SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended March 31, 2022
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________ to________
PATHFINDER ACQUISITION CORPORATION
Securities registered pursuant to Section 12(b) of the Act: Indicate by check mark whether the Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. Combination. As a result, the financial statements included in the accompanying unaudited interim condensed consolidated financial statements reflect (i) the historical operating results of Legacy Movella prior to the Business Combination; (ii) the combined results of the As of March 31, The disruption in the global economy and financial markets. The Company $7.9 million The following table 2021 was $0.9 million. Assumes conversion at $9.80 per share. The Company has Liquidity and Capital Resources As of March 31, spending to support our research and development efforts; capital expenditures to build out new facilities and purchase hardware and software; the expansion of sales and marketing activities; and our continued investment in our IT infrastructure to support our growth. In working capital. For the three months ended March 31, 2022 For the three months ended March 31, As of March 31, 2023, we had the following debt obligations outstanding (in thousands): We are exposed to the credit risk of our customers. We market and sell our products worldwide and attribute revenues to the geography where product is shipped. No single direct or indirect customer accounted for 10% or more of our revenues in the three months ended March 31, 2023. Evaluation of Disclosure Controls and Procedures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Cayman Islands001-4007498-1575384Delaware 98-1575384 (State or other jurisdiction of (I.R.S. Employer (Commission File Number)(IRS Employer 1950 University Avenue, Suite 350110, 3535 Executive Terminal Drive Henderson, NV89052 Palo Alto, CA 94303(Address Ofof Principal Executive Offices)(Zip Code) (650) 321-4910Registrant’sRegistrant's telephone number, including area codeNot Applicable(Former name or former address, if changed since last report)Title of each class Trading Symbol(s) Trading Symbol(s)Name of each exchange on which registered Units, each consisting of one Class A ordinary share, $0.0001Common stock, $.00001 par value and one-fifth of one redeemable warrantper sharePFDRUMVLA The Nasdaq Stock Market LLC Class A ordinary shares included as partWarrants, each warrant exercisable for one share of the units common stock at an exercise price of $11.50PFDRThe Nasdaq Stock Market LLCRedeemable warrants included as part of the unitsPFDRWMVLAW The Nasdaq Stock Market LLC registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐☒x No ☐ company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ☐oAccelerated filer ☐oNon-accelerated filer ☒xSmaller reporting company ☒xEmerging growth company ☒x ☐Exchange Act). Yes ☒o No ☐AsThe registrant had outstanding 50,907,431 shares of common stock as of May 12, 2022, 32,500,000 Class A ordinary shares, par value $0.0001 per share, and 8,125,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.PATHFINDER ACQUISITION CORPORATION Form 10-QFor the Quarter Ended March 31, 2022Table of ContentsPagePART I. FINANCIAL INFORMATIONiPART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsAs of
March 31,
2023As of
December 31,
2022ASSETS Current assets Cash and cash equivalents $ 62,096 $ 14,334 Accounts receivable, net of allowance for credit losses of $440 and $144 at March 31, 2023 and December 31, 2022 4,716 6,690 Inventories 6,570 5,164 Prepaid expenses and other current assets 5,657 3,274 Total current assets 79,039 29,462 Property and equipment, net 2,362 2,361 Goodwill 36,666 36,381 Intangible assets, net 843 5,807 Non-marketable equity securities 25,285 25,285 Capitalized equity issuance costs and other assets 1,735 4,265 Deferred tax assets 86 86 Right-of-use assets 3,107 3,281 Total assets $ 149,123 $ 106,928 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable $ 3,896 $ 5,967 Accrued expenses and other current liabilities 7,356 7,944 Line of credit and current portion of long-term debt 148 148 Current portion of deferred revenue 3,159 3,334 Payable to Kinduct sellers – current — 4,303 Total current liabilities 14,559 21,696 Long-term portion of term debt 43,187 25,649 Convertible notes, net – related party (Note 12) — 6,186 Warrant liabilities 1,513 — Deferred revenue, net of current portion 1,389 1,344 Operating lease liabilities and other non-current liabilities 2,982 3,088 Total liabilities 63,630 57,963 Commitments and contingencies (Note 13) Mezzanine equity PATHFINDER ACQUISITION CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2022 December 31, 2021 (Unaudited) Assets: Current assets: Cash $ 75,500 $ 21,217 Prepaid expenses 599,717 713,426 Total current assets 675,217 734,643 Investments held in Trust Account 325,035,666 325,028,452 Total Assets $ 325,710,883 $ 325,763,095 Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit Current liabilities: Accounts payable $ 252,590 $ 200,984 Accrued expenses 232,000 330,565 Due to related party 61,116 61,116 Note payable 500,000 250,000 Total current liabilities 1,045,706 842,665 Derivative warrant liabilities 3,977,500 6,342,500 Deferred underwriting commissions 11,375,000 11,375,000 Total liabilities 16,398,206 18,560,165 Commitments and Contingencies Class A ordinary shares subject to possible redemption, $0.0001 par value; 32,500,000 shares at redemption value of $10.00 as of March 31, 2022 and December 31, 2021 325,000,000 325,000,000 Shareholders’ Deficit: Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding as of March 31, 2022 and December 31, 2021 - - Class A ordinary shares, $0.0001 par value; 300,000,000 shares authorized; no non-redeemable shares issued and outstanding as of March 31, 2022 and December 31, 2021 - - Class B ordinary shares, $0.0001 par value; 30,000,000 shares authorized; 8,125,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021 813 813 Additional paid-in capital - - Accumulated deficit (15,688,136 ) (17,797,883 ) Total shareholders’ deficit (15,687,323 ) (17,797,070 ) Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit $ 325,710,883 $ 325,763,095 As of
March 31,
2023As of
December 31,
2022Redeemable convertible preferred stock, $0.00001 par value. 0 shares authorized, issued, and outstanding at March 31, 2023; 3,207,472 shares authorized, issued and outstanding as of December 31, 2022; liquidation preference of $30,000 as of December 31, 2022 — 41,991 Non-redeemable convertible preferred stock, $0.00001 par value. 20,000,000 shares authorized, 0 shares issued, and outstanding at March 31, 2023; 29,524,294 shares authorized and 24,338,566 shares issued and outstanding as of December 31, 2022; liquidation preference of $146,548 as of December 31, 2022 — 143,192 Total mezzanine equity — 185,183 Stockholders’ equity (deficit) Common stock, $0.00001 par value. 900,000,000 shares authorized, 50,693,308 shares issued and outstanding at March 31, 2023; 46,430,391 shares authorized, 6,231,947 shares issued and outstanding at December 31, 2022 1 1 Additional paid-in capital 206,428 692 Accumulated other comprehensive loss (1,386) (1,646) Accumulated deficit (126,180) (142,016) Total Movella stockholders’ equity (deficit) 78,863 (142,969) Non-controlling interest in subsidiaries 6,630 6,751 Total stockholders’ equity (deficit) 85,493 (136,218) Total liabilities, mezzanine equity and stockholders’ equity (deficit) $ 149,123 $ 106,928 PATHFINDER ACQUISITION CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For The Three Months Ended March 31, 2022 2021 General and administrative expenses $ 232,467 $ 270,296 General and administrative expenses - related party 30,000 20,000 Loss from operations (262,467 ) (290,296 ) Other income (expenses): Change in fair value of derivative warrant liabilities 2,365,000 1,935,000 Offering costs associated with derivative warrant liabilities - (575,330 ) Income from investments held in Trust Account 7,214 534 Net income $ 2,109,747 $ 1,069,908 Weighted average shares outstanding of Class A ordinary share, basic and diluted 32,500,000 14,805,556 Basic net income per share, Class A ordinary share $ 0.05 $ 0.05 Weighted average shares outstanding of Class B ordinary share, basic 8,125,000 7,784,722 Basic net income per share, Class B ordinary share $ 0.05 $ 0.05 Weighted average shares outstanding of Class B ordinary share 8,125,000 8,125,000 Diluted net income per share, Class B ordinary share $ 0.05 $ 0.05 Three Months Ended
March 31,2023 2022 Revenues Product $ 7,659 $ 8,100 Service 1,508 1,408 Total revenues 9,167 9,508 Cost of revenues Product 2,361 3,589 Service 1,210 1,113 Total cost of revenues 3,571 4,702 Gross profit 5,596 4,806 Operating expenses Research and development 2,904 3,536 Sales and marketing 3,480 3,440 General and administrative 3,957 3,337 Impairment of intangible assets 4,657 — Total operating expenses 14,998 10,313 Loss from operations (9,402) (5,507) Other income (expense) Loss on debt extinguishment (107) — Change in fair value of warrant liabilities 1,390 — Debt issuance costs (7,945) — Revaluation of debt, net 31,868 — Interest expense (172) (400) Interest income 256 4 Other income (expense), net (115) 83 Income (loss) before income taxes 15,773 (5,820) Income tax expense 58 15 Net income (loss) 15,715 (5,835) Net loss attributable to non-controlling interests (121) (239) Net income (loss) attributable to Movella Holdings Inc. 15,836 (5,596) Deemed dividend from accretion of Series D-1 preferred stock (316) (659) Net income (loss) attributable to common stockholders $ 15,520 $ (6,255) Earnings per share attributable to common stockholders Basic $ 0.51 $ (1.38) Diluted $ 0.36 $ (1.38) Weighted average shares used in computing earnings per share attributable to common stockholders Weighted average shares outstanding, basic 30,440,497 4,529,543 Diluted 44,562,485 4,529,543 PATHFINDER ACQUISITION CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICITFor The Three Months Ended March 31, 2022Three Months Ended March 31, 2023 2022 Net income (loss) $ 15,715 $ (5,835) Other comprehensive income (loss), net of tax Foreign currency translation adjustments, net of tax 260 20 Comprehensive income (loss) 15,975 (5,815) Comprehensive loss attributable to non-controlling interests (121) (239) Comprehensive income (loss) attributable to Movella Holdings Inc. $ 16,096 $ (5,576) Ordinary Shares Additional Total Class A Class B Paid-in Accumulated Shareholders’ Shares Amount Shares Amount Capital Deficit Deficit Balance - December 31, 2021 - $ - 8,125,000 $ 813 $ - $ (17,797,883 ) $ (17,797,070 ) Net income - - - - - 2,109,747 2,109,747 Balance - March 31, 2022 (Unaudited) - $ - 8,125,000 $ 813 $ - $ (15,688,136 ) $ (15,687,323 ) For The Three Months Ended March 31, 2021 Ordinary Shares Additional Total Class A Class B Paid-in Accumulated Shareholders’ Shares Amount Shares Amount Capital Deficit Deficit Balance - December 31, 2020 - $ - 8,625,000 $ 863 $ 24,137 $ (8,000 ) $ - Excess cash received over the fair value of the private warrants - - - - 2,040,000 - 2,040,000 Accretion of Class A ordinary shares subject to possible redemption amount - - - - (2,064,137 ) (25,763,234 ) (27,827,371 ) Net income - - - - - 1,069,908 1,069,908 Balance - March 31, 2021 (Unaudited) - $ - 8,625,000 $ 863 $ - $ (24,701,326 ) $ (24,717,463 ) PATHFINDER ACQUISITION CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended March 31, 2022 2021 Cash Flows from Operating Activities: Net income $ 2,109,747 $ 1,069,908 Adjustments to reconcile net income to net cash used in operating activities: Change in fair value of derivative warrant liabilities (2,365,000 ) (1,935,000 ) Offering costs associated with derivative warrant liabilities - 575,330 Income from investments held in Trust Account (7,214 ) (534 ) Changes in operating assets and liabilities: Prepaid expenses 113,709 (1,190,326 ) Accounts payable 51,606 367,250 Accrued expenses (98,565 ) 66,646 Net cash used in operating activities (195,717 ) (1,046,726 ) Cash Flows from Investing Activities Cash deposited in Trust Account - (325,000,000 ) Net cash used in investing activities - (325,000,000 ) Cash Flows from Financing Activities: Proceeds from note payable to related party 250,000 81,243 Repayment of note payable to related party - (129,181 ) Proceeds received from initial public offering - 325,000,000 Proceeds received from private placement - 8,500,000 Offering costs paid - (7,020,676 ) Net cash provided by financing activities 250,000 326,431,386 Net increase in cash 54,283 384,660 Cash - beginning of the period 21,217 - Cash - end of the period $ 75,500 $ 384,660 Supplemental disclosure of noncash financing activities: Offering costs included in accounts payable $ - $ 2,750 Offering costs included in accrued expenses $ - $ 51,338 Offering costs paid by related party under promissory note $ - $ 47,938 Deferred underwriting commissions in connection with the initial public offering $ - $ 11,375,000 Redeemable
convertible
preferred stockNon-redeemable
convertible
preferred stockCommon stock Shares Amount Shares Amount Shares Amount Additional
paid-in
capitalAccumulated
other
comprehensive
income (loss)Accumulated
deficitNon-controlling
