Finnovate Acquisition Corp. Reports Q3 2024 Net Loss of $97,285 Amid Declining Assets

Finnovate Acquisition Corp. reported its financial results for the third quarter of 2024, revealing a net loss of $97,285 for the three months ending September 30, 2024, compared to a net income of $6,069 for the same period in 2023. For the nine-month period, the company recorded a net income of $95,191, a significant decline from the $2,412,428 reported in the previous year. The decrease in profitability is attributed to a drop in interest income from investments held in the Trust Account, which fell to $1,247,329 from $3,894,122 year-over-year, alongside a reduction in operating expenses from $1,481,694 to $1,152,138.

The company’s total assets decreased to $26.2 million as of September 30, 2024, down from $51.2 million at the end of 2023. This decline was primarily due to the redemption of Class A ordinary shares, which saw 2,374,826 shares redeemed at a price of approximately $11.33 per share during the May 2024 extraordinary general meeting. The total liabilities also increased to $4.6 million from $2.8 million, driven by higher accounts payable and accrued expenses, as well as increased borrowings under related party promissory notes.

Strategically, Finnovate has been pursuing a business combination with Scage International Limited, a zero-emission solution provider in China. The company entered into a Business Combination Agreement with Scage on August 21, 2023, which was subsequently amended to adjust the valuation and extend deadlines for completion. As of the latest filing, the company has until May 8, 2025, to finalize this business combination, following shareholder approvals and additional funding commitments from its sponsor, Sunorange.

Operationally, the company has faced challenges, including a Nasdaq delisting notice due to non-compliance with minimum public holder requirements. Following a hearing, the company was granted a temporary reprieve but ultimately failed to meet the criteria by the November 4, 2024 deadline, leading to its securities being quoted on the OTC Markets. The company’s cash position remains precarious, with only $7,555 available for working capital as of September 30, 2024, raising concerns about its ability to continue operations without a successful business combination.

Looking ahead, Finnovate's management has expressed uncertainty regarding its ability to complete the business combination by the deadline, which could trigger an automatic winding up and liquidation of the company. The ongoing economic conditions, including inflation and market volatility, further complicate the outlook, as the company navigates the complexities of securing additional financing and meeting regulatory requirements.