Relativity Acquisition (RACY) - 2025 Q1 - Quarterly Report

FORM 10-Q Cover Information Relativity Acquisition Corp. submitted its quarterly report (Form 10-Q) for the period ended March 31, 2025 - Relativity Acquisition Corp. submitted its quarterly report (Form 10-Q) for the period ended March 31, 2025[1] Status Indicators | Indicator | Status | | :--- | :--- | | Accelerated Filer | No | | Large Accelerated Filer | No | | Non-Accelerated Filer | Yes | | Smaller Reporting Company | Yes | | Emerging Growth Company | Yes | | Shell Company | Yes | Shares Issued and Outstanding | Stock Class | Shares Issued and Outstanding as of May 15, 2025 | | :--- | :--- | | Class A Common Stock (par value $0.0001 per share) | 4,309,987 shares | | Class B Common Stock (par value $0.0001 per share) | 1 share | PART I – FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements and related notes for the periods ended March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Summary | Indicator | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets ($) | | | | Cash | $45,438 | $1,674 | | Cash in Trust Account | $773,667 | $769,267 | | Total Assets | $837,203 | $803,544 | | Liabilities ($) | | | | Warrant Liability | $716,864 | $541,787 | | Total Liabilities | $3,173,203 | $2,666,407 | | Stockholders' Deficit ($) | | | | Accumulated Deficit | $(3,028,877) | $(2,542,359) | | Total Stockholders' Deficit | $(3,028,453) | $(2,541,935) | Consolidated Statements of Operations Summary (Three Months Ended March 31) | Indicator | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Formation and Operating Costs | $293,991 | $407,744 | | Operating Loss | $(293,991) | $(407,744) | | Change in Fair Value of Warrant Liability | $(175,077) | $157,802 | | Interest Income from Trust Account Cash | $6,111 | $16,109 | | Net Loss | $(463,778) | $(236,796) | | Basic and Diluted Net Loss Per Share (Class A Common Stock, Redeemable) | $(0.11) | $(0.05) | Consolidated Statements of Cash Flows Summary (Three Months Ended March 31) | Cash Flow Category | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(173,680) | $(104,232) | | Net Cash Used in Investing Activities | $(16,822) | $(1,004,593) | | Net Cash Provided by Financing Activities | $234,266 | $1,102,218 | | Net Change in Cash | $43,764 | $(6,607) | | Cash at End of Period | $45,438 | $524 | Item 1. Financial Statements This section contains the company's unaudited consolidated financial statements for the periods ended March 31, 2025, and December 31, 2024, along with notes, indicating an expanded net loss, increased cash outflow, and significant going concern doubts for Q1 2025 Condensed Consolidated Balance Sheets This section presents the company's condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024 Balance Sheet Key Data | Indicator | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash | $45,438 | $1,674 | | Cash in Trust Account | $773,667 | $769,267 | | Total Assets | $837,203 | $803,544 | | Warrant Liability | $716,864 | $541,787 | | Accumulated Deficit | $(3,028,877) | $(2,542,359) | Unaudited Condensed Consolidated Statements of Operations This section presents the company's unaudited condensed consolidated statements of operations for the three months ended March 31, 2025, and March 31, 2024 Operations Statement Key Data | Indicator | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Formation and Operating Costs | $293,991 | $407,744 | | Operating Loss | $(293,991) | $(407,744) | | Change in Fair Value of Warrant Liability | $(175,077) | $157,802 | | Interest Income from Trust Account Cash | $6,111 | $16,109 | | Net Loss | $(463,778) | $(236,796) | | Basic and Diluted Net Loss Per Share (Class A Common Stock) | $(0.11) | $(0.05) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit This section presents the company's unaudited condensed consolidated statements of changes in stockholders' deficit for the three months ended March 31, 2025, and March 31, 2024 Changes in Stockholders' Deficit | Change Item | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Beginning Balance (Accumulated Deficit) | $(2,542,359) | $(2,117,202) | | Increase in Class A Common Stock Subject to Redemption | $(22,647) | $(19,384) | | Excise Tax Related to Redemptions | $(93) | $(10,192) | | Net Loss | $(463,778) | $(236,796) | | Ending Balance (Accumulated Deficit) | $(3,028,877) | $(2,383,574) | Unaudited Condensed Consolidated Statements of Cash Flows This section presents the company's unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2025, and March 31, 2024 Cash Flow Statement Key Data | Cash Flow Category | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(173,680) | $(104,232) | | Net Cash Used in Investing Activities | $(16,822) | $(1,004,593) | | Net Cash Provided by Financing Activities | $234,266 | $1,102,218 | | Net Change in Cash | $43,764 | $(6,607) | | Cash at End of Period | $45,438 | $524 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited condensed consolidated financial statements, offering additional context and explanations for the reported figures Note 1 — Organization and Business Operations This note describes the company's formation as a SPAC, its business purpose, operational status, and key events