interestsTotal Balance, December 31, 2021 6,562,724 $ 39,307 49,792,827 $ 143,192 9,184,092 $ 1 $ — $ 1,431 $ (109,601) $ 7,383 $ (100,786) Retroactive conversion of shares due to Business Combination (3,355,252) — (25,457,033) — (4,695,450) — — — — — — Balance at December 31, 2021, as converted 3,207,472 39,307 24,335,794 143,192 4,488,642 1 — 1,431 (109,601) 7,383 (100,786) Stock-based compensation expense — — — — — — 313 — — — 313 Accretion of Series D-1 convertible preferred stock — 659 — — — — (418) — (241) — (659) Issuance of common stock for exercise of options — — — — 88,217 — 87 — — — 87 Issuance of common stock warrants to Eastward — — — — — — 18 — — — 18 Foreign currency translation adjustment — — — — — — — 20 — — 20 Net loss — — — — — — — — (5,596) (239) (5,835) Balance, March 31, 2022 3,207,472 39,966 24,335,794 143,192 4,576,859 1 — 1,451 (115,438) 7,144 (106,842) Balance, December 31, 2022 6,562,724 41,991 49,798,500 143,192 12,751,023 1 692 (1,646) (142,016) 6,751 (136,218) Retroactive conversion of shares due to Business Combination (3,355,252) — (25,459,934) — (6,519,076) — — — — — — Balance at December 31, 2022, as converted 3,207,472 41,991 24,338,566 143,192 6,231,947 1 692 (1,646) (142,016) 6,751 (136,218) Stock-based compensation expense — — — — — — 664 — — — 664 Accretion of Series D-1 convertible preferred stock prior to close of Business Combination Agreement — 316 — — — — (316) — — — (316) Issuance of common stock for exercise of options prior to close of Business Combination Agreement — — — — 3,970 — 10 — — — 10 Issuance of common stock upon conversion of Preferred stock (3,207,472) (42,307) (24,338,566) (143,192) 27,583,963 — 185,499 — — — 185,499 Issuance of common stock in connection with Business Combination Agreement, net of redemptions and transaction costs — — — — 15,954,708 — 13,359 — — — 13,359 Issuance of common stock upon conversion of Convertible notes — — — — 651,840 — 6,520 — — — 6,520 Issuance of common stock upon conversion of Legacy Movella warrants — — — — 266,880 — — — — — — Foreign currency translation adjustment — — — — — — — 260 — — 260 Net income (loss) — — — — — — — — 15,836 (121) 15,715 Balance, March 31, 2023 — $ — — $ — 50,693,308 $ 1 $ 206,428 $ (1,386) $ (126,180) $ 6,630 $ 85,493 Three Months Ended March 31, 2023 2022 Cash flows from operating activities Net income (loss) $ 15,715 $ (5,835) Adjustments to reconcile net income (loss) to net cash used in operating activities Depreciation and amortization 672 1,852 Stock-based compensation expense 664 313 Allowance for credit losses 296 — Impairment of intangible assets 4,657 — Unrealized loss on marketable securities — 58 Non-cash interest expense from note accretion 61 76 Non-cash interest expense from deferred payout accretion 57 — Amortization of debt discount and debt issuance costs 52 69 Gain on change in fair value of warrant liabilities (1,390) — Gain on revaluation of debt, net (31,868) — Loss on debt extinguishment 107 — Debt issuance costs 7,945 — Right-of-use assets 174 — Changes in operating assets and liabilities: Accounts receivable 1,788 728 Inventories (1,229) (1,063) Prepaid expenses and other assets (1,408) (50) Other assets (1,594) 10 Accounts payable 629 (1,046) Accrued expenses and other liabilities (397) (297) Deferred revenue (235) 514 Other liabilities (136) (74) Net cash used in operating activities (5,440) (4,745) Cash flows from investing activities Purchase of intangibles (15) (153) Purchases of property and equipment (191) (215) Net cash used in investing activities (206) (368) Cash flows from financing activities Proceeds from Venture Linked Notes 75,000 — Payment of debt issuance costs (8,791) — Proceeds from Business Combination 36,048 — Payment of equity issuance costs (18,682) — Repayment of loans using proceeds from Venture Linked Notes (25,557) — Proceeds from term loans and revolving line of credit, net — 943 Proceeds from issuance of convertible notes — 4,873 Principal payments of loans — (280) Proceeds from the exercise of stock options 10 87 Payment of deferred payout to Kinduct sellers (4,360) — Net cash provided by financing activities 53,668 5,623 Three Months Ended March 31, 2023 2022 Effect of foreign exchange rate changes on cash and equivalents (260) (219) Net increase in cash and cash equivalents 47,762 291 Cash and cash equivalents Beginning of period 14,334 11,166 End of period $ 62,096 $ 11,457 Supplemental disclosures of cash flow information Cash paid for interest $ 557 $ 207 Cash paid for taxes, net of refunds 59 47 Supplemental disclosure of non-cash financing activity Accretion of Series D-1 convertible preferred Stock $ 316 $ 659 Issuance of convertible notes in exchange for Kinduct deferred payout — 1,148 Issuance of warrants to lender — 18 Right-of-use assets obtained in exchange for operating lease liabilities — 4,280 Issuance of common stock upon conversion of Convertible notes 6,520 — Issuance of common stock upon conversion of preferred stock 185,499 — Acquisition of warrant liabilities 2,903 — Capitalized equity issuance costs applied to proceeds 4,248 — PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNote 1 - Description of OrganizationBusinessBusiness Operations(the “Company”(“Pathfinder”) is a blank check company incorporated as a Cayman Islands exempted company on December 18, 2020. The Company was incorporated for), consummated the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similarpreviously announced business combination with one or more businesses(the “Business Combination”) contemplated by that the Company has not yet identified (“Business Combination”).As of March 31, 2022, the Company had not yet commenced operations. All activity for the period from December 18, 2020 (inception) through March 31, 2022 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below, and since the Company’s Initial Public Offering, the search for a business combination target. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.The Company’s sponsor is Pathfinder Acquisition LLC, a Delaware limited liability company (“Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on February 16, 2021. On February 19, 2021, the Company consummated its Initial Public Offering of 32,500,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), including 2,500,000 additional Units to partially cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $325.0 million, and incurring offering costs of approximately $18.5 million, of which approximately $11.4 million was for deferred underwriting commissions (see Note 5). The underwriters had 45 days from the effective date of the prospectus to exercise the remaining portion of its option to purchase up to 2,000,000 Units at the Initial Public Offering price to cover over-allotments, if any. On April 2, 2021, the over-allotment option on the remaining Units expired unexercised by the underwriters.Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 4,250,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $2.00 per Private Placement Warrant, generating gross proceeds to the Company of $8.5 million (Note 4).Upon the closing of the Initial Public Offering and the Private Placement, $325.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee and are invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (“Investment Company Act”) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, which are invested only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.The Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time the Company signs a definitive agreement in connection with the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target business or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Company will provide its holders (the “Public Shareholders”) of the Public Shares with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to the second amended and restated memorandum and articles of association which was adopted by the Company upon the consummation of the Initial Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transactions is required by applicable law or stock exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or whether they were a Public Shareholder on the record date for the general meeting held to approve the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the holders of the Founder Shares prior to this Initial Public Offering (the “Initial Shareholders”) agreed to vote their Founder Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination. In addition, the Company agreed not to enter into a definitive agreement regarding an initial Business Combination without the prior consent of the Sponsor.Notwithstanding the foregoing, the Company’s Amended and Restated Memorandum and Articles of Association provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.The Company’s Sponsor, officers and directors agreed not to propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association (A) to modify the substance or timing of the Company’s obligation to allow the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provisions relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February 19, 2023 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Initial Shareholders agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution in the Trust Account will be less than the $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. There can be no guarantee that the Company will be successful in obtaining such waivers from its targeted vendors and service providers.Termination of Proposed Business CombinationOn July 15, 2021, the Company entered into a Business Combination Agreement, dated October 3, 2022 (the “Original Business“Business Combination Agreement”), by and among the Company, ServiceMax, Inc., a Delaware corporation (“ServiceMax”), and Stronghold Merger Sub, Inc., a Cayman Islands exempted company incorporated with limited liability and a wholly owned subsidiary of ServiceMax. On August 11, 2021, the Company, ServiceMax and ServePathfinder, Motion Merger Sub, Inc., a Delaware corporation and wholly-ownedwholly owned subsidiary of Pathfinder (“Merger Sub”) and Movella Inc., a Delaware corporation.Company (“Closing Date, promptly following the consummation of the Domestication, Merger Sub”), entered into an Amended and Restated Business Combination Agreement (the “Business Combination Agreement”), pursuant to which Merger Sub would be merged with and into ServiceMax,Movella (the “Merger”), with ServiceMaxMovella continuing as the surviving company in the Merger and, after giving effect to the Merger, Movella became a wholly owned subsidiary of New Movella (the time that the Merger became effective being referred to as the “Effective Time”). Pathfinder’s Class A ordinary shares, public warrants and the Pathfinder Units were historically quoted on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “PFDR,” “PFDRW,” and “PFDRU,” respectively. On the Closing Date, the Pathfinder Units automatically separated into the component securities and, as a wholly-owned subsidiary of Pathfinder (the “result, no longer trade as a separate security. On February 13, 2023, the New Movella Common Stock and warrants began trading on Nasdaq under the symbols “MVLA” and “MVLAW,” respectively. See Business CombinationNote 4.”).On December 6, 2021, theand ServiceMax entered into a Termination Agreement (the “Termination Agreement”), effective as of such date, pursuant to which the parties agreed to mutually terminateaccounted for the Business Combination Agreement dueas a reverse recapitalization whereby Legacy Movella was determined as the accounting acquirer and PFDR as the accounting acquiree. This determination was primarily based on:unfavorable market conditions.nominate the majority of the members of the board of directors;terminationnet assets of Pathfinder are stated at historical cost, with no goodwill or other intangible assets recorded.Combination Agreement is effective as of December 6, 2021.terminationCompany andCombination Agreement,Combination; (iii) the Business Combination Agreement isassets and liabilities of no further forceLegacy Movella at their historical cost; and effect, and certain transaction agreements entered into in(iv) the Company’s equity structure for all periods presented.Agreement, including, but not limited to, (i) the Second Amended and Restated Sponsor Letter Agreement, dated as of October 19, 2021, by and among the Company ServiceMax, Pathfinder Acquisition, LLC, a Delaware limited liability company (the “Sponsor”),has converted the equity structure for the periods prior to the Business Combination to reflect the number of shares of New Movella’s common stock issued to Legacy Movella’s stockholders in connection with the recapitalization transaction. As such, the shares, corresponding capital amounts and the other parties thereto, (ii) the Registration and Shareholder Rights Agreement, dated as of August 11, 2021, between Pathfinder, the Sponsor, ServiceMax, Silver Lake Technology Management, L.L.C., and certain other equityholders of ServiceMax JV, LP, a Delaware limited partnership and the parent entity of ServiceMax, and (iii) the Amended and Restated Subscription Agreements, dated August 11, 2021, between the Company, ServiceMax and certain investors, will either be terminated or no longer be effective,earnings per share, as applicable, related to Legacy Movella’s convertible preferred stock and common stock prior to the Business Combination have been retroactively converted as shares by applying the exchange ratio of approximately 0.4887 established in accordance with their respective terms.For additional information regarding the agreement, see the Company’s Current Reports on Form 8-K filed by the Company on July 19, 2021, August 12, 2021, and December 6, 2021,and the withdrawal of Company’s registration statement on Form S-4 (as amended) on December 6, 2021.