSource’s Incorporation and Location in Israel—Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.”

 

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It may be difficult to initiate an action with respect to U.S. securities law in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to hear such a claim. See “Risk FactorsRisks Related to ironSource’s Incorporation and Location in Israel—Our amended and restated articles of association contain a forum selection clause” and Enforceability of Civil Liability.” Furthermore, ironSource’s amended and restated articles of association will include an exclusive forum provision that requires that securities claims will be brought solely in U.S. federal courts.

As a result of all of the above, TBA shareholders and shareholders of ironSource may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a corporation incorporated in the United States.

Future resales of the ironSource Class A ordinary shares issued in connection with the Business Combination may cause the market price of the ironSource Class A ordinary shares to drop significantly, even if ironSource’s business is doing well.

Certain shareholders of ironSource, the Sponsor and certain directors of TBA who hold TBA Ordinary Shares have entered into support agreements with ironSource and TBA. Pursuant to such support agreements, such ironSource shareholders and TBA shareholders have agreed that, during the applicable lock-up period, they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any share or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Support Agreement). Additional shareholders of ironSource, including shareholders who are parties to the Shareholders Rights Agreement, are expected to enter into similar arrangements. See the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Business Combination—Support Agreements.”

Further, concurrently with the closing of the Transactions under the Merger Agreement, the Sponsor will enter into a Joinder to Shareholders Rights Agreement, which will provide the Sponsor and the other parties thereto with customary demand registration rights and piggy-back registration rights with respect to registration statements filed by ironSource after the closing. See the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Business Combination—Second Amended and Restated Shareholders Rights Agreement.”

Upon expiration of the applicable lock-up period and upon the effectiveness of any registration statement ironSource files pursuant to the above-referenced Shareholders Rights Agreement, in a registered offering of securities pursuant to the Securities Act or otherwise in accordance with Rule 144 under the Securities Act, the ironSource shareholders may sell large amounts of ironSource Class A ordinary shares in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the trading price of the ironSource Class A ordinary shares or putting significant downward pressure on the price of the ironSource Class A ordinary shares. Further, sales of ironSource Class A ordinary shares upon expiration of the applicable lockup period could encourage short sales by market participants. Generally, short selling means selling a security, contract or commodity not owned by the seller. The seller is committed to eventually purchase the financial instrument previously sold. Short sales are used to capitalize on an expected decline in the security’s price. Short sales of ironSource Class A ordinary shares could have a tendency to depress the price of the ironSource Class A ordinary shares, which could increase the potential for short sales.

 

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Additionally, through the Investment Agreements, ironSource has agreed with the PIPE Investors to register the PIPE Shares on a resale registration statement following the closing of the Transactions. These shares will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of TBA’s “affiliates” as such term is defined in Rule 144 under the Securities Act. This additional liquidity in the market for ironSource Class A ordinary shares may lead to downward pressure on the market price of the ironSource Class A ordinary shares.

We cannot predict the size of future issuances of ironSource Class A ordinary shares or the effect, if any, that future issuances and sales of shares of ironSource Class A ordinary shares will have on the market price of the ironSource Class A ordinary shares. Sales of substantial amounts of ironSource Class A ordinary shares (including those shares issued in connection with the Business Combination), or the perception that such sales could occur, may materially and adversely affect prevailing market prices of ironSource Class A ordinary shares.

TBA’s board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination.

TBA’s board of directors did not obtain a third-party fairness opinion in connection with their determination to approve the Business Combination. In analyzing the Business Combination, TBA’s board of directors and management conducted due diligence on ironSource and researched the industry in which ironSource operates and concluded that the Business Combination was fair to and in the best interest of TBA and its shareholders. Accordingly, investors will be relying solely on the judgment of TBA’s board of directors and management in valuing ironSource’s business, and TBA’s board of directors and management may not have properly valued such business. The lack of a third-party fairness opinion may lead an increased number of shareholders to vote against the proposed Business Combination or demand redemption of their shares for cash, which could potentially impact TBA’s ability to consummate the Business Combination or materially and adversely affect ironSource’s liquidity following the consummation of the Business Combination.

TBA and ironSource will incur significant transaction and transition costs in connection with the Business Combination.

TBA and ironSource have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Transactions and operating as a public company following the consummation of the Transactions. ironSource may also incur additional costs to retain key employees. All expenses incurred in connection with the Business Combination, including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs or paid by ironSource following the Closing.

Subsequent to the completion of the Business Combination, the combined company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and the combined company’s ordinary share price, which could cause you to lose some or all of your investment.

Although TBA has conducted extensive due diligence on ironSource, TBA cannot assure you that this diligence will surface all material issues that may be present in ironSource’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of ironSource’s business and outside of its control will not later arise. As a result of these factors, the combined company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in its reporting losses. Even if TBA’s due diligence successfully identified certain risks, unexpected risks may arise and previously known

 

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risks may materialize in a manner not consistent with TBA’s preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on the combined company’s liquidity, the fact that the combined company reports charges of this nature could contribute to negative market perceptions of the combined company or its securities. In addition, charges of this nature may cause the combined company to violate net worth or other covenants to which the combined company may be subject as a result of assuming pre-existing debt held by ironSource’s business or by virtue of the combined company obtaining post-combination debt financing. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.

The ironSource Class A ordinary shares to be received by TBA’s shareholders as a result of the Business Combination will have different rights from TBA Ordinary Shares.

Following completion of the Business Combination, TBA’s shareholders will no longer be shareholders of TBA but will instead be shareholders of ironSource. There will be important differences between your current rights as a TBA shareholder and your rights as an ironSource shareholder. See “Comparison of Rights of ironSource Shareholders and TBA Shareholders” for a discussion of the different rights associated with the ironSource Class A ordinary shares.

TBA’s shareholders will have a reduced ownership and voting interest after consummation of the Business Combination and will exercise less influence over management.

After the completion of the Business Combination, TBA’s shareholders will own a smaller percentage of the combined company than they currently own of TBA. At the Closing, assuming no holder of TBA Ordinary Shares exercises redemption rights as described in this proxy statement/prospectus, and based on current estimates of transaction expenses, existing ironSource shareholders would hold approximately 77% of the issued and outstanding ironSource Class A ordinary shares and current shareholders of TBA (including the Sponsor) would hold approximately 11% of the issued and outstanding ironSource Class A ordinary shares and PIPE Investors will hold approximately 12% of the issued and outstanding ironSource Class A ordinary shares. Consequently, TBA’s shareholders, as a group, will have reduced ownership and voting power in the combined company compared to their ownership and voting power in TBA.

ironSource may issue additional ironSource Class A ordinary shares or other equity securities without seeking approval of the ironSource shareholders, which would dilute your ownership interests and may depress the market price of the ironSource Class A ordinary shares.

Upon consummation of the Business Combination, ironSource may choose to seek third party financing to provide additional working capital for the ironSource business, in which event ironSource may issue additional equity securities. Following the consummation of the Business Combination, ironSource may also issue additional ironSource Class A ordinary shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding warrants or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.

The issuance of additional ironSource Class A ordinary shares or other equity securities of equal or senior rank would have the following effects:

 

   

ironSource’s existing shareholders’ proportionate ownership interest in ironSource will decrease;

 

   

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

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the relative voting strength of each previously outstanding ironSource ordinary share may be diminished; and

 

   

the market price of the ironSource Class A ordinary shares may decline.

TBA’s current directors’ and executive officers’ affiliates own TBA Ordinary Shares that will be worthless if the Business Combination is not approved. Such interests may have influenced their decision to approve the Business Combination.

If the Business Combination or another business combination is not consummated by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, the Founder Shares and Private Placement Shares held by the Sponsor and TBA’s directors and officers, which were acquired prior to and concurrently with the TBA IPO for an aggregate purchase price of $25,000 and $24,000,000, respectively, would be worthless because the holders thereof are not entitled to participate in any redemption or liquidating distribution with respect to such Founder Shares and/or Private Placement Shares. On the other hand, if the Business Combination is consummated, each outstanding Founder Share and Private Placement Share will convert into one ironSource Class A ordinary share, subject to adjustment described herein, at the closing. Such shares had an aggregate market value of $253.5 million and $24.3 million, respectively, based upon the closing price of $10.14 per share on NYSE on May 17, 2021.

These financial interests may have influenced the decision of TBA’s directors and officers to approve the Business Combination and to continue to pursue the Business Combination. In considering the recommendations of TBA’s board of directors to vote for the Business Combination Proposal and other proposals, its shareholders should consider these interests. See the section of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.”

The Sponsor, an affiliate of current officers and directors of TBA, is liable to ensure that proceeds of the Trust Account are not reduced by vendor claims in the event the Business Combination is not consummated. Such liability may have influenced TBA’s board of directors’ decision to pursue the Business Combination and TBA’s board of directors’ decision to approve it.

If the Business Combination or another business combination is not consummated by TBA on or before January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date), the Sponsor, an affiliate of current officers and directors of TBA, will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by TBA for services rendered or contracted for or for products sold to TBA, but only if such a vendor or target business has not executed a waiver agreement. If TBA consummates a business combination, on the other hand, TBA will be liable for all such claims. TBA has no reason to believe that the Sponsor will not be able to fulfill its indemnity obligations to TBA.

 

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These obligations of the Sponsor may have influenced TBA’s board of directors’ decision to pursue the Business Combination with ironSource or TBA’s board of directors’ decision to approve the Business Combination. In considering the recommendations of TBA’s board of directors to vote for the Business Combination Proposal and other proposals, shareholders should consider these interests. See the section of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.”

TBA’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to TBA’s public shareholders in the event a business combination is not consummated.

If proceeds in the Trust Account are reduced below $10.00 per public share and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, TBA’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While TBA currently expects that its independent directors would take legal action on TBA’s behalf against the Sponsor to enforce the Sponsor’s indemnification obligations, it is possible that TBA’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If TBA’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to TBA’s public shareholders may be reduced below $10.00 per share.

Activities taken by existing TBA shareholders to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on the TBA Ordinary Shares.

At any time prior to the extraordinary general meeting, during a period when they are not then aware of any material nonpublic information regarding TBA or its securities, TBA, the Sponsor, TBA’s officers and directors, ironSource, the ironSource officers and directors and/or their respective affiliates may purchase TBA Ordinary Shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire TBA Ordinary Shares or vote their TBA Ordinary Shares in favor of the Business Combination Proposal. The purpose of such purchases and other transactions would be to increase the likelihood of approval of the Business Combination Proposal by the holders of a majority of the outstanding TBA Ordinary Shares and ensure that TBA has in excess of $5,000,001 of net assets to consummate the Business Combination where it appears that such requirement would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares owned by the Sponsor for nominal value. Entering into any such arrangements may have a depressive effect on the TBA Ordinary Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase TBA Ordinary Shares at a price lower than market and may therefore be more likely to sell the TBA Ordinary Shares he owns, either prior to or immediately after the extraordinary general meeting.

In addition, if such purchases are made, the public “float” of the ironSource Class A ordinary shares following the Business Combination and the number of beneficial holders of ironSource ordinary shares may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of ironSource securities on NYSE or another national securities exchange or reducing the liquidity of the trading market for the ironSource Class A ordinary shares.

 

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The Business Combination may be completed even though material adverse effects may result from the announcement of the Business Combination, industry-wide changes and other causes.

In general, either TBA or ironSource may refuse to complete the Business Combination if certain types of changes or conditions that constitute a failure of a representation to be true and correct exert a material adverse effect upon the other party between the signing date of the Merger Agreement and the planned closing. However, other types of changes do not permit either party to refuse to consummate the Business Combination, even if such change could be said to have a material adverse effect on ironSource or TBA, including the following events (except, in certain cases where the change has a disproportionate effect on a party):

 

   

changes generally affecting the economy and the financial or securities markets, including the COVID-19 pandemic;

 

   

the outbreak or escalation of war or any act of terrorism, civil unrest or natural disasters;

 

   

changes (including changes in law) or general conditions in the industry in which the party operates;

 

   

changes in GAAP, or the authoritative interpretation of GAAP; or

 

   

changes attributable to the public announcement or pendency of the Transactions or the execution or performance of the Merger Agreement.

Furthermore, TBA or ironSource may waive the occurrence of a failure of a representation to be true and correct that constitutes a material adverse effect affecting the other party. If a failure of a representation to be true and correct that constitutes a material adverse effect occurs and the parties still consummate the Business Combination, the market trading price of ironSource’s ordinary shares may suffer.

Delays in completing the Business Combination may substantially reduce the expected benefits of the Business Combination.

