Item 1A. Risk Factors
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2
of the Exchange Act, we are not required to include risk factors in this Report. However, the following is a partial list of material
risks, uncertainties and other factors that could have a material effect on us and our operations:
● We
are a blank check company and an early stage company with no operating history or revenue or basis to evaluate our ability to select
a suitable target business for the Business Combination.
●
We may not be able to select an appropriate target business or businesses and complete a Business Combination in the Combination Period, including the BSTR Business Combination.
●
Our expectations around the performance of a prospective target business or businesses, such as BSTR, may not be realized.
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We may not be successful in retaining or recruiting officers, key employees or directors following a Business Combination.
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Our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving the Business Combination.
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If we do not consummate the BSTR Business Combination, we may not be able to obtain additional financing to complete another Business Combination.
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We may issue Class A ordinary shares to investors in connection with the Business Combination at a price that is less than the prevailing market price of the Public Shares at that time, such as in the BSTR Business Combination.
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If the BSTR Business Combination is not consummated, Public Shareholders may not be afforded an opportunity to vote on another Business Combination.
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The funds in the Trust Account may not be protected against third party claims or bankruptcy.
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An active trading market for the Public Shares may not develop and the Public Share may have limited liquidity and trading.
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Members of our management team and the Board have significant experience as founders, board members, officers, executives or employees of other companies. Certain of those persons, as well as our affiliates, have been, may be, or may become, involved in litigation, investigations or other proceedings, including related to those companies or otherwise. The defense or prosecution of these matters could be time-consuming and could divert our management’s attention, and may have an adverse effect on us, which may impede our ability to consummate the Business Combination.
●
If we do not consummate the BSTR Business Combination, there may be more competition to find an attractive target for the Business Combination, which could increase the costs associated with completing the Business Combination and may result in our inability to find a suitable target or consummate the Business Combination.
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If we do not consummate the BSTR Business Combination, we may attempt to simultaneously complete the Business Combination with multiple prospective targets, which may hinder our ability to complete the Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
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In addition to the BCMA, we have engaged CF&Co. as a financial advisor and placement agent in connection with the BSTR Business Combination. Furthermore, if the BSTR Business Combination is not consummated, we may acquire a target company that has engaged CF&Co., or another affiliate of the Sponsor, as a financial advisor. Any fee in connection with such engagement are, or may be, conditioned upon the completion of such transactions. This financial interest in the completion of such transactions may influence the advice such affiliate provides.
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We may attempt to complete the Business Combination with a private company about which little information is available, which may result in the Business Combination with a company that is not as profitable as we suspected, if at all.
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Since the Sponsor will lose its entire investment in us if the Business Combination is not completed (other than with respect to any Public Shares it may acquire during or after the Initial Public Offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for the Business Combination, such as the BSTR Business Combination.
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The nominal purchase price paid by the Sponsor for the Founder Shares may result in significant dilution to the implied value of the Public Shares upon the consummation of the Business Combination and the Sponsor is likely to make a substantial profit on its investment in us in the event we consummate the Business Combination, even if the Business Combination causes the trading price of the Public Shares to materially decline.
●
The value of the Founder Shares following completion of the Business Combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of the Public Shares at such time is substantially less than $10.00 per share.
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Resources could be wasted in researching Business Combinations that are not completed (including the BSTR Business Combination), which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we have not completed the Business Combination by the end of the Combination Period, the Public Shareholders may receive only $10.53 per share as of December 31, 2025 (inclusive of $0.15 per share to be funded pursuant to the Sponsor Note and which amount takes into account our estimate of the amount that may be withdrawn to pay our taxes (other than Excise Tax)) and is subject to our right to withdraw interest from the Trust Account to pay any additional taxes (other than Excise Tax)) or less than such amount in certain circumstances, on the liquidation of the Trust Account.
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Military or other conflicts in Ukraine, the Middle East or elsewhere and other disruptions to the equity or debt capital markets, including as a result of inflation in the United States and elsewhere, may lead to increased volume and price volatility for publicly traded securities, or affect the operations or financial condition of potential target companies, which could make it more difficult for us to consummate the Business Combination.
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There may be fewer attractive targets available for acquisition due to the increased number of SPACs that have gone public in recent years and there may be more competition for attractive targets. If the BSTR Business Combination is not consummated, this could increase the cost of the Business Combination and could even result in our inability to find a target or to consummate the Business Combination.
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Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations or our prospects.
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We may not be able to complete a Business Combination that may be subject to regulatory review and approval requirements, including foreign investment regulations and review by government entities such as the Committee on Foreign Investment in the United States, or that may be ultimately prohibited.
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If the Business Combination involves a company organized under the laws of a state of the United States, it is possible that Excise Tax will be imposed on us in connection with redemptions of the Public Shares after or in connection with the Business Combination.
For additional risks relating to our operations,
other than as set forth above, see the section titled “Risk Factors” contained in the Registration Statement. Any of these
factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks
could arise that may also affect our business or ability to consummate the Business Combination. We may disclose changes to such risk
factors or disclose additional risk factors from time to time in our future filings with the SEC.
For risks related to BSTR and the BSTR Business
Combination, please see the registration statement to be filed by Pubco in connection with the BSTR Business Combination, once filed.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.