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Spark I Acquisition (SPKL) - 2024 Q4 - Annual Report
SPKLSpark I Acquisition (SPKL)2025-03-21 21:25

IPO and Fundraising - The company completed its IPO on October 11, 2023, raising a total of 100.5millionfromthesaleof10,000,000units,witheachunitpricedat100.5 million from the sale of 10,000,000 units, with each unit priced at 10.05[18]. - A total of 100,500,000fromtheIPOandprivateplacementisheldinatrustaccountforthebenefitofpublicshareholders,withspecificconditionsforrelease[20].−Atotalof100,500,000 from the IPO and private placement is held in a trust account for the benefit of public shareholders, with specific conditions for release[20]. - A total of 115,000,000 is planned to be raised through a forward purchase agreement and additional funds from PIPE investors if needed[45]. - The company had access to 8,490,535followingtheIPOandthesaleofPrivateWarrantstocoverpotentialclaimsandliquidationcosts[102].−AsofDecember31,2024,thecompanyhad8,490,535 following the IPO and the sale of Private Warrants to cover potential claims and liquidation costs[102]. - As of December 31, 2024, the company had 375,403 in cash outside its trust account and a working capital deficit of 868,904[128].−Thecompanyhasapproximately868,904[128]. - The company has approximately 2,200,000 available outside the trust account to fund working capital requirements until at least July 11, 2025[177]. - The company has 100,500,000innetproceedsfromtheIPO,whichmayonlybeinvestedindirectU.S.Treasuryobligationswithamaturityof185daysorlessorincertainmoneymarketfunds[187].BusinessCombinationPlans−Thecompanyhassignedanon−bindingletterofintentforabusinesscombinationwithKneronHoldingCorporation,aproviderofedgeAIsolutions,andisactivelynegotiatingtermsforabindingagreement[17][31].−Thecompanyistargetinglate−stagetechnologystartupsinAsiaorU.S.companieswithastrongAsiapresence,focusingonthosewithanenterprisevaluegreaterthan100,500,000 in net proceeds from the IPO, which may only be invested in direct U.S. Treasury obligations with a maturity of 185 days or less or in certain money market funds[187]. Business Combination Plans - The company has signed a non-binding letter of intent for a business combination with Kneron Holding Corporation, a provider of edge AI solutions, and is actively negotiating terms for a binding agreement[17][31]. - The company is targeting late-stage technology startups in Asia or U.S. companies with a strong Asia presence, focusing on those with an enterprise value greater than 1 billion[25]. - The company has identified and prioritized initial targets within the SparkLabs Group ecosystem for potential business combinations[31]. - The company has a strategy to leverage its network and relationships within the SparkLabs Group to source acquisition opportunities[26]. - The company must complete its initial business combination with a fair market value equal to at least 80% of the net assets held in the trust account[36]. - The completion of the business combination with Kneron is subject to due diligence, negotiation of a definitive agreement, and approval from both boards and shareholders[49]. - The company has a letter of intent for a potential initial business combination with Kneron and another company in the hospitality software space, but these are non-binding and may not lead to a successful transaction[146]. Due Diligence and Risk Management - The company will conduct thorough due diligence on prospective target businesses, including financial and operational reviews[34]. - The company intends to conduct extensive due diligence on prospective target businesses, including management meetings and financial reviews[52]. - The management team will assess risks inherent in target businesses, but cannot guarantee all risks will be identified[50]. - The company may not have the resources to diversify operations post-business combination, which could increase risk exposure[56]. - The company may face intense competition from other entities in identifying and acquiring target businesses, which could limit its ability to complete an initial business combination[106]. - The company may face challenges in obtaining additional financing for business combinations or operations, which could lead to restructuring or abandonment of deals[123]. Shareholder Rights and Redemption - A total of 1,788,962 public shares, or 17.89% of the 10,000,000 public shares sold in the IPO, must be voted in favor of the initial business combination for approval[77]. - Shareholder approval may be sought for the initial business combination based on various factors, including potential changes in control or significant share issuance[64]. - The company will not redeem public shares if the total cash consideration required exceeds the available cash, which would prevent the business combination from proceeding[72]. - Shareholders are restricted from redeeming more than 15% of the shares sold in the IPO without prior consent, aimed at preventing a small group from blocking the business combination[80]. - The redemption process will be conducted either through a shareholder meeting or a tender offer, based on various factors including timing and legal requirements[73]. - Shareholders can withdraw their redemption request up to two business days before the scheduled vote on the business combination[88]. - If the initial business combination is not approved, public shareholders who elected to redeem their shares will not receive any funds from the trust account[89]. - Public shareholders may receive 10.05orlesspershareuponredemption,andwarrantswillexpireworthlessifthecompanyfailstocompletethebusinesscombination[149].RegulatoryandComplianceIssues−Thecompanyisrequiredtofileannual,quarterly,andcurrentreportswiththeSEC,includingauditedfinancialstatements[108].