Item 1A. Risk Factors
Item 1A. Risk Factors.
As a smaller reporting company,
we are not required to include risk factors in this Annual 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, followed by another material risk that should be reviewed
when considering an investment in our securities.
For additional risks relating to our operations, other than as set
forth below, 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 initial 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.
Risks Relating to our Search for, Consummation
of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks
● Our public shareholders may not be afforded an opportunity to vote on our proposed business combination,
which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.
● If we seek shareholder approval of our initial business combination, our initial shareholders, officers
and directors have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.
● Your only opportunity to affect the investment decision regarding a potential business combination will
be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of the business combination.
● The ability of our public shareholders to redeem their shares for cash may make our financial condition
unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a
target.
● The ability of our public shareholders to exercise redemption rights with respect to a large number of
our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
● The ability of our public shareholders to exercise redemption rights with respect to a large number of
our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait
for liquidation in order to redeem your shares.
● The requirement that we complete our initial business combination within the prescribed time frame may
give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence
on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial
business combination on terms that would produce value for our shareholders.
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Risks Associated with Acquiring and Operating
a Business Outside of the U.S.
● If we effect our initial business combination with a company located outside of the U.S., we would be
subject to a variety of additional risks that may negatively impact our business operations and financial results.
● If we effect a business combination with a company located outside of the United States, the laws
applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.
● Because of the costs and difficulties inherent in managing cross-border business operations after
we acquire it, our results of operations may be negatively impacted following a business combination.
Risks Relating to our Sponsor and Management
Team
● Our officers and directors will allocate their time to other businesses, thereby causing conflicts of
interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on
our ability to complete our initial business combination.
● Since our sponsor, officers and directors, and any other persons who have an interest in our founder shares
and/or private placement units, including any non-managing sponsor investors, will lose their entire investment in us, except to
the extent they are entitled to redeem any public shares they acquire, as described in this report, or to receive liquidating distributions
on the founder shares from assets outside the trust account, if our initial business combination is not completed, a conflict of interest
may arise in determining whether a particular business combination target is appropriate for our initial business combination.
● Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a
reduction in the amount of funds in the trust account available for distribution to our public shareholders.
● Our ability to successfully effect our initial business combination and to be successful thereafter will
be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of our
or a target’s key personnel could negatively impact the operations and profitability of our post-combination business.
● We may approve an amendment or waiver of the letter agreement that would allow our sponsor to directly,
or the members of our sponsor to indirectly, transfer founder shares and private placement shares or membership interests in our sponsor
in a transaction in which our sponsor removes itself as our sponsor before identifying an initial business combination, which may deprive
us of key personnel.
● Past performance by our management team and their respective affiliates may not be indicative of future
performance of an investment in us.
● We are dependent upon our officers and directors and their departure could adversely affect our ability
to operate.
Risks Relating to Our Securities
● Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability
to make transactions in our securities and subject us to additional trading restrictions.
● The grant of registration rights to our initial shareholders and holders of our private placement units
and representative shares may make it more difficult to complete our initial business combination, and the future exercise of such rights
may adversely affect the market price of our Class A ordinary shares.
General Risks Related to Our Business
● We are a newly incorporated company with no operating history and no revenues, and you have no basis on
which to evaluate our ability to achieve our business objective.
● Our independent registered public accounting firm’s report contains an explanatory paragraph that
expresses substantial doubt about our ability to continue as a “going concern.”
● You will not have any rights or interests in funds from the trust account, except under certain limited
circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or rights, potentially at a loss.
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Risks Relating to Taxation
We believe that we likely
were a passive foreign investment company, or “PFIC,” during the fiscal year ended December 31, 2025, which may result in
adverse U.S. federal income tax consequences to U.S. holders.
If we are a PFIC for any taxable year (or portion thereof) that is
included in the holding period of a U.S. Holder (as defined in the section of the Registration Statement titled “ Income Tax Considerations
– Certain U.S. Federal Income Tax Considerations - U.S Holders ”) of our Class A ordinary shares, the U.S. Holder may be
subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our
current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception (see the section of the Registration
Statement titled “ Income Tax Considerations – Certain U.S. Federal Income Tax Considerations - U.S Holders – Passive
Foreign Investment Company Rules ”). We expect to consummate a business combination in calendar year 2026 based on our 18-month
time horizon. However, we are uncertain of the timing of a business combination and whether we will successfully consummate a business
combination in 2026 or later. Because we are a blank check company with no current active business prior to our initial business combination,
and based upon the composition of our income and assets, and upon a review of our financial statements, we likely were a PFIC for U.S.
federal income tax purposes for the fiscal year ended December 31, 2025. We are uncertain if we will continue to be a PFIC in 2026 making
it difficult to determine the availability of the PFIC start-up exception to fiscal year ended December 31, 2025. Our actual PFIC status
for any taxable year will not be determinable until after the end of such taxable year. Accordingly, there can be no assurances with respect
to our status as a PFIC for our current taxable year or any subsequent taxable year. Moreover, if we determine we are a PFIC for any taxable
year, upon written request, we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service (the “IRS”)
may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a “qualified
electing fund” election, but there can be no assurance that we will timely provide such required information. We urge U.S. investors
to consult their own tax advisors regarding the possible application of the PFIC rules. We urge U.S. holders to consult their own tax
advisors regarding the possible application of the PFIC rules. For a more detailed explanation of the tax consequences of PFIC classification
to U.S. Holders, see the section of the Registration Statement titled “ Income Tax Considerations – Certain U.S. Federal
Income Tax Considerations - U.S Holders – Passive Foreign Investment Company Rules .”