iacb-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2022


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number 001-40048

____________________________

Innovid Corp.

(Exact name of registrant as specified in its charter)

____________________________


Delaware						87-3769599
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)
30 Irving Place, 12th Floor New York, New York						10003
(Address of Principal Executive Offices)						(Zip Code)

+1 (212) 966-7555

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	CTV	New York Stock Exchange
Warrants to purchase one share of common stock, each at an exercise price of $11.50 per share	CTVWS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this

chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The registrant had outstanding 132,091,610 shares of common stock as of May 6, 2022.

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TABLE OF CONTENTS


			Page
Part I
Item 1. Financial Statements and Supplementary Data			F-1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			37

Part II
Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 3. Defaults Upon Senior Securities			42
Item 4. Mine Safety Disclosures			42
Item 5. Other Information			42
Item 6. Exhibits			42
Signatures			43

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BASIS OF PRESENTATION

Unless otherwise stated in this prospectus or the context otherwise requires:

“Advertising Services” means the Company’s leading independent software platform that provides ad serving and creative services;

“APAC” means Asia-Pacific region;

“acquisition date” means the completion of the acquisition of TVS on February 28, 2022;

“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act;

“CEO” means Chief Executive Officer;

“CFC” means controlled foreign corporation;

“CFO” means Chief Financial Officer;

“Closing” means the closing of the Transaction;

“Closing Date” means the closing date of the Transaction;

“Common stock” means Innovid common stock, par value $0.0001 per share;

“Company,” “we,” “us” and “our” refers to Innovid Corp . and its subsidiaries;

“COVID-19” means the novel coronavirus which began in 2019;

“CTV” means connected TV;

“EMEA” means Europe, the Middle East and Africa region;

“Exchange Act” means the Securities Exchange Act of 1934, as amended;

“Exchange Ratio” means the ratio which applied to each share of Legacy Innovid redeemable convertible preferred stock and common stock when converted into the right to receive approximately 1.337 shares of the common stock of the Company as a result of the Transaction.

“Flexibility Act” means the Paycheck Protection Program Flexibility Act;

“Forward Purchase Agreements” means the forward purchase agreements entered into, or amended and restated, by ION on January 26, 2021;

“Founder Shares” means the 6,325,000 shares of ION Class B Ordinary Shares Stock purchased by the Sponsor in a private placement prior to the ION IPO, subject to certain forfeitures immediately prior to Closing agreed to by Sponsor in the Sponsor Support Agreement;

“GAAP” means accounting principles generally accepted in the United States of America;

“GILTI” means global intangible low-taxed income;

“Innovid” or “Innovid Corp.” means Innovid Corp., a Delaware corporation;

“Innovid Corp. Incentive Plan” means Innovid’s 2021 Incentive Award Plan;

“Innovid Inc.” or “Legacy Innovid” means Innovid, Inc., a Delaware corporation;

“ION” means ION Acquisition Corp 2 Ltd. prior to the Transaction;

“ION Class B Ordinary Share” means the Class B ordinary shares of ION, par value $0.0001 per share;

“ION IPO” means ION’s initial public offering that was consummated on February 16, 2021;

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“JOBS Act” means the Jumpstart Our Business Startups Act of 2012;

“LATAM” means Latin American region;

“Legacy Plan” means Legacy Innovid’s stock option plan.

“Merger Agreement” means the Agreement and Plan of Merger dated June 24, 2021 by and among ION, Innovid, Inc., Merger Sub 1 and Merger Sub 2;

“Merger Sub 1” means Inspire Merger Sub 1, Inc., a Delaware corporation and a direct wholly owned subsidiary of ION;

“Merger Sub 2” means Inspire Merger Sub 2, LLC, a Delaware Limited Liability Company and a direct wholly owned subsidiary of ION;

“Mergers” mean Merger 1 and Merger 2, collectively, of Merger Sub 1 and Merger Sub 2, respectively;

“NYSE” means the New York Stock Exchange;

“OTT” means over-the-top;

“PIPE Financing” means the purchase of shares of our common stock pursuant to the Subscription Agreements, and the purchase of shares of our common stock and warrants pursuant to the Forward Purchase Agreements;

“PIPE Investment” means the issuance and sale of $200,000,000 of common stock in a private placement to the PIPE Investors pursuant to the Subscription Agreements;

“PIPE Investors” mean those certain investors participating in the PIPE Financing pursuant to the Subscription Agreements and the Forward Purchase Agreements;

“PPP Loan” means Paycheck Protection Program Loan;

“Private Placement Warrants” means warrants which were not transferable, assignable or salable until 30 days after the completion of the Transaction and exercisable on a cashless basis and non-redeemable so long as they are held by the initial purchaser or its permitted transferees.

“SEC” means the United States Securities and Exchange Commission;

“Securities Act” means the Securities Act of 1933, as amended;

“Sponsor” means ION Holdings 2, LP, a Cayman Islands exempted limited partnership;

“Sponsor Support Agreement” means that certain Support Agreement, dated June 22, 2021, by and among the Sponsor, ION, Innovid Inc. and the other parties thereto, as amended and modified from time to time;

“SSIG” means the Special Situations Investing Group II, LLC;

“SSP” means stand-alone selling price;

“Subscription Agreements” means the subscription agreements dated June 24, 2021 the “Initial Subscription Agreements” and October 18, 2021 the “Additional Subscription Agreements” pursuant to which (together with the Forward Purchase Agreements) the PIPE Financing will be consummated;

“SVB” means Silicon Valley Bank;

“Transaction” means the Mergers and the related transactions contemplated by the Merger Agreement;