affecting its operations and going concern - Company is a special purpose acquisition company (SPAC), formed on April 13, 2021, to complete a business combination; as of March 31, 2025, it has not commenced any operations, with primary income from interest on IPO proceeds[22][23] - The company has repeatedly extended its business combination deadline, currently to February 15, 2026; a special meeting on February 13, 2025, approved charter amendments for this extension, resulting in 753 Class A common shares redeemed and approximately $9,266 withdrawn from the trust account[38][39] - The company was delisted from Nasdaq on June 3, 2024, after receiving notice for non-compliance with multiple listing rules, including market value, public float, and market value of publicly held shares[46] - A business combination agreement was signed on February 28, 2025, with Instinct Brothers Co., Ltd., to acquire all its equity for $200 million in Pubco common stock[116] - The company faces risks from economic uncertainty, inflation, rising interest rates, and geopolitical instability, which could adversely affect its ability to complete a business combination[50] - An excise tax liability of $10,285 was incurred from redemption activities in 2024 and on February 13, 2025, under the Inflation Reduction Act of 2022[51][53] - As of March 31, 2025, the company had $45,438 in its operating bank account and a working capital deficit of $2,392,803; management believes the inability to complete a business combination by February 15, 2026, and subsequent mandatory liquidation, raises substantial doubt about its ability to continue as a going concern[54][56] Note 2 — Significant Accounting Policies This note outlines the significant accounting policies used in preparing the financial statements, including GAAP compliance, investment classification, and equity treatment - Financial statements are prepared in accordance with U.S. GAAP and SEC rules; as an emerging growth company, the company has elected not to opt out of the extended transition period for new or revised financial accounting standards[57][61] - Cash in the trust account, totaling $773,667 as of March 31, 2025, is invested in U.S. government securities or qualifying money market funds and classified as trading securities[65] - Redeemable Class A common stock is classified as temporary equity, with its carrying value immediately adjusted for changes in redemption value[74][88][89] Redeemable Class A Common Stock Shares and Redemption Value | Date | Redeemable Shares | Redemption Value Per Share ($) | | :--- | :--- | :--- | | March 31, 2025 | 62,488 | $11.08 | | December 31, 2024 | 63,241 | $10.74 | Effective Tax Rate | Period | Effective Tax Rate (%) | | :--- | :--- | | Three Months Ended March 31, 2025 | 0.18% | | Three Months Ended March 31, 2024 | 1.27% | - The company is evaluating the impact of ASU 2023-09 (income tax disclosure improvements) and ASU 2023-07 (reportable segment disclosure improvements), with ASU 2023-07 adoption having no material impact on financial statements and disclosures[81][82] Note 3 — Initial Public Offering This note details the company's IPO, including the units issued, proceeds, and the amount placed in the trust account - The company completed its IPO on February 15, 2022, issuing 14,375,000 units at $10.00 per unit, including the full exercise of the over-allotment option, with $146,625,000 of net proceeds deposited into the trust account[84][85] Changes in Redeemable Common Stock | Item | Amount ($) | | :--- | :--- | | Redeemable Common Stock as of December 31, 2023 | $1,723,901 | | Less: Redemptions | $(1,019,230) | | Add: Revaluation of Carrying Value to Redemption Value | $(25,599) | | Redeemable Common Stock as of December 31, 2024 | $679,072 | | Less: Redemptions | $(9,266) | | Add: Revaluation of Carrying Value to Redemption Value | $22,647 | | Redeemable Common Stock as of March 31, 2025 | $692,453 | Note 4 — Private Placement This note describes the private placement units purchased by the sponsor concurrently with the IPO - Concurrently with the IPO, the sponsor purchased 653,750 private placement units at $10.00 per unit, totaling $6,537,500, with each unit comprising one Class A common stock share and one private placement warrant[91] - Private placement warrants are non-redeemable while held by the sponsor or permitted transferees and are exercisable on a cashless basis[92] Note 5 — Related Party Transactions This note discloses transactions with related parties, including stock conversions, promissory notes, and administrative service fees - 3,593,749 Class B common shares held by the sponsor and other initial stockholders were converted to Class A common shares on February 27, 2023[94] - Promissory notes with SVES LLC and Mazaii Corp Ltd. were terminated, and a debt forgiveness gain was recognized; as of March 31, 2025, there is an outstanding balance of $225,000 under a promissory note with Instinct Bio Technical Company Pte Ltd[101][102][103][104] - The company pays a $10,000 monthly administrative service fee to an affiliate of the sponsor for office space, utilities, and administrative support, incurring $30,000 for the three months ended March 31, 2025[106] Note 6 — Commitments and Contingencies This note outlines the company's commitments and contingent liabilities, including registration rights, advisory fees, and business combination agreements - Holders of founder shares, private placement units, and private placement warrants possess registration rights, allowing them to require the company to register their securities[109] - A.G.P. has been engaged as a business combination advisor, with a fee of $5,031,250 payable upon successful completion of a business combination; no related fees were recorded as of March 31, 2025, as the business combination is not yet certain[110][111] - A business combination agreement was signed with Instinct Brothers Co., Ltd. on February 28, 2025, for a merger valued at $200 million in Pubco common stock, following the termination of a prior agreement with SVES on May 15, 2024[115][116] Note 7 — Fair Value Measurement This note provides information on the fair value measurements of the company's warrant liabilities, including their classification and valuation methodologies Warrant Liability Fair Value (March 31, 2025) | Liability Category | Fair Value ($) | | :--- | :--- | | Public Warrants | $685,681 | | Private Warrants | $31,183 | | Total Warrant Liability | $716,864 | Warrant Liability Fair Value (December 31, 2024) | Liability Category | Fair Value ($) | | :--- | :--- | | Public Warrants | $518,219 | | Private Warrants | $23,568 | | Total Warrant Liability | $541,787 | - Public warrants were initially classified as Level 3, then reclassified to Level 1, and subsequently reclassified back to Level 3, currently valued using a market approach; private warrants have been valued using a Monte Carlo model since issuance and are classified as Level 3 fair value measurements[121][122][123] Changes in Warrant Liability Fair Value | Item | Warrant Liability ($) | | :--- | :--- | | Warrant Liability as of December 31, 2024 | $541,787 | | Change in Fair Value of Warrant Liability | $175,077 | | Warrant Liability as of March 31, 2025 | $716,864 | | Warrant Liability as of December 31, 2023 | $526,007 | | Change in Fair Value of Warrant Liability | $(157,802) | | Warrant Liability as of March 31, 2024 | $368,205 | Note 8 — Warrant Liability This note details the company's outstanding warrant liabilities, including their number, exercise price, and redemption terms - As of March 31, 2025, and December 31, 2024, the company had 15,028,750 outstanding warrants, comprising both public and private warrants, which are classified as liabilities and remeasured at fair value[125][126] - Each warrant holder is entitled to purchase one Class A common stock share at an exercise price of $11.50 per share; warrants become exercisable at the later of the business combination completion or 12 months after the IPO, and expire five years after the business combination completion or earlier redemption or liquidation[127][128] - The company may redeem outstanding warrants (excluding private warrants) if the closing price of Class A common stock equals or exceeds $18.00 for 20 out of 30 trading days[131] Note 9 — Stockholders' Deficit This note provides details on the company's authorized and outstanding share capital, including preferred stock, Class A common stock, and Class B common stock - The company is authorized to issue 1,000,000 shares of preferred stock, none of which were issued or outstanding as of March 31, 2025, and December 31, 2024[132] - 100,000,000 shares of Class A common stock are authorized, with 4,247,499 shares issued or outstanding (excluding potentially redeemed shares) as of March 31, 2025, and December 31, 2024[133] - 10,000,000 shares of Class B common stock are authorized, with 1 share issued and outstanding as of March 31, 2025, and December 31, 2024; 3,593,749 Class B common shares were converted to Class A common shares on February 27, 2023[134][135] - The conversion ratio of Class B common stock is subject to anti-dilution provisions, unless waived by a majority of Class B common stock holders[136] Note 10 — Segment Reporting This note clarifies that the company operates as a single reportable segment, with the CEO overseeing overall financial and operational performance - The company operates as a single reportable segment, with the Chief Executive Officer, as the chief operating decision maker, assessing the company's assets, operating results, and financial metrics on an overall basis[137][138] Segment Reporting Key Metrics | Indicator | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash in Trust Account | $773,667 | $769,267 | | Cash | $45,438 | $1,674 | | | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | Formation and Operating Costs | $293,991 | $407,744 | | Interest Income from Trust Account and Investments | $6,111 | $16,109 | Note 11 — Subsequent Events This note confirms that no subsequent events requiring adjustment or disclosure were identified by the company - No subsequent events requiring adjustment or disclosure were identified[142] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and operating results for the three months ended March 31, 2025, highlighting its status as a blank check company, expanded net loss, going concern doubts, and recent business