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSLiquidity and Capital Resources and Going Concern2022,2023, the Company had approximately $76,000 in its operating bank accounts,incurred a total of $29.2 million of business combination related costs which is not sufficient working capital to meet its needs through the earlierprincipally consisted of the consummation of a Business Combination or one year from this filing.In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statement-Going Concern,” management has determined that working capital needs, the mandatory liquidationadvisory, legal, other professional fees, debt discount and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relatingdebt issuance costs. The Company expensed $1.6 million related to the recovery ofVenture Linked Notes in the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. The Company intends to complete a business combination by February 19, 2023.Priortwelve months ended December 31, 2022 and an additional $7.9 million related to the completion ofVenture Linked Notes in the Initial Public Offering, the Company’s liquidity needs had been satisfied through the payment of $25,000 from the Sponsor to cover for certain expenses on behalf of the Company in exchange for the issuance of the Founder Shares, and a loan of approximately $129,000 pursuant to the IPO Note issued to the Sponsor (as defined in Note 4). The Company repaid the IPO Note in full on February 19, 2021. Subsequent to thethree months ended March 31, 2023. Upon consummation of the Initial Public Offering and Private Placement, the Company’s liquidity needsbusiness combination agreement in February 2023, $19.7 million of transaction costs have been satisfied withrecorded as a reduction in the proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor will provide the Company Working Capital Loans (as defined in Note 4). As of March 31, 2022 and December 31, 2021, we had borrowed $500,000 and $250,000 in Working Capital Loans under the Promissory Note (as defined in Note 4).Note 2 - Basis of Presentation and SummaryPrinciples of Significant Accounting PoliciesBasis of Presentationaccompanying unaudited condensed financial statements are presentedinformation contained herein has been prepared by Movella Holdings Inc. (the “Company”) in U.S. dollars in conformityaccordance with generally accepted accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and pursuant to the rules and regulations of the SEC. Accordingly, they do notSecurities and Exchange Commission (the “SEC”). The condensed consolidated financial statements include allthe accounts of the Company, its wholly-owned and majority-owned subsidiaries, and joint ventures in which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The information at March 31, 2023 and footnotes required by GAAP. In the opinionresults of management, the unauditedCompany’s operations for the three months ended March 31, 2023 and 2022 are unaudited. The condensed consolidated financial statements reflect all adjustments, which includeconsisting of only normal recurring adjustmentsaccruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for thea fair statement of the balancesresults of the interim periods presented. These unaudited condensed consolidated financial statements and resultsnotes hereto should be read in conjunction with the audited financial statements and notes thereto included elsewhere herein. Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit. Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s financial statements for the year ended December 31, 2022. There were no material changes to our significant accounting policies and estimates during the three months ended March 31, 2023 with the exception of the addition of policies relating to the FP Venture Linked Notes and assumed warrant liabilities. The results of operations for the interim periods presented. Operatingpresented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.are not necessarily indicativeto conform to the current period’s condensed consolidated financial statement presentation. The reclassifications had no impact on total revenues, expenses, assets, liabilities, stockholders’ deficit, cash flows from operating activities, cash flows from investing activities, or cash flows from financing activities for all periods presented.results that may be expected through December 31, 2022.Principles of ConsolidationTheaccompanying condensed consolidated financial statements of the Company include its wholly-owned subsidiaries in connection with the Proposed Business Combination. All inter-company accounts and transactions are eliminated in consolidation.Emerging Growth CompanyThe Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFurther, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amountsamount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amountsamount of incomerevenues and expenses during the reporting period. MakingSuch estimates requires managementinclude, but are not limited to, exercise significant judgment. It is at least reasonably possible that the estimatemeasurement of the effectvaluation allowances relating to accounts receivable, inventories and deferred tax assets; estimates of a condition, situation or setfuture payouts for customer incentives and allowances and warranties; uncertain tax positions; incremental borrowing rates; fair values of circumstances that existed at the datestock-based compensation, fair value of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of theembedded derivatives, fair value of the warrant liability. SuchVenture Linked Notes, and valuation of common stock, preferred stock and warrants; estimates mayand assumptions used in connection with business combinations; useful lives of long-lived assets including intangible assets and property and equipment; revenue recognition; and future cash flows used to assess and test for impairment of goodwill and long-lived assets, if applicable. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be subject to change as more current information becomes available and accordingly thedetermined with precision, actual results could differ significantly from thosethese estimates.CashDue to the Coronavirus (“COVID-19”) pandemic, there has been uncertainty and Cash Equivalentsconsiders all short-term investments withis not aware of any specific event or circumstance that would require a material update to its estimates or judgments or an original maturityadjustment of three monthsthe carrying value of its assets or less when purchased to be cash equivalents. The Company had no cash equivalentsliabilities as of March 31, 20222023. However, these estimates may change as new events occur and additional information is obtained, as well as other factors related to COVID-19 that could result in material impacts to the Company’s condensed consolidated financial statements in future reporting periods.2021.2022, respectively. There are restrictions on the Company’s ability to transfer cash and cash equivalents of $0.2 million held outside of the U.S. by its subsidiaries in China and $1.0 million held by its joint venture entity in China as of March 31, 2023.Investments Heldthe Company has elected the fair value option to account for its Francisco Partners Venture Linked Notes (the “Venture Linked Notes”) primarily to avoid the separate recognition of certain linked instruments in the Trust AccountThe Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in income from investments held in Trust Account in the accompanying consolidated statements of operations. The estimatedIn accordance with ASC 825, the Company records the Venture Linked Notes at fair valuesvalue with changes in fair value recorded as a component of investments heldother income (expense), net in the Trust Account are determined using available market information.Concentrationconsolidated statements of Credit RiskFinancial instruments that potentially subjectoperations and comprehensive loss. As a result of applying the Companyfair value option, $0.8 million of direct costs and fees related to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. As of MarchPre-Close Notes and $1.6 million related to the Venture Linked Notes was expensed during the year ended December 31, 2022 and an additional $7.9 million related to the Venture Linked Notes was expensed upon consummation of the Business Combination Agreement in February 2023.2021,2022, the Company had not experienced lossespaid $4.0 million for the first two deferred cash installment payments with the remaining $6.0 million of installment payments partially satisfied with an exchange of $1.1 million owed under the deferred payout for convertible notes. See Note 5. Debt and Note 12. Related Party Transactions for more information on these accountsthe convertible notes. Any amounts that were due and management believespayable under the deferred payout agreement were accruing interest at 12% until paid in full. On December 16, 2022, the Company is not exposedreached an agreement with the former owners of Kinduct to significant riskssatisfy in full the remaining balance of the deferred payout, with $1.0 million paid on such accounts.December 20, 2022 and quarterly installments of $0.5 million due beginning March 31, 2023 unless an Acceleration Event occurs. On February 10, 2023, an Acceleration Event occurred and the Company satisfied the deferred payout liability in full on February 13, 2023.Fair ValueReverse Recapitalization, are allocated between the debt and equity elements of Financial Instrumentsthe transaction. Debt issuance costs of Therelating to the Venture Linked Notes have been expensed in the three months ended March 31, 2023, as the Company elected the fair value option for the Venture Linked Notes which closed on February 10, 2023. The Company recorded $19.7 millionof equity issuance costs as a reduction in proceeds received from the business combination.liabilities which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements” approximatelong-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts represented in the consolidated balance sheets, except for derivative warrant liabilities (see note 9).PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFair Value MeasurementsFair value is defined as the price that would be received for saleamount of an asset or paidgroup containing these assets may not be recoverable. For the three months ended March 31, 2023 and 2022, the Company recognized $4.7 million and nil, respectively, of impairment losses.transfer546,056 common shares of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy,Legacy Movella which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:●Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;●Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and●Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.In some circumstances, the inputs used to measure fair value might be categorized within different levelswere then converted into 266,880 shares of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchyNew Movella common stock based on the lowest level inputExchange Ratio of approximately 0.4887.significant to the fair value measurement.Derivative Warrant LiabilitiesThe Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchaseits outstanding warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”)derivatives. The Company has outstanding public and FASB ASC Topic 815, “Derivativesprivate warrants, both of which do not meet the criteria for equity classification and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recordedare accounted for as liabilities or as equity, is re-assessed at the end of each reporting period.The warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815.liabilities. Accordingly, the Company recognizes the warrant instrumentswarrants as liabilities at fair value and adjusts the carrying value of the instrumentswarrants to fair value at each reporting periodperiod. The warrant liabilities are subject to re-measurement at each balance sheet date until they are exercised, or expire. The initialand any change in fair value is recognized in the Company’s condensed consolidated statement of the Public Warrants issued in connection with the Public Offeringoperations and the fair value of the Private Placement Warrants have been estimated using a binomial lattice model in a risk-neutral framework.comprehensive loss. The fair value of the Public Warrants aspublic warrants is estimated based on the quoted market price of such warrants. The fair value of the private warrants is estimated using a binomial option pricing model. For the three months ended March 31, 2023 and 2022 the Company recorded a gain on change in fair value of the warrant liabilities of $1.4 million and December 31,nil, respectively.is based onas consideration for a licensing arrangement. The Company does not have significant influence over the privately held company and these equity securities do not have readily determinable fair values, as such the Company accounted for these equity securities using a measurement alternative in accordance with ASC 321, Investments—Equity Securities, which allows entities to measure these investments at cost, less any impairment, adjusted for changes from observable listed pricesprice changes in orderly transactions for such warrants. As the transferidentifiable or similar investments of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, theissuer.the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.Offering Costs Associatedthere were no transactions with the Initial Public OfferingOffering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directlyobservable prices related to the Initial Public Offering. Offering costsnon-marketable equity securities, and that there were allocatedno indicators of impairment related to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the consolidated statements of operations. Offering costs associated with the Class A ordinary shares issued were charged against the carrying value of the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSClass A Ordinary Shares Subject to Possible RedemptionThe Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features 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, Class A ordinary shares is classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, 32,500,000 Class A ordinary shares subject to possible redemption is presented at redemption value as temporarynon-marketable equity outside of the shareholders’ equity section of the Company’s consolidated balance sheet.The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.Net income (loss) per ordinary shareThe Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income per ordinary share is calculated by dividing the net income by the weighted average shares of ordinary shares outstanding for the respective period.The calculation of diluted net income does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering (including the Over-allotment Units) and the private placement warrants to purchase an aggregate of 10,750,000 Class A ordinary shares in the calculation of diluted income per share, because in the calculation of diluted income per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per share is the same as basic net income per sharesecurities for the three months ended March 31, 20222023.2021. Accretion associatedClassificationredeemable Class A ordinary shares is excluded fromFASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share asfor convertible instruments and requires the redemption value approximates fair value.The Company has considered the effect of Class B ordinary shares that were excluded from weighted average number as they were contingent on the exerciseuse of the over-allotment option by the underwriters. Since the contingency was satisfied, the Company included these shares in the weighted average number as of theif-converted method. ASU 2020-06 is effective for private companies’ fiscal years beginning of theafter December 15, 2023, respectively, and interim period to determine the dilutive impact of these shares.The following table reflects presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per share of ordinary shares: For The Three Months
