Financial Risks and Liabilities - The company expects to incur significant costs in pursuit of its acquisition plans, with potential funding through an initial public offering and loans from affiliates [152]. - If the company is unable to complete its initial business combination due to insufficient funds, it may be forced to cease operations and liquidate the trust account [154]. - The sponsor is liable for claims that reduce the trust account funds below $10.20 per public share, but there is no guarantee that the sponsor has sufficient funds to satisfy these obligations [158]. - Claims by third parties could reduce the per-share redemption amount received by shareholders, potentially below $10.20 [156]. - The company may incur substantial debt to complete a business combination, which could negatively impact the value of shareholders' investments [172]. - Shareholders may be held liable for claims against the company to the extent of distributions received upon redemption of their shares [166]. - The company may face challenges in obtaining additional financing for its initial business combination, which could lead to restructuring or abandonment of the transaction [188]. - The company may face significant consequences if its securities are delisted from Nasdaq, including reduced liquidity and trading activity [237]. - The company may incur additional costs if the choice-of-forum provision is found inapplicable or unenforceable, potentially affecting financial condition and operations [201]. Shareholder Considerations - Public shareholders may receive approximately $10.20 per share on the liquidation of the trust account, with the possibility of receiving less under certain circumstances [153]. - There is no specified maximum redemption threshold, allowing the company to complete a business combination even if a majority of shareholders disagree [181]. - The company has approximately 19.5% of its ordinary shares owned by initial shareholders, which may facilitate amendments to its memorandum and articles of association with a two-thirds majority approval [185]. - The company may amend the terms of public warrants with the approval of at least a majority of the outstanding public warrants, potentially increasing the exercise price or shortening the exercise period [186]. - If the initial business combination is not completed, initial shareholders will lose their entire investment, creating a conflict in selecting a target business [227]. Regulatory and Compliance Issues - The company may face adverse effects from changes in laws or regulations, impacting its ability to negotiate and complete its initial business combination [165]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an acquisition, particularly if the target company is not compliant [194]. - The requirement to furnish financial statements may limit the pool of potential target businesses due to the inability of some targets to provide necessary disclosures [189]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements, which may affect investor attractiveness [191]. - The company has not opted out of the extended transition period for new financial accounting standards, which may complicate comparisons with other public companies [192]. - The company is a "smaller reporting company," allowing it to provide only two years of audited financial statements, which may hinder performance comparisons with other public companies [193]. - The company does not intend to utilize exemptions from Nasdaq's corporate governance requirements, currently complying with them [256]. Operational and Market Risks - The company may pursue acquisition opportunities with early-stage or financially unstable businesses, which carry inherent risks [178]. - The lack of diversification may subject the company to numerous economic, competitive, and regulatory risks [176]. - Economic uncertainty and volatility in financial markets, exacerbated by geopolitical tensions, may adversely affect the company's ability to identify and consummate an initial business combination [196]. - Economic and political conditions in the country of operations could significantly affect the company's results and prospects [207]. - Exchange rate fluctuations may adversely affect the financial results of a target business, especially if revenues and expenses are in foreign currencies [208]. - The company may face challenges in managing cross-border operations, including regulatory compliance and cultural differences [205]. Management and Governance - The company is dependent on a small group of officers and directors, and their unexpected departure could adversely affect operations [220]. - Officers and directors are not required to commit full time to the company's affairs, leading to potential conflicts of interest [221]. - The company may engage in business combinations with entities affiliated with its sponsor, officers, and directors, raising potential conflicts of interest [225]. - Initial shareholders own approximately 19.5% of the issued and outstanding shares, which allows them to control the appointment of the board of directors [240]. - The company has not adopted a policy to prohibit directors and officers from having financial interests in transactions, which may lead to conflicts of interest [224]. Financial Instruments and Market Activity - The initial public offering price was $10.00 per unit, resulting in an immediate dilution of approximately 96.8% (or $9.68 per share) for public shareholders [241]. - The pro forma net tangible book value per Class A ordinary share after the IPO was negative $0.32 [241]. - The company issued 12,937,500 warrants with an exercise price of $11.50 per warrant as part of the 17,250,000 units sold in the IPO [244]. - If additional Class A ordinary shares are issued at a Newly Issued Price of less than $9.20, the exercise price of the warrants will be adjusted to 115% of the higher of the Market Value and the Newly Issued Price [242]. - The company may redeem outstanding warrants at $0.01 per warrant if the Class A ordinary shares' price equals or exceeds $18.00 for any 20 trading days within a 30 trading-day period [243]. - Up to $1,500,000 of working capital loans may be converted into warrants at the price of $1.00 per warrant [244]. - The potential issuance of additional Class A ordinary shares could make the company a less attractive acquisition vehicle [246]. - The potential issuance of shares underlying various warrants may adversely affect the market price of Class A ordinary shares [262]. - EarlyBirdCapital will receive a cash fee equal to up to 3.5% of the total gross proceeds raised in the initial public offering if the initial business combination is consummated [272]. Miscellaneous - The company may reincorporate or merge with another entity, which could result in tax implications for shareholders [270]. - As of December 31, 2021, the company was not subject to any material market or interest rate risk due to investments in U.S. government treasury obligations [327]. - The company has not engaged in any hedging activities since inception and does not expect to do so in the future [328]. - The market for directors and officers liability insurance has become more expensive and less favorable, potentially complicating the negotiation of initial business combinations [230]. - The company may need to purchase additional insurance to protect directors and officers from potential liabilities, adding expenses post-business combination [232].
Finnovate Acquisition Corp.(FNVTU) - 2021 Q4 - Annual Report