Company Overview - The company is a blank check company with no operating history and no revenue, making it difficult for investors to evaluate its ability to achieve business objectives [98]. - The company has net tangible assets exceeding $5,000,000, exempting it from certain SEC rules protecting investors in blank check companies [157]. Compliance and Regulatory Risks - The company has identified a material weakness in its disclosure controls and procedures as of September 30, 2023, which remains unremedied as of December 31, 2023 [115]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements and restrictions on its activities, potentially affecting its ability to complete an initial business combination [102]. - The SEC has issued final rules that may increase costs and time needed to complete the business combination, effective July 1, 2024 [111]. - Compliance with the Sarbanes-Oxley Act may require substantial financial and management resources, increasing the time and costs of completing a business combination [267]. Financial Considerations - The company has instructed the Trustee to liquidate U.S. government securities in the Trust Account and hold funds in cash, which may reduce the amount public stockholders receive upon liquidation [104]. - If the initial business combination is not completed by March 19, 2024, public stockholders may receive approximately $10.20 per share upon liquidation of the trust account [128]. - The proceeds in the trust account could be reduced below $10.20 per share due to third-party claims, impacting the redemption amount for stockholders [130]. - The company may incur substantial costs in investigating potential acquisitions, which would not be recoverable if the acquisition does not proceed [194]. - The company may require additional financing to fund operations or growth of the target business, which could adversely affect its development [263]. Shareholder and Stockholder Issues - The company’s stockholders may be held liable for claims by third parties against it to the extent of distributions received, which could be viewed as preferential transfers in bankruptcy [121]. - Stockholders holding over 15% of the issued shares may lose the ability to redeem those excess shares without prior consent from the company [161]. - Public stockholders may be incentivized to redeem their shares at the time of the initial business combination, which could complicate the completion of the transaction [147]. - If public stockholders exercise their redemption rights, the company may not meet the minimum cash requirements needed to consummate an initial business combination [252]. - If the initial business combination is not completed, public stockholders may only receive $10.20 per share or potentially less upon redemption [262]. Business Combination Challenges - The company’s management team has a history of past performance that may not be indicative of future success in identifying suitable candidates for business combinations [99]. - The company may face challenges maintaining its listing on Nasdaq if its founders or affiliates purchase shares in the open market, reducing the public float [152]. - The company may only be able to complete one business combination with the proceeds from the initial public offering, leading to a lack of diversification that may negatively impact operations and profitability [227]. - Increased competition among special purpose acquisition companies (SPACs) for attractive targets may lead to higher costs and difficulties in finding suitable acquisition opportunities [237]. - The company may face challenges in completing initial business combinations due to the lack of diversification, which could expose it to significant economic, competitive, and regulatory risks [232]. Conflicts of Interest - The personal and financial interests of the company's founders, executive officers, and directors may influence their motivation in identifying and selecting a target business combination [220]. - The company may face conflicts of interest due to its officers and directors being affiliated with other entities engaged in similar business activities [214]. - The company has not adopted a policy prohibiting its directors and executive officers from having financial interests in investments to be acquired or disposed of, which may present additional conflicts of interest [218]. Market and Economic Conditions - The company may face increased market volatility and uncertainty due to geopolitical conflicts, which could adversely affect its ability to raise financing [177]. - The market for directors and officers liability insurance has become less favorable, increasing costs and complicating negotiations for initial business combinations [239]. Miscellaneous - The company may amend the terms of the public warrants with the approval of at least 50% of the holders, potentially affecting the interests of warrant holders [140]. - The company may issue additional shares of Series A common stock or preferred stock to complete the initial business combination, which could significantly dilute the equity interest of existing investors [221]. - The company has authorized the issuance of up to 100,000,000 shares of Series A common stock, with 91,832,610 shares available for issuance as of December 31, 2023 [222]. - The company may issue a substantial number of additional shares to complete the initial business combination or under an employee incentive plan, which could dilute existing stockholder interests [223]. - The absence of a specified maximum redemption threshold may facilitate the consummation of initial business combinations even if a majority of stockholders disagree [246].
Atlantic Coastal Acquisition Corp. II(ACABU) - 2023 Q4 - Annual Report