Satisfying the conditions to, and completion of, the Business Combination may take longer than, and could cost more than, TBA expects. Any delay in completing or any additional conditions imposed in order to complete the Business Combination may materially and adversely affect the benefits that TBA expects to achieve from the Business Combination.

TBA and ironSource have no history operating as a combined company. The unaudited pro forma condensed combined financial information may not be an indication of ironSource’s financial condition or results of operations following the Business Combination, and accordingly, you have limited financial information on which to evaluate ironSource and your investment decision.

ironSource and TBA have no prior history as a combined entity and their operations have not been previously managed on a combined basis. The unaudited pro forma condensed combined financial information contained in this proxy statement/prospectus has been prepared using the consolidated historical financial statements of TBA and ironSource, and is presented for illustrative purposes only and should not be considered to be an indication of the results of operations including, without limitation, future revenue, or financial condition of TBA following the Business Combination. Certain adjustments and assumptions have been made regarding TBA after giving effect to the Business Combination. ironSource and TBA believe these assumptions are reasonable, however, the information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments are difficult to make with accuracy. These assumptions may not prove to be

 

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accurate, and other factors may affect TBA’s results of operations or financial condition following the consummation of the Business Combination. For these and other reasons, the historical and pro forma condensed combined financial information included in this proxy statement/prospectus does not necessarily reflect ironSource’s results of operations and financial condition and the actual financial condition and results of operations of ironSource following the Business Combination may not be consistent with, or evident from, this pro forma financial information.

The projections and forecasts presented in this proxy statement/prospectus may not be an indication of the actual results of the transaction or ironSource’s future results.

This proxy statement/prospectus contains projections and forecasts prepared by ironSource. None of the projections and forecasts included in this proxy statement/prospectus have been prepared with a view toward public disclosure other than to certain parties involved in the Business Combination or toward complying with SEC guidelines or GAAP. The projections and forecasts were prepared based on numerous variables and assumptions which are inherently uncertain and may be beyond the control of ironSource and TBA and exclude, among other things, transaction-related expenses. Important factors that may affect actual results and results of ironSource’s operations following the Business Combination, or could lead to such projections and forecasts not being achieved include, but are not limited to: client demand for ironSource’s products, an evolving competitive landscape, rapid technological change, margin shifts in the industry, regulation changes in a highly regulated environment, successful management and retention of key personnel, unexpected expenses and general economic conditions. As such, these projections and forecasts may be inaccurate and should not be relied upon as an indicator of actual past or future results.

If TBA is unable to complete the Business Combination or another business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such other date as approved by TBA shareholders through approval of an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, TBA public shareholders may only receive $10 per share (or less than such amount in certain circumstances).

If TBA is unable to complete the Business Combination or another business combination within the required time period, TBA will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding 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 TBA to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding TBA public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of TBA’s remaining shareholders and its board of directors, dissolve and liquidate, subject (in each case) to TBA’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, TBA public shareholders may only receive $10 per share. In certain circumstances, TBA public shareholders may receive less than $10 per share on the redemption of their shares.

If the Business Combination is not completed, potential target businesses may have leverage over TBA in negotiating a business combination, TBA’s ability to conduct due diligence on a business combination as it approaches its dissolution deadline may decrease, and it may have

 

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insufficient working capital to continue to pursue potential target businesses, each of which could undermine its ability to complete a business combination on terms that would produce value for TBA shareholders.

Any potential target business with which TBA enters into negotiations concerning an initial business combination will be aware that, unless TBA amends its existing charter to extend its life and amend certain other agreements it has entered into, then TBA must complete its initial business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date). Consequently, if TBA is unable to complete this Business Combination, a potential target business may obtain leverage over it in negotiating an initial business combination, knowing that if TBA does not complete its initial business combination with that particular target business, it may be unable to complete its initial business combination with any target business. This risk will increase as TBA gets closer to the timeframe described above. In addition, TBA may have limited time to conduct due diligence and may enter into its initial business combination on terms that it would have rejected upon a more comprehensive investigation. Additionally, TBA may have insufficient working capital to continue efforts to pursue a business combination.

In the event of liquidation by TBA, third parties may bring claims against TBA and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by shareholders could be less than $10 per share.

Under the terms of the TBA Articles, TBA must complete the Business Combination or another business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (unless such date is extended by TBA’s shareholders) or TBA must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against TBA. Although TBA has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims which could take priority over those of TBA’s public shareholders. If TBA is unable to complete a business combination within the required time period, the Sponsor has agreed that it will be liable to TBA if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which it has discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account to below $10.00 per public share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under TBA’s indemnity of the underwriter of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, 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. Furthermore, the Sponsor will not be liable to public shareholders and instead will only have liability to TBA. TBA has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, the Sponsor may not be able to satisfy those obligations. TBA has not asked the Sponsor to reserve for such eventuality. Therefore, the per-share distribution from the Trust Account in such a situation may be less than the approximately $10.00 estimated to be in the Trust Account as of two business days prior to the extraordinary general meeting date, due to such claims.

 

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Additionally, if TBA is forced to file a bankruptcy case winding-up petition or an involuntary bankruptcy case winding-up petition is filed against it which is not dismissed, or if TBA otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject to applicable bankruptcy or insolvency law and may be included in its bankruptcy estate.

TBA’s shareholders may be held liable for claims by third parties against TBA to the extent of distributions received by them.

If TBA is unable to complete the Business Combination or another business combination within the required time period, TBA will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding 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 TBA to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding TBA public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of TBA’s remaining shareholders and its board of directors, dissolve and liquidate, subject (in each case) to TBA’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. TBA cannot assure you that it will properly assess all claims that may be potentially brought against TBA. As a result, TBA’s shareholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its shareholders may extend well beyond the third anniversary of the date of distribution. Accordingly, TBA cannot assure you that third parties will not seek to recover from its shareholders amounts owed to them by TBA.

Additionally, if TBA is forced to file a bankruptcy case winding-up petition or an involuntary bankruptcy case winding-up petition is filed against it that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy and/or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover all amounts received by TBA’s shareholders. Because TBA intends to distribute the proceeds held in the Trust Account to its public shareholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public shareholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, TBA’s board of directors may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and TBA to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. TBA cannot assure you that claims will not be brought against it for these reasons.

TBA may be a target of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Business Combination from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements or similar agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on TBA’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed. Currently, TBA is not aware of any securities class action lawsuits or derivative lawsuits being filed in connection with the Transactions.

 

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The Sponsor and certain members of TBA’s board of directors have agreed to vote in favor of the Business Combination, regardless of how TBA’s public shareholders vote.

The Sponsor and certain members of TBA’s board of directors own and are entitled to vote an aggregate of approximately 21.5% on an as-converted basis of the outstanding TBA Ordinary Shares. These holders have agreed to vote their shares in favor of the Business Combination Proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. Accordingly, it is more likely that the necessary shareholder approval for the Business Combination Proposal and the other proposals will be received than would be the case if these holders agreed to vote their Founder Shares in accordance with the majority of the votes cast by TBA’s public shareholders.

The ongoing COVID-19 pandemic may materially and adversely affect TBA’s and ironSource’s ability to consummate the Transactions.

The COVID-19 pandemic has resulted in governmental authorities worldwide implementing numerous measures to contain the virus, including travel restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. More generally, the pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets. The pandemic may also amplify many of the other risks described in this proxy statement/prospectus.

TBA and ironSource may be unable to complete the Transactions if concerns relating to COVID-19 continue to restrict the movement of people, cause further shutdowns or closures of businesses and other limitations. The extent to which COVID-19 impacts TBA’s and ironSource’s ability to consummate the Transactions will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, TBA’s and ironSource’s ability to consummate the Transactions may be materially and adversely affected.

The Business Combination may not qualify as a reorganization under Section 368(a) of the Code, potentially causing U.S. Holders of TBA Ordinary Shares to recognize gain or loss for U.S. federal income tax purposes.

It is intended that the Business Combination qualify as a “reorganization” within the meaning of Section 368(a) of the Code (the “Intended Tax Treatment”). The parties intend to report the Business Combination in a manner consistent with the Intended Tax Treatment. However, there are significant factual and legal uncertainties as to whether the Business Combination will qualify for the Intended Tax Treatment. For example, under Section 368(a) of the Code, the acquiring corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance directly on point as to how the provisions of Section 368(a) of the Code apply in the case of an acquisition of a corporation with only investment-type assets, such as TBA. There are significant factual and legal uncertainties concerning the determination of this requirement. Moreover, qualification of the Business Combination for the Intended Tax Treatment is based on facts which will not be known until or following the closing of the Business Combination, and the closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will qualify for the Intended Tax Treatment, and neither TBA nor ironSource intends to request a ruling from the Internal Revenue Service (the “IRS”) regarding the U.S. federal income tax treatment of the Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court will not sustain a challenge by the IRS.

 

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If, as of the Closing Date, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder of TBA Ordinary Shares may recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the Closing Date) of ironSource Class A ordinary shares received in the Business Combination, over such U.S. Holder’s aggregate tax basis in the corresponding TBA Ordinary Shares surrendered by such U.S. Holder in the Business Combination.

Additionally, even if the Business Combination qualifies as a Reorganization within the meaning of Section 368(a) of the Code, proposed Treasury Regulations promulgated under Section 1291(f) of the Code (which have a retroactive effective date) generally require that, unless certain elections have been made by a U.S. Holder, a U.S. Holder who disposes of stock of a PFIC must recognize gain equal to the excess of the fair market value of such PFIC stock over its adjusted tax basis, notwithstanding any other provision of the Code. TBA believes that it is likely currently classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. Holder of TBA Ordinary Shares to recognize gain under the PFIC rules on the exchange of TBA Ordinary Shares for ironSource common stock pursuant to the Business Combination unless such U.S. Holder has made certain tax elections with respect to such U.S. Holder’s TBA Ordinary Shares. Any gain recognized from the application of the PFIC rules would be taxable income with no corresponding receipt of cash. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. Holder on the undistributed earnings, if any, of TBA. It is not possible to determine at this time whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such Treasury Regulations would apply.

U.S. Holders of TBA Ordinary Shares are urged to consult their own tax advisors to determine the tax consequences if the Business Combination does not qualify for the Intended Tax Treatment and the application of the PFIC rules to their specific situation in connection with the Business Combination.

Risks Related to the Redemption

The ability of TBA public shareholders to exercise redemption rights with respect to a large number of TBA Shares could increase the probability that the Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem TBA stock.

The obligations of ironSource to consummate the Business Combination is conditioned upon, among other things, TBA having an amount of available cash in its Trust Account, following payment by TBA to its shareholders who have validly elected to redeem their TBA Ordinary Shares, plus proceeds from the PIPE Investment, of no less than approximately $1,300,000,000. If the Business Combination is not consummated, you would not receive your pro rata portion of the Trust Account until the Trust Account is liquidated. If you are in need of immediate liquidity, you could attempt to sell your TBA Shares in the open market; however, at such time TBA Shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with TBA’s redemption until TBA liquidates or you are able to sell your TBA Shares in the open market.

Public shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the public shares.

A public shareholder, together with any affiliate or any other person with whom such shareholder is acting in concert or as a “group,” will be restricted from seeking redemption rights with respect to more than 15% of the public shares. Accordingly, if you hold more than 15% of the public shares and

 

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the Business Combination Proposal is approved, you will not be able to seek redemption rights with respect to the full amount of your shares and may be forced to hold the shares in excess of 15% or sell them in the open market. TBA cannot assure you that the value of such excess shares will appreciate over time following a business combination or that the market price of TBA Shares will exceed the per-share redemption price.

There is no guarantee that a TBA shareholder’s decision to redeem its shares for a pro rata portion of the Trust Account will put the shareholder in a better future economic position.

There is no assurance as to the price at which an TBA shareholder may be able to sell its ironSource Class A ordinary shares in the future following the completion of the Transactions or shares with respect to any alternative business combination. Certain events following the consummation of any initial business combination, including the Transactions, may cause an increase in the share price, and may result in a lower value realized now than a shareholder of TBA might realize in the future had the shareholder not redeemed his, her or its shares. Similarly, if a shareholder does not redeem its shares, the shareholder will bear the risk of ownership of the public shares after the consummation of any initial business combination, and there can be no assurance that a shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A shareholder should consult the shareholder’s tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET,

RANKING AND OTHER INDUSTRY DATA

This proxy statement/prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this proxy statement/prospectus, including statements regarding ironSource’s, TBA’s or the combined company’s future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements include, without limitation, ironSource’s or TBA’s expectations concerning the outlook for their or the combined company’s business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations of the combined company as set forth in the sections of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—TBAs Board of Directors Reasons for the Business Combination and Recommendation of Its Board of Directors.” Forward-looking statements also include statements regarding the expected benefits of the proposed Business Combination between ironSource and TBA.

