Finnovate Acquisition (FNVT) - 2022 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This part presents the unaudited condensed financial statements and management's discussion and analysis for Finnovate Acquisition Corp Item 1. Financial Statements Finnovate Acquisition Corp.'s unaudited condensed financial statements, including balance sheets, operations, equity, and cash flows, are presented with detailed notes Condensed Balance Sheets The condensed balance sheets detail the company's financial position, showing stable Trust Account investments and a decrease in cash Condensed Balance Sheets | Metric | March 31, 2022 (Unaudited) | December 31, 2021 (Audited) | | :-------------------------------- | :--------------------------- | :-------------------------- | | Cash | $760,526 | $1,011,771 | | Investments held in Trust Account | $175,966,462 | $175,952,102 | | Total Assets | $177,349,172 | $177,633,484 | | Total Current Liabilities | $95,049 | $218,631 | | Working capital loan – related party | $449,765 | $449,765 | | Total Liabilities | $544,814 | $668,396 | | Class A ordinary shares subject to possible redemption | $175,950,000 | $175,950,000 | | Total Shareholders' Equity | $854,358 | $1,015,088 | Condensed Statements of Operations Statements of operations reveal a net loss for the period, primarily due to administrative expenses, partially offset by Trust Account interest Condensed Statements of Operations | Metric | For the three months ended March 31, 2022 | For the period from March 15, 2021 (inception) through March 31, 2021 | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------------------------------- | | Formation, general and administrative expenses | $175,090 | $10,832 | | Interest earned on Investment held in Trust Account | $14,360 | - | | Net loss | $(160,730) | $(10,832) | | Basic and diluted net loss per redeemable ordinary share | $(0.01) | $(0.00) | | Basic and diluted net loss per non-redeemable ordinary share | $(0.01) | $(0.00) | Condensed Statements of Changes in Shareholders' Equity This statement details changes in shareholders' equity, reflecting the net loss and components like ordinary shares and accumulated deficit Condensed Statements of Changes in Shareholders' Equity | Metric | Balance – December 31, 2021 | Net Loss | Balance – March 31, 2022 | | :-------------------------- | :-------------------------- | :--------- | :----------------------- | | Class A Shares Amount | $15 | - | $15 | | Class B Shares Amount | $431 | - | $431 | | Additional Paid-in Capital | $1,654,188 | - | $1,654,188 | | Accumulated Deficit | $(639,546) | $(160,730) | $(800,276) | | Total Shareholders' Equity | $1,015,088 | $(160,730) | $854,358 | Condensed Statements of Cash Flows The cash flow statement indicates a net cash outflow from operating activities, driven by net loss and changes in operating items Condensed Statements of Cash Flows | Metric | For the three months ended March 31, 2022 | For the period from March 15, 2021 (inception) through March 31, 2021 | | :------------------------------------ | :---------------------------------------- | :---------------------------------------------------------------- | | Net loss | $(160,730) | $(10,832) | | Net cash provided by operating activities | $(251,245) | $(25,000) | | Net cash provided by financing activities | — | $25,000 | | Net change in cash | $(251,245) | — | | Cash at end of period | $760,526 | — | Notes to Condensed Financial Statements These notes provide detailed information on the company's organization, IPO, Trust Account, accounting policies, related party transactions, and liquidity NOTE 1 – ORGANIZATION AND BUSINESS BACKGROUND Finnovate Acquisition Corp., a SPAC, completed its IPO in November 2021, placing $175.95 million in a Trust Account, facing liquidation risk by May 2023 - Finnovate Acquisition Corp. was incorporated on March 15, 2021, as a blank check company (SPAC) for the purpose of a business combination[19] - The company completed its IPO on November 8, 2021, selling 17,250,000 units (including over-allotment) for gross proceeds of $172,500,000[21][65] - $175,950,000 from the IPO proceeds and private placement warrants was placed in a Trust Account, invested in U.S. government securities or money market funds[23][67] - The company must complete a Business Combination within 18 months from the IPO closing (by May 8, 2023), or it will liquidate, which raises substantial doubt about its ability to continue as a going concern[32][38] Liquidity and Working Capital | Metric | As of March 31, 2022 | | :--------------------- | :------------------- | | Cash in operating account | $760,526 | | Working capital | $1,076,203 | | Working Capital Loan outstanding | $449,765 | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section