FINNOVATE ACQUISITION CORP. All statements other than statements of historical fact included in this Annual
Report including, without limitation, statements under "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding our financial position, business strategy and the plans and objectives
of management for future operations, are forward-looking statements. When used
in this Quarterly Report, words such as "anticipate," "believe," "estimate,"
"expect," "intend" and similar expressions, as they relate to us or our
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, our management. Actual results could differ
materially from those contemplated by the forward-looking statements as a result
of certain factors detailed in our filings with the
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties
Overview
We are a blank check company incorporated in the
We consummated our initial public offering on
20
The issuance of additional shares in an initial business combination:
? may significantly dilute the equity interest of investors in the initial
public offering, which dilution would increase if the anti-dilution provisions
in our Class B ordinary shares resulted in the issuance of our Class A
ordinary shares on a greater than one-to-one basis upon conversion of our
Class B ordinary shares;
? may subordinate the rights of holders of our Class A ordinary shares if shares
of preferred shares are issued with rights senior to those afforded our Class
A ordinary shares;
? could cause a change in control if a substantial number of shares of our Class
A ordinary shares are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could result
in the resignation or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A ordinary shares
and/or warrants.
Similarly, if we issue debt securities, or otherwise incur significant debt, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of such covenants;
? our immediate payment of all principal and accrued interest, if any, if the
debt is payable on demand;
? our inability to obtain necessary additional financing if the debt
contains covenants restricting our ability to obtain such financing while
the debt is outstanding;
? our inability to pay dividends on our ordinary or preferred shares;
? using a substantial portion of our cash flow to pay principal and interest
on our debt, which will reduce the funds available for dividends on our
ordinary shares if declared and our ability to pay expenses, make capital
expenditures and acquisitions and fund other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in
our business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry
and competitive conditions and adverse changes in government regulation;
and
? limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements and
execution of our strategy and for other purposes, and other disadvantages
compared to our competitors who have less debt.
We expect to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
We completed the sale of 15,000,000 units (the "public units" and, with respect
to the ordinary shares included in the public units being offered, the "public
shares") at
On
21
Following the closing of the initial public offering on
Results of Operations
As of
For the three months ended
For the period from
Liquidity, Capital Resources and Going Concern
As of
As noted above, pursuant to our initial public offering on
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our initial
shareholders or their affiliates or certain of our officers and directors may,
but are not obligated to, loan us funds as may be required. If we complete our
initial business combination, we would repay such loaned amounts (subject to the
conversion rights described below). In the event that our initial business
combination does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment. Up to
22
We expect our primary liquidity requirements prior to our initial business
combination to include approximately
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in the trust account to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a "no-shop" provision (a provision designed to keep target businesses from "shopping" around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a "no-shop" provision would be determined based on the terms of the specific initial business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. There is no assurance that the Company's plan to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
If the Company is not able to consummate a Business Combination before
Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangement as of
Contractual Obligations
As of
We have entered into an administrative services agreement pursuant to which we
are paying our sponsor for office space, utilities and administrative support
services, in an amount of
We have engaged
23
We have engaged a third-party consultant to provide us with assistance in
various aspects of our potential Business Combination. Pursuant to the terms of
the agreement, we have agreed to pay a contingent fee of at least
Critical Accounting Policies
Management's discussion and analysis of our results of operations and liquidity
and capital resources are based on our audited financial information. We
describe our significant accounting policies in Note 2 - Summary of Significant
Accounting Policies, of the Notes to Financial Statements included in this
Annual Report, with those considered critical outlined below. Our audited
financial statements have been prepared in accordance with
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' equity section of the balance sheet.
Immediately upon the closing of the initial public offering, we recognized the accretion from initial book value to redemption amount. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.
Net Loss Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
Earnings Per Share. Net loss per share is computed by dividing net loss by the
weighted average number of ordinary shares outstanding during the period. We
have two classes of shares, redeemable ordinary shares and non-redeemable
ordinary shares. Our redeemable ordinary shares are comprised of Class A shares
sold in the initial public offering. Our non-redeemable shares are comprised of
Class A shares held by
The calculation of diluted loss per ordinary share does not consider the effect of the warrants issued in connection with the initial public offering since exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such rights would be anti-dilutive. Accretion of the carrying value of Class A ordinary shares to redemption value is excluded from net loss per redeemable share because the redemption value approximates fair value. As a result, diluted loss per share is the same as basic loss per share for the period presented.
24 Recent Accounting Standards
In
In
We do not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an "emerging growth company," whichever is earlier.
25
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the
© Edgar Online, source
