10-Q: Harvard Ave Acquisition Corp. Q3 Loss, IPO Funds Secured

Harvard Ave Acquisition Corporation reported a net loss for Q3 2025 and successfully closed its IPO, securing $145 million in a trust account, but faces a going concern warning.

Summary

• Reported a net loss of $32,542 for the three months ended September 30, 2025, and $96,712 for the nine months ended September 30, 2025.
• Successfully consummated its Initial Public Offering (IPO) on October 24, 2025, selling 14,500,000 units at $10.00 per unit, generating gross proceeds of $145,000,000.
• Simultaneously, completed a private placement of 339,964 units and 1,019,892 restricted Class A ordinary shares to its Sponsors and underwriters, raising $3,399,640.
• A total of $145,000,000 from the IPO proceeds and a portion of the private placement proceeds were placed into a U.S.-based trust account.
• Underwriters forfeited their over-allotment option to purchase an additional 2,175,000 units on October 24, 2025.
• Sponsors surrendered 725,000 Class B ordinary shares to maintain 25% ownership following the over-allotment option forfeiture.
• The company has a working capital deficiency of $543,625 as of September 30, 2025, and management has identified substantial doubt about its ability to continue as a going concern.
• Disclosure controls and procedures were deemed not effective at a reasonable assurance level as of September 30, 2025.

Sentiment

Score: 3

Explanation: While the IPO was successfully completed, the significant working capital deficiency, explicit going concern warning, and ineffective disclosure controls present substantial financial and operational concerns. The geopolitical risks further add to the uncertainty regarding a successful business combination within the mandated timeframe.

Positives

• Successfully completed its Initial Public Offering (IPO) on October 24, 2025, raising $145,000,000 in gross proceeds.
• Secured an additional $3,399,640 through a private placement to Sponsors and underwriters.
• A significant portion of the IPO and private placement proceeds, $145,000,000, has been placed into a U.S.-based trust account for future business combination.

Negatives

• Reported a net loss of $32,542 for the three months ended September 30, 2025, and $96,712 for the nine months ended September 30, 2025.
• Has a working capital deficiency of $543,625 as of September 30, 2025, an increase from $266,763 at December 31, 2024.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to its working capital deficiency and the mandatory liquidation date if a business combination is not completed.
• Disclosure controls and procedures were concluded to be not effective at a reasonable assurance level as of September 30, 2025.
• The promissory note from a related party, with an outstanding balance of $431,730, remains outstanding despite being due upon IPO closing.

Risks

• The company's ability to continue as a going concern is in substantial doubt due to its working capital deficiency and the mandatory liquidation date if a business combination is not completed within the Combination Period.
• Geopolitical instability from the ongoing Russia-Ukraine conflict and the Israel-Hamas conflict could lead to market disruptions, volatility in commodity prices, credit and capital markets, supply chain interruptions, and increased cyber-attacks, potentially adversely affecting the search for an initial Business Combination.
• The proceeds deposited in the Trust Account could become subject to the claims of the company's creditors, if any, which could have priority over the claims of the public shareholders.
• Sponsors' indemnity obligations for third-party claims are not assured to be satisfied, as the company has not verified their funds and believes their only assets are company securities.
• Public shareholders will not receive any funds for their rights if the company fails to complete a Business Combination and redeems public shares, rendering the rights worthless.
• The company's disclosure controls and procedures were not effective at a reasonable assurance level, indicating potential risks in financial reporting and information communication.

Future Outlook

The company intends to use substantially all funds in the Trust Account to complete a Business Combination within 18 to 24 months from the IPO closing. It expects to incur significant costs in pursuit of acquisition plans and will generate non-operating income from interest on trust account funds. Management plans to address the going concern uncertainty through a Business Combination, though there is no assurance of success.

Management Comments

• We are a blank check company incorporated in the Cayman Islands on August 15, 2024 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses.
• We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
• We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination.
• Our management evaluated, with the participation of our current chief executive officer and chief financial officer... the effectiveness of our disclosure controls and procedures as of September 30, 2025... Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of September 30, 2025.