outlines significant accounting policies, including GAAP basis, emerging growth company status, and policies for investments, shares, and warrants - The financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations (Form 10-Q, Article 8 of Regulation S-X)[41] - The company is an 'emerging growth company' under the JOBS Act and has elected to use the extended transition period for complying with new or revised financial accounting standards[43][44] - Investments held in the Trust Account are cash equivalents in money market funds, presented at fair value, with gains/losses included in income[48] - Class A ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value[53] - The company accounts for its outstanding warrants as equity-classified instruments[56] - Net loss per ordinary share is calculated using the two-class method, allocating loss proportionally to redeemable and non-redeemable shares[60] Net Loss Per Ordinary Share (March 31, 2022) | Share Class | Allocation of Net Loss | Weighted-Average Shares Outstanding | Basic and Diluted Net Loss Per Share | | :---------- | :--------------------- | :---------------------------------- | :----------------------------------- | | Class A | $(128,806) | 17,400,000 | $(0.01) | | Class B | $(31,924) | 4,312,500 | $(0.01) | NOTE 3 – INITIAL PUBLIC OFFERING The company completed its IPO in November 2021, selling 17,250,000 units at $10.00 each, with proceeds deposited into a Trust Account - IPO completed on November 8, 2021, with full over-allotment exercised on November 12, 2021[65] - 17,250,000 units sold at $10.00 per unit, generating gross proceeds of $172,500,000[65] - Each unit consists of one Class A ordinary share and three-quarters of one redeemable Public Warrant, exercisable at $11.50 per share[66] - $175,950,000 ($10.20 per Unit) from net proceeds was deposited into the Trust Account[67] NOTE 4 – PRIVATE PLACEMENT WARRANTS The Sponsor and EarlyBirdCapital purchased 8,800,000 Private Placement Warrants for $8.8 million, exercisable at $11.50 per share - 8,800,000 Private Placement Warrants were sold to the Sponsor and EarlyBirdCapital for gross proceeds of $8,800,000[68] - Each Private Placement Warrant is exercisable for one Class A ordinary share at $11.50 per share[69] - Proceeds from Private Placement Warrants held in the Trust Account will fund public share redemption if no business combination is completed, and the warrants will expire worthless[69] NOTE 5 – RELATED PARTY TRANSACTIONS This section details related party transactions, including Founder Shares, Director Shares, related party loans, and an administrative services agreement - Sponsor paid $25,000 for 4,312,500 Class B ordinary shares (Founder Shares) in March 2021, which are subject to transfer restrictions[70][71] - 150,000 Class A ordinary shares (EBC Founder Shares) were issued to EarlyBirdCapital and its designees, deemed compensation by FINRA and subject to a 180-day lock-up[72][74] - 75,000 Founder Shares were transferred to independent directors in October 2021[75] - A Promissory Note from the Sponsor for up to $250,000 was fully repaid as of November 8, 2021[76] - As of March 31, 2022, $449,765 was outstanding under a Working Capital Loan from the Sponsor or affiliates, which may be convertible into warrants[77] - The company pays the Sponsor $3,000 per month for administrative services, with $15,000 accrued as of March 31, 2022[78] NOTE 6 —INVESTMENT HELD IN TRUST ACCOUNT The Trust Account held $175,966,462 as of March 31, 2022, invested in a money market fund and measured at fair value Investment Held in Trust Account (March 31, 2022) | Asset | Fair Value (Level 1) | | :---------------- | :------------------- | | Money market fund | $175,966,462 | NOTE 7 – COMMITMENTS AND CONTINGENCIES This section outlines commitments, including registration rights, underwriting agreements, and a business combination marketing agreement with EarlyBirdCapital - Holders of Founder Shares and Private Placement Warrants are entitled to registration rights[80] - EarlyBirdCapital earned an underwriting discount of $3,450,000 from the IPO and over-allotment[81] - The company will pay EarlyBirdCapital a cash fee of 3.5% ($6,037,500) of the gross proceeds of the Public Offering upon consummation of a Business Combination for advisory services[82] NOTE 8 – SHAREHOLDERS' EQUITY This section details authorized and outstanding share capital, including Preference, Class A, and Class B Ordinary Shares, and Public Warrant terms - Authorized: 5,000,000 Preference Shares (none issued), 500,000,000 Class A Ordinary Shares, 50,000,000 Class B Ordinary Shares[83][84][85] - Outstanding (March 31, 2022): 150,000 Class A Ordinary Shares (excluding redeemable), 4,312,500 Class B Ordinary Shares[84][85] - Class