Ended March 31, 2022 Class A Class B Basic and diluted net income per ordinary share: Numerator: Allocation of net income $ 1,687,797 $ 421,949 Denominator: Basic and diluted weighted average ordinary shares outstanding 32,500,000 8,125,000 Basic and diluted net income per ordinary share $ 0.05 $ 0.05 PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For The Three Months
Ended March 31, 2021 Class A Class B Net income per ordinary share: Numerator: Allocation of net income, basic $ 701,213 $ 368,696 Allocation of net income, diluted 690,807 379,101 Denominator: Basic weighted average ordinary shares outstanding 14,805,556 7,784,722 Diluted weighted average ordinary shares outstanding 14,805,556 8,125,000 Basic net income per ordinary share $ 0.05 $ 0.05 Diluted net income per ordinary share $ 0.05 $ 0.05 Income TaxesThe Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Forperiods within those benefits to be recognized, a tax position must be more likelyfiscal years. Early adoption is permitted, but no earlier than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2022 andfiscal years beginning after December 31, 2021.15, 2020, including interim periods within those fiscal years. The Company is currently not awareevaluating the timing of any issues under review that could result in significant payments, accruals or material deviation fromadoption and the impact of this ASU on its position.There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s consolidated financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.Recent Accounting PronouncementsThe Company’s management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the Company’scondensed consolidated financial statements.Note 3 - Initial Public OfferingOn February 19, 2021, the Company consummated its Initial Public Offering of 32,500,000 Units, including 2,500,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $325.0 million, and incurring offering costs of approximately $18.5 million, of which approximately $11.4 million was for deferred underwriting commissions. The underwriters have 45 days from the effective dateInventories consisted of the prospectusfollowing (in thousands):March 31,
2023December 31,
2022Raw materials $ 2,986 $ 2,758 Work-in-progress 1,231 1,132 Finished goods 2,353 1,274 $ 6,570 $ 5,164 exercise the remaining portioncost of its option to purchase up to 2,000,000 Units at the Initial Public Offering price to cover over-allotments. On April 2, 2021, the over-allotment option on the remaining Units expired unexercised by the underwriters; thus, 500,000 Class B ordinary shares were forfeited.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSEach Unit consists of one Class A ordinary sharerevenues, representing inventories considered obsolete and one-fifth of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 8).Note 4 - Related Party TransactionsFounder SharesOn December 28, 2020, the Sponsor paid an aggregate of $25,000unsaleable was insignificant for certain expenses on behalf of the Company in exchange for issuance of 7,906,250 Class B ordinary shares (the “Founder Shares”). On February 16, 2021, the Company effected a share dividend of 718,750 Class B ordinary shares to the Sponsor, resulting in there being an aggregate of 8,625,000 Class B ordinary shares outstanding. The Sponsor agreed to forfeit up to an aggregate of 1,125,000 Founder Shares to the extent that the option to purchase additional Units is not exercised in full by the underwriters or is reduced, so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters partially exercised their over-allotment option to purchase an additional 2,500,000 Units on February 19, 2021 and on April 2, 2021, the over-allotment option on the remaining Units expired unexercised by the underwriters; thus, 500,000 Class B ordinary shares were forfeited by the Sponsor.The Initial Shareholders agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or earlier if, subsequent to the initial Business Combination, the closing price of the Class A ordinary share equals or exceeds $12.00 per share (as adjusted for share sub-divisions, capitalization of shares, share dividends, rights issuances, subdivisions reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, and (B) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.Private Placement WarrantsSimultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 4,250,000 Private Placement Warrants to the Sponsor, each exercisable to purchase one Class A ordinary share at $11.50 per share, at a price of $2.00 per Private Placement Warrant, generating gross proceeds to the Company of $8.5 million.Each whole Private Placement Warrant is exercisable for one whole Class A ordinary share at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable except as described below in Note 8 and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.Related Party LoansOn December 23, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public Offering pursuant to a promissory note (the “IPO Note”). The IPO Note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. Prior to the closing of the Initial Public Offering, the Company borrowed approximately $129,000 under the IPO Note. The IPO Note was fully repaid on February 19, 2021. Subsequent to the repayment, the facility was no longer available to the Company.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSIn addition, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors will loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $2.00 per warrant. The warrants would be identical to the Private Placement Warrants.Promissory NoteOn July 15, 2021, the Company issued a promissory note (the “Promissory Note”) to the Sponsor providing for borrowings by the Company in an aggregate principal amount of up to $500,000. The Promissory Note was issued to allow for borrowings from time to time by the Company for working capital expenses. The Promissory Note (i) bears no interest, (ii) is due and payable upon the earlier of (a) February 19, 2023 and (b) the date that the Company consummates an initial business combination and (iii) may be prepaid at any time. As of March 31, 2022 and December 31, 2021, the Company had borrowed $500,000 and $250,000 in loans under the Promissory Note, respectively.Administrative Services AgreementCommencing on the date that the Company’s securities were first listed on Nasdaq through the earlier of consummation of the initial Business Combination and the liquidation, the Company agreed to pay the Sponsor $10,000 per month for office space, secretarial and administrative services provided to the Company. For the three months ended March 31, 2023 and 2022.March 31,
2023December 31,
2022Prepaid and financed insurance $ 1,513 $ — Prepaid expenses 1,409 1,029 Value added tax receivable 900 446 Contract assets — 197 Vendor prepaid 287 — Government tax receivables 1,419 1,416 Other assets 129 186 $ 5,657 $ 3,274 March 31,
2023December 31,
2022Office equipment $ 157 $ 157 Computer hardware and software 2,081 2,017 Lab equipment 2,802 2,864 Furniture and fixtures 553 545 Leasehold improvements 1,087 1,069 Gross book value 6,680 6,652 Less: accumulated depreciation and amortization (4,318) (4,291) $ 2,362 $ 2,361 2021,other current liabilitiesMarch 31,
2023December 31,
2022Accrued compensation and employee benefits $ 2,189 $ 2,999 Accrued professional services 1,243 1,909 Financed insurance 912 — Accrued valued added and other taxes 508 399 Accruals for purchases received 607 751 Current operating lease liabilities 483 593 Accrued TAS legal settlement — 325 Other current liabilities 1,414 968 $ 7,356 $ 7,944 incurred expensesto use observable market data, when available, and to minimize the use of $30,000unobservable inputs when determining fair value.$20,000 under this agreement, respectively.cash equivalents, accounts receivable, and accounts payable approximate their respective fair values because of their short maturities, the Venture Linked Notes are carried at fair value due to the Company's election of the ASC 825 fair value option, while the convertible notes and the deferred payout owed to the sellers of Kinduct were carried at amortized cost, with the convertible notes adjusted for changes in fair value of the embedded derivative. As of March 31, 20222023 and December 31, 2021,2022, the Company had accrued approximately $130,000carrying amount of the Venture Linked Notes was $42.9 million and $100,000, respectively,zero, respectively. Refer to Note 5. Debt for services in connection with such agreementadditional information on the accompanying consolidated balance sheets in accrued expenses and accounts payable.Venture Linked Notes.In addition, the Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The audit committee will review on a quarterly basis all payments that were made by the Company to the Sponsor, officers or directors, or the Company’s or their affiliates. Any such payments prior to an initial Business Combination will be made from funds held outside the Trust Account. As of March 31, 2022 and December 31, 2021, there was approximately $61,000 due to related parties.Note 5 - Commitments and ContingenciesRegistration and Shareholder RightsThe holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement entered into on the effective date of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSUnderwriting AgreementThe underwriters were entitled to an underwriting discount of $0.20 per unit, or $6.5 million in the aggregate, payable upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $11.4 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.Risks and UncertaintiesManagement continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these condensed financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed financial statements.Consulting AgreementsThe Company has an agreement with third party consultant to provide certain advisory services to the Company relating to identification of and negotiation with potential targets, assistance with due diligence, marketing, financial analyses and investor relations, pursuant to which the consultants have agreed to defer their fees and have payment of such fees to be solely contingent on the Company closing an initial Business Combination. As of March 31, 2022 and December 31, 2021, the Company has incurred approximately $5.0 million in contingent fees pursuant to these agreements. The Company will recognize an expense for these services when the performance trigger is considered probable, which in this case will occur upon closing of an initial Business Combination.Note 6 - Class A Ordinary Shares Subject to Possible RedemptionThe Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 300,000,000 shares of Class A ordinary shares with a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. As of March 31, 2022 and December 31, 2021, there were 32,500,000 shares of Class A ordinary shares outstanding, which were all subject to possible redemption and are classified outside of permanent equity in the consolidated balance sheets.The Class A ordinary shares subject to possible redemption reflected on the consolidated balance sheets is reconciled on the following table:Gross proceeds $ 325,000,000 Less: Fair value of Public Warrants at issuance (9,880,000 ) Offering costs allocated to Class A ordinary shares subject to possible redemption (17,947,372 ) Plus: Accretion on Class A ordinary shares subject to possible redemption amount 27,827,372 Class A ordinary shares subject to possible redemption $ 325,000,000 PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSNote 7 - Shareholders’ DeficitPreference Shares - The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share. As of March 31, 2022 and December 31, 2021, there were no preference shares issued or outstanding.Class A Ordinary Shares - The Company is authorized to issue 300,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. As of March 31, 2022 and December 31, 2021, there were 32,500,000 of Class A ordinary shares issued and outstanding. All Class A ordinary shares subject to possible redemption have been classified as temporary equity (see Note 6).Class B Ordinary Shares - The Company is authorized to issue 30,000,000 Class B ordinary shares with a par value of $0.0001 per share. On December 28, 2020, the Company issued 7,906,250 Class B ordinary shares. On February 16, 2021, the Company effected a share dividend of 718,750 Class B ordinary shares to the Sponsor, resulting in there being an aggregate of 8,625,000 Class B ordinary shares outstanding. Of the of 8,625,000 Class B ordinary shares outstanding, up to 1,125,000 Class B ordinary shares were subject to forfeiture, to the Company by the Initial Shareholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Class B ordinary shares would collectively represent 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. The underwriters partially exercised their over-allotment option to purchase an additional 2,500,000 Units on February 19, 2021 and on April 2, 2021, the over-allotment option on the remaining Units expired unexercised by the underwriters; thus, 500,000 Class B ordinary shares were subsequently forfeited.Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholders except as required by law; provided that only holders of Class B ordinary shares will have the right to vote on the appointment of directors prior to or in connection with the completion of the initial Business Combination.The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor, its affiliates or any member of the management team upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.Note 8 - WarrantsAs of March 31, 2022 and December 31, 2021, the Company had 6,500,000 of Public Warrants and the 4,250,000 of Private Placement Warrants outstanding.Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permit holders to exercise their warrants on a cashless basis under certain circumstances). The Company agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use commercially reasonable efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement relating to the Public Warrants. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Initial Shareholders or their affiliates, without taking into account any Founder Shares held by the Initial Shareholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary shares during the 10-trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price See “- Redemption of warrants when the price per class A ordinary share equals or exceeds $18.00” and “- Redemption of warrants when the price per class A ordinary share equals or exceeds $10.00” as described below).The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except (i) that the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (ii) except as described below, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees and (iii) the Sponsor or its permitted transferees will have the option to exercise the Private Placement Warrants on a cashless basis and have certain registration rights. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00:Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):●in whole and not in part;●at a price of $0.01 per warrant;●upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and●if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSThe Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period.Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00:Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):●in whole and not in part;●at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of Class A ordinary shares to be determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares;●if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per share (as adjusted) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and●if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.The “fair market value” of Class A ordinary shares for the above purpose shall mean the volume weighted average price of Class A ordinary shares during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable on a cashless basis in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.Note 9 - Fair Value Measurementspresents information aboutsets forth the Company’s financial assets and liabilities that arewere measured at fair value, on a recurring basis as of March 31, 2023 (in thousands):March 31, 2023 Level 1 Level 2 Level 3 Total Financial Assets Cash equivalents Money market funds $ 50,119 $ — $ — $ 50,119 Total assets $ 50,119 $ — $ — $ 50,119 Financial Liabilities Venture Linked Notes $ — $ — $ 42,874 $ 42,874 Public warrants 876 — — 876 Private warrants — 637 — 637 Total liabilities $ 876 $ 637 $ 42,874 $ 44,387 December 31, 2022 Level 1 Level 2 Level 3 Total Financial Assets Cash equivalents Money market funds $ 11 $ — $ — $ 11 Marketable equity securities 2 — — 2 Total assets $ 13 $ — $ — $ 13 Financial Liabilities Pre-Close Notes $ — $ — $ 25,300 $ 25,300 Embedded derivative in convertible notes — — 60 60 Total liabilities $ — $ — $ 25,360 $ 25,360 2021 and indicates2022, the carrying amount of cash equivalents approximated fair value hierarchydue to the short period of the valuation techniques that the Company utilizedtime to determine such fair value.March 31, 2022 Description Quoted
Prices in
Active
Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Other
Unobservable
Inputs
(Level 3) Assets: Investments held in Trust Account - money market fund $ 325,035,666 $ - $ - Liabilities: Derivative warrant liabilities - Public warrants $ - $ 2,405,000 $ - Derivative warrant liabilities - Private placement warrants $ - $ 1,572,500 $ - PATHFINDER ACQUISITION CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2021 Description Quoted
Prices in
Active
Markets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Other
Unobservable
Inputs
(Level 3) Assets: Investments held in Trust Account - money market fund $ 325,028,452 $ - $ - Liabilities: Derivative warrant liabilities - Public warrants $ - $ 3,835,000 $ - Derivative warrant liabilities - Private placement warrants $ - $ 2,507,500 $ - Level 1 assets include investments in money market funds that invest solely in U.S. Treasury securities with an original maturity of 185 days or less. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. The estimated fair value of Public Warrants were transferred from a Level 3 measurement to a Level 1 measurement in April 2021, when the Public Warrants were separately listed and traded in an active market. Subsequently in December 2021, the estimated fair value of Public Warrants were transferred from a Level 1 measurement to Level 2 measurement.maturity. The estimated fair value of the available-for-sale marketable equity securities may not be representative of values that will be realized in the future.Warrants was transferred from a warrants, whose fair value is primarily determined using quoted prices for the Public warrants.measurement to a Level 2instruments include the Venture Linked Notes and the warrant liabilities assumed in connection with the Business Combination Agreement.measurementof the public warrants is estimated based on the quoted market price of such warrants on the valuation date. The public warrants were initially recognized as a liability in April 2021, asconnection with the transferBusiness Combination on February 10, 2023 at a fair value of $1.8 million. As of March 31, 2023, the estimated fair value of the public warrants was $0.9 million. The non-cash gain of $0.9 million resulting from the change in fair value of the public warrants between February 10, 2023, and March 31, 2023 is recorded in change in fair value of warrant liabilities in our consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023. to anyone whonotrecorded in change in fair value of warrant liabilities in our consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.permitted transferee would resultbinomial lattice model with significant assumptions including Movella's stock price, dividend yield, expected volatility, the risk-free rate, the discount rate, the term of the instrument, and lattice model inputs such as movement up or down and the probability of such movements. Changes in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is equivalentthe Venture Linked Notes and Pre-Close Notes totaling a net gain of $31.9 million and zero for the three months ended March 31, 2023 and 2022 are included in the Company’s consolidated statement of operations within other income (expense), net within the caption “Revaluation of debt, net”. As of March 31, 2023, the $75.0 millionthatCondensed Consolidated Financial Statements (Unaudited)each Public Warrant. Venture Linked Notes had a fair value of $42.9 million. The fair value of the Venture Linked Notes was determined using a binomial lattice model with the following key assumptions:March 31, 2023 February 10, 2023 Term 4.9 years 5.0 years Stock price $1.36 per share $8.58 per share Dividend yield — % — % Expected volatility 67.5 % 67.5 % Risk-free rate 3.7 % 3.9 % Risky rate 26.6 % 25.6 % Movement up 1.15 1.15 Movement down 0.87 0.87 Probability up 47.1 % 47.1 % Probability down 52.9 % 52.9 % transfers to/matters, refrain from Levels 1, 2,redeeming the FP Shares (outside of certain circumstances), the Note Purchase Agreement provides that Movella issued and 3FP purchased notes evidencing the Venture Linked Notes, the deemed proceeds of which were used to, among other things, refinance the Pre-Close Notes in their entirety. Pursuant to the Venture Linked Notes, Movella Holdings has the right, subject to certain exceptions, to cause FP to sell all or a portion of the FP Shares at any time at its sole discretion over the life of the Venture Linked Notes, and a percentage of the proceeds (which percentage is a function of when proceeds are generated, based on a predetermined schedule with a sliding scale) of any such sale shall be applied as a credit against the outstanding obligations under the Venture Linked Notes upon repayment of the Venture Linked Notes in full or a refinancing event. The Venture Linked Notes will mature five years after the Closing Date.March 31,
2023December 31,
2022Venture Linked Notes $ 75,000 $ — Pre-Close Notes — 25,300 Convertible notes - related party — 6,345 ACOA Loans 461 497 Add: fair value of embedded derivative in convertible notes — 60 Less: unamortized debt discounts and issuance costs — (219) Less: fair value adjustment on Venture Linked Notes (32,126) — Total debt $ 43,335 $ 31,983 Classification: Line of credit and current portion of long-term debt $ 148 $ 148 Long-term portion of term debt 43,187 25,649 Convertible notes, net – related party — 6,186 Three Months Ended March 31, 2023 2022 Revenues Product $ 7,659 $ 8,100 Service 1,508 1,408 Total Revenues $ 9,167 $ 9,508 or the year endedfrom deferred revenue balances as of December 31, 2021.The initial fair valueTable of the Public and Private Placement Warrants, issued in connection with the Public Offering, has been estimated using a binomial lattice model. For periods subsequentContentsthe detachment of the Public Warrants from the Units, the Public Warrants’ listed price in an active market was used as the fair value. The estimated fair value of the Public and Private Placement Warrants, prior to Public Warrants being traded in an active market, is determined using Level 3 inputs. Inherent in a binomial lattice model are assumptions related to the Unit price, expected volatility, risk-free interest rate, term to expiration, and dividend yield. The Unit price is based on the publicly traded price of the Units as of the measurement date. The Company estimated the volatility for the Public and Private Placement Warrants based on the implied volatility from the traded prices of warrants issued by other special purpose acquisition companies. The risk-free interest rate is based on interpolated U.S. Treasury rates, commensurate with a similar term to the Public and Private Placement Warrants. The term to expiration was calculated as the contractual term of the Public and Private Placement Warrants, assuming one year to a Business Combination from the IPO date. Finally, the Company does not anticipate paying a dividend. The most significant input was volatility and significant increases (decreases)Condensed Consolidated Financial Statements (Unaudited)expected volatility in isolation would result in a significantly higher (lower) fair value measurement.The change in the fair valueaccompanying condensed consolidated statements of the derivative warrant liabilities, measured using Level 3 inputs,operations for the three months ended March 31, 20212023 and 2022 are as follows (in thousands):Three Months Ended March 31, 2023 2022 Research and development $ 219 $ 48 Sales and marketing 140 93 General and administrative 305 172 Total stock-based compensation $ 664 $ 313 summarizedsettled in cash, or withheld or reacquired to satisfy the applicable exercise, or purchase price, or a tax withholding obligation, plus (y) the number of shares which, but for the termination of the 2019 Plan immediately prior to the completion of the offering, were reserved under the 2019 Plan but not at such time issued or subject to outstanding awards under the 2019 Plan, plus (z) an annual increase on the first day of each calendar year, for a period of not more than 10 years, beginning on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to (i) 5% of outstanding shares on the last day of the immediately preceding calendarStock Options Outstanding Weighted-Average
Exercise PriceOutstanding - December 31, 2022 5,691,018 $ 2.15 Granted — $ — Exercised (3,970) $ 2.59 Cancelled (12,423) $ 3.70 Expired — $ — Balance outstanding at March 31, 2023 5,674,625 $ 2.19 Exercisable at March 31, 2023 3,552,483 $ 1.89 Three Months Ended
March 31,2023 2022 Numerator: Net income (loss) attributable to common stockholders, basic $ 15,520 $ (6,255) Add: Deemed dividends from accretion of Series D-1 Preferred Stock 316 — Add: Convertible notes interest expense and loss on debt extinguishment 219 — Net income (loss) attributable to common stockholders, diluted $ 16,055 $ (6,255) Denominator: Weighted-average common shares outstanding for basic EPS 30,440,497 4,529,543 Weighted average shares from preferred stock converted into common shares 12,566,203 — Weighted average dilutive outstanding options 1,080,655 — Weighted average shares from convertible notes converted into common shares 296,949 — Weighted average Legacy Movella warrants converted into common shares 178,181 — Diluted weighted-average common shares outstanding 44,562,485 4,529,543 Net income (loss) per share: Basic net income (loss) per share attributable to common stockholders $ 0.51 $ (1.38) Diluted net income (loss) per share attributable to common stockholders $ 0.36 $ (1.38) March 31, 2023 2022 Convertible preferred stock — 27,543,266 Outstanding stock options 1,682,520 7,493,066 Convertible notes(a) — 616,506 Legacy Movella Common stock warrants (1:1) — 291,502 Legacy Movella Preferred stock warrants (1:1) — 24,437 Public warrants (1:1) 6,499,961 — Private warrants (1:1) 4,250,000 — Total 12,432,481 35,968,777 Derivative warrant liabilities at January 1, 2021 $ - Issuance of Public and Private Warrants 16,340,000 Change in fair value of derivative warrant liabilities (1,935,000 ) Derivative warrant liabilities at March 31, 2021 $ 14,405,000 Note 10 - Subsequent Eventsevaluated subsequent eventsleased office spaces in U.S. locations including San Jose and transactionsLos Angeles, California, and Henderson, Nevada. Outside the U.S., leased sites include offices in Netherlands, Nova Scotia Canada, Shanghai, China, Taiwan and Hong Kong. Future minimum lease payments are under non-cancelable operating leases that occurred upexpire at various dates through year 2031. Rent expense is recognized using the straight-line method over the term of the lease.Year ended December 31, 2023 (remainder) $ 666 2024 737 2025 561 2026 561 2027 561 2028 561 Thereafter 1,312 Total minimum operating lease payments $ 4,959 Less: Amounts representing interest (1,852) Present value of net minimum operating lease payments 3,107 Less: Current portion (483) Long-term portion of operating lease obligations $ 2,624 Balance Sheet Classification March 31,
2023December 31,