“TVSquared” means TV Squared Limited;

“TVS” means “TVSquared”;

“UK” means United Kingdom;

“US” means United States of America;

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“warrants” means the redeemable warrants (including those that underlie the units) that were offered and sold by ION in its initial public offering and registered pursuant to the IPO registration statement or the redeemable warrants of Innovid Corp. issued as a matter of law upon the conversion thereof following the Transaction, as context requires;

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business. These statements are based on the beliefs and assumptions of the management of Innovid. Although Innovid believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot assure you that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Form 10-Q, words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

• our public securities’ potential liquidity and trading;

• our ability to raise financing in the future;

• our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

• changes in applicable laws or regulations;

• our ability to maintain and expand relationships with advertisers;

• decreases and/or changes in CTV audience viewership behavior;

• Innovid’s ability to make the right investment decisions and to innovate and develop new solutions;

• the accuracy of Innovid’s estimates of market opportunity, forecasts of market growth and projections of future financial performance;

• the extent of investment required in Innovid’s sales and marketing efforts;

• Innovid’s ability to effectively manage its growth;

• sustained overall demand for advertising;

• the impact of the COVID-19;

• the continued acceptance of digital advertising by consumers and the impact of opt-in, opt-out or ad-blocking technologies;

• Innovid’s ability to scale its platform and infrastructure to support anticipated growth and transaction volume;

• the impact of increasing competition in the digital advertising space, including with competitors who have significantly more resources;

• other risks and uncertainties indicated in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2022, including those set forth under the section titled “Risk Factors.”

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

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INNOVID, CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except stock and per stock data)


Item 1. Financial Statements
	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	45,441	$	156,696
Trade receivables, net (allowance for doubtful accounts of $74 and $81 at March 31, 2022 and December 31 2021, respectively)	38,766		35,422
Prepaid expenses and other current assets	6,571		3,131
Total current assets	90,778		195,249
NON-CURRENT ASSETS:
Long-term deposit	303		310
Long-term restricted deposits	453		462
Property and equipment, net	6,599		4,840
Goodwill	97,202		4,555
Intangible assets, net	59,265		—
Right of use lease asset	3,497		—
Other non-current assets	542		116
Total non-current assets	167,861		10,283
TOTAL ASSETS	$	258,639	$	205,532
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables	3,791		5,026
Employees and payroll accruals	10,159		7,742
Accrued expenses and other current liabilities	4,183		3,082
Current portion of long-term debt	6,000		6,000
Lease liabilities - current portion	1,681		—
Total current liabilities	25,814		21,850
NON-CURRENT LIABILITIES:
Lease liabilities - non-current portion	3,253		—
Other non-current liabilities	10,471		3,455
Warrants liability	16,185		18,972
Total non-current liabilities	29,909		22,427
TOTAL LIABILITIES	55,723		44,277
COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)
STOCKHOLDERS’ EQUITY (DEFICIT):
Common stock of $0.0001 par value - Authorized: 500,000,000 and 500,000,000 at March 31, 2022 and December 31, 2021, respectively; Issued and outstanding: 132,088,772 and 119,017,380 at March 31, 2022 and December 31, 2021, respectively	13		12
Additional paid-in capital	342,828		293,719
Accumulated deficit	(139,925)		(132,476)
Total stockholders’ equity	202,916		161,255
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	258,639	$	205,532

The accompanying notes are an integral part of the condensed consolidated financial statement

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INNOVID, CORP. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except stock and per stock data)


	Three months ended March 31,
	2022		2021
	(Unaudited)		(Unaudited)
Revenues	$	25,862	$	18,013
Cost of revenues	6,344		3,862
Gross profit	19,518		14,151
Operating expenses:
Research and development	7,329		5,297
Sales and marketing	10,520		6,651
General and administrative	11,466		2,391
Total operating expenses	29,315		14,339
Operating loss	(9,797)		(188)
Finance expenses, net	(2,311)		1,569
Loss before taxes	(7,486)		(1,757)
Taxes on income	(37)		179
Net loss	(7,449)		(1,936)

Accretion of preferred stock to redemption value	—		(23,728)
Net loss attributable to common stockholders	$	(7,449)	$	(25,664)
Net loss per stock attributable to common stockholders (1)
Basic and diluted	$	(0.06)	$	(1.55)
Weighted-average number of stock used in computing net loss per stock attributable to common stockholders (1)
Basic and diluted	124,245,358		16,547,808

The accompanying notes are an integral part of the condensed consolidated financial statements.

(1) Prior period results have been adjusted to reflect the exchange of Innovid Inc’s common stock for Innovid Corp’s common stock at an exchange ratio of approximately 1.337 as a result of the Transaction. See Note 3, “Transaction and Business Combination” in the notes to the unaudited interim condensed consolidated financial statements for further details.

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INNOVID, CORP. AND ITS SUBSIDIARIES CONDENSED STATEMENTS OF CHANGES IN TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except stock data)


	Temporary equity			Common stock			Treasury stock			Additional paid-in capital		Accumulated deficit		Total stockholders’ equity (deficit)
	Number	Amount		Number	Amount		Number	Amount


Balance as of December 31, 2020	73,690,340	$	86,997	16,275,609	$	2	1,914,328	$	(1,629)	$	10	$	(48,113)	$	(49,730)
Accretion of preferred stock to redemption value	—	23,728		—	—		—	—		(586)		(23,142)		(23,728)
Stock-based compensation	—	—		—	—		—	—		280		—		280
Stock options exercised	—	—		761,697	—		—	—		306		—		306
Net loss	—	—

SEC Form 10-Q filed by Innovid Corp.