Forward-looking statements involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but are not limited to:

 

   

ironSource’s markets are rapidly evolving and may decline or experience limited growth;

 

   

ironSource’s reliance on operating system providers and app stores to support its platform;

 

   

ironSource’s ability to compete effectively in the markets in which it operates;

 

   

ironSource’s quarterly results of operations may fluctuate for a variety of reasons;

 

   

failure to maintain and enhance the ironSource brand;

 

   

ironSource’s dependence on its ability to retain and expand its existing customer relationships and attract new customers;

 

   

ironSource’s reliance on its customers that contribute more than $100,000 of annual revenue;

 

   

ironSource’s ability to successfully and efficiently manage its current and potential future growth;

 

   

ironSource’s dependence upon the continued growth of the app economy and the increased usage of smartphones, tablets and other connected devices;

 

   

ironSource’s dependence upon the success of the gaming and mobile app ecosystem and the risks generally associated with the gaming industry;

 

   

ironSource’s, and ironSource’s competitors’, ability to detect or prevent fraud on its platforms;

 

   

failure to prevent security breaches or unauthorized access to ironSource’s or its third-party service providers data;

 

   

the global scope of ironSource’s operations, which are subject to laws and regulations worldwide, many of which are unsettled and still developing;

 

   

the rapidly changing and increasingly stringent laws, contractual obligations and industry standards relating to privacy, data protection, data security and the protection of children;

 

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the effects of health epidemics, including the COVID-19 pandemic; and

 

   

the other matters described in the section titled “Risk Factors” beginning on page 30.

In addition, the Business Combination is subject to the satisfaction of the conditions to the completion of the Business Combination set forth in the Merger Agreement and the absence of events that could give rise to the termination of the Merger Agreement, the possibility that the Business Combination does not close, and risks that the proposed Business Combination disrupts current plans and operations and business relationships, or poses difficulties in attracting or retaining employees for ironSource.

ironSource and TBA caution you against placing undue reliance on forward-looking statements, which reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this proxy statement/prospectus. Neither ironSource nor TBA undertakes any obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event that any forward-looking statement is updated, no inference should be made that ironSource or TBA will make additional updates with respect to that statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear, up to the consummation of the Business Combination, in TBA’s public filings with the SEC or, upon and following the consummation of the Business Combination, in ironSource’s public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult. For additional information, please see the section titled “Where You Can Find More Information” on page 323.

Market, ranking and industry data used throughout this proxy statement/prospectus, including statements regarding market size and technology adoption rates, is based on the good faith estimates of ironSource’s management, which in turn are based upon ironSource’s management’s review of internal surveys, independent industry surveys and publications, including reports by App Annie, AppsFlyer, Apptopia, Altman Solon, eMarketer, Newzoo, Omdia, Statista and Sensor Tower and other third party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While ironSource is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and “ironSources Managements Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

 

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EXTRAORDINARY GENERAL MEETING OF TBA SHAREHOLDERS

General

TBA is furnishing this proxy statement/prospectus to its shareholders as part of the solicitation of proxies by its board of directors for use at the extraordinary general meeting of TBA shareholders and at any adjournment or postponement thereof. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the extraordinary general meeting.

Date, Time and Place of Extraordinary General Meeting of TBA’s Shareholders

The extraordinary general meeting will be held on June 22, 2021, at 10:00 a.m., Eastern Time at the offices of Kirkland & Ellis LLP located at 300 N. LaSalle, Chicago, Illinois 60654, and over the Internet by means of a live audio webcast. You may attend the extraordinary general meeting webcast by accessing the web portal located at https://www.cstproxy.com/thomabravo/sm2021 and following the instructions set forth on your proxy card.

Purpose of the TBA Extraordinary General Meeting

At the extraordinary general meeting, TBA is asking its shareholders:

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination;

Proposal No. 2—The Merger Proposal—to consider and vote upon a proposal to authorize the Plan of Merger; and

Proposal No. 3—The Adjournment Proposalto consider and vote upon a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination.

Recommendation of TBA’s Board of Directors

TBA’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of TBA and its shareholders and recommended that TBA shareholders vote “FOR” the Business Combination Proposal, “FOR” the Merger Proposal and “FOR” the Adjournment Proposal, if presented.

Record Date; Persons Entitled to Vote

TBA Shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned TBA Ordinary Shares at the close of business on May 24, 2021, which is the record date for the extraordinary general meeting. Shareholders will have one vote for each TBA Ordinary Share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there are 102,400,000 Class A Shares outstanding and 25,000,000 Class B Shares outstanding, of which 100,000,000 Class A Shares are public shares.

Quorum

A quorum is the minimum number of TBA Ordinary Shares that must be present to hold a valid meeting. A quorum will be present at the TBA extraordinary general meeting if a majority of the voting

 

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power of the issued and outstanding TBA Ordinary Shares entitled to vote at the meeting are represented at the virtual extraordinary general meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Shares and Class B Shares are entitled vote together as a single class on all matters to be considered at the extraordinary general meeting.

Vote Required

The proposals to be presented at the extraordinary general meeting will require the following votes:

Business Combination ProposalThe approval of the Business Combination Proposal will require an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The Transactions will not be consummated if TBA has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Transactions.

Merger Proposal—The approval of the Merger Proposal will require the affirmative vote of the holders of at least two thirds of the TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Brokers are not entitled to vote on the Merger Proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the Merger Proposal

Adjournment ProposalThe approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Brokers are not entitled to vote on the Business Combination Proposal or the Merger Proposal absent voting instructions from the beneficial holder. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

Voting Your Shares

If you are a holder of record of TBA Ordinary Shares, there are two ways to vote your TBA Ordinary Shares at the extraordinary general meeting:

By Mail. You may vote by proxy by completing the enclosed proxy card and returning it in the postage-paid return envelope. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted “FOR” all of the proposals in accordance with the recommendation of TBA’s board of directors. Proxy cards received after a matter has been voted upon at the extraordinary general meeting will not be counted.

In Person. You may attend the extraordinary general meeting in person or by webcast and vote electronically using the ballot provided to you at the meeting or during the webcast. You may attend the extraordinary general meeting webcast by accessing the web portal located at https://www.cstproxy.com/thomabravo/sm2021 and following the instructions set forth on your proxy card. See “Questions and Answers about the Business Combination and the Extraordinary General Meeting—When and where will the extraordinary general meeting take place?” for more information.

 

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Revoking Your Proxy

If you are a holder of record of TBA Ordinary Shares and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

   

you may send another proxy card to TBA’s secretary with a later date so that it is received prior to the vote at the extraordinary general meeting or attend the extraordinary general in person or by live webcast of the extraordinary general meeting and vote electronically;

 

   

you may notify TBA’s secretary in writing, prior to the vote at the extraordinary general meeting, that you have revoked your proxy; or

 

   

you may attend the live webcast of the extraordinary general meeting and vote electronically or revoke your proxy electronically, although your attendance alone will not revoke any proxy that you have previously given.

If you hold your TBA Ordinary Shares in “street name,” you may submit new instructions on how to vote your shares by contacting your broker, bank or other nominee.

Who Can Answer Your Questions About Voting Your Shares

If you are a TBA shareholder and have any questions about how to vote or direct a vote in respect of your TBA Ordinary Shares, you may contact Morrow Sodali LLC, TBA’s proxy solicitor, at:

Morrow Sodali LLC

470 West Avenue

Stamford CT 06902

Individuals call toll-free (800) 662-5200

Banks and brokers call (203) 658-9400

Email: TBA.info@investor.morrowsodali.com

Redemption Rights

Holders of public shares may seek to redeem their shares for cash, regardless of whether they vote for or against, or whether they abstain from voting on, the Business Combination Proposal. Any shareholder holding public shares may demand that TBA redeem such shares for a full pro rata portion of the Trust Account (which, for illustrative purposes, was $10.00 per share as of May 17, 2021), calculated as of two (2) business days prior to the anticipated consummation of the mergers. If a holder properly seeks redemption as described in this section and the mergers with ironSource are consummated, TBA will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the mergers.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the public shares. Accordingly, all public shares in excess of 15% held by a public shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash.

Holders of Founder Shares will not have redemption rights with respect to such shares.

Holders may demand redemption by delivering their share certificates (if any) and other redemption forms, either physically or electronically using Depository Trust Company’s DWAC System,

 

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to TBA’s transfer agent prior to the vote at the extraordinary general meeting. If you hold the shares in “street name,” you will have to coordinate with your broker to have your shares certificated and delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming shareholder. In the event the proposed mergers are not consummated this may result in an additional cost to shareholders for the return of their shares.

TBA’s transfer agent can be contacted at the following address:

Continental Stock Transfer & Trust Company

1 State Street—30th Floor New York,

New York 10004 Attn: Mark Zimkind

Email: mzimkind@continentalstock.com

Any request to redeem such shares, once made, may be withdrawn at any time up to the vote on the Business Combination Proposal. Furthermore, if a holder of a public share delivered its share certificate and other redemption forms in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).

If the Mergers are not approved or completed for any reason, then TBA’s public shareholders who elected to exercise their redemption rights will not be entitled to redeem their shares for a full pro rata portion of the Trust Account, as applicable. In such case, TBA will promptly return any shares tendered for redemption by public holders. If TBA would be left with less than $5,000,001 of net tangible assets as a result of the holders of public shares properly demanding redemption of their shares for cash, TBA will not be able to consummate the mergers.

The closing price of Class A Shares on May 17, 2021, was $10.14. The cash held in the Trust Account on such date was approximately $1,000,016,414 ($10.00 per public share). Prior to exercising redemption rights, shareholders should verify the market price of Class A Shares as they may receive higher proceeds from the sale of their ordinary shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. TBA cannot assure its shareholders that they will be able to sell their Class A Shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares.

If a holder of public shares exercises his, her or its redemption rights, then he, she or it will be exchanging its Class A Shares for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption no later than the close of the vote on the Business Combination Proposal by delivering your share certificate (if any) and other redemption forms (either physically or electronically) to TBA’s transfer agent prior to the vote at the extraordinary general meeting, and the mergers are consummated.

For a detailed discussion of the material U.S. federal income tax considerations for shareholders with respect to the exercise of these redemption rights, see “Certain Material U.S. Federal Income Tax Considerations” beginning on page 274. The consequences of a redemption to any particular shareholder will depend on that shareholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.

 

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Appraisal Rights

Under Section 239 of the Cayman Companies Law, the holders of TBA Ordinary Shares will not have appraisal or dissenter rights in connection with the Business Combination. Holder of public shares should consult their Cayman Islands legal counsel regarding their rights under the Cayman Companies Law.

Proxy Solicitation Costs

TBA is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone. TBA and its directors, officers and employees may also solicit proxies online. TBA will file with the SEC all scripts and other electronic communications as proxy soliciting materials. TBA will bear the cost of the solicitation.

TBA has hired Morrow Sodali LLC to assist in the proxy solicitation process. TBA will pay to Morrow Sodali LLC a fee of $47,500, plus disbursements.

TBA will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. TBA will reimburse them for their reasonable expenses.

Other Matters

As of the date of this proxy statement/prospectus, TBA’s board of directors does not know of any business to be presented at the extraordinary general meeting other than as set forth in the notice accompanying this proxy statement/prospectus. If any other matters should properly come before the extraordinary general meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

Interests of TBA’s Officers and Directors in the Transactions

In considering the recommendation of TBA’s board of directors to vote in favor of approval of the Business Combination Proposal and the Merger Proposal, shareholders should keep in mind that the Sponsor and TBA’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of TBA’s shareholders generally. In particular:

If the Business Combination with ironSource or another business combination is not consummated by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and TBA’s board of directors, dissolving and liquidating. On the other hand, if the Business Combination is consummated, each outstanding TBA Ordinary Share will be converted into one ironSource Class A ordinary share, subject to adjustment described herein.

If TBA is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by TBA for services rendered or contracted for or products sold to TBA. If TBA consummates a business combination, on the other hand, TBA will be liable for all such claims.

 

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The Sponsor and TBA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on TBA’s behalf, such as identifying and investigating possible business targets and business combinations. However, if TBA fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, TBA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles). As of the date of this proxy statement/prospectus, the Sponsor and TBA’s officers and directors and their affiliates had incurred approximately $5,000 of unpaid reimbursable expenses and may incur additional expenses in the future.

