Financial Condition - As of December 31, 2023, the company had cash of 851,869, excluding current liabilities related to franchise and income taxes [67]. - As of December 31, 2023, the company had 272,000 from its Sponsor to fund working capital requirements [96]. - The company has 10.40 per share, which may decrease under certain circumstances [134]. - Public stockholders may only receive funds from the trust account upon the completion of an initial business combination or under specific circumstances, with a potential redemption amount of less than 10.40 per share [82]. - The company may complete its initial business combination without seeking stockholder approval, which could lead to a situation where a majority of public stockholders do not support the combination [70]. - The company may face intense competition from other entities with similar business objectives, which could hinder its ability to complete an initial business combination [93]. - If the company does not complete its initial business combination by June 22, 2024, or if it opts for a second extension to September 22, 2024, it may be forced to liquidate [94]. - The company may enter into a business combination with a financially unstable business, which could lead to volatile revenues and difficulties in retaining key personnel [130]. - The company is not required to obtain a fairness opinion for its initial business combination, relying instead on the judgment of its board of directors [131]. - The company may incur substantial debt to complete an initial business combination, which could adversely affect financial condition and stockholder value [143]. - The potential for initial business combinations with private companies may result in less profitable outcomes due to limited available information [146]. - The company may not be able to maintain control of a target business post-combination, which could lead to management challenges [174]. - The management team may have conflicts of interest due to their involvement with other entities, potentially affecting the decision-making process regarding business combinations [190]. - The company may engage in business combinations with entities affiliated with its Sponsor or directors, raising potential conflicts of interest [196]. Regulatory and Compliance Challenges - The company faces regulatory challenges in pursuing business combinations with PRC-based entities, which may complicate acquisition efforts [68]. - The company will not conduct an initial business combination with any target company that operates through VIEs, which may limit acquisition candidates in the PRC [227]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an initial business combination [223]. - The company is subject to complex procedures and requirements for mergers and acquisitions involving PRC-based businesses, which could complicate its business combination efforts [230]. - The PRC government retains significant control over foreign investments, with a negative list system that restricts foreign entities from investing in certain sectors [237]. - Changes in PRC government policies and regulations can occur rapidly and may adversely affect the ability of companies to operate profitably in the PRC [239]. - The approval process for acquisitions may involve strict time limits and economic data submissions, complicating negotiations and potentially delaying transactions [235]. Shareholder Considerations - Initial stockholders have agreed to vote in favor of the initial business combination, which may increase the likelihood of receiving requisite stockholder approval [71]. - The company may issue shares in connection with its initial business combination at a price less than the prevailing market price, potentially affecting shareholder value [77]. - The company must maintain net tangible assets of at least $5,000,001 to proceed with the initial business combination after redemptions [75]. - The company’s Sponsor and affiliates may purchase public shares to influence stockholder approval of the initial business combination, potentially reducing the public float [86]. - The absence of a specified maximum redemption threshold may allow the company to complete an initial business combination that a majority of stockholders do not support [148]. - Amendments to the Certificate of Incorporation may facilitate initial business combinations that some stockholders may not agree with, requiring only 65% approval [152]. - Stockholders may be held liable for claims against the company to the extent of distributions received upon redemption of shares [115]. - The company does not intend to comply with certain Delaware law procedures for liquidating distributions, which may increase stockholder liability [116]. Market and Economic Factors - The competition for attractive targets among special purpose acquisition companies has increased, potentially raising costs and limiting available options for initial business combinations [135]. - The market for directors' and officers' liability insurance has become more expensive and less favorable, impacting the ability to negotiate initial business combinations [139]. - The PRC's economic growth has been uneven, and any slowdown could reduce demand for services and products, impacting potential business combinations [250]. - Recent cybersecurity regulations may require Chinese technology firms to undergo reviews before listing on foreign exchanges, narrowing the pool of potential acquisition targets [248]. - Negative publicity and litigation surrounding PRC-based companies listed in the U.S. have adversely affected stock prices, which could impact the company's operations [253]. Management and Operational Risks - Key personnel's involvement post-business combination is uncertain, and their departure could negatively impact operations and profitability [169]. - The company does not have employment agreements or key-man insurance for its executive officers, which could pose risks if key personnel leave [186]. - Past performance of the management team is not indicative of future success, and reliance on historical performance may be misplaced [185]. - The company may need to borrow additional funds from its Sponsor or affiliates to continue operations, as there is no obligation for them to provide such funds [96]. - If additional financing is required for the initial business combination, it may not be available on acceptable terms, potentially leading to restructuring or abandonment of the transaction [155].
Four Leaf Acquisition (FORL) - 2023 Q4 - Annual Report