combination agreement - As a blank check company, the company had not commenced any operations as of March 31, 2025, with all activities related to its formation, IPO, and the search for a business combination target; it will not generate operating revenue until a business combination is completed, with non-operating income primarily from interest on IPO funds in the trust account[146][152] - The business combination deadline has been extended to February 15, 2026; as of March 31, 2025, there were 62,488 public shares, 4,309,988 total Class A common shares, and 1 Class B common share outstanding[147][148] - A business combination agreement was signed with Instinct Brothers Co., Ltd. on February 28, 2025, for a merger valued at $200 million in Pubco common stock[149] Operating Performance Comparison (Three Months Ended March 31) | Indicator | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net Loss | $(463,778) | $(236,796) | | Formation and Operating Costs | $293,991 | $407,744 | | Change in Fair Value of Warrant Liability | $(175,077) | $157,802 | | Interest Income from Trust Account Cash | $6,111 | $16,109 | - As of March 31, 2025, the company had a working capital deficit of $2,392,803 and approximately $773,667 in its trust account; the inability to complete a business combination by February 15, 2026, and subsequent mandatory liquidation, raises substantial doubt about its ability to continue as a going concern[156][162][170][173] - The company has received a $225,000 promissory note loan from Instinct Bio Technical Company Pte Ltd. for working capital purposes[167] - As an emerging growth company, the company has elected not to opt out of the extended transition period for new or revised financial accounting standards[174][175] - The company has no off-balance sheet arrangements[184] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk under Exchange Act Rule 12b-2 - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[186] Item 4. Control and Procedures Management assessed the effectiveness of disclosure controls and procedures as of March 31, 2025, concluding they were ineffective due to untimely closing of books and regulatory filings - As of March 31, 2025, the company's disclosure controls and procedures were deemed ineffective, primarily due to the failure to timely close books and submit regulatory filings[188] - Disclosure controls and procedures can only provide reasonable, not absolute, assurance, and their design considers resource limitations and cost-effectiveness[189] PART II – OTHER INFORMATION This section provides other information not covered in the financial statements, including legal proceedings, risk factors, and sales of unregistered equity securities Item 1. Legal Proceedings To the company's management's knowledge, there are no pending or threatened legal proceedings against the company or its officers or directors - Company management states there are currently no pending or threatened legal proceedings against the company or any of its officers or directors[192] Item 1A. Risk Factors As a smaller reporting company, the company is not required to include risk factors in this report but reiterates no material changes since the last report and highlights new risks from military conflicts and the 1% U.S. federal excise tax - As a smaller reporting company, the company is not required to include risk factors in this report but re-emphasizes that previously disclosed risk factors have not materially changed[193] - New risk factors include potential military conflicts in Ukraine, the Middle East, or other regions, which could lead to securities volatility or impact the operations or financial condition of potential target companies[194] - Since 2023, a 1% U.S. federal excise tax may be imposed on share redemptions under the Inflation Reduction Act of 2022, potentially reducing the cash available for business combinations[195][196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds during this reporting period - No unregistered sales of equity securities or use of proceeds occurred during this reporting period[197] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during this reporting period - No defaults upon senior securities occurred during this reporting period[198] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable to the company[199] Item 5. Other Information There is no other information requiring disclosure during this reporting period - No other information is reported during this period[200] Item 6. Exhibits This section lists the exhibits filed as part of or incorporated by reference into this report, including executive certifications and XBRL data files - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, along with Inline XBRL instance and taxonomy extension files[201][202] PART III This section contains the signatures of the company's authorized officers, certifying the accuracy and completeness of the report SIGNATURES This report was duly signed by Relativity Acquisition Corp.'s Chief Executive Officer Tarek Tabsh and Chief Financial Officer Steven Berg on May 15, 2025 - The report was signed by Chief Executive Officer Tarek Tabsh and Chief Financial Officer Steven Berg on May 15, 2025[205][207]