The Merger Agreement provides for the continued indemnification of TBA’s current directors and officers and the continuation of directors and officers liability insurance covering TBA’s current directors and officers.

TBA’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to TBA to fund certain capital requirements. On November 6, 2020, the Sponsor agreed to loan TBA an aggregate of up to $400,000 to cover expenses related to the TBA IPO pursuant to a promissory note that was repaid in full on January 20, 2021. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to TBA outside of the Trust Account.

Orlando Bravo will be a member of the board of directors of ironSource following the closing of the Business Combination and, therefore, in the future Mr. Bravo will receive any cash fees, stock options or stock awards that ironSource’s board of directors determines to pay to its non-executive directors.

Thoma Bravo Ascension, which is an affiliate of Thoma Bravo, will participate in the purchase of PIPE Shares from ironSource and/or its shareholders at the closing of the Transactions, and certain of TBA’s directors and officers are affiliated with Thoma Bravo.

Purchases of TBA Shares

At any time prior to the extraordinary general meeting, during a period when they are not then aware of any material nonpublic information regarding TBA or its securities, the Sponsor, TBA’s officers and directors, ironSource, ironSource shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of TBA’s Ordinary Shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and, with ironSource’s consent, the transfer to such investors or holders of shares owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on TBA’s Ordinary Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the extraordinary general meeting.

 

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If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such proposals would be approved. No agreements dealing with the above arrangements or purchases have been entered into as of the date of this proxy statement/prospectus by the Sponsor, TBA officers and directors, ironSource, ironSource shareholders or any of their respective affiliates. TBA will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

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PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

The following is a discussion of the proposed Business Combination and the Merger Agreement. This is a summary only and may not contain all of the information that is important to you. This summary is subject to, and qualified in its entirety by reference to, the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. TBA shareholders are urged to read this entire proxy statement/prospectus carefully, including the Merger Agreement, for a more complete understanding of the Business Combination.

General

Transaction Structure

The Merger Agreement provides for (i) the merger of Merger Sub with and into TBA (the “First Merger”), with TBA surviving the First Merger as a wholly owned subsidiary of ironSource (such company, as the surviving entity of the First Merger, the “Surviving Entity”), and (ii) the merger of the Surviving Entity with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger as a wholly-owned subsidiary of ironSource (such company, as the surviving entity of the Second Merger, the “Surviving Company”).

Pro Forma Capitalization

The pro forma equity valuation of the Company upon consummation of the Transactions is estimated to be approximately $11.1 billion. We estimate that, upon consummation of the Transactions (the “Effective Time”), assuming none of TBA’s public shareholders demand redemption (“TBA Redemptions”) pursuant to TBA’s amended and restated memorandum and articles of association (“TBA Articles”), the existing shareholders of ironSource will own approximately 74% of the economic interest in ironSource, the existing shareholders of TBA (including the Sponsor) will own approximately 13% of the economic interest in ironSource and the PIPE investors will own approximately 13% of the economic interest in ironSource.

Merger Consideration

Immediately prior to the Effective Time, ironSource will effect a stock split of each ironSource Class A ordinary share and each ironSource Class B ordinary share into such number of ironSource Class A ordinary shares and ironSource Class B ordinary shares, in each case, calculated in accordance with the terms of the Merger Agreement, such that each ironSource Class A ordinary share and each ironSource Class B ordinary share will have a value of $10.00 per share after giving effect to such stock split (the “Stock Split”) (with an assumed ratio of 1:4.99 as calculated as of the date of filing, which is subject to change until the closing of the Business Combination). Unless otherwise indicated, this proxy statement/prospectus does not reflect the Stock Split.

Pursuant to the Merger Agreement, at the Effective Time (a) each Class B Ordinary Share of TBA, par value $0.0001 per share (collectively, the “Class B Shares”), outstanding immediately prior to the Effective Time will be automatically converted into one Class A Ordinary Share of TBA, par value $0.0001 per share (collectively, the “Class A Shares”, together with the Class B Shares, the “TBA Ordinary Shares”) and each Class B Share will no longer be outstanding and be automatically cancelled and cease to exist and each former holder of Class B Shares will cease to have any rights with respect to such shares, and (b) each Class A Share issued and outstanding immediately prior to the Effective Time (other than certain excluded shares) will be converted into one ironSource Class A ordinary share, subject to adjustment described herein.

 

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Background of the Business Combination

TBA is a blank check company incorporated on November 6, 2020 as a Cayman Islands exempted company 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. The Business Combination with ironSource is the result of an active search for a potential transaction utilizing the network and investing and transaction experience of TBA’s management team and board of directors. The terms of the Merger Agreement are the result of arm’s-length negotiations between representatives of ironSource and TBA. The following is a brief discussion of the background of these negotiations, the Merger Agreement and the Business Combination.

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement, but it does not purport to catalogue every conversation and correspondence among representatives of TBA, ironSource and their respective advisors.

The registration statement for the TBA IPO was declared effective on January 14, 2021. On January 20, 2021, TBA consummated the TBA IPO of 100,000,000 Class A Shares (inclusive of the exercise by the underwriters of the over-allotment in full) at an offering price of $10.00 per share, generating total gross proceeds of $1,000,000,000. Simultaneously with the closing of the TBA IPO, TBA consummated the sale of 2,400,000 Class A Shares at a price of $10.00 per share in a private placement to the Sponsor, generating gross proceeds of $24,000,000. Following the closing of the TBA IPO, an amount equal to $1,000,000,000 from the net proceeds of the sale of the Class A Shares in the TBA IPO and a portion of the proceeds from the sale of the private placement Class A Shares was placed into the Trust Account.

Prior to the consummation of the TBA IPO, neither TBA, nor anyone on its behalf, contacted any prospective target businesses or had any substantive discussions, formal or otherwise, with respect to a transaction with TBA.

From the date of the TBA IPO through the execution of the Merger Agreement with ironSource on March 20, 2021, representatives of TBA, including Orlando Bravo (Chairman of the board of directors) and Robert Sayle (Chief Executive Officer), commenced an active search for prospective acquisition targets. During this period, these representatives of TBA reviewed self-generated ideas, initiated contact and were contacted by a number of individuals and entities with respect to business combination opportunities. After the TBA IPO, TBA had contact with representatives of numerous potential targets. Of those potential targets, TBA entered into a non-disclosure agreement with four (4) of the targets (other than ironSource) and conducted initial business due diligence with respect to each, including one or more video or teleconference meetings with members of their respective management teams. However, none of the discussions advanced to a stage where either party delivered a letter of intent, term sheet or other definitive documentation. All discussions with representatives of these potential targets ceased on or before February 25, 2021.

The decision not to pursue any particular target business that TBA evaluated generally was the result of one or more of: (i) TBA’s determination that such business or combination of businesses did not represent an attractive target due to a combination of business and growth prospects, strategic direction, management teams, structure and/or valuation; (ii) a difference in initial valuation expectations between TBA, on the one hand, and the target and/or its owners, on the other hand; (iii) a potential target’s unwillingness to engage in substantive discussions with TBA given the timing and uncertainty of closing due to the requirement for TBA to obtain shareholder approval as a condition to consummating any business combination; (iv) a potential target’s desire to remain a privately held company; or (v) a potential target’s unwillingness to engage in substantive discussions with TBA in light of conflicting business objectives on the target’s side.

 

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On January 22, 2021, an email was sent by an existing ironSource shareholder, connecting ironSource management with TBA. TBA responded on the same day expressing a desire to meet with ironSource and discuss at a high level a potential business combination. Between January 23 and February 2 various emails were exchanged coordinating the logistics for a meeting between ironSource management and TBA.

On February 2, 2021, Robert Sayle and other representatives of TBA met via video conference with Tomer Bar-Zeev, Chief Executive Officer of ironSource. During that meeting, TBA and ironSource discussed high-level due diligence matters, including an overview of ironSource’s business, finances, market position and strategy.

On February 7, 2021, ironSource sent TBA a draft non-disclosure agreement in order to allow ironSource to begin sharing due diligence materials with TBA to assist TBA in evaluating a potential transaction with ironSource. Following review by TBA, on February 7, 2021, ironSource and TBA entered into a customary non-disclosure agreement. Soon thereafter, beginning on February 9, 2021, ironSource began providing financial projections and other due diligence materials to TBA, including through an electronic data room on Intralinks maintained by ironSource’s financial advisor, Goldman Sachs & Co. LLC (“Goldman Sachs”). In connection with the discussions surrounding TBA and a potential business combination, ironSource had engaged Goldman Sachs and Jefferies LLC (“Jefferies”).

On February 8, 2021, Messrs. Sayle and Bar-Zeev had a conference call to discuss the diligence process. Also on that day, Messrs. Bravo and Sayle had a conference call with representatives of Goldman Sachs to discuss the general merits of a potential business combination with TBA.

On February 9, 2021, representatives of TBA and ironSource held an in-depth due diligence session via video conference, during which members of ironSource management, including Mr. Bar-Zeev, Omer Kaplan, Chief Revenue Officer of ironSource, Assaf Ben Ami, Chief Financial Officer of ironSource, and Arnon Harish, President of ironSource presented an overview of ironSource’s business and financials, as well as business plans, strategy and market dynamics. During that meeting, representatives of TBA also discussed the background of TBA and its objectives in searching for a business combination partner.

Between February 10 and February 22, 2021, representatives of TBA, ironSource, Goldman Sachs and Jefferies held several video and telephonic meetings to discuss the terms of a potential transaction and various due diligence areas.

On February 11, 2021, Messrs. Bravo and Sayle emailed to Mr. Bar-Zeev a non-binding letter of intent and term sheet describing a potential transaction between TBA and ironSource. The term sheet included, among other terms, (i) a pre-transaction valuation range of $13 to $15 billion on a fully-diluted basis, (ii) details on the proposed use of proceeds, including secondary purchases and cash to be funded to the combined company’s balance sheet, (iii) a proposed $1.5 billion PIPE investment, a portion of which would be funded by an affiliate of Thoma Bravo, (iv) the lock-up period applicable to the Sponsor and ironSource shareholders, (v) two directors designated by the Sponsor to be appointed to the board at the closing and (vi) certain other customary terms.

On February 15, 2021, Mr. Bar-Zeev emailed to Messrs. Bravo and Sayle a revised draft of the term sheet, which modified certain of the proposed terms, including, among other things, (i) the proposed use of proceeds, (ii) that an affiliate of Thoma Bravo would commit at least $200 million of the PIPE financing, (iii) that the Sponsor would forfeit a portion of its founder shares if redemptions by TBA’s shareholders exceeded certain thresholds and an earn-out with respect to another portion of the Sponsor’s founder shares, (iv) modified lock-up terms applicable to the Sponsor, (v) that ironSource would have a dual-class equity structure, (vi) that the Sponsor would be permitted to designate one

 

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director to the combined company’s board at the closing and (vii) a minimum cash condition of $1.7 billion (after giving effect to redemptions by TBA’s public shareholders and the payment of TBA’s fees and expenses).

From February 16 to February 25, 2021, representatives of TBA and ironSource had several discussions about transaction terms and exchanged revised drafts of the term sheet. On February 25, 2021, TBA and ironSource agreed to a non-binding term sheet and entered into a customary 45-day exclusivity agreement. Following discussions with and based upon the advice of Goldman Sachs and Jefferies, the term sheet included a pre-transaction valuation of ironSource of $12 billion on a fully-diluted basis. ironSource arrived at this valuation in order to drive the success of the potential transaction and to account for changing market conditions, in particular in the SPAC market. Additional material terms included in the non-binding term sheet included (i) that an affiliate of Thoma Bravo would commit at least $150 million of the PIPE financing, (ii) that if redemptions by TBA’s public shareholders exceed $100 million, the Sponsor would cause affiliates of Thoma Bravo to commit additional PIPE financing or the Sponsor would forfeit a number of founder shares having a value equal to the excess redemptions, in each case subject to a $250 million cap, (iii) a 12 month lock-up applicable to the Sponsor, subject to early release based on the post-closing trading price or ironSource’ shares, (iv) the right for the Sponsor to designate one director to the combined company’s board at closing and (v) a minimum cash condition of $1.8 billion (after giving effect to redemptions by TBA’s public shareholders and the payment of TBA’s fees and expenses).