2022Right-of-use assets, net Right-of-use assets, net $ 3,107 $ 3,281 Current operating lease liabilities Accrued expenses and other current liabilities (483) (593) Non-current operating lease liabilities Operating lease liabilities and other non-current liabilities (2,624) (2,688) Total operating lease liabilities $ (3,107) $ (3,281) Weighted average remaining lease term (in years) 7.1 7.0 Weighted-average discount rate 14 % 14 % Three Months Ended March 31, 2023 2022 Operating lease costs included in operating costs and expenses: Operating leases $ 361 $ 317 Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows related to operating leases $ 300 $ 366 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ — 4,280 datefull valuation allowances for the condensed financial statements were issued. Based upon this review,majority of the entities.didhad net operating loss carryforwards for federal and state income tax purposes of approximately $25.8 million and $26.5 million, respectively, which expire beginning in the year 2030 and 2029, respectively.identifyexpect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2023.subsequent eventslosses in such accounts, the recent failure of Silicon Valley Bank (SVB), at which the Company held cash and cash equivalents in multiple accounts, potentially exposed the Company to significant credit risk prior to the completion by the Federal Deposit Insurance Corporation of the resolution of SVB in a manner that fully protected all depositors. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company generally does not require collateral or other security in support of accounts receivable. The Company periodically reviews the need for an allowance by considering factors such as historical experience, credit quality, the age of the account receivable balances and current economic conditions that may affect a customer’s ability to pay. As of March 31, 2023 and December 31, 2022, no customer represented 10% or more of the Company’s accounts receivable balance.Three Months Ended March 31, 2023 2022 United States $ 2,004 $ 2,310 China 1,653 1,351 Asia, other 1,602 1,779 Europe 2,714 2,900 Other 1,194 1,168 $ 9,167 $ 9,508 required adjustmenta material adverse effect on its condensed consolidated results of operations or disclosure in the financial statements. Operations.Operations,” any references to “we,” “us,” “our,” the “Company,” “Movella,” or other words of similar import refer to Movella Holdings Inc., a Delaware corporation.References“Company,” “Pathfinder Acquisition Corporation,” “Pathfinder,” “our,” “us” or “we” refer to Pathfinder Acquisition Corporation. The following discussionBusiness Combination Agreement, Merger Sub merged with and analysisinto Movella Inc. with Movella Inc. surviving the Merger as a wholly owned subsidiary of Pathfinder. Upon the consummation of the Company’sBusiness Combination, Pathfinder was renamed Movella Holdings Inc. Movella Inc. was deemed the accounting predecessor and the combined entity will be deemed the successor SEC registrant, which means that Movella’s financial conditionstatements for previous periods will be disclosed in the registrant’s current and future periodic reports filed with the SEC. The Business Combination was accounted for as a reverse recapitalization as provided under GAAP. Under this method of accounting, Pathfinder was treated as the acquired company for financial statement reporting purposes. The most significant change in the successor’s future reported financial position and results was an increase in cash of approximately $58.0 million. Total transaction costs were approximately $29.2 million. New Movella is listed on the Nasdaq and trades under the ticker symbol “MVLA.” As Movella has become the successor to an SEC-registered and Nasdaq-listed company and as Movella’s current management team and business operations will comprise New Movella’s management and operations, New Movella will need to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. New Movella has incurred and will continue to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.shouldmay not be readcomparable from period to period or going forward. Set forth below is a brief discussion of the key factors and variables that could impact our results of operations:conjunctionthe markets we serve. We derive our revenues from the sale of sensors solutions, and software licenses and subscriptions, and no individual customer represents 5% or more of our total revenues and many of our customers are reoccurring in nature.and the notes thereto containedincluded elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.Cautionary Note Regarding Forward-Looking StatementsThis Quarterly Report on Form 10-Q includes forward-looking statements withinfor the meaningthree months ended March 31, 2023 and 2022. The period-to-period comparison of Section 27Aresults is not necessarily indicative of results to be expected for future periods and the results for any interim period are not necessarily indicative of results to be expected for a full fiscal year.Three Months Ended March 31, 2023 2022 (unaudited)
(in thousands)Statement of Operations Data: Revenues Product $ 7,659 83.5 % $ 8,100 85.2 % Service 1,508 16.5 % 1,408 14.8 % Total revenues 9,167 100.0 % 9,508 100.0 % Cost of revenues Product 2,361 25.8 % 3,589 37.7 % Service 1,210 13.2 % 1,113 11.7 % Total cost of revenues 3,571 39.0 % 4,702 49.4 % Gross profit 5,596 61.0 % 4,806 50.6 % Operating expenses Research and development 2,904 31.7 % 3,536 37.2 % Sales and marketing 3,480 38.0 % 3,440 36.2 % General and administrative 3,957 43.2 % 3,337 35.1 % Impairment of intangible assets 4,657 50.8 % — — % Total operating expenses 14,998 163.7 % 10,313 108.5 % Loss from operations (9,402) (102.7 %) (5,507) (57.9 %) Other income (expense) Loss on debt extinguishment (107) (1.2 %) — — % Change in fair value of warrant liabilities 1,390 15.2 % — — % Debt issuance costs (7,945) (86.7 %) — — % Revaluation of debt, net 31,868 347.6 % — — % Interest expense (172) (1.9 %) (400) (4.2 %) Interest income 256 2.8 % 4 — % Other income (expense), net (115) (1.3 %) 83 0.9 % Income (loss) before income taxes 15,773 171.8 % (5,820) (61.2 %) Income tax expense 58 0.6 % 15 0.2 % Net income (loss) 15,715 171.2 % (5,835) (61.4 %) Net loss attributable to non-controlling interests (121) (1.3 %) (239) (2.5 %) Net income (loss) attributable to Movella Holdings Inc. 15,836 172.5 % (5,596) (58.9 %) Deemed dividend from accretion of Series D-1 preferred stock (316) (3.4 %) (659) (6.9 %) Net income (loss) attributable to common stockholders $ 15,520 169.1 % $ (6,255) (65.8 %) Earnings per share attributable to common stockholders Basic $ 0.51 $ (1.38) Diluted $ 0.36 $ (1.38) Weighted average shares used in computing earnings per share attributable to common stockholders Weighted average shares outstanding, basic 30,440,497 4,529,543 Diluted 44,562,485 4,529,543 Securities Act of 1933, as amended,transactions that capitalized the developed technology intangible assets on the balance sheet, and Section 21Ethe non-cash nature of the Exchange Act.amortization expense being recorded as the developed technology intangible assets are being amortized over their useful lives. The result of the exclusion of amortization of acquired intangible assets is a decreased cost of revenues. The exclusion does not take into account the possibility that we may have to internally develop or externally acquire developed technology in the future in order to derive revenues from such assets.have based these forward-looking statements onexpect that stock-based compensation will increase in significance in the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy. Although stock-based compensation is an important aspect of the compensation paid to our employees, there are multiple factors that are accounted for in determining a fair value of such compensation due to varying valuation methodologies, subjective assumptions and the difference in award types. This makes the comparison of our current expectationsfinancial results to previous and projections about future events. These forward-looking statementsperiods difficult to interpret; therefore, we believe it is useful to exclude stock-based compensation from our non-GAAP financial measures in order to highlight the performance of our core business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies. The result of excluding stock-based compensation is an improvement to net income; however, non-GAAP net loss does not consider the potentially dilutive impact of stock-based compensation or other stock-knownchange each period; and unknown risks, uncertainties assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially differentconsistent with the way many investors evaluate our performance and compare our operating results to peer companies. The result of excluding deemed dividend from any future results, levelsaccretion of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminologySeries D-1 preferred stock is an improvement to net income; however, non-GAAP net loss does not consider the potentially dilutive impact this stock-settled obligation; and“may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”amortization of acquired intangible assets. Although amortization is a non-cash charge, the assets being amortized may have to be replaced in the future, and Non-GAAP net loss does not reflect cash requirements for these replacements or new capital expenditure requirements; andnegativefuture, and Non-GAAP net loss does not reflect cash requirements for potential refinancings; andsuch terms or other similar expressions. Factors that might cause or contributechange in fair value of warrant liabilities, which is a non-cash item related to suchfair value adjustments on our Public and Private warrant liabilities. Although change in fair value of warrant liabilities is a discrepancy include, but are not limited to, those described innon-cash charge, our other SEC filings.OverviewWe are a blank check company incorporated as a Cayman Islands exempted company on December 18, 2020. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We are an emerging growth company and, as such, we arewarrant liabilities may be subject to allredemption in the future, and Non-GAAP net loss does not reflect cash requirements for potential redemptions; andrisksdeSPAC allocated to the Venture Linked Notes. Our current debt may have to be refinanced in the future, and Non-GAAP net loss does not reflect cash requirements for potential refinancings; andemerging growth companies.Our sponsor is Pathfinder Acquisition LLC, a Delaware limited liability company. The registration statement for our initial public offering was declared effectivecapital and tax structures, specifically cash and non-cash interest on February 16, 2021 (our “initial public offering”). On February 19, 2021, we consummated our initial public offering of 32,500,000 units (“Units”), including 2,500,000 additional Units to partially cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $325.0 million,debt instruments, any offset from interest earned from our daily sweep accounts and incurring offering costs of approximately $18.5 million, of which approximately $11.4 million was for deferred underwriting commissions. The underwriters had 45 days from the effective date of the prospectus to exercise the remaining portion of its option to purchase up to 2,000,000 Units at our initial public offering price to cover over-allotments, if any. On April 2, 2021, the over-allotment option on the remaining Units expired unexercised by the underwriters.Simultaneously with the closing of our initial public offering, we consummated the private placement (the “private placement”) of 4,250,000 private placement warrants to our sponsor, each exercisable to purchase one Class A ordinary share at $11.50 per share (the “private placement warrants”), at a price of $2.00 per private placement warrant, generating gross proceeds to us of $8.5 million.Upon the closing of our initial public offering and the private placement, $325.0 million ($10.00 per Unit) of the net proceeds of our initial public offering and certain of the proceeds of the private placement was placed in a trust account with Continental Stock Transfer & Trust Company acting as trustee (the “trust account”) and was invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds, meetingand income taxes in the United States and certain conditions under Rule 2a-7 promulgated underforeign jurisdictions in which we conduct business. Thus Adjusted EBITDA do not reflect the Investment Company Actinterest expense or cash requirements necessary to service interest or principal payments on our debt, or cash interest income earned, nor does it reflect tax payments that may represent a reduction in cash available to us; and1940,certain recurring, non-cash charges, such as amended,depreciation of property and equipment. Although depreciation is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for these replacements or the Investment Company Act,new capital expenditure requirements; andare invested only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the trust account as described below.Our management has broad discretion with respect to the specific application of the net proceeds of our initial public offering andincludes income from the sale of private placement warrants, although substantially allnon-core assets and government subsidies, as well as realized and unrealized gains and losses on foreign exchange transactions consisting of currency movements on transactions settled in other currencies during the net proceeds are intendedyear. Accordingly, Adjusted EBITDA does not reflect certain income and expenses not directly tied to be applied generally toward consummating a Business Combination. Our initial Business Combination must be with one or more operating businesses or assets with a fair market value equalthe ongoing core operations of our business, such as legal reserves and settlements and restructuring and other related reorganization costs, if any; andat least 80% of the net assets heldtax studies. We do not expect to incur such transaction expenses in the trust account (excludingfuture as the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time we sign a definitive agreement in connection with the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target business or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.If we are unable to complete a Business Combination within 24 months from our initial public offering, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay its income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and its board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.Recent DevelopmentsTermination of Proposed Business CombinationOn July 15, 2021, we entered into a Business Combination Agreement (the “Original Business Combination Agreement”), by and among us, ServiceMax, Inc., a Delaware corporation (“ServiceMax”), and Stronghold Merger Sub, Inc., a Cayman Islands exempted company incorporated with limited liability and a wholly owned subsidiary of ServiceMax. On August 11, 2021, we, ServiceMax and Serve Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of us (“Merger Sub”), entered into an Amended and Restated Business Combination Agreement (the “Business Combination Agreement”), pursuant to which Merger Sub would be merged with and into ServiceMax, with ServiceMax surviving as a wholly-owned subsidiary of Pathfinder (the “Business Combination”).On December 6, 2021, we and ServiceMax entered into a Termination Agreement (the “Termination Agreement”), effective as of such date, pursuant to which the parties agreed to mutually terminate the Business Combination Agreement due to unfavorable market conditions. The terminationconsummation of the Business Combination Agreement and our public listing has already occurred.Three Months Ended March 31, 2023 2022 (unaudited)
