{"url_path":"/sec/cik-0001852889/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-22","source_url":"https://www.sec.gov/Archives/edgar/data/1852889/0001829126-26-006699-index.html","accession_number":"0001829126-26-006699","cik":"0001852889","ticker":null,"issuer_name":"Libity","edgar_url":"https://www.sec.gov/Archives/edgar/data/1852889/0001829126-26-006699-index.html","primary_entity_key":"0001852889","primary_entity_name":"Libity"},"word_count":2108,"has_tables":true,"body_markdown":"**Item 1A. Risk Factors**\n\n \n\nAn investment in our securities involves a high degree of risk. The risks described below are those that we currently consider material to our shareholders, but are not exhaustive. Additional risks not presently known to us, or that we currently believe to be immaterial, may also impair our business and results.\n\n \n\n**Risks Relating to the Business Combination**\n\n \n\nWe may not complete the Business Combination with Blue Finance within the time required by the BCA. The BCA is subject to customary closing conditions, including SEC clearance of the Form F-4 registration statement, shareholder approval, receipt of required regulatory consents (including in the United Kingdom, Ireland and the Cayman Islands), and absence of a material adverse effect. If any such condition is not satisfied or waived by November 4, 2026, either party may terminate the BCA. Failure to consummate the Business Combination would leave us dependent on identifying an alternative target within the Combination Period ending May 12, 2028 as the extension was further approved by shareholders on May 14, 2026.\n\n \n\nA large number of redemptions in connection with the Business Combination would reduce the cash available to the post-Closing company. Substantially all of our Trust Account has been depleted through prior redemptions; as of the date of this Form 10-K, only 14,125 Class A ordinary shares remain subject to redemption. Although redemptions at Closing are therefore expected to be limited in absolute dollar terms, additional financings (if any) may be necessary to fund Blue Finance’s operations post-Closing, and no PIPE financing has been committed.\n\n \n\nOur board did not obtain a fairness opinion in connection with the Business Combination. The Libity board of directors relied on the experience of its members and the results of due diligence to approve the transaction. No third-party valuation or fairness opinion was obtained, and shareholders have no assurance from an independent source that the price being paid for Blue Finance is fair to the Company from a financial point of view.\n\n \n\nThe Current Sponsor, the Former Sponsor and our directors and officers have interests in the Business Combination that differ from those of other shareholders, including the fact that their equity interests were acquired at nominal prices and will be worthless if the Business Combination (or another business combination) is not completed within the Combination Period.\n\n \n\n3\n\n \n\n \n\n**Risks Relating to Blue Finance’s Business**\n\n \n\nBlue Finance is subject to extensive regulation by the FCA, including the Consumer Duty, affordability and creditworthiness assessment obligations, and complaints-handling requirements. Any actual or perceived failure to comply could result in enforcement action, restrictions on Blue Finance’s permissions, customer remediation obligations, or reputational harm. Blue Finance depends on warehouse and forward-flow facilities to fund originations; the loss or non-renewal of such facilities, or a material tightening of their terms, could materially reduce loan volumes.\n\n \n\nBlue Finance operates in the United Kingdom and its revenues are denominated in pounds sterling, while New Pubco will be incorporated in Ireland and report in U.S. dollars. Currency fluctuations and cross-border tax and regulatory considerations could adversely affect the post-Closing company’s financial results.\n\n \n\n**Risks Relating to Our SPAC Structure and Trust Account**\n\n \n\nOn May 12, 2025, our shareholders approved an extension of the deadline by which we must consummate an initial business combination from May 12, 2025 to May 12, 2027. In connection with the extension, holders of 1,449,359 Class A ordinary shares exercised their redemption rights and redeemed their shares for an aggregate of approximately $17.5 million, or approximately $12.09 per share. As a result of these redemptions, only 26,021 Class A ordinary shares remained outstanding and subject to possible redemption, and the balance in the Trust Account was reduced to approximately $473,146.