On February 17, 2021, the board of directors of TBA met via video conference. In attendance were all members of the board, members of TBA management and representatives of Cadwalader, Wickersham & Taft LLP (“Cadwalader”), outside counsel to TBA. The board received a report from Mr. Sayle regarding the status of term sheet negotiations with ironSource, as well as an overview of the business and financial due diligence performed to date.

On February 20, 2021, Kirkland & Ellis LLP (“Kirkland”), U.S. counsel to TBA, and Goldfarb Segligman & Co. (“Goldfarb”), Israeli counsel to TBA, were provided access to a data room and commenced confirmatory legal due diligence. On or about the same day, other third party advisors to TBA, including Deloitte, as TBA’s accounting advisor, and Ernst and Young LLP, as TBA’s tax advisor, also commenced confirmatory due diligence.

On February 21, 2021, representatives of TBA, Goldman Sachs and Jefferies had a conference call to discuss details regarding the PIPE Investment, including the size of the PIPE Investment, potential investors and the proposed timeline for wall-crossing investors. In addition, on that day, representatives of Latham & Watkins LLP (“Latham”), U.S. counsel to ironSource, Meitar | Law Offices (“Meitar”), Israeli counsel to ironSource, and Kirkland and Goldfarb had a conference call to discuss certain structuring considerations for the proposed transaction.

On February 22, 2021, representatives of TBA, including Messrs. Bravo and Sayle, held another business and financial due diligence meeting with ironSource via video conference.

On February 23, 2021, representatives of Deloitte held an accounting due diligence meeting with representatives of ironSource via video conference, and representatives of West Monroe, a technology consulting firm engaged by TBA, held a meeting with representatives of ironSource via video conference to discuss technical IT diligence matters.

On February 24, 2021, representatives of Ernst and Young held a tax due diligence meeting with representatives of ironSource and KPMG via video conference. Also on that day, representatives of Goldfarb, Kirkland, Goldman Sachs, Jefferies and Meitar held a legal due diligence meeting with representatives of ironSource via video conference.

 

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Beginning on February 25, 2021, representatives of TBA and ironSource as well as Goldman Sachs, Jefferies and Citigroup (collectively, the “Placement Agents”) held calls to discuss and revise marketing materials, timing and investor targeting for the proposed PIPE Investment. Representatives of TBA and ironSource also began to hold telephone conference calls to discuss the proposed PIPE Investment with a certain selected group of wall-crossed investors who agreed to be subject to certain confidentiality and other restrictions in order to gain access to information related to the proposed PIPE Investment.

During the period from March 1 to March 17, 2021, and over the course of multiple meetings hosted by the Placement Agents, Mr. Sayle and other representatives of TBA joined members of ironSource management, including Messrs. Bar-Zeev, Ben Ami, Kaplan and Harish, to present and discuss the ironSource opportunity with potential PIPE investors. The meetings covered, among other things, ironSource’s business model, technology and intellectual property, projections, key relationships and market positioning and provided TBA and ironSource with valuable insights into the third-party investors’ views on the opportunity and valuation thereof.

On March 5, 2021, Mr. Bravo and Mr. Bar-Zeev had a call to discuss certain aspects of the proposed transaction, including the status of business diligence, post-closing corporate governance and the PIPE financing.

On March 7, 2021, Latham distributed an initial draft of the Merger Agreement to Kirkland.

On March 10, 2021, Latham distributed initial drafts of the disclosure schedules to the Merger Agreement and the Sponsor Support Agreement to Kirkland. Between March 10, 2021 until the parties signed the Merger Agreement on March 20, 2021, Latham, Meitar, Kirkland and Goldfarb continued to exchange correspondence related to the Merger Agreement, due diligence matters and other ancillary agreements related to the business combination.

On March 11, 2021, Kirkland returned a revised draft of the Merger Agreement that proposed various revisions to the terms of the Merger Agreement, including revisions to the representations and warranties and the interim operating covenants of both ironSource and TBA, the closing conditions and the termination provisions. In addition, Kirkland’s revised draft included comments from Goldfarb with respect to Israeli law matters.

On March 13, 2021, after having reviewed each of Kirkland’s proposed changes, Latham sent Kirkland a revised draft of the Merger Agreement reflecting comments from Meitar as well.

On March 14, 2021, after having reviewed each of Latham’s and Meitar’s proposed changes and discussing the key changes with TBA management, Kirkland sent Latham a revised draft of the Merger Agreement, which included comments from Goldfarb with respect to Israeli law matters. Between March 14, 2021 until the March 17, 2021, Kirkland and Latham discussed various terms of the Merger Agreement and exchanged drafts of the same.

On March 16, 2021, PIPE investors were provided a draft of the Investment Agreement. During the period from March 16 to March 20, 2021, representatives of TBA, ironSource, the Placement Agents, Latham, Meitar, Kirkland and Goldfarb negotiated the terms of the contemplated PIPE Investment with potential PIPE investors, including, among other things, the structure of the PIPE, the conditions to the closing, the registration rights granted to the investors pursuant to the proposed Investment Agreements, representations of the investors and the rights of the investors in the PIPE to terminate the Investment Agreements under certain circumstances. During this period, ironSource’s and TBA’s advisors exchanged revised drafts of the Investment Agreements with potential investors and their respective advisors until the Investment Agreements were finalized by March 20, 2021. PIPE investors executed the Investment Agreements prior to the execution of the Merger Agreement on March 20, 2021.

 

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On March 16, 2021, Mr. Sayle of TBA and Messrs. Bar-Zeev and Ben Ami of ironSource discussed certain transaction terms, including the valuation of ironSource and the amount of the PIPE Investment. After discussion, and upon the advice of the Placement Agents, ironSource determined to reduce the pre-transaction valuation of ironSource to $10 billion in order account for continuously changing market conditions and in order to provide optimal liquidity conditions for its shareholders following the closing of the proposed transactions. Additionally, the parties determined to reduce the amount of the PIPE investment to $1.3 billion, based in part upon the reduced desire of ironSource’s shareholders to sell at the revised valuation. In addition, based on the new valuation, Mr. Sayle requested to increase Thoma Bravo Ascension’s PIPE Investment, to which the parties agreed, from $200 million to $300 million.

On March 16, 2021, members of ironSource management met together with representatives of Latham and Meitar as well as several of the members of the ironSource board of directors, to discuss various issues related to the transaction, including the revised valuation.

On March 17, 2021, Latham and Kirkland agreed on what became substantially the final form of the Merger Agreement. Between March 17 and March 20, 2021, Latham and Kirkland negotiated and finalized various ancillary agreements, including the disclosure schedules to the Merger Agreement.

On March 19, 2021, the board of directors of TBA met via video conference. In attendance were all members of the board, members of TBA management and representatives of Kirkland, Cadwalader, and Maples and Calder (Cayman) LLP, Cayman Islands counsel to TBA (“Maples”). The board received a report from Mr. Sayle regarding business due diligence findings, transaction terms and the status of negotiations with ironSource. In addition, a representative of Maples reviewed the TBA board of directors’ fiduciary duties under Cayman Islands law in the context of consideration of the proposed business combination transaction with ironSource. Certain members of the TBA Board examined the valuation of ironSource and asked various questions of TBA management.

On March 19, 2021, the board of directors of ironSource approved (i) the entry into the Merger Agreement, (ii) the consummation of the business combination, (iii) the consummation of the related transactions contemplated by the Merger Agreement and (iv) certain ancillary matters.

On March 20, 2021, representatives of ironSource, TBA, Latham, Meitar, Kirkland and KPMG LLP, tax advisor to ironSource, held a video conference to finalize certain terms of the Business Combination.

On March 20, 2021, the board of directors of TBA met via video conference. In attendance were all members of the board, members of TBA management and representatives of Kirkland and Cadwalader. A representative of Kirkland presented the terms and conditions of the Merger Agreement and other key transaction documents. After discussion and in consideration of all the factors discussed at prior meetings, the board of directors unanimously adopted resolutions (i) determining that it is in the best interests of TBA and its shareholders for TBA to enter into the Merger Agreement, (ii) adopting the Merger Agreement and authorizing TBA’s execution, delivery and performance of the same and the consummation of the transactions contemplated by the Merger Agreement and entry into the ancillary documents, (iii) approving the calling of an extraordinary shareholder meeting for shareholders to vote on the Merger and related transactions, (iv) approving the filing of the proxy statement with the SEC and (v) approving certain ancillary matters.

On March 20, 2021, the parties executed the Merger Agreement and other related transaction agreements.

On March 21, 2021, a press release was issued announcing the Business Combination. Prior to market open on March 22, 2021, TBA filed a current report on Form 8-K that included the Merger

 

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Agreement, other agreements entered into in connection with the Business Combination, the press release, an investor presentation and transcripts of a webcast and investor presentation.

TBA’s Board of Directors’ Reasons for the Business Combination

TBA’s board of directors, in evaluating the Business Combination, consulted with TBA’s management and financial and legal advisors. In reaching its unanimous resolution (i) that the Merger Agreement and the transactions contemplated thereby are advisable and in the best interests of TBA and its shareholders and (ii) to recommend that the shareholders adopt the Merger Agreement and approve the Business Combination and the transactions contemplated thereby, TBA’s board of directors considered a range of factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business Combination, TBA’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision. TBA’s board of directors viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of TBA’s reasons for the Business Combination and all other information presented in this section is forward- looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

TBA’s board of directors and management also considered the general criteria and guidelines that TBA believed would be important in evaluating prospective target businesses as described in the prospectus for its initial public offering. TBA’s board of directors also considered that they could enter into a business combination with a target business that does not meet those criteria and guidelines. In the prospectus for its initial public offering, TBA stated that it intended to focus primarily on acquiring a company or companies that possess some or all of the following characteristics, although TBA indicated that it may enter into a business combination with a target business that does not meet these criteria or guidelines:

 

   

market leading software franchise;

 

   

strong momentum and a differentiated growth opportunity;

 

   

high ability to achieve operational improvement;

 

   

high proportion of revenue from predictable, recurring sources;

 

   

strong management team;

 

   

fragmented market with near-term inorganic growth opportunities; and

 

   

sensible valuation.

In considering the Business Combination, TBA’s board of directors determined that the Business Combination was an attractive business opportunity that met the vast majority of the criteria and guidelines above, although not weighted or in any order of significance.

In approving the Business Combination, TBA’s board of directors determined not to obtain a fairness opinion. The officers and directors of TBA have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and background and sector expertise enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, TBA’s officers and directors have substantial experience with mergers and acquisitions.

 

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TBA’s board of directors considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Merger Agreement and the transactions contemplated thereby, including, but not limited to, the following material factors:

 

   

Large and Growing Global Market Opportunity. ironSource’s core market opportunity is large and global with strong secular trends that support long-term sustainable growth. ironSource’s core addressable market is projected to grow to as much as $41 billion by 2025 at a forecasted CAGR of 19%. The app economy specifically is one of the fastest-growing markets today, with millions of apps available to billions of users who spend 83% of their time on mobile devices inside apps. Within the app economy, games are the leading category of apps, accounting for the majority of apps in the Apple App Store in 2020 according to Statista, and ironSource has established a strong leadership position within this category, focusing its product development and innovation on building core infrastructure serving mobile game developers. Moreover, there is a growing opportunity to expand the use of the ironSource platform to apps beyond gaming, driving improved revenue, more cost efficient user acquisition and overall business growth for developers of apps in other categories. As of March 31, 2021, over 17% of ironSource’s customers with over $100,000 in trailing 12-month revenue came from industries beyond gaming.

 

   

Comprehensive, Differentiated Platform. The comprehensive nature of Sonic and Aura, coupled with their combination into one platform, serves to differentiate the ironSource platform by providing app developers multiple channels to acquire and engage users, making it the most comprehensive app business platform in the market and underpinning its market leadership. That market leadership makes ironSource an attractive choice for customers looking to grow their app, and the breadth of its solutions means developers of all sizes and at all stages of growth have a way to leverage the platform.

 

   

Track-Record of Innovation. ironSource has demonstrated a track record of innovation. ironSource regularly creates new products to enable it to grow in scale and advance its market leadership. ironSource has been first-to-market with multiple automation and optimization products which have established themselves as the de-facto industry-standard—from ad revenue measurement tools, which connect in-app advertising revenue to marketing spend at a granular level, to a data-science driven cross promotion tool, which allows developers to promote new content to their existing user bases to grow engagement across their portfolio of apps. In February 2020, ironSource launched its Sonic publishing solution, Supersonic, which has already been used to publish 25 games which had over 13 million daily active users as of March 31, 2021. In addition, 18 out of the 25 published games using the Supersonic solution were ranked in the top 10 most downloaded on either the Apple App Store or Google Play Store during 2020 or 2021.