−Thecompanyisclassifiedasan"emerginggrowthcompany,"allowingittotakeadvantageofcertainexemptionsfromreportingrequirementsuntilitmeetsspecificrevenueormarketvaluethresholds[115].−Thecompanymustmaintainnettangibleassetsofatleast10.05 or less per share upon redemption, and warrants will expire worthless if the company fails to complete the business combination[149]. Regulatory and Compliance Issues - The company is required to file annual, quarterly, and current reports with the SEC, including audited financial statements[108]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements until it meets specific revenue or market value thresholds[115]. - The company must maintain net tangible assets of at least 5,000,001 to avoid being subject to SEC's "penny stock" rules[140]. - The company must maintain a minimum shareholders' equity of 2.5millionandatleast300publicholderstoremainlistedonNasdaq[163].−IfNasdaqdeliststhecompany′ssecurities,itcouldfacesignificantadverseconsequences,includingreducedliquidityandincreasedregulatoryscrutiny[164].−TheSEC′s2024SPACRulesimposeadditionaldisclosurerequirementsandcouldmateriallyaffectthecompany′sabilitytocompleteitsinitialbusinesscombination[203].FinancialObligationsandLiabilities−ThecompanyhasissuedaNoteintheprincipalamountofupto2.5 million and at least 300 public holders to remain listed on Nasdaq[163]. - If Nasdaq delists the company's securities, it could face significant adverse consequences, including reduced liquidity and increased regulatory scrutiny[164]. - The SEC's 2024 SPAC Rules impose additional disclosure requirements and could materially affect the company's ability to complete its initial business combination[203]. Financial Obligations and Liabilities - The company has issued a Note in the principal amount of up to 1,900,000 to the Sponsor, with 840,000advancedasofDecember31,2024[178].−Thecompanymayneedtoincuradditionalexpensesforrun−offinsurancetoprotectdirectorsandofficersfrompotentialliabilitiesarisingfrompre−combinationconduct[175].−Thecompany’sobligationtoindemnifyitsofficersanddirectorsmaydiscourageshareholdersfrombringinglawsuitsagainstthemforbreachesoffiduciaryduty[186].−Ifthirdpartiesbringclaimsagainstthecompany,theproceedsheldinthetrustaccountcouldbereduced,potentiallyloweringtheper−shareredemptionamountforshareholders[182].−Ifthetrustaccountisreducedbelow840,000 advanced as of December 31, 2024[178]. - The company may need to incur additional expenses for run-off insurance to protect directors and officers from potential liabilities arising from pre-combination conduct[175]. - The company’s obligation to indemnify its officers and directors may discourage shareholders from bringing lawsuits against them for breaches of fiduciary duty[186]. - If third parties bring claims against the company, the proceeds held in the trust account could be reduced, potentially lowering the per-share redemption amount for shareholders[182]. - If the trust account is reduced below 10.05 per public share due to creditor claims, the actual redemption amount may be less than anticipated[101]. - The company may face claims of punitive damages if it distributes proceeds from the trust account to shareholders before addressing creditor claims in the event of bankruptcy[188]. Management and Governance - The company has a conflict of interest policy in place to manage potential conflicts arising from its management team and board of directors[30]. - The company has three executive officers with annual compensation of 350,000fortheCEO,350,000 for the CEO, 180,000 for the COO, and 25,000fortheCFO,alongwith25,000 for the CFO, along with 75,000 for each independent director[107]. - The company has agreed to waive redemption rights for founder shares and public shares held by management in connection with the business combination[77]. - Holders of Class A ordinary shares will not have voting rights on director elections prior to the initial business combination[210]. - The company is not currently registering Class A ordinary shares issuable upon exercise of the warrants, which may lead to warrants expiring worthless if not registered[211]. Operational Challenges - The company has no operating history and no revenues, making it difficult for investors to evaluate its ability to achieve business objectives[121]. - The company may not be able to acquire target businesses that do not meet financial statement requirements, potentially limiting acquisition opportunities[111]. - The company may depend on loans from the Sponsor or its affiliates to fund operations if net proceeds from the IPO and Private Warrants are insufficient[176]. - The company may face increased costs and decreased availability of directors and officers liability insurance, which could complicate negotiations for an initial business combination[171]. - The company may liquidate securities in the trust account to mitigate the risk of being deemed an investment company, which would reduce the amount available for public shareholders upon redemption[198]. - The company may incur additional regulatory burdens and expenses if deemed subject to the Investment Company Act, potentially hindering its business combination efforts[197].