Industry Context

As a Special Purpose Acquisition Company (SPAC), Harvard Ave Acquisition Corporation operates in a highly competitive and time-sensitive environment. The successful completion of its IPO and placement of funds into a trust account is a standard initial step. However, the reported going concern warning and ineffective disclosure controls highlight significant challenges, particularly in a market that has seen increased scrutiny and reduced investor appetite for SPACs. Geopolitical instability further complicates the search for a suitable target business, potentially impacting valuation and deal certainty.

Comparison to Industry Standards

• The company's structure as a blank check company (SPAC) is standard for the industry, aiming to acquire a private operating company.
• The IPO proceeds of $145 million and the $10.00 per unit price are within the typical range for SPAC offerings, though on the smaller side compared to some larger SPACs.
• The 18-24 month timeline to complete a business combination is a standard regulatory requirement for SPACs, aligning with industry norms.
• The "going concern" warning and the conclusion that disclosure controls were "not effective" are significant deviations from expected industry best practices for public companies, even for an emerging growth company. This raises concerns about internal financial management and reporting integrity, which could deter potential target businesses and investors.
• The reliance on related party financing (promissory note, related party receivable) and administrative support from sponsors is common in the early stages of SPACs, but the outstanding promissory note after IPO closing and the structure of the related party receivable indicate potential operational inefficiencies or control weaknesses.

Corporate Governance

Related Party Transactions

• A related party receivable of $1,865,088 as of September 30, 2025, due to the company's bank account being owned by a related party to the Sponsor. This issue was resolved in November 2025 when the company gained direct access to the account.
• An outstanding promissory note of $431,730 from Copley Square Sponsor Limited (a Sponsor), which is non-interest bearing and was due at the IPO closing but remains outstanding.
• $1,855,308 is due to Sponsors, representing proceeds received in advance from the private placement.
• An affiliate of the Sponsors is allowed to charge the company up to $10,000 per month for administrative support services (office, utilities, personnel) from September 30, 2025, until a Business Combination or liquidation.
• Sponsors, officers, and directors or their affiliates/designees may provide working capital loans, up to $3,000,000 of which could be convertible into working capital units.
• Sponsors surrendered 725,000 Class B ordinary shares on October 24, 2025, to maintain 25% ownership after the IPO due to the underwriters' over-allotment option forfeiture.

Stakeholder Impact

• Shareholders: Public shareholders face the risk of their rights expiring worthless if a Business Combination is not completed. All shareholders face uncertainty due to the going concern warning and the limited timeframe for a Business Combination. The ineffective disclosure controls could impact investor confidence.
• Sponsors: Have significant financial exposure through the promissory note, private placement, and potential working capital loans, and have agreed to waive redemption rights for their insider and private shares. They also bear liability for certain third-party claims if the trust account falls below a threshold.
• Underwriters: Received a cash underwriting fee of $1,800,000 and are entitled to a deferred underwriting fee of $4,350,000 upon the closing of the initial Business Combination, which they will forfeit if no Business Combination is completed.
• Creditors: The proceeds in the Trust Account could become subject to claims of creditors, potentially having priority over public shareholders' claims.

Next Steps

• Identify and evaluate target businesses for a Business Combination.
• Perform business due diligence on prospective target businesses.
• Structure, negotiate, and complete a Business Combination within 18 to 24 months from the IPO closing (October 24, 2025).
• Address the working capital deficiency and the going concern uncertainty, primarily through the completion of a Business Combination.
• Improve disclosure controls and procedures to achieve effectiveness at a reasonable assurance level.

Key Dates

Recommendation

The company faces significant challenges, including a substantial working capital deficiency and an explicit 'going concern' warning, indicating a high risk of liquidation if a business combination is not completed within the tight 18-24 month timeframe. The disclosure that internal controls were 'not effective' further undermines investor confidence in financial reporting integrity. While the IPO successfully raised funds, the fundamental operational and financial risks, coupled with geopolitical uncertainties, make this a highly speculative investment with a strong downside bias. Seasoned investors would likely seek to exit or avoid this position due to the elevated risk profile and lack of clear path to a viable business combination.

Keywords

SPAC, Harvard Ave Acquisition Corporation, 10-Q, Quarterly Report, Business Combination, IPO, Trust Account, Going Concern, Financial Results, SEC Filing, Blank Check Company, Private Placement, Corporate Governance, Risk Factors, Geopolitical Risk