 

   

Significant Scale. ironSource’s scaled base of over 4,000 customers globally provides it with an extensive contextual dataset and a holistic view of the mobile ecosystem, which drives a significant competitive advantage. More data drives better targeting, and its customers provide it with data across over 2.5 billion monthly active users. ironSource powers the business growth of 89% of the top 100 games, and has been ranked multiple times as one of the top 3 platforms for driving both quality and scaled user growth by leading industry indexes. Lastly, the Aura solution suite is used by some of the world’s leading telecom operators and connected device OEMs and reached over 130 million daily active users.

 

   

Long-Term, Sticky Customer Relationships. ironSource’s performance-based business model is highly aligned with its customers’ growth, making it intuitive for customers to start working with ironSource and driving long-term customer relationships. In addition, the depth of integration ironSource’s platform has with its customers drives a sticky relationship and high customer retention rate. A developer can only use one mediation product to manage an app’s

 

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monetization across multiple advertising networks, and a telecom operator can only integrate one device experience management solution at the system-level into its smartphone network. Switching solution providers not only causes customers to incur switching costs, but also to forego the data insights they would receive while using the platform. In addition, customers who onboard a solution from either the Sonic or Aura solution suites tend to onboard additional, complementary solutions over time, further deepening the relationship and increasing switching costs. The combination of these factors results in ironSource demonstrating industry leading financial metrics including a dollar-based net expansion rate of 176% over the trailing 12-month period as of March 31, 2021, and a gross retention rate of 99% for ironSource’s customers who generated over $100,000 revenue over the trailing 12-month period. As of March 31, 2021, ironSource had 292 customers who generated over $100,000 revenue over the trailing 12-month period, collectively accounting for 94% of its revenue.

 

   

Track Record of Organic and Profitable Growth. ironSource has a strong track record of successfully identifying multiple opportunities in the app economy and leveraging its core capabilities around user growth, content monetization and data to execute on them to build successful, profitable solutions. This is reflected in the company’s rare combination of scale, growth, and profitability, achieving $331.5 million of revenue, 83% growth year-over-year, $58.8 million of income from continuing operations, net of income taxes, 18% income from continuing operations, net of income taxes margin, $103.5 million of Adjusted EBITDA and 31% Adjusted EBITDA Margin in 2020 and $119.7 million of revenue, 96% growth year-over-year, and $10.2 million of income from continuing operations, net of income taxes, 9% income from continuing operations, net of income taxes margin, $39.5 million of Adjusted EBITDA and 33% Adjusted EBITDA Margin in the three months ended March 31, 2021. Also noteworthy is ironSource’s accelerating growth rate through 2020 and 2021 where its fourth quarter 2020 and first quarter 2021 growth was higher than any of the previous three quarters.

 

   

Demonstrated M&A Capabilities. ironSource has demonstrated an ability to augment its growth with strategic M&A that has added to the capabilities and scope of its platform, while also successfully integrating and transforming the growth and profitability profiles of acquired companies. For example, in 2015 ironSource acquired SupersonicAds, which formed the basis of ironSource’s mediation product. Further, in 2021, ironSource also acquired Soomla and Luna Labs, which formed the basis of their ad quality product and augmented their creative management solutions respectively.

 

   

Experienced, Founder-Led Management Team with a Proven Track Record of Driving Profitable Growth. ironSource has a unique founder-led culture driven by eight co-founders who have worked together for many years. This management team has been the driving force behind the success of the company to date, and is deeply invested in continuing to steer the company towards future growth. The company culture cultivated by the founders empowers and rewards initiative-taking and encourages the surfacing of new ideas and their actualization into actionable growth drivers.

 

   

Platform for Future Development and Expansion. Public company status, combined with the capital from the Business Combination, is expected to provide ironSource with a strong platform for further developing and expanding its current platform, including through strategic acquisitions.

 

   

Shareholder Liquidity. The Merger Agreement includes an obligation to have the ironSource Class A ordinary shares issued as consideration listed on the New York Stock Exchange, a major U.S. stock exchange, which TBA’s board of directors believes has the potential to offer shareholders greater liquidity.

 

   

Attractive Valuation. TBA’s board of directors believes ironSource’s implied valuation following the Business Combination relative to the current valuations experienced by comparable

 

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publicly traded companies in the software and business enablement technology sector is favorable for TBA and its shareholders.

 

   

Due Diligence. TBA has conducted due diligence examinations of ironSource, including financial, accounting, tax, legal, industry, and technical due diligence, as well as discussions with ironSource’s management and financial, legal and other advisors.

 

   

Lock-Up. Certain shareholders of ironSource have agreed to be subject to a 180 day lockup (subject to early release in certain cases) in respect of their ironSource ordinary shares following the closing of the Business Combination.

 

   

Other Alternatives. TBA’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to TBA, that the Business Combination represents the best potential business combination for TBA and the most attractive opportunity for TBA’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential combination targets, and TBA’s board of directors’ belief that such process has not presented a better alternative.

 

   

Negotiated Transaction. The financial and other terms of the Merger Agreement are reasonable and were the product of arm’s-length negotiations between TBA and ironSource.

TBA’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Rapidly Evolving Technologies and Markets. ironSource operates in an industry that is characterized by rapid technological change, new features, tools, solutions and strategies, as well as evolving legal and regulatory requirements, changing customer needs and a dynamic competitive market. Failing to adapt as technologies and markets evolve could materially and adversely affect ironSource’s market position and business.

 

   

Dependence on Operating System Providers and App Stores. ironSource’s platform depends upon the effective operation of certain mobile operating systems, networks and standards that are run by operating system providers and app stores. ironSource does not control operating system providers or app stores and as a result, ironSource is subject to risks and uncertainties related to the actions taken, or not taken, by these parties.

 

   

Competition. The markets in which ironSource operates are highly competitive, and a significant number of companies have developed or are developing products and solutions that currently, or in the future may, compete with some or all of ironSource’s individual products or solution suites. Certain of these competitors may have significantly greater resources than ironSource to develop new or innovative solutions.

 

   

Ability to Expand into the Wider App Economy. ironSource’s growth strategy is based, in part, on expanding into industries that go beyond mobile gaming apps into the broader app economy. These industries are still in the early stages of adoption of technologies enabling ad-based monetization and user growth, and its is uncertain whether these types of apps will provide the opportunities for expansion that ironSource currently expects, as well as how rapidly these opportunities may materialize, if at all.

 

   

Public Company Systems. The need to update ironSource’s financial systems, controls and operations necessary for a public company, including the costs related thereto.

 

   

Increased Regulation. Regulation in ironSource’s industry, particularly with respect to data protection, could increase, which may limit ironSource’s ability to grow or require ironSource to incur significant additional costs to comply.

 

   

Loss of Key Personnel. Key personnel in ironSource’s industry is vital and competition for such personnel is intense. In particular, the founders who are members of the leadership team are

 

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critical to ironSource’s overall management, as well as the continued development of its solutions, culture and strategic direction. The loss of any key personnel could be harmful to ironSource’s business.

 

   

Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues.

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.

 

   

Redemption Risk. The potential that a significant number of TBA shareholders elect to redeem their shares prior to the consummation of the Business Combination and pursuant to the TBA Articles, which would potentially make the Business Combination more difficult or impossible to complete.

 

   

Shareholder Vote. The risk that TBA’s shareholders may fail to provide the votes necessary to effect the Business Combination.

 

   

Closing Conditions. The fact that the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within TBA’s control.

 

   

Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

 

   

No Third-Party Valuation. The risk that TBA did not obtain a third-party valuation or fairness opinion in connection with the merger.

 

   

Limitations of Review. Limits of the due diligence performed by TBA’s management and outside advisors and the inherent risk that even a thorough review may not uncover all potential risks of the business, which if realized, may impact the value of the business.

 

   

Liquidation of TBA. The risks and costs to TBA if the Business Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in TBA being unable to effect a business combination by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date).

 

   

TBA Shareholders Receiving Minority Position. The fact that existing TBA shareholders will hold a minority position in the combined company, and that existing ironSource equity holders will own shares that have five (5) votes per share compared to existing TBA shareholders, who will own shares that have one (1) vote per share.

 

   

Fees and Expenses. The fees and expenses associated with completing the Business Combination.

In addition to considering the factors described above, TBA’s board of directors also considered other factors including, without limitation:

 

   

Interests of Certain Persons. Some officers and directors of TBA may have interests in the Business Combination, including via Founder Shares or anticipated membership on the ironSource board following the completion of the Business Combination. See the section titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.” TBA’s independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of the TBA board of directors, the Merger Agreement and the transactions contemplated therein, including the Business Combination. TBA’s board of directors concluded that the potentially disparate interests would be mitigated because (i) these interests were

 

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disclosed in the prospectus for TBA’s initial public offering or included in this proxy statement/prospectus, (ii) these disparate interests would exist with respect to a business combination by TBA with any other target business or businesses and (iii) a significant portion of the consideration to TBA’s directors and executive officers was structured to be realized based on future stock performance; and

 

   

Other Risks. Various other risks associated with ironSource’s business and the Business Combination, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.

TBA’s board of directors concluded that the potential benefits that it expected TBA and its shareholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, TBA’s board of directors unanimously determined that the Merger Agreement and the Business Combination contemplated therein were advisable, fair to and in the best interests of TBA and its shareholders.

Unaudited Prospective Financial Information of ironSource

Prior to approval by the TBA board of directors and the execution of the Merger Agreement and related agreements, ironSource provided TBA with internally prepared forecasts, including for calendar years 2021 and 2022. This prospective financial information was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or the generally accepted accounting principles in the United States (“GAAP”) with respect to forward looking financial information. As a private company, ironSource does not, as a matter of course, make public projections as to future performance, revenues, earnings or other results of operations. The forecasts were prepared solely for internal use, capital budgeting and other management purposes. The forecasts are subjective in many respects and therefore susceptible to varying interpretations and the need for periodic revision based on actual experience and business developments, and were not intended for third-party use, including by investors or equity or debt holders.

In its presentation to the TBA board of directors, TBA management presented certain forecasted financial information for ironSource provided by ironSource. The forecasted financial information provided to the TBA board of directors included a range of estimates for revenue and Adjusted EBITDA in each case for both calendar year 2021 and 2022.

ironSource believes that the assumptions used to derive its forecasts are both reasonable and supportable. In preparing these models, ironSource’s management relied on a number of factors, including the executive team’s significant experience in the mobile app economy and the historical performance of ironSource. The forecasts for revenue reflect the consistent application of the accounting policies of ironSource and should be read in conjunction with the accounting policies included in Note 2 — “Significant Accounting Policies” accompanying the historical audited consolidated financial statement of ironSource and included elsewhere in this proxy statement/prospectus. Adjusted EBITDA included in the prospective financial information is considered a non-GAAP financial measure. Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Non-GAAP financial measures as used by ironSource may not be comparable to similarly titled amounts used by other companies. Financial measures provided to a financial advisor in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Accordingly, we have not provided a reconciliation of such financial measures.

 

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This summary of the forecasts is not being included in this proxy statement/prospectus to influence your decision whether to vote in favor of any proposal. None of ironSource, TBA or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ from the forecasts, and none of them undertake any obligation to update or otherwise revise or reconcile the forecasts to reflect circumstances existing after the date the forecasts were generated, including in respect of the potential impact of the COVID-19 pandemic (or any escalation thereof), or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the forecasts are shown to be in error, in each case, except as may be required under applicable law. While presented with numerical specificity, these forecasts were based on numerous variables and assumptions known to ironSource and TBA at the time of preparation. These variables and assumptions are inherently uncertain and many are beyond the control of ironSource or TBA. Important factors that may affect actual results and cause the forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to the businesses of ironSource (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the competitive environment, changes in technology, general business and economic conditions and other factors described or referenced under the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Various assumptions underlying the forecasts may prove to not have been, or may no longer be, accurate. The forecasts may not be realized, and actual results may be significantly higher or lower than projected in the forecasts. The forecasts also reflect assumptions as to certain business strategies or plans that are subject to change. As a result, the inclusion of the forecasts in this proxy statement/prospectus should not be relied on as “guidance” or otherwise predictive of actual future events, and actual results may differ materially from the forecasts. For all of these reasons, the forward-looking financial information described below and the assumptions upon which they are based (i) are not guarantees of future results, (ii) are inherently speculative and (iii) are subject to a number of risks and uncertainties, and readers of this proxy statement/prospectus are cautioned not to rely on them.