\n\n \n\nSubsequently, on May 14, 2026, our\nshareholders approved a further extension of the deadline to consummate an initial business combination from May 12, 2027 to May 12,\n2028. In connection with the 2026 Extraordinary General Meeting, holders of 11,896 Class A ordinary shares redeemed approximately\n$152,721 at a per-share redemption price of approximately $12.84. Following this redemption, 14,125 Class A ordinary shares subject\nto possible redemption remained outstanding in the trust. If we do not complete an Initial Business Combination by May 12,\n2028, we will cease operations, redeem the remaining public shares, and dissolve. The amount per share available on redemption will\nbe limited to the balance remaining in the Trust Account at that time, which as of December 31, 2025 was $12.56. If third\nparties bring claims against us, the proceeds held in the Trust Account could be reduced below that amount.\n\n \n\nWe are reliant on the Current Sponsor to fund our ongoing operations. Under the Sponsor Purchase Agreement, the Current Sponsor assumed responsibility for funding the ongoing expenses of the Company and any monthly extension contributions. The Current Sponsor has extended working capital loans of up to $300,000 to fund our operations pending Closing, but is not obligated to make additional loans beyond that amount. If the Current Sponsor is unable or unwilling to continue providing funding, we may be unable to continue our search for a target or fund the expenses of the Business Combination.\n\n \n\nOur independent registered public accounting firm’s report on our financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.\n\n \n\n**Risks Relating to Our Securities and OTC Trading**\n\n \n\nOur securities were delisted from Nasdaq effective July 14, 2025 and now trade only on the OTC Markets. OTC trading is substantially less liquid than exchange-listed trading, generally has wider bid-ask spreads, and is subject to penny-stock rules that may further impair liquidity. This may adversely affect the trading price of our securities and the ability of shareholders to buy or sell our securities. In order to list the post-Closing company’s securities on Nasdaq or another national securities exchange, New Pubco will be required to satisfy the initial listing requirements of such exchange, which are more stringent than the continued listing requirements applicable prior to delisting.\n\n \n\nOur warrants are accounted for as liabilities measured at fair value, with changes in fair value reported in earnings. This may cause significant volatility in our reported results and may make us a less attractive business combination partner to certain targets.\n\n \n\nThe Current Sponsor holds the sole Class B ordinary share (the Founder Share) and a majority of our outstanding Class A ordinary shares. As a result, the Current Sponsor controls the outcome of most matters submitted to a shareholder vote, including the election of directors and approval of the Business Combination.\n\n \n\n4\n\n \n\n \n\n**Risks Relating to Internal Controls and Regulation**\n\n \n\nWe previously identified a\nmaterial weakness in our internal control over financial reporting relating to an ineffective review control that resulted in a\nmaterial adjustment to accrued expenses. Additionally, the Company did not maintain a control requiring independent reconciliation\nof the total trust account balance prior to distribution to redeeming shareholders, which resulted in an underpayment of\napproximately $155,957 to redeeming shareholders at the May 2025 extraordinary general meeting, subsequently corrected through\na stub payment made in May 2026. Finally, the Company identified a material weakness during the year ended December 31, 2025\ndue to lack of controls over complex financial instruments. We continue remediation efforts but have not yet concluded that the\nmaterial weaknesses have been remediated. The 2024 SPAC Rules impose additional disclosure and process requirements on de-SPAC\ntransactions that may increase our costs and extend our timeline to completion.\n\n \n\nBecause we are incorporated in the Cayman Islands, shareholders may face practical difficulties enforcing their rights under U.S. federal securities laws, including in effecting service of process and enforcing U.S. judgments against our directors and officers resident outside the United States.\n\n \n\n**Risks Relating to Macroeconomic and Geopolitical Conditions**\n\n \n\nMacroeconomic conditions, tariff and trade policy uncertainty, geopolitical instability, and capital market volatility may adversely affect our ability to consummate the Business Combination. Global macroeconomic conditions have been characterized by significant volatility in recent periods. Factors including elevated inflation, rising and sustained high interest rates, broad-based U.S. tariff and trade policy changes, geopolitical conflicts (including the ongoing wars in Ukraine and the Middle East and heightened U.S.