Company Structure and Operations - The company is a blank check company with no operating history or revenue, making it difficult to evaluate its ability to achieve its business objectives [130]. - The company may be deemed a "blank check" company under U.S. securities laws, exempt from certain investor protections due to having net tangible assets exceeding $5 million [156]. - The company has not yet identified any specific target business for its initial business combination, which limits the ability to evaluate potential risks and merits [181]. - The company has no current commitments to issue debt securities, but may incur substantial debt to complete the initial business combination, which could adversely affect its financial condition [216]. - The company is classified as an "emerging growth company," which allows it to take advantage of reduced disclosure requirements, potentially affecting the attractiveness of its securities to investors [289]. Financial Considerations - The trust account will initially contain $10.20 per share of Series A common stock, which may incentivize public stockholders to redeem their shares [140]. - As of March 15, 2023, approximately $312,468,148 remained available from the initial public offering proceeds to complete the initial business combination, including up to $10,500,000 for deferred underwriting commissions [217]. - The total funds available for the initial business combination, after deducting deferred underwriting commissions, amount to $295.5 million [271]. - The company generated gross proceeds of $300,000,000 from its Initial Public Offering of 30,000,000 units, sold at a price of $10.00 per unit [307]. - The company incurred cash used in operating activities of $1,184,963 for the year ended December 31, 2022 [321]. Business Combination Risks - The company must complete its initial business combination within 15 months from the closing of its initial public offering, which may limit negotiation leverage with potential target businesses [144]. - If the company fails to complete its initial business combination within the required time period, it will redeem public shares and liquidate, ceasing all operations except for winding up [145]. - The requirement for target businesses to have a fair market value of at least 80% of the trust account may limit the number of potential acquisition targets [134]. - The company may face challenges in conducting due diligence on potential targets due to time constraints as it approaches its dissolution deadline [144]. - The company may face intense competition from private equity groups, venture capital funds, and other blank check companies in acquiring target businesses [240]. Shareholder Rights and Redemption - Public stockholders may not have the opportunity to vote on the proposed initial business combination, which could lead to a situation where a majority does not support the combination [135]. - Stockholders holding over 15% of the issued shares may lose the ability to redeem all such shares without prior written consent [159]. - If public stockholders exercise their redemption rights, it may limit the cash available for the initial business combination, potentially requiring the company to seek additional financing [232]. - If the initial business combination is not completed, public stockholders may only receive $10.20 per share or potentially less upon redemption [241]. Management and Conflicts of Interest - Founders and executive officers have agreed to vote in favor of the initial business combination, potentially influencing the outcome even if public stockholders oppose it [137]. - There may be conflicts of interest among key personnel regarding their compensation and the selection of target businesses [200]. - The company has not adopted a policy to prohibit directors and officers from having financial interests in potential acquisition targets, which may lead to conflicts of interest [209]. - The economic interests of the management team and sponsor may not align with those of public stockholders, as they could profit from a business combination even if public shares lose value [270]. Market and Economic Conditions - The ongoing COVID-19 pandemic and geopolitical conflicts, such as the situation in Ukraine, may materially adversely affect the company's search for target businesses for initial business combinations [172]. - The company may face increased market volatility and decreased liquidity in financing due to COVID-19 and geopolitical risks, impacting its ability to raise equity and debt financing [175]. - The company may be subject to foreign ownership restrictions and CFIUS review due to its sponsor's ties with a non-U.S. person, which could limit potential business combinations [296]. Regulatory and Compliance Issues - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing a business combination [245]. - The SEC has proposed rules that may increase costs and time needed to complete the initial business combination [251]. - The SEC's statements regarding the accounting treatment of warrants may impact the company's financial reporting and market perception [291]. Share Issuance and Dilution - The company may issue additional shares of Series A common stock or preferred stock to complete the initial business combination, potentially diluting existing stockholders [212]. - The nominal purchase price for founder shares was $25,000, resulting in an implied value of approximately $0.0035 per share, which may lead to significant dilution of public shares upon the initial business combination [270]. - The company may issue a substantial number of additional shares of common or preferred stock to complete the initial business combination, which could significantly dilute existing investors' equity interests [215]. Operational Challenges - The company may face challenges in negotiating and completing an initial business combination due to changes in the market for directors and officers liability insurance, which has become more expensive and less favorable [224]. - The company may pursue a business combination with a private company, which typically has limited public information available, increasing the risk of acquiring a less profitable entity [227]. - The company may face substantial delays and increased transaction costs if required to undergo a CFIUS review prior to or after its initial business combination [297].
Atlantic Coastal Acquisition Corp. II(ACABU) - 2022 Q4 - Annual Report