The prospective financial information included in this document has been prepared by, and is the responsibility of, ironSource’s management. Neither ironSource’s independent registered public accounting firm, Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, nor any other independent accountants, have audited reviewed, examined, compiled nor applied agreed-upon procedures with respect to the prospective financial information contained herein. Accordingly, Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited does not express an opinion or any other form of assurance with respect thereto. The audit reports included in this proxy statement/prospectus relate to historical financial information. They do not extend to the prospective financial information and should not be read to do so.

EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LAWS, IRONSOURCE DOES NOT INTEND TO MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE PROSPECTIVE FINANCIAL INFORMATION. THE PROSPECTIVE FINANCIAL INFORMATION DOES NOT TAKE INTO ACCOUNT ANY CIRCUMSTANCES OR EVENTS OCCURRING AFTER THE DATE THAT THE INFORMATION WAS PREPARED. READERS OF THIS PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION SET FORTH BELOW. NONE OF IRONSOURCE, TBA NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, ADVISORS OR OTHER REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY IRONSOURCE SHAREHOLDER, TBA SHAREHOLDER OR ANY OTHER PERSON REGARDING ULTIMATE PERFORMANCE COMPARED TO THE INFORMATION CONTAINED IN THE PROSPECTIVE FINANCIAL INFORMATION OR THAT FINANCIAL AND OPERATING RESULTS WILL BE ACHIEVED.

 

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The following table presents the selected forecasted financial information that TBA management reviewed with the TBA board of directors and which was used by TBA in connection with the financial analysis summarized below:

 

     Year Ended December 31,  
     2021E      2022E  
     (in millions)  

Revenue

   $ 455      $ 622  

Adjusted EBITDA(1)

     130        188  

 

(1)

ironSource defines Adjusted EBITDA as income from continuing operations, net of income taxes as adjusted for income taxes, financial expenses, net and depreciation and amortization, further adjusted for assets impairment, share-based compensation expense and fair value adjustment related to contingent consideration. ironSource cautions investors that amounts presented in accordance with the definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBITDA in the same manner. Adjusted EBITDA should not be considered as an alternative to net profit or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

The forecasts are based on information as of the date of this proxy statement/prospectus and reflect numerous assumptions including assumptions with respect to general business, economic, market, regulatory and financial conditions and various other factors, all of which are difficult to predict and many of which are beyond the Company’s control, such as the risks and uncertainties contained in the section “Risk Factors”.

The ironSource prospective financial information was prepared using several assumptions, including the following assumptions that ironSource management believed to be material:

 

   

projected revenue is based on a variety of operational assumptions including, among others, continued development of our technology adoption of additional solutions by our customers, timing for release of new solutions and assumptions about their expected adoption, the continued growth of our markets and

 

   

other key assumptions impacting profitability projections including headcount, research and development costs, sales and marketing costs and excluding costs associated with public company operations and compliance.

Satisfaction of 80% Test

It is a requirement under the TBA Articles and NYSE rules that any business acquired by TBA have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable) at the time of the execution of a definitive agreement for an initial business combination. The balance of the funds in the Trust Account (excluding deferred underwriting commissions and taxes payable) at the time of the execution of the Merger Agreement with ironSource was approximately $1,000,000,000 and 80% thereof represents approximately $800,000,000. In determining whether the 80% requirement was met, rather than relying on any one factor, TBA’s board of directors concluded that it was appropriate to base such valuation all of the qualitative factors described in this section and the section of this proxy statement entitled “TBAs Board of Directors Reasons for the Business Combination and Recommendation of Its Board of Directors” as well as quantitative factors, such as the anticipated implied equity value of the combined company being approximately $11.1 billion with no material debt expected to be outstanding. Based on the qualitative and quantitative information used to approve the Business Combination described herein, TBA’s board of directors determined that the foregoing 80% fair market value

 

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requirement was met. TBA’s board of directors believes that the financial skills and background of its members qualify it to conclude that the acquisition met the 80% requirement.

Interests of Certain Persons in the Business Combination

In considering the recommendation of TBA’s board of directors to vote in favor of approval of the Business Combination Proposal and the Merger Proposal shareholders should keep in mind that TBA’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of TBA’s shareholders generally. In particular:

 

   

If the Business Combination with ironSource or another business combination is not consummated by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles), TBA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and TBA’s board of directors, dissolving and liquidating. In such event, the Founder Shares and Private Placement Shares held by the Sponsor and TBA’s directors and officers, which were acquired prior to and concurrently with the TBA IPO for an aggregate purchase price of $25,000 and $24,000,000, respectively, would be worthless because the holders thereof are not entitled to participate in any redemption or liquidating distribution with respect to such Founder Shares and/or Private Placement Shares. Such shares had an aggregate market value of $277.8 million based upon the closing price of $10.14 per share on the NYSE on May 17, 2021. On the other hand, if the Business Combination is consummated, each outstanding Founder Share and Private Placement Share will be converted into one ironSource Class A ordinary share subject to adjustment described herein.

 

   

If TBA is unable to complete a business combination within the required time period, the Sponsor will be liable under certain circumstances described herein to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by TBA for services rendered or contracted for or products sold to TBA. If TBA consummates a business combination, on the other hand, TBA will be liable for all such claims.

 

   

The Sponsor and TBA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on TBA’s behalf, such as identifying and investigating possible business targets and business combinations. However, if TBA fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, TBA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by January 20, 2023 (or July 20, 2023, if TBA has executed a letter of intent, agreement in principle or definitive agreement for its business combination by January 20, 2023 but has not completed the business combination by such date) (or such later date as may be approved by TBA’s shareholders in an amendment to the TBA Articles). As of the date of this proxy statement/prospectus, the Sponsor and TBA’s officers and directors and their affiliates had incurred approximately $5,000 of unpaid reimbursable expenses and may incur additional expenses in the future.

 

   

The Merger Agreement provides for the continued indemnification of TBA’s current directors and officers and the continuation of directors and officers liability insurance covering TBA’s current directors and officers.

 

   

TBA’s Sponsor, officers and directors (or their affiliates) may make loans from time to time to TBA to fund certain capital requirements. On November 6, 2020, the Sponsor agreed to loan

 

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TBA an aggregate of up to $400,000 to cover expenses related to the TBA IPO pursuant to a promissory note that was repaid in full on January 20, 2021. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to TBA outside of the Trust Account.

 

   

Orlando Bravo will be a member of the board of directors of ironSource following the closing of the Business Combination and, therefore, in the future Mr. Bravo will receive any cash fees, stock options or stock awards that ironSource’s board of directors determines to pay to its non-executive directors.

 

   

TB Ascension, which is an affiliate of Thoma Bravo, will participate in the purchase of PIPE Shares from ironSource and/or its shareholders at the closing of the Transactions, and certain of TBA’s directors and officers are affiliated with Thoma Bravo.

Anticipated Accounting Treatment

The Transaction is comprised of a series of transactions pursuant to the Merger Agreement, as described elsewhere in this proxy statement/prospectus. For accounting purposes, the Transaction effectuated the following:

 

1.

The exchange of shares held by ironSource shareholders, which is accounted for as a recapitalization in accordance with U.S. GAAP.

 

2.

The mergers of TBA with Merger Sub and Merger Sub II, which are not within the scope of ASC 805 (“Business Combinations) since TBA does not meet the definition of a business in accordance with ASC 805. The term “Business Combination” as used elsewhere in this proxy statement/prospectus refers to the business combination as defined in the Merger Agreement and is not meant to imply that this transaction constitutes a business combination under ASC 805. Any difference between the fair value of ironSource Class A ordinary shares issued and the fair value of TBA’s identifiable net assets will be recorded against additional paid-in capital. For purposes of the unaudited pro forma condensed combined financial information, it is assumed that the fair value of each ironSource Class A ordinary share issued to TBA shareholders is equal to the fair value of each ironSource Class A ordinary share held by each ironSource shareholder. In the no redemption scenario, the shares acquired by TBA will be accounted for as treasury stock.

 

3.

The Investment Agreements related to the PIPE, to the extent they are a primary investment in ironSource (in the maximum redemption scenario) which were executed concurrently with and following the Merger Agreement, will result in the issuance of ironSource Class A ordinary shares (to the extent Primary PIPE Shares are issued and sold in the PIPE), leading to an increase in share capital and share premium.

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for the filing of required notifications and the expiration or termination of the required waiting periods under the HSR Act and filings with the Cayman Islands necessary to effectuate the Business Combination.

Vote Required for Approval

The approval of the Business Combination Proposal will require an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary

 

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general meeting. The Transactions will not be consummated if TBA has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

Brokers are not entitled to vote on the Business Combination Proposal absent voting instructions from the beneficial holder. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

The approval of the Business Combination Proposal is a condition to the consummation of the Transactions. If the Business Combination Proposal is not approved, the other proposals (except an Adjournment Proposal, as described below) will not be presented to the TBA shareholders for a vote.

Resolution to be Voted Upon

The full text of the resolution to be proposed is as follows:

RESOLVED, as an ordinary resolution, that TBA’s entry into the Merger Agreement, dated as of March 20, 2021, by and among TBA, ironSource, Showtime Cayman and Showtime Cayman II, a copy of which is attached to this proxy statement/prospectus as Annex A, pursuant to which, among other things, the merger of Showtime Cayman with and into TBA, with TBA surviving the merger, and immediately thereafter and as part of the same overall transaction, the surviving entity merging with and into Showtime Cayman II, with Showtime Cayman II surviving the merger as a wholly-owned subsidiary of ironSource, which will become the parent/public company following the business combination, in accordance with the terms and subject to the conditions of the Merger Agreement, be approved, ratified and confirmed in all respects.”

Recommendation of TBA’s Board of Directors

TBA’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE TBA SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.

No Appraisal Rights

Under Section 239 of the Cayman Companies Law, the holders of TBA Ordinary Shares will not have appraisal or dissenter rights in connection with the Business Combination. Holder of public shares should consult their Cayman Islands legal counsel regarding their rights under the Cayman Companies Law.

Resale of ironSource Class A ordinary shares

The ironSource Class A ordinary shares to be issued to shareholders of TBA in connection with the Business Combination will be freely transferable under the Securities Act except for shares issued to any shareholder who may be deemed for purposes of Rule 144 under the Securities Act an “affiliate” of TBA immediately prior to the Effective Time or an “affiliate” of ironSource following the Business Combination. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under common control with, ironSource or TBA (as appropriate) and may include the executive officers, directors and significant shareholders of ironSource or TBA (as appropriate).

 

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Stock Exchange Listing of ironSource Class A Ordinary Shares

ironSource will use reasonable best efforts to cause, prior to the Effective Time, the ironSource Class A ordinary shares issuable pursuant to the Merger Agreement to be approved for listing on NYSE under the symbol “IS,” subject to official notice of issuance. Approval of the listing on NYSE of the ironSource Class A ordinary shares (subject to official notice of issuance) is a condition to each party’s obligation to complete the Business Combination.

Delisting and Deregistration of TBA Ordinary Shares

If the Business Combination is completed, shares of Class A Shares will be delisted from NYSE and will be deregistered under the Exchange Act.

Combined Company Status as a Foreign Private Issuer under the Exchange Act

ironSource expects to remain a “foreign private issuer” (under SEC rules). Consequently, upon consummation of the Business Combination, the combined company will be subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. The combined company will be required to file its annual report on Form 20-F for the year ending December 31, 2021 with the SEC by April 30, 2022. In addition, the combined company will furnish reports on Form 6-K to the SEC regarding certain information required to be publicly disclosed by the combined company in Israel or that is distributed or required to be distributed by the combined company to its shareholders.

Based on its foreign private issuer status, the combined company will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as a U.S. company whose securities are registered under the Exchange Act. The combined company will also not be required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. In addition, among other matters, the combined company officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of the ironSource Class A ordinary shares.

Given the substantial number of ironSource Class A ordinary shares that ironSource will issue in the Business Combination to TBA shareholders who are U.S. residents and the prospective, increased U.S.-oriented profile of the combined company’s officers and directors, assets and business administration, it is possible that the combined company will lose its status as a foreign private issuer after the Business Combination, potentially as soon as January 1, 2022. If that happens the combined company will no longer be exempt from such rules and, among other things, will be required to file quarterly reports on Form 10-Q containing interim financial statements as if it were a company incorporated in the United States, as well as annual reports on Form 10-K. The combined company’s qualification for foreign private issuer status will be tested again as of June 30, 2021 (the final business day of the second fiscal quarter in 2021) to determine whether the combined company will instead be subject to the reporting requirements applicable to U.S. companies registered under the Exchange Act beginning at the start of 2022. If it no longer meets the definition of a “foreign private issuer” as of that test date, the combined company will begin to be required to file a quarterly report on Form 10-Q for the quarter ending March 31, 2022, and will be required to continue to file quarterly reports with the SEC thereafter.