-China trade tensions), and concerns about a potential global economic slowdown have created, and may continue to create, adverse conditions affecting capital markets, credit availability, and business confidence. Deteriorating market conditions could reduce investor appetite for the Business Combination, make it more difficult to obtain PIPE or alternative financing commitments, impair New Pubco’s ability to satisfy Nasdaq initial listing requirements, or make shareholder approval less certain. A prolonged period of market dislocation or capital market disruption could delay or prevent completion of the Business Combination before the November 4, 2026 outside date under the BCA. We cannot predict the duration or severity of current macroeconomic conditions or the impact of future policy changes, and there can be no assurance that such conditions will not further deteriorate before the Business Combination is consummated.\n\n \n\nBlue Finance’s consumer lending business is directly exposed to elevated UK benchmark interest rates and the availability of institutional funding facilities, each of which could materially impair its financial results and reduce the attractiveness of the Business Combination. Blue Finance funds its loan originations through warehouse and forward-flow facilities with institutional credit partners. Elevated benchmark rates (including SONIA and the Bank of England base rate) directly increase Blue Finance’s cost of funds, compress net interest margins, and reduce the economics of its lending operations. A sustained high-rate environment, a credit tightening by funding partners, or a material deterioration in UK consumer credit performance could materially reduce Blue Finance’s loan volumes, increase credit losses, or result in the loss or non-renewal of critical funding facilities. Any of these outcomes could adversely affect Blue Finance’s financial condition and results of operations, render the Business Combination less attractive to shareholders, or affect New Pubco’s ability to operate and grow the business following Closing.\n\n \n\nCurrency fluctuations between the pound sterling and the U.S. dollar could adversely affect the reported financial results of New Pubco following Closing. Blue Finance’s revenues and costs are denominated in pounds sterling. Following the Business Combination, New Pubco will be incorporated in Ireland and will report its financial results in U.S. dollars. Accordingly, Blue Finance’s sterling-denominated results will be translated into U.S. dollars for reporting purposes, and any depreciation of sterling against the U.S. dollar will reduce the reported dollar-equivalent value of Blue Finance’s revenues, earnings, and assets. Volatility in the sterling/dollar exchange rate — which has been elevated in recent periods due to UK macroeconomic uncertainty, trade policy developments, and global risk sentiment — could cause significant period-to-period variability in New Pubco’s reported results and make it difficult for investors to assess the underlying performance of the business. The Company and Blue Finance have not entered into currency hedging arrangements, and there can be no assurance that any such arrangements will be entered into following Closing.\n\n \n\n5\n\n \n\n \n\nU.S. tariff and trade policy developments may indirectly affect Blue Finance’s business through macroeconomic spillover effects on the UK economy and UK consumer credit quality. The U.S. administration has imposed, and may impose additional, broad-based tariffs on goods imported from numerous trading partners, including the United Kingdom. Although Blue Finance’s business is a UK consumer lending operation with no direct U.S. import or export exposure, the broader macroeconomic effects of tariff escalation — including retaliatory measures, reduced global trade volumes, currency volatility, increased inflationary pressure, and potential recessionary conditions in the UK — could reduce UK consumer spending power, increase unemployment, and impair the credit quality of Blue Finance’s borrowers. An increase in defaults, delinquencies, or credit losses in Blue Finance’s loan portfolio as a result of such conditions could materially reduce its earnings and the value of the combined company following Closing. Additionally, tariff-driven volatility in U.S. capital markets could reduce investor interest in New Pubco’s securities following Closing.\n\n \n\nNew Pubco and Blue Finance will depend on access to debt and equity capital markets following Closing, and current macroeconomic conditions may impair their ability to raise financing on acceptable terms. No committed PIPE financing has been arranged in connection with the Business Combination. Following Closing, New Pubco and Blue Finance will be dependent on available debt and equity markets to fund Blue Finance’s ongoing lending operations and support its growth strategy. A market environment characterized by tight credit conditions, elevated credit spreads, reduced appetite for small- and mid-cap equity issuances, or continued macroeconomic uncertainty could impair New Pubco’s ability to access capital on acceptable terms or at all. Any failure to obtain adequate financing could constrain Blue Finance’s loan origination volumes, limit its growth, and adversely affect New Pubco’s financial condition and the trading price of its securities following Closing."}