Factorial Energy (FAC) risk factors, FY2025 10-K

Other

1. 01Our initial shareholders own 20% of our issued and outstanding ordinary shares following the completion of our initial public offering
2. 02Your only opportunity to effect your investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash
3. 03The 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
4. 04The 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
5. 05We may not be able to complete our initial business combination within the Completion Window, in which case we would redeem our public shares
6. 06We may decide not to extend the term we have to consummate our initial business combination, in which case we would redeem our public shares, and the warrants may be worthless
7. 07If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for submitting or tendering its shares, such shares may not be redeemed
8. 08You will not be entitled to protections normally afforded to investors of other blank check companies subject to Rule 419 of the Securities Act
9. 09If the net proceeds from our initial public offering and simultaneous private placement not being held in the trust account are insufficient to allow us to operate until the completion of the business combination, we will depend on loans from the Sponsor or management team to complete the business combination
10. 10If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share
11. 11Our 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
12. 12We may not have sufficient funds to satisfy indemnification claims of our directors and officers
13. 13Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations
14. 14If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination
15. 15Our search for an initial business combination, and any target business with which we may ultimately consummate an initial business combination, may be materially adversely affected by current global conflicts in the Middle East, Europe, and Latin America
16. 16If we are unable to consummate our initial business combination within the Completion Window, our public shareholders may be forced to wait beyond 24 months before redemption from our trust account
17. 17Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares
18. 18Because we are neither limited to evaluating a target business in a particular industry or sector, nor have we selected any target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations
19. 19We may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise
20. 20We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel
21. 21Unlike some other similarly structured SPACs, our initial shareholders will receive additional Class A ordinary shares if we issue certain shares to consummate an initial business combination
22. 22We may issue our shares to investors in connection with our initial business combination at a price which is less than the prevailing market price of our shares at that time
23. 23Because only holders of our Class B ordinary shares have the right to vote on the appointment of directors, we are a “controlled company” within the meaning of Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance requirements
24. 24We currently do not intend to rely on the “controlled company” exemption but may do so in the future. Accordingly, if we choose to do so, you will not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements
25. 25We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our initial shareholders, officers or directors, which may raise potential conflicts of interest
26. 26Pursuant to certain subscription agreements dated October 29, 2024, on November 12, 2024, our initial shareholders paid an aggregate of $25,000, or approximately $0.004 per share, to cover certain of our offering costs in exchange for an aggregate of 5,750,000 founder shares
27. 27We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us
28. 28We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability
29. 29We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all
30. 30We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our shareholders do not agree
31. 31We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination
32. 32Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations, or our prospects
33. 33Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses
34. 34Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination
35. 35In pursuing a potential business combination, we may be targeted by securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent such business combination from being completed
36. 36Trade policies that restrict imports or increase import tariffs may have a material adverse effect on our search for an initial business combination target or the performance or business prospects of a post-combination company

Risks Relating to the Post-Business Combination Company

1. 37The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business
2. 38Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business
3. 39We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company
4. 40We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results
5. 41Our initial business combination and our structure thereafter may not be tax-efficient to our shareholders and warrant holders. As a result of our business combination, our tax obligations may be more complex, burdensome and/or uncertain

Risks Relating to Acquiring and Operating a Business in Foreign Countries

1. 42If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us
2. 43We may reincorporate in another jurisdiction, which may result in taxes imposed on shareholders or warrant holders
3. 44We may reincorporate in or transfer by way of continuation to another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights
4. 45We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance
5. 46If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues
6. 47Exchange rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished

Risks Relating to our Management Team

1. 48We are dependent upon our officers and directors and their loss, or a reduction in the amount of time they can dedicate to our initial business combination, could adversely affect our ability to operate
2. 49The ownership interest of our sponsor may change, and our sponsor may divest its ownership interest in us before identifying a business combination, which could deprive us of key personnel
3. 50Our 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
4. 51Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests
5. 52Members of our management team and affiliated companies may have been, and may in the future be, involved in civil disputes or governmental investigations unrelated to our business
6. 53Our letter agreements with our initial shareholders, officers and directors may be amended without shareholder approval

Risks Relating to our Securities

1. 54You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss
2. 55Nasdaq 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
3. 56We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers
4. 57After our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other legal rights
5. 58Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management
6. 59A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination
7. 60We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless
8. 61Our warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination
9. 62Because each unit contains one-half of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other SPACs
10. 63Holders of Class A ordinary shares will not be entitled to vote on continuing the company in a jurisdiction outside of the Cayman Islands
11. 64Holders of our warrants will not be permitted to exercise their warrants unless we register and qualify the underlying Class A ordinary shares or certain exemptions are available
12. 65You may only be able to exercise your public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer Class A ordinary shares from such exercise than if you were to exercise such warrants for cash
13. 66We are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective
14. 67Past performance by our management team and their respective affiliates, including investments and transactions in which they have participated and businesses with which they have been associated, may not be indicative of future performance of an investment in the company
15. 68Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss
16. 69We may be a passive foreign investment company, or “PFIC,” which could result in adverse United States federal income tax consequences to U.S. investors
17. 70If our initial business combination involves a company organized under the laws of the United States (or any subdivision thereof), a U.S. federal excise tax could be imposed on us in connection with any redemptions of our Class A ordinary shares after or in connection with such initial business combination
18. 71Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination
19. 72Recent increases in inflation in the United States and elsewhere could make it more difficult for us to complete our initial business combination