KRAKacquisition (KRAQ) risk factors, FY2025 10-K

Risks Relating to Our Search for, and Consummation of or Inability to Consummate, a Business Combination

1. 01If we seek shareholder approval of our initial Business Combination, our Initial Shareholders have agreed to vote in favor of such initial Business Combination, regardless of how our Public Shareholders vote
2. 02If we seek shareholder approval of our initial Business Combination, our Sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from Public Shareholders, which may influence a vote on a proposed Business Combination and reduce the public ‘‘float” of our Class A Ordinary Shares
3. 03Your only opportunity to affect the decision regarding a potential Business Combination will be the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of the Business Combination
4. 04The redemption rights of our Public Shareholders may make our financial condition unattractive to potential Business Combination targets and may make it difficult for us to enter into a Business Combination with a target
5. 05We do not have a minimum net tangible asset requirement
6. 06The ability of our Public Shareholders to exercise redemption rights with respect to a large number of our shares and the amount of deferred underwriting commissions may not allow us to complete the most desirable Business Combination or optimize our capital structure and may substantially dilute your investment in us
7. 07The 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
8. 08We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a Business Combination with which a substantial majority of our shareholders do not agree
9. 09If a shareholder fails to receive notice of our offer to redeem our Public Shares in connection with our Business Combination or fails to comply with the procedures for tendering its shares, such shares may not be redeemed
10. 10We 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
11. 11Because we are not limited to a particular industry, sector or any specific 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’ operations
12. 12We 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
13. 13Our 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
14. 14If 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
15. 15Holders of our Class A Ordinary Shares will not be entitled to vote on any appointment or removal of directors prior to our initial Business Combination and will also not be able to vote on our continuation in a jurisdiction outside the Cayman Islands prior to our initial Business Combination
16. 16Changes 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
17. 17If 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 Business Combination
18. 18If our circumstances change over time, we will update our disclosure to reflect how such changes impact the risk that we may be considered to be an unregistered investment company
19. 19If we effect our initial Business Combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations
20. 20The recent excise tax on stock buybacks could be imposed on redemptions of our shares if we were to become a ‘‘covered corporation” in the future
21. 21We 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
22. 22There are risks related to digital assets to which we may become subject
23. 23Digital assets are relatively novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty that could adversely impact their price
24. 24We are not required to obtain an opinion from an independent entity that commonly renders valuation opinions or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view
25. 25We may issue our shares to investors in connection with our initial Business Combination at a price that is less than the prevailing market price of our shares at that time
26. 26Recent increases in inflation in the United States and elsewhere could make it more difficult for us to consummate an initial Business Combination
27. 27Our search for a Business Combination, and any target business with which we ultimately consummate a Business Combination, may be materially adversely affected by events that are outside of our control, such as increased geopolitical unrest, pandemic outbreaks and volatility in the debt and equity markets
28. 28We may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may hinder our ability to complete our 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. 30Our 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
31. 31In order to effectuate our initial Business Combination, we may seek to amend our Amended and Restated Memorandum and Articles of Association or governing instruments in a manner that will make it easier for us to complete our initial Business Combination but that our shareholders may not support
32. 32We 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
33. 33Changes 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
34. 34Because 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
35. 35Compliance 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 acquisition
36. 36We may not hold an annual general meeting until after the consummation of our initial Business Combination

Risks Relating to Our Sponsor and Management Team

1. 37Past performance by our Co-Founders, including our Management Team may not be indicative of future performance of an investment in the Company
2. 38We may seek acquisition opportunities in industries or sectors that may or may not be outside of our Management’s areas of expertise
3. 39Since our Sponsor, officers and directors will lose their entire investment in us if our Business Combination is not completed, a conflict of interest may arise in determining whether a particular Business Combination target is appropriate for our initial Business Combination
4. 40Our initial Business Combination will require approval of our Sponsor and all of our directors
5. 41We 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
6. 42Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us
7. 43Our officers, directors, security holders, Sponsor and their respective affiliates may have competitive pecuniary interests that conflict with our interests
8. 44We may engage in a Business Combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest

Risks Relating to Our Securities

1. 45The grant of registration rights to our Initial Shareholders and other holders of our Private Placement Warrants may make it more difficult to complete our initial Business Combination, and the future exercise of such rights may adversely affect the market price of our Class A Ordinary Shares
2. 46Nasdaq 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. 47a decreased ability to issue additional securities or obtain additional financing in the future
4. 48You will not be entitled to protections normally afforded to investors of blank check companies
5. 49You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your Public Shares or Warrants, potentially at a loss
6. 50We 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
7. 51Our Initial Shareholders may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support
8. 52Our Sponsor paid an aggregate of $25,000, or approximately $0.0029 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A Ordinary Shares
9. 53Initial implied value per Public Share(1)
10. 54The Sponsor’s total investment in the equity of the company, inclusive of the Founder Shares and the Sponsor’s $2,250,000 investment in the Private Placement Warrants, is $2,275,000
11. 55A provision of our warrant agreement may make it more difficult for us to consummate an initial Business Combination
12. 56We may redeem your unexpired Public Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless
13. 57Our Management’s ability to require holders of our Public Warrants to exercise such Public Warrants on a cashless basis will cause holders to receive fewer Class A Ordinary Shares upon their exercise of the Public Warrants than they would have received had they been able to exercise their Public Warrants for cash
14. 58Our Public Warrants, Private Placement Warrants and Founder Shares may have an adverse effect on the market price of our Class A Ordinary Shares and make it more difficult to effectuate our Business Combination
15. 59Because each unit contains one-fourth of one Public Warrant and only a whole warrant may be exercised, the units issued in the Initial Public Offering may be worth less than units of other blank check companies
16. 60If we take advantage of Nasdaq’s controlled company standards, we would be exempt from various corporate governance requirements
17. 61We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective
18. 62We 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 executive officers, or enforce judgments obtained in the United States courts against our directors or officers
19. 63Provisions in our Amended and Restated Memorandum and Articles of Association and Cayman Islands law 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
20. 64Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss
21. 65We may reincorporate in another jurisdiction in connection with our initial Business Combination and such reincorporation may result in taxes imposed on shareholders
22. 66Our 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
23. 67We may not have sufficient funds to satisfy indemnification claims of our directors and officers
24. 68In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors
25. 69Our letter agreement with our Sponsor, officers and directors may be amended without shareholder approval