Despite its initial exemption due to its foreign private issuer status, ironSource, and following the consummation of the Business Combination, the combined company, nevertheless expects to issue interim quarterly financial information publicly and to furnish it to the SEC on Form 6-K.

 

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Combined Company Status as an Emerging Growth Company under U.S. Federal Securities Laws and Related Implications

Each of TBA and ironSource is, and consequently, following the Business Combination, the combined company will be, 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”). As such, the combined company will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s securities may be more volatile.

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 combined 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 combined 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 combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

The combined company will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the combined company’s initial public offering, (b) in which the combined company’s has total annual gross revenue of at least $1.07 billion, or (c) in which the combined company is deemed to be a large accelerated filer, which means the market value of the combined company’s common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which the combined company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

 

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PROPOSAL TWO—THE MERGER PROPOSAL

The Merger Proposal, if approved, will authorize the Plan of Merger.

Under the Merger Agreement, the approval of the Merger Proposal is a condition to the adoption of the Business Combination Proposal and vice versa. Accordingly, if the Business Combination Proposal is not approved, the Merger Proposal will not be presented at the extraordinary general meeting.

A copy of the Plan of Merger is attached to this proxy statement/prospectus as Annex C.

Required Vote

The approval of the Merger Proposal will require a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two thirds of TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Brokers are not entitled to vote on the Merger Proposal absent voting instructions from the beneficial holder. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

Resolution to be Voted Upon

The full text of the resolution to be proposed is as follows:

“RESOLVED, as a special resolution, that the Plan of Merger be authorised, approved and confirmed in all respects, that Thoma Bravo Advantage be and is hereby authorised to enter into the Plan of Merger, and that the merger of Showtime Cayman with and into Thoma Bravo Advantage, with Thoma Bravo Advantage surviving the merger as a wholly owned subsidiary of ironSource Ltd., be authorised, approved and confirmed in all respects.”

Recommendation

TBA’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TBA SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE MERGER PROPOSAL.

 

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PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

The Adjournment Proposal, if adopted, will allow TBA’s board of directors to adjourn the extraordinary general meeting to a later date or dates, if necessary. In no event will TBA solicit proxies to adjourn the extraordinary general meeting or consummate the Transactions beyond the date by which it may properly do so under the TBA Articles and the law of the Cayman Islands. The purpose of the Adjournment Proposal is to provide more time to meet the requirements that are necessary to consummate the Transactions. See the section titled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Transactions.”

Consequences If the Adjournment Proposal Is Not Approved

If the Adjournment Proposal is presented to the meeting and is not approved by the shareholders, TBA’s board of directors may not be able to adjourn the extraordinary general meeting to a later date or dates. In such event, the Transactions would not be completed.

Required Vote

The approval of the Adjournment Proposal will require the affirmative vote of the holders of a majority of the TBA Ordinary Shares who, being present and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

Recommendation

TBA’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TBA SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

 

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THE MERGER AGREEMENT

For a discussion of the Business Combination structure and merger consideration provisions of the Merger Agreement, see the section entitled “Proposal One – The Business Combination Proposal.” Such discussion and the following summary of other material provisions of the Merger Agreement is qualified by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. TBA shareholders are encouraged to read the Merger Agreement in its entirety for a more complete understanding of the Business Combination.

The Merger Agreement summary below is included in this proxy statement/prospectus only to provide you with information regarding the terms and conditions of the Merger Agreement and not to provide any other factual information regarding TBA, ironSource or their respective businesses. Accordingly, the representations and warranties and other provisions of the Merger Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus.

Closing and Effective Time of the Transactions

The Closing will take place on the date that is two business days following the satisfaction or waiver of the conditions set forth in the Merger Agreement (the “Closing Date”) and summarized below under the subsection entitled The Merger Agreement—Conditions to Closing of the Transactions,” unless TBA and ironSource agree in writing to another place, time or date. The Transactions are expected to be consummated promptly after the extraordinary general meeting of TBA’s shareholders described in this proxy statement/prospectus.

Representations and Warranties

The Merger Agreement contains representations and warranties of TBA relating, among other things, to:

 

   

corporate organization and qualification;

 

   

the authorization, delivery and enforceability of the Merger Agreement and the Ancillary Documents;

 

   

governmental approvals and no conflicts;

 

   

litigation and proceedings;

 

   

Trust Account;

 

   

brokers’ fees;

 

   

SEC filings;

 

   

financial statements;

 

   

internal controls;

 

   

compliance with the Sarbanes-Oxley Act;

 

   

absence of undisclosed liabilities;

 

   

compliance with laws;

 

   

business activities;

 

   

taxes;

 

   

capitalization;

 

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NYSE listing;

 

   

material contracts;

 

   

transactions with related parties;

 

   

Sponsor Support Agreement;

 

   

Investment Company Act and Jumpstart Our Business Startups Act;

 

   

absence of certain changes; and

 

   

non-Israeli residency.

The Merger Agreement contains representations and warranties of ironSource, Merger Sub and Merger Sub II relating, among other things, to:

 

   

corporate organization and qualification;

 

   

subsidiaries;

 

   

the authorization, delivery and enforceability of the Merger Agreement and the Ancillary Documents;

 

   

governmental approvals and no conflicts;

 

   

capitalization;

 

   

financial statements;

 

   

internal controls;

 

   

absence of certain changes;

 

   

absence of undisclosed liabilities;

 

   

litigation and proceedings;

 

   

compliance with laws;

 

   

material contracts;

 

   

employee benefits;

 

   

labor matters;

 

   

taxes;

 

   

insurance;

 

   

real property;

 

   

permits;

 

   

environmental matters;

 

   

intellectual property;

 

   

information technology security;

 

   

environmental matters;

 

   

brokers’ fees;

 

   

transactions with related parties; and

 

   

international trade.

 

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Covenants

The parties have each agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective as promptly as reasonably practicable the transactions contemplated by the Merger Agreement.

ironSource has also agreed to, except as (i) expressly contemplated by the Merger Agreement or the Ancillary Documents, (ii) consented to in writing by TBA (such consent not to be unreasonably conditioned, withheld or delayed) or (iii) as required by applicable law, conduct and operate its business in the ordinary course of business in all material respects through the earlier of the Closing or the valid termination of the Merger Agreement pursuant to its terms.

TBA and ironSource have agreed that, except as (i) expressly contemplated by the Merger Agreement or the Ancillary Documents, (ii) consented to in writing by TBA (such consent not to be unreasonably conditioned, withheld or delayed) or (iii) as required by applicable law, and subject to certain disclosed exceptions, neither ironSource nor its subsidiaries will take the following actions, among others, during the interim period from the date of the Merger Agreement through the earlier of the Closing or the valid termination of the Merger Agreement pursuant to its terms:

 

   

change or amend its organizational documents;

 

   

make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly owned subsidiary of ironSource either to ironSource or any other wholly owned subsidiary of ironSource;

 

   

except for entries, modifications, amendments, waivers or terminations in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under or terminate, any material contract, or any lease;

 

   

other than in connection with the exercise of options outstanding as of the date of the Merger Agreement or otherwise granted as permitted by the terms of the Merger Agreement, (i) issue, deliver, sell, transfer, pledge or dispose of, or place any lien (other than a permitted lien) on, any equity securities of ironSource or any of its subsidiaries or (ii) issue or grant any options, warrants or other rights to purchase or obtain any equity securities of ironSource or any of its subsidiaries;

 

   

sell, assign, transfer, convey, lease, license, abandon, allow to lapse or expire, subject to or grant any material lien (other than permitted liens) on, or otherwise dispose of, any material assets, rights or properties (including material intellectual property), other than (i) the sale or license of goods and services to customers in the ordinary course of business, (ii) the sale or other disposition of assets or equipment deemed by ironSource in its reasonable business judgment to be obsolete or otherwise warranted in the ordinary course of business, (iii) grants of non-exclusive licenses of intellectual property in the ordinary course of business, (iv) as already contracted by ironSource or any of its subsidiaries, or (v) transactions among ironSource and its subsidiaries or among its subsidiaries;

 

   

settle any pending or threatened action, suit, audit, arbitration or legal, judicial or administrative proceeding, if such settlement would require payment by ironSource in an amount greater than $10,000,000 or admit criminal wrongdoing;

 

   

except in the ordinary course of business consistent with past practices, or as otherwise required by the terms of any existing ironSource benefit plan or existing employment contract as in effect on the date hereof or as otherwise required under applicable law, (i) pay or promise to pay, fund any new, enter into or make any grant of any severance, change in control, retention or termination payment to any ironSource employee, (ii) take any action to accelerate

 

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any material payments or benefits, or the funding of any material payments or benefits, payable or to become payable to any officer level ironSource employees, (iii) take any action to materially increase any compensation or material benefits of any ironSource employee, except for bonuses, base salary increases or in connection with any promotions or (iv) establish, adopt, enter into, amend or terminate any material ironSource benefit plan or any contract that would be a material ironSource benefit plan if it were in existence as of the date of the Merger Agreement;

 

   

negotiate, modify, extend, or enter into any collective bargaining agreement or other contract with any labor union, labor organization or works council or any arrangement with an employer organization or recognize or certify any labor union, labor organization, works council, or group of employees as the bargaining representative for any employees of ironSource or its subsidiaries;

 

   

make any loans or advance any money or other property to any person, except for (i) advances in the ordinary course of business to employees, officers or directors of ironSource or any of its subsidiaries for expenses, (ii) prepayments and deposits paid to suppliers of ironSource or any of its subsidiaries in the ordinary course of business, (iii) trade credit extended to customers of ironSource or any of its subsidiaries in the ordinary course of business and (iv) advances or other payments among ironSource and its subsidiaries;

 

   

redeem, purchase, repurchase or otherwise acquire, or offer to redeem, purchase, repurchase or acquire, any equity securities of ironSource any of its subsidiaries other than (x) transactions among ironSource and its subsidiaries or among the subsidiaries of ironSource, or (y) in connection with the termination of employees of ironSource or any of its subsidiaries under ironSource’s existing option plans;

 

   

adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any equity securities of ironSource or any of its subsidiaries;

 

   

make any material change in accounting principles, estimation techniques and assumptions or methods of financial accounting materially affecting the reported consolidated assets, liabilities or results of operations of ironSource and its subsidiaries, other than as may be required by GAAP or applicable law;

 

   

adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of ironSource or its subsidiaries;

 

   

make, change or revoke any material tax election in a manner inconsistent with past practice, change or revoke any material accounting method with respect to taxes, file any material tax return in a manner materially inconsistent with past practice, settle or compromise any material tax claim or tax liability, enter into any material closing agreement with respect to any tax, or surrender any right to claim a material refund of taxes, or change its jurisdiction of tax residency;

 

   

other than in the ordinary course of business, incur, create, assume or guarantee any indebtedness for borrowed money in excess of $10,000,000, other than (i) ordinary course trade payables, (ii) between ironSource and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries or (iii) in connection with borrowings, extensions of credit and other financial accommodations under ironSource’s and its subsidiaries’ existing credit facilities, notes and other existing indebtedness as of the date of the Merger Agreement and, in each case, any refinancings thereof;

 

   

other than in the ordinary course of business, enter into any agreement that materially restricts the ability of ironSource or its subsidiaries to engage or compete in any line of business, enter into any agreement that materially restricts the ability of ironSource or its subsidiaries to enter into a new line of business or enter into any new line of business;

 

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(i) make any capital expenditures that in the aggregate exceed $10,000,000, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with, or (ii) delay the making of any material capital expenditures as provided in, ironSource’s annual capital expenditures budget for periods following the date hereof, made available to TBA;

 

   

accelerate or delay any annual or other bonuses ahead of the date on which such bonuses would have been paid in the ordinary course of business for fiscal year 2021;

 

   

except in the ordinary course of business consistent with past practices, (i) make any changes which are material to ironSource and its subsidiaries (taken as a whole) with respect to their policies or practices concerning (A) collection of accounts receivable, or (B) payment of accounts payable; or (ii) make any changes which are material to ironSource and its subsidiaries (taken as a whole) in its cash management customs and practices (including customs and practices relating to the timing of collection of receivables, the timing of payment of payables and any other movement of cash, cash equivalents or marketable securities);