Financial Condition and Risks - The trust account is expected to contain approximately $11.23 per Class A ordinary share at the time of the initial business combination[159]. - Public shareholders may be incentivized to redeem their shares due to the trust account value, potentially receiving less than $10.20 per share if claims against the trust account arise[161]. - If additional capital is required, the company may need to borrow from its sponsor or management team, as third-party loans are unlikely[158]. - The company may incur significant costs in pursuing acquisition plans, and the funds outside the trust account may not be sufficient for operations during the Extension Period[157]. - The company may face write-downs or impairments post-business combination, negatively impacting financial condition and share price[160]. - Changes in laws or regulations could adversely affect the company's ability to complete its initial business combination and overall results[170]. - The SEC's Final Rules may impose additional disclosure requirements and increase potential liabilities, impacting the company's business operations[171]. - The company may not have sufficient funds to satisfy indemnification claims of its directors and officers, which could discourage litigation against them[166]. - If bankruptcy occurs after distributing trust account proceeds, shareholders may face reduced amounts due to creditor claims[169]. - The company is not obligated to seek loans from affiliates in the future, which may limit available funds for operations[158]. - If the initial business combination is not consummated within the Extension Period, public shareholders may face delays in redeeming their shares from the trust account[177]. - The company may incur substantial debt to complete a business combination, which could adversely affect its financial condition and shareholder value[240]. Shareholder Rights and Governance - Initial shareholders control 42.8% of the issued and outstanding ordinary shares, allowing them to appoint all directors prior to the initial business combination[180]. - The company may not hold an annual general meeting until after the initial business combination, delaying shareholder opportunities to appoint directors[182]. - The absence of a specified maximum redemption threshold may allow the company to complete a business combination that a majority of shareholders do not agree with[248]. - The approval for amendments to the memorandum and articles of association requires a two-thirds majority vote from shareholders, while amendments related to the trust account can be approved by 65% of the votes cast[251]. - Initial shareholders collectively own 42.8% of the ordinary shares, allowing them to exert substantial influence over shareholder votes, including amendments to governing documents[256]. - Shareholders will have the opportunity to redeem their shares for cash if amendments to the governing documents are proposed that affect their rights[252]. - The company is not required to hold an annual general meeting prior to the initial business combination, allowing current directors to remain in office until the completion of the business combination[256]. Business Combination and Acquisition Risks - The company may issue additional Class A ordinary shares or preference shares to complete its initial business combination, which could significantly dilute existing shareholders' equity[204]. - The company may face challenges in completing its initial business combination due to the potential adverse effects of registration rights on the market price of its Class A ordinary shares[192]. - The company may pursue business combinations in industries outside of its management's expertise, which could lead to inadequate risk assessment[197]. - If the company does not complete its initial business combination, public shareholders may only receive their pro rata portion of the funds in the trust account, potentially less than $10.20 per share[198]. - The company may be classified as a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. investors[206]. - The company is not required to obtain an independent valuation for its business combination, relying instead on its board of directors' judgment[202]. - The investigation and negotiation for potential business combinations may incur substantial costs that are not recoverable if the transactions do not complete[205]. - The company may pursue business combinations with private companies, which often have limited public information, increasing the risk of unprofitable acquisitions[245]. - The company may face challenges in maintaining control of a target business post-combination, potentially impacting operational profitability[246]. - The potential for simultaneous business combinations may increase costs and risks, complicating the completion of initial business combinations[244]. - The company may not be able to diversify its operations, making it vulnerable to economic and competitive developments in a single industry[243]. Regulatory and Compliance Issues - The SEC proposed rules for SPACs to provide a safe harbor from being classified as an "investment company," requiring a de-SPAC transaction to be announced within 18 months and completed within 24 months of the IPO registration statement[172]. - A SPAC that holds 40% or more of its total assets in investment securities may be classified as an investment company, raising concerns about its operational status[174]. - If a SPAC does not complete its initial business combination within 24 months, it may be deemed an unregistered investment company, potentially leading to liquidation and loss of value for investors[175]. - Prior to December 14, 2023, funds in the trust account were held in U.S. government treasury obligations; however, the company has since instructed to liquidate these and hold funds in cash to mitigate investment company status risks[176]. - The company may be exposed to liabilities under the Foreign Corrupt Practices Act, which could adversely affect its business and financial condition[300]. - Changes in the market for directors and officers liability insurance could increase costs and complicate negotiations for initial business combinations[302]. - The company may need to purchase additional insurance to protect directors and officers from potential liabilities arising from pre-combination conduct, adding to expenses[304]. - The company is subject to evolving regulatory measures, which may increase compliance costs and risks of non-compliance[298]. Internal Controls and Financial Reporting - As of December 31, 2023, the company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting, specifically regarding the accuracy and completeness of accrued expenses and interest earned in the trust account[360]. - The management concluded that the internal control over financial reporting was not effective as of December 31, 2023, based on the evaluation under the Internal Control-Integrated Framework (2013)[361]. - The company has performed additional accounting and financial analyses and enhanced internal controls and procedures in response to identified weaknesses[361]. - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected the internal control[362]. - The company does not expect that its disclosure controls and procedures will prevent all errors and instances of fraud, acknowledging inherent limitations[360]. - Management plans to continue improving processes to effectively evaluate accounting technical pronouncements for significant or unusual transactions[361]. - The design of disclosure controls and procedures is influenced by resource constraints and the need to balance benefits against costs[360]. - The company has committed to ongoing enhancements of internal controls to address the complexities of accounting standards[361]. - The report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting, as the company is classified as an emerging growth company[362]. - Management believes that the financial statements present fairly the financial position, results of operations, and cash flows for the periods presented despite the identified weaknesses[360]. Management and Operational Risks - The management team has extensive experience in identifying and executing strategic investments globally, but past performance may not guarantee future results[194]. - The success of the initial business combination depends on key personnel, whose loss could negatively impact operations and profitability[221]. - Conflicts of interest may arise as officers and directors allocate their time between the Company and other business activities[226]. - The Company may engage underwriters for additional services, which could create potential conflicts of interest in sourcing and consummating a business combination[232]. - The personal and financial interests of directors and officers may influence their motivation in identifying and selecting a target business, potentially breaching fiduciary duties[231]. - The nominal purchase price for founder shares was $25,000, approximately $0.003 per share, which may significantly dilute the implied value of public shares upon consummation of an initial business combination[236]. - The sponsor invested a total of $16,725,000 in the company, including $16,700,000 for private placement warrants, which could lead to substantial profits for the sponsor even if public shares decline in value[237]. - A majority of the Company's directors and officers live outside the United States, which may complicate enforcement of legal rights for U.S. investors[218]. - The management team has significant experience, but involvement in litigation or investigations could impede the ability to consummate an initial business combination[219]. - Cyber incidents could lead to information theft, data corruption, operational disruption, and financial loss, particularly as the company lacks significant investments in data security protection[284]. - If the company pursues a target company outside the United States, it may face additional risks, including regulatory approvals and fluctuations in foreign exchange rates[286]. - Corporate governance standards in non-US countries may be weaker, potentially leading to unfavorable transactions and poor management practices[292].
Investcorp Europe Acquisition Corp I(IVCBU) - 2023 Q4 - Annual Report