B ordinary shares convert to Class A ordinary shares on a one-for-one basis at the time of a Business Combination, subject to adjustment[88] - Public Warrants become exercisable on the later of 12 months from IPO closing or 30 days after a Business Combination, at $11.50 per share[89] - The company may redeem Public Warrants at $0.01 per warrant if Class A ordinary share price equals or exceeds $18.00 for 20 trading days within a 30-trading day period[92] NOTE 9 – SUBSEQUENT EVENTS No subsequent events were identified after the balance sheet date up to the financial statements' issuance date - No subsequent events were identified as of the date the financial statements were issued[96] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, highlighting net loss, liquidity challenges, going concern risk, and critical accounting policies as a blank check company - The company is a blank check company formed to complete an initial business combination and has not commenced any operations[99][106] - Net loss for the three months ended March 31, 2022, was $160,730, primarily from administrative expenses, offset by interest income from the Trust Account[107] - The company had $760,526 in cash outside the Trust Account for working capital as of March 31, 2022[108] - The automatic liquidation if a business combination is not completed by May 8, 2023, raises substantial doubt about the company's ability to continue as a going concern[113] - Expected primary liquidity requirements include $280,000 for business combination expenses, $75,000 for regulatory reporting, $54,000 for administrative services, and $841,000 for working capital[111] - The company has no off-balance sheet arrangements or long-term debt, capital, or operating lease obligations as of March 31, 2022[114][115] - As an 'emerging growth company' under the JOBS Act, the company is delaying the adoption of new accounting standards[125] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faced no material market or interest rate risk as of March 31, 2022, due to Trust Account investments in short-term government securities - As of March 31, 2022, the company was not subject to any material market or interest rate risk[128] - Investments in the Trust Account are in short-term U.S. government treasury obligations or money market funds, resulting in no material exposure to interest rate risk[128] - The company has not engaged in, nor does it expect to engage in, hedging activities[130] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective as of March 31, 2022[132] - Controls and procedures provide reasonable, not absolute, assurance and may not prevent all errors or fraud[131][133] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[134] PART II OTHER INFORMATION This part provides other information, including legal proceedings, risk factors, unregistered sales of equity securities, and exhibits Item 1. Legal Proceedings The company reported no legal proceedings as of the filing date - There are no legal proceedings[136] Item 1A. Risk Factors Risk factors from the Form 10-K are incorporated by reference, with no material changes reported as of the current filing date - Risk factors are incorporated by reference from the Form 10-K filed on April 10, 2022[137] - No material changes to the disclosed risk factors as of the filing date of this 10-Q[137] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of equity securities, including Founder Shares and Private Warrants, and the use of IPO proceeds placed in a Trust Account - In March 2021, 4,312,500 Class B ordinary shares were issued to the Sponsor for $25,000, with 75,000 shares transferred to independent directors[138] - 150,000 Class A ordinary EBC founder shares were issued to EarlyBirdCapital and its designees for nominal consideration[139] - Founder shares convert to Class A ordinary shares on a one-for-one basis upon business combination, subject to adjustment, and are generally not transferable until 180 days after a business combination[140][141] - 8,800,000 Private Warrants were sold to the Sponsor and EarlyBirdCapital for $8,800,000, identical to Public Warrants but with transfer restrictions[143] - A total of $175,950,000 from the IPO, over-allotment, and private warrants was placed in a U.S.-based trust account[144] - There has been no material change in the planned use of proceeds from the IPO[146] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities[147] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[148] Item 5. Other Information The company reported no other information for this item - No other information to report[149] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - Exhibits include certifications (Rule 13a-14(a), 18 U.S.C. Section 1350) and Inline XBRL documents[151]