(in thousands)Net income (loss) attributable to common stockholders $ 15,520 $ (6,255) Deemed dividend from accretion of Series D-1 preferred stock 316 659 Stock-based compensation 664 313 Amortization of acquired intangibles 457 1,626 Loss on debt extinguishment 107 — Change in fair value of warrant liabilities (1,390) — Debt issuance costs 7,945 — Revaluation of debt, net (31,868) — Impairment of intangible assets 4,657 — Non-GAAP net loss (3,592) (3,657) Interest expense 172 400 Interest income (256) (4) Income tax expense 58 15 Depreciation and amortization, excluding acquired intangibles 215 226 Other expenses (income), net 115 (83) Non-recurring transaction expenses 316 — Adjusted EBITDA $ (2,972) $ (3,103) Three Months Ended March 31, 2023 Adjustments GAAP
FinancialsStock-Based
CompensationAmortization
of IntangiblesImpairment
of IntangiblesNon-GAAP
FinancialsRevenues Product $ 7,659 $ — $ — $ — $ 7,659 Service 1,508 — — — — 1,508 Total revenues 9,167 9,167 Cost of revenues Product 2,361 — — — — 2,361 Service 1,210 — 260 — — 950 Total cost of revenues 3,571 — 260 — 3,311 Gross profit Product 5,298 5,298 Service 298 558 Total gross profit 5,596 5,856 Gross margin Product 69.2 % 69.2 % Service 19.8 % 37.0 % Total gross margin 61.0 % 63.9 % Operating expenses Research and development 2,904 219 — — 2,685 Sales and marketing 3,480 140 139 — 3,201 General and administrative 3,957 305 58 — 3,594 Impairment of intangible assets 4,657 — — 4,657 — Total operating expenses $ 14,998 $ 664 $ 197 $ 4,657 $ 9,480 Total $ 664 $ 457 $ 4,657 Loss from operations $ (9,402) $ (3,624) Three Months Ended March 31, 2022 Adjustments GAAP
FinancialsStock-Based
CompensationAmortization
of IntangiblesNon-GAAP
FinancialsRevenues Product $ 8,100 $ — $ — $ 8,100 Service 1,408 — — 1,408 Total revenues 9,508 — — 9,508 Cost of revenues Product 3,589 — 583 3,006 Service 1,113 — 581 532 Total cost of revenues 4,702 — 1,164 3,538 Gross profit Product 4,511 5,094 Service 295 876 Total gross profit 4,806 5,970 Gross margin Product 55.7 % 62.9 % Service 21.0 % 62.2 % Total gross margin 50.5 % 62.8 % Operating expenses Research and development 3,536 48 — 3,488 Sales and marketing 3,440 93 370 2,977 General and administrative 3,337 172 92 3,073 Total operating expenses $ 10,313 $ 313 $ 462 $ 9,538 Total $ 313 $ 1,626 Loss from operations $ (5,507) $ (3,568) Three Months Ended March 31, Change 2023 2022 $ % (unaudited)
(dollars in thousands)Revenues Product $ 7,659 $ 8,100 $ (441) (5) % Service 1,508 1,408 100 7 % Three Months Ended March 31, Change 2023 2022 $ % (unaudited)
(dollars in thousands)Cost of revenues Product $ 2,361 $ 3,589 $ (1,228) (34) % Service 1,210 1,113 97 9 % Gross profit Product 5,298 4,511 787 17 % Service 298 295 3 NM Three Months Ended March 31, Change 2023 2022 $ % (unaudited)
(dollars in thousands)Research and development $ 2,904 $ 3,536 $ (632) (18) % Sales and marketing 3,480 3,440 40 1 % General and administrative 3,957 3,337 620 19 % Impairment of intangible assets 4,657 — 4,657 NM Three Months Ended March 31, Change 2023 2022 $ % (unaudited)
(dollars in thousands)Loss on debt extinguishment $ (107) $ — $ (107) NM Change in fair value of warrant liabilities 1,390 — 1,390 NM Debt issuance costs (7,945) — (7,945) NM Revaluation of debt, net 31,868 — 31,868 NM Interest expense (172) (400) (228) (57) % Interest income 256 4 252 NM Other income (expense), net (115) 83 (198) (239) % Three Months Ended March 31, Change 2023 2022 $ % (unaudited)
(dollars in thousands)Income tax expense $ 58 $ 15 $ 43 NM December 6, 2021.client equity securities received for services.Going Concerncommon stock and through payments received from customers and borrowings under our credit facilities. Since our inception, we have generated losses from our operations as reflected in our accumulated deficit of $126.2 million as of March 31, 2023 and negative cash flows from operating activities. We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we will continue to make in research and development and sales and marketing and due to additional general and administrative costs we expect to incur as a public company. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.2022,2023, we had cash and cash equivalents of $62.1 million, including $1.2 million held in China and subject to transfer and other restrictions as described below, of which $1.0 million was held by the Qingdao JV and $0.2 million was held by our wholly owned entities in China and Hong Kong, and principal amount of debt outstanding of $75.0 million.$76,000 in our operating bank account, which is not sufficient working capital$58.0 million of net cash proceeds after transaction costs and repayment of debt. The Note Purchase Agreement also contains a financial covenant requiring us to meet its needs throughachieve positive adjusted EBITDA on a consolidated basis for the earliermost recently ended four-quarter period, commencing with the last day of the consummation of a Business Combination or one year from this filing.Our liquidity needs had been satisfied through the payment of $25,000 from our sponsor to cover for certain of our expenses in exchange for the issuancefiscal quarter ending June 30, 2024 and as of the founder shares, and a loanlast day of approximately $129,000 pursuant to the IPO Note issued to our sponsor (as definedeach fiscal quarter thereafter. While there has been substantial doubt in Note 5 to the financial statements included in Item 1 of this Report). We repaid the IPO Note in full on February 19, 2021. Subsequent to the consummation of our initial public offering and the private placement, our needs have been satisfied with the proceeds from the consummation of the private placement not held in the trust account. In addition, in order to finance transaction costs in connection with a Business Combination, our sponsor will provide us Working Capital Loans (as defined in Note 5 to the financial statements included in Item 1 of this Report). As of March 31, 2022 and December 31, 2021, we had borrowed $500,000 and $250,000 in Working Capital Loans under the Promissory Note (as defined in Note 5 to the financial statements included in Item 1 of this Report), respectively.In connection with the management’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statement-Going Concern,” management has determined that working capital needs, the mandatory liquidation and subsequent dissolution raise substantial doubtprior periods about our ability to continue as a going concern. These financial statements do not include any adjustments relating toconcern, given the recovery of the recorded assets or the classification of the liabilities that might be necessary shouldabove we be unablebelieve we have sufficient liquidity to continue as a going concern.Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of our operations and/or searchconcern for a target company, the specific impact is not readily determinable as ofat least one year from the date of theissuance of these financial statements. The financial statements do not include any adjustmentsIn addition, we hold a substantial amount of non-marketable equity securities that might result fromcould be divested in order to provide liquidity as we deem fit. Our future capital requirements will depend on many factors, including: our growth rate; the outcometiming and extent of this uncertainty.February 2022, the Russian Federationaddition, we may enter into additional strategic partnerships as well as agreements to acquire or invest in complementary products, teams and Belarus commenced a military action with the country of Ukraine.this action, various nations, includingthese and other factors, we may be required to seek additional equity or debt financing sooner than we currently anticipate. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. InUnited States, have instituted economic sanctions againstCOVID-19 pandemic, which has caused disruption in the Russian Federationglobal financial markets, and Belarus. Further,rising interest rates may reduce our ability to access capital and negatively affect our liquidity in the impact of this action and related sanctionsfuture. If we are unable to raisethe world economy are not determinable as of the date of these condensed financial statements and the specific impact on the Company’s financial condition,our business opportunities because we lack sufficient capital, our business, results of operations, and financial condition would be materially and adversely affected. Approximately $3.5 million and $4.1 million of our cash and cash equivalents balance were held outside of the United States as of March 31, 2023 and December 31, 2022, respectively. There are restrictions on our ability to transfer cash and cash equivalents of $1.2 million held outside of the U.S. by our subsidiaries in China and Hong Kong and the Qingdao JV as of March 31, 2023. These restrictions include restrictions on the ability of these entitiesis also not determinablefrom product sales, as well as the issuance of new equity, debt, or other securities.Three Months Ended March 31, 2023 2022 (unaudited)
(in thousands)Statement of Cash Flows Data: Net cash provided by (used in): Operating activities $ (5,440) $ (4,745) Investing activities (206) (368) Financing activities 53,668 5,623 Effect of foreign exchange rate changes on cash and cash equivalents (260) (219) Net increase in cash and cash equivalents $ 47,762 $ 291 datefair value option per ASC 825, $1.4 million non-cash gain on warrant revaluation, non-cash charges included $4.7 million non-cash loss on impairment of these condensed financial statements. Resultsintangible assets, $0.7 million depreciation and amortization and $0.7 million of OperationsOur entire activity since inception up to March 31, 2022preparation for our formation and our initial public offering and since our initial public offering, searching for a business combination target company. We do not expect to generate any operating revenues until the closing and completion of our initial Business Combination.we had net income of approximately $2.1cash used in operating activities was $4.7 million which consistedwas primarily the result of approximately $2.4a net loss of $5.8 million, cash used in working capital of $1.3 million, partially offset by non-cash expenses $1.9 million of non-operating gain resulting from the change in fair valuedepreciation and amortization and $0.3 million of derivative warrant liabilitiesshare-based compensation.approximately $7,000 of income from investments held in trust account, offset by approximately $262,000 inequipment purchases and IP licenses. Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and administrative expenses.equipment, leasehold improvements, and software and computer equipment used internally.2021, we had net income of approximately $1.1 million, which consisted of approximately a $1.9 million non-operating gain resulting from the change2023, cash used in fair value of derivative warrant liabilities and approximately $1,000 of income from investments held in trust account, partially offset by approximately $290,000 in general and administrative expenses, and approximately $575,000 in offering costs associated with derivative warrant liabilities.Contractual ObligationsAdministrative Services AgreementCommencing on the date that our securities were first listed on the Nasdaq Capital Market (“NASDAQ”) through the earlier of consummation of the initial Business Combination and the liquidation, we agreed to pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to us.In addition, our sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection withinvesting activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors, or us or their affiliates. Any such payments prior to an initial Business Combination will be made from funds held outside the trust account.We incurred approximately $30,000 and $20,000 in general and administrative expenses in the accompanying consolidated statements of operations forwas de minimis. For the three months ended March 31, 2022, cash used in investing activities was $0.4 million, primarily due to $0.2 million purchases of property and 2021, respectively. Asequipment and $0.2 million purchase of intangible assets.2022 and December 31, 2021, we had accrued approximately $130,000 and $100,000, respectively, for services in connection with such agreement on2023, cash provided by financing activities was $53.7 million, consisting primarily of proceeds of $75.0 million from the accompanying condensed consolidated balance sheets.Registration and Shareholder RightsThe holdersissuance of the founder shares, private placement warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable uponVenture Linked Notes, $36.0 million gross proceeds from the exercisePathfinder trust, partially offset by $25.6 million repayment of the private placement warrantsPre-Close Notes, $18.7 million payment of equity issuance costs, payment of debt issuance costs of $8.8 million, and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement entered into on the effective date of our initial public offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completionrepayment of the initial Business Combination. We will bear the expenses incurred in connection with the filingKinduct deferred payout of any such registration statements.Underwriting AgreementThe underwriters were entitled to an underwriting discount of $0.20 per unit, or $6.5$4.4 million in the aggregate, payable upon the closing of our initial public offering. In addition, $0.35 per unit, or approximately $11.4 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.Critical Accounting PoliciesDerivative Warrant LiabilitiesWe do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.The 6,500,000 public warrants issued in connection with our initial public offering and the 4,250,000 private placement warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the carrying value of the instruments to fair value at each reporting period until they are exercised or expires. The initial fair value of the public warrants issued in connection with the Public Offering and the fair value of the private placement warrants have been estimated using a binomial lattice model in a risk-neutral framework. The fair value of the public warrants as of March 31, 2022 and December 31, 2021, is based on observable listed prices for such warrants. As the transfer of private placement warrants to anyone who is not a permitted transferee would result in the private placement warrants having substantially the same terms as the public warrants, we determined that the fair value of each private placement warrant is equivalent to that of each public warrant. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.Class A Ordinary Shares Subject to Possible RedemptionWe account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares is 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 the occurrence of uncertain future events. Accordingly, 325,000,000 Class A ordinary shares subject to possible redemption is presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheet.We recognize changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Effective with the closing of our initial public offering, we recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.Net income per ordinary shareWe comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income per ordinary share is calculated by dividing the net income by the weighted average shares of ordinary shares outstanding for the respective period.The calculation of diluted net income does not consider the effect of the warrants underlying the Units sold in our initial public offering (including the consummation of the Over-allotment) and the private placement warrants to purchase an aggregate of 10,750,000 Class A ordinary shares in the calculation of diluted income per share, because in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income per share is the same as basic net income per share forFor the three months ended March 31, 2022, cash provided by financing activities was $5.6 million, consisting primarily of $4.9 million from the issuance of the convertible notes and 2021. Accretion associated with$0.9 million from the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.We have considered the effectrefinanced SVB term loan, partially offset by principal repayments of Class B ordinary shares that were excluded from weighted average number as they were contingent$0.3 million on the exercise of over-allotment option by the underwriters. Since the contingency was satisfied, we included these shares in the weighted average number as of the beginning of the interim period to determine the dilutive impact of these shares.Recent Accounting PronouncementsOur management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on our consolidated financial statements.Off-Balance Sheet ArrangementsLender Agreement Date Maturity Date Annual
Interest RateVenture Linked Note Feb. 10, 2023 Feb. 10, 2028 9.25% PIK $ 75,000 $ 75,931 ACOA Loans June 9, 2020 Varies N/A Varies 461 definedof and for the year ended December 31, 2022 and in Item 303(a)(4)(ii)“Exhibit 99.1 Management’s Discussion and Analysis of Regulation S-K.Financial Condition and Results of Operations” included in our Form 8-K/A filed on March 31, 2023, we have disclosed those accounting policies that we consider to be significant in determining our results of operations and financial condition. There have been no material changes to those policies that we consider to be significant since the filing of our Form 8-K/A. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the U.S.JOBS ActThe Jumpstart Our Business Startups ActIn August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirementsaccounting models available for qualifying public companies. We qualify as an “emerging growth company”convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and underrequires the JOBS Act are allowed to comply with new or revised accounting pronouncements based onuse of the if-converted method. ASU 2020-06 is effective date for private (not publicly traded) companies.companies’ fiscal years beginning after December 15, 2023, respectively, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. 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, the 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 ofcurrently evaluating the benefitstiming of relying onadoption and 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 auditor’s attestation reportimpact of this ASU on our system of internal controls overcondensed consolidated 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 auditor’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.Aboutabout Market Risksmaller reporting companyhypothetical 10% change in foreign currency exchanges rates applicable to our business would have increased or decreased our revenues by approximately $0.5 million. Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements.defined by Rule 12b-2 of March 31, 2023 and December 31, 2022, respectively, consisting of bank deposits, commercial paper, U.S. government securities, corporate bonds, and money market funds. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. As of March 31, 2023, we had total outstanding principal amount of debt of $75.0 million.Exchange Actchange in the amounts of interest we must pay on our borrowings to the extent they are subject to variable interest rates. Our term loan with Francisco Partners bears PIK interest at 9.25% and thus is not subject to variable interest rates. Our ACOA Loan are not requiredinterest-free. The effect of a hypothetical 10% change in interest rates on the fair value of outstanding debt would result in approximately zero additional interest expense on our consolidated financial statements. For more information on the structure of interest rates under our debt instruments, see “—Liquidity and Capital Resources—Debt Obligations” above.provide the information otherwise required under this item.risks from inflation. We have been able to offset increased costs as a result of inflation through price increases to date. We cannot, however, be certain that we will be able to continue to offset such higher costs as a result of inflationary pressures through price increases. Our inability to do so could harm our business, financial condition, and results of operations.Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosureWe maintain “disclosure controls and procedures, as of the end of the fiscal quarter ended March 31, 2022,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concludedAct of 1934, that during the period covered by this report, our disclosure controls and procedures were not effective as of March 31, 2022, because of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for complex financial instruments issued by the Company was not effectively designed or maintained. This material weakness resulted in the restatement of the Company’s balance sheet as of February 19, 2021, and its interim financial statements for the quarters ended March 31, 2021 and June 30, 2021. Additionally, this material weakness could result in a misstatement of complex financial instruments and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis.Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our reports that we file or furnish pursuant to the Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officerofficer) and Chief Financial Officer (our principal financial officer or persons performing similar functions,officer), as appropriate to allow for timely decisions regarding required disclosure.Changes In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in Internal Control overevaluating the cost-benefit relationship of possible controls and procedures.ReportingThere was no change inOfficer (our principal financial officer), of the effectiveness of our internal control over financial reportingdisclosure controls and procedures, as suchoccurred duringas of the fiscal quarter ended March 31, 2022end of the period covered by this Quarterly Report on Form 10-Q, that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective at the reasonable assurance level as of such date, due to the material weakness in our internal control over financial reporting described below. Notwithstanding the identified material weakness, management has concluded that the condensed consolidated financial statements included in this Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods disclosed in accordance with GAAP.isare reasonably likely to materially affect, our internal control over financial reporting except for the below:reporting.principal executive officermanagement, including our Chief Executive Officer and principal financial officer performed additional accountingChief Financial Officer, believes that our disclosure controls and financial analysesprocedures and other post-closing procedures including consulting with subject matter experts related to the accounting for certain complex financial instruments. To address this material weakness, management has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of Company’s internal control over financial reporting. Whilereporting are designed to provide reasonable assurance of achieving their objectives and are effective at the Company has processes to identifyreasonable assurance level. However, management does not expect that our disclosure controls and appropriately apply applicable accounting requirements, management plans to enhance these processes to better evaluate its researchprocedures or our internal control over financial reporting will prevent or detect all errors and understandingall fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the nuancescontrol system are met. Because of the complex accounting standardsinherent limitations in all control systems, no evaluation of controls can provide absolute assurance that applyall control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to its financial statements. The Company plans to include providing enhanced access to accounting literature, research materialserror or fraud may occur and documents and increased communication among its personnel and third-party professionals with whom it consults regarding complex accounting applications.None.As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosedThe risks described in "Risk Factors" in our Form 10-K filed withfor the SEC on April 1,year ended December 31, 2022 as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosedand in our Registration StatementForm 8-K/A filed withMarch 31, 2023 could materially and adversely affect our business, financial condition, and results of operations, and cause the SEC. Wetrading price of our common stock to decline. Our business, financial condition, and results of operations may disclose changesbe affected by factors that are not presently known to such factorsus or disclose additional factors from timethat we currently consider to timebe immaterial to our operations. Due to risks and uncertainties, known and unknown, our historical financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The “Risk Factors” sections in our future filings withForm 10-K for the SEC.Item 2. Unregistered Sales of Equity Securitiesyear ended December 31, 2022 and Use of Proceeds.None.Item 3. Defaults upon Senior SecuritiesNone.Item 4. Mine Safety Disclosures.Not applicable.Item 5. Other Information.None.ExhibitNumberExhibit
NumberDescription 3.1 3.2 4.1 4.2 4.3* 4.4 10.1 10.2† 10.3† 10.4† 10.5 Exhibit
NumberDescription 10.6 10.7+ 31.1 31.2 32.1*32.1#32.2*32.2#101.INS Inline XBRL Instance Document.Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as(embedded within the Inline XBRL and contained in Exhibit 101)document).* These certifications are furnishedCertain of the exhibits and schedules to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted exhibits and schedules to the SEC upon its request.† Indicates management contract or compensatory plan. + Certain information was redacted from this exhibit pursuant to Section 906Item 601(a)(6) of Regulation S-K.# In accordance with Item 601(b)(32)(ii) of Regulation S‑K and SEC Release No. 34‑47986, the Sarbanes-Oxley Act of 2002certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10‑Q and will not filedbe deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall theyor deemed to be deemed incorporated by reference ininto any filing under the Exchange Act or the Securities Act of 1933 except as shall be expressly set forthto the extent that the Company specifically incorporates it by specific reference in such filing.(1)Previously filed as an exhibit to our Current Report on Form 8-K filed on February 22, 2021 and incorporated by reference herein.reference.SIGNATUREreportregistration statement to be signed on its behalf by the undersigned hereuntothereunto duly authorized.Dated: May 13, 2022PATHFINDER ACQUISITION CORPORATIONMovella Holdings Inc.By: /s/ David ChungBen A. LeeName: David ChungBen A. LeeTitle:President and Chief Executive Officer Principal Executive Officer By:/s/ Lance TaylorName:By:Lance Taylor/s/ Stephen SmithTitle:Stephen Smith Chief Financial Officer Principal Financial and Accounting Officer Date: May 12, 2023 28iso4217:USD xbrli:shares