10-K: Lionheart Holdings Faces Going Concern Doubt Amid SPAC Deadline

Lionheart Holdings, a blank check company, reported net income for fiscal year 2025 but faces substantial doubt about its ability to continue as a going concern if it fails to complete a business combination by June 20, 2026.

Summary

• Lionheart Holdings is a blank check company incorporated on February 21, 2024, with the sole purpose of effecting a Business Combination with one or more businesses.
• The company consummated its Initial Public Offering (IPO) on June 20, 2024, raising $230,000,000 from 23,000,000 Units, including the full exercise of the Over-Allotment Option.
• Simultaneously with the IPO, 6,000,000 Private Placement Warrants were sold to the Sponsor and Cantor for $6,000,000.
• A total of $230,000,000 from the IPO and Private Placement proceeds was initially placed in a Trust Account, which had grown to $246,161,982 as of December 31, 2025, due to interest income.
• The company has until June 20, 2026, to complete its initial Business Combination; failure to do so will result in liquidation and redemption of Public Shares.
• For the fiscal year ended December 31, 2025, the company reported a net income of $8,952,273, primarily from interest earned on marketable securities held in the Trust Account.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to the lack of a definitive business combination and limited liquidity outside the Trust Account.
• The redemption price for Public Shares was approximately $10.70 per share as of December 31, 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with low sentiment due to the explicit 'going concern' warning and the approaching deadline for a business combination without a target identified, despite positive interest income from the Trust Account.

Positives

• Generated net income of $8,952,273 for the fiscal year ended December 31, 2025, primarily from interest income on the Trust Account.
• The Trust Account balance has grown to $246,161,982 as of December 31, 2025, from an initial $230,000,000, indicating effective management of trust assets.
• The company has a defined business strategy to acquire established businesses of scale with proven unit economics and capable management teams, avoiding startups or excessively leveraged companies.

Negatives

• Substantial doubt exists about the company's ability to continue as a going concern if a Business Combination is not completed by the June 20, 2026, deadline.
• The company has not generated any operating revenues to date and does not expect to until a Business Combination is consummated.
• Cash held outside the Trust Account for operating activities is limited, with $230,540 as of December 31, 2025, potentially requiring reliance on loans from the Sponsor or Management Team.
• A deferred underwriting fee of $9,800,000 is payable to the Underwriters only upon completion of a Business Combination, which will reduce the cash available for the combined entity.

Risks

• Inability to complete an initial Business Combination within the Combination Period (June 20, 2026), leading to liquidation and redemption of Public Shares, with Warrants expiring worthless.
• Difficulty obtaining additional financing to complete an initial Business Combination or to fund the operations and growth of a target business.
• Potential issuance of Ordinary Shares at a price less than the prevailing market price during an initial Business Combination, diluting existing shareholders.
• Public Shareholders may not be afforded an opportunity to vote on a proposed initial Business Combination, and even with a vote, Founder Shares' participation may lead to approval despite majority Public Shareholder dissent.
• Increased competition for attractive target businesses due to a growing number of SPACs, potentially increasing acquisition costs or making it harder to find a target.
• Attempting to complete Business Combinations with multiple prospective targets simultaneously may hinder completion and give rise to increased costs and risks.
• Potential conflicts of interest for Underwriters providing additional services due to their entitlement to a Deferred Fee upon Business Combination completion.
• Risk of acquiring a private company about which little information is available, potentially resulting in a less profitable outcome.
• Resources could be wasted on researching Business Combination targets that are not completed, adversely affecting subsequent attempts.
• Recent fluctuations in inflation and interest rates, military conflicts, and other disruptions could make an initial Business Combination more difficult.
• Changes in laws or regulations, including international trade policies, could adversely affect the business or Business Combination prospects.
• Adverse developments affecting the financial services industry could impact the company's business, financial condition, or Business Combination prospects.
• Cybersecurity incidents or attacks could result in information theft, data corruption, operational disruption, and/or financial loss.
• Risk of being deemed an investment company under the Investment Company Act, leading to burdensome compliance requirements and restricted activities.
• The ability of Public Shareholders to redeem their Public Shares for cash may make the company's financial condition unattractive to potential Business Combination targets.
• Large redemptions and the payment of the Deferred Fee may not allow the company to complete the most desirable Business Combination or optimize its capital structure, and may materially dilute Public Shareholders' investment.
• The requirement to complete an initial Business Combination within the Combination Period may give potential target businesses leverage and limit due diligence time.
• If the Combination Period is not extended, the company would liquidate, and Warrants would be worthless.
• Purchases of Public Shares or Public Warrants by the Sponsor, directors, officers, advisors, and their respective affiliates may influence a vote on a proposed Business Combination and reduce the public float.
• Public Shareholders may be held liable for claims by third parties against the company to the extent of distributions received upon redemption of their Public Shares.
• If third parties bring claims against the company, the proceeds held in the Trust Account could be reduced, and the per-share redemption amount received by Public Shareholders may be less than the Redemption Price.
• Directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Public Shareholders.
• The securities in which the company invests the funds held in the Trust Account could bear a negative rate of interest, reducing the interest income or the value of assets.
• If the company files a bankruptcy or insolvency petition, the claims of creditors may have priority over the claims of shareholders, reducing the per-share redemption amount.
• Lack of an active market for public securities could adversely affect the liquidity and price of securities.
• Conflicts of interest for the Sponsor, directors, and officers due to their potential for substantial profit from Founder Shares, even if Public Shareholders experience losses.
• The value of the Founder Shares following completion of an initial Business Combination is likely to be substantially higher than the nominal price paid for them, even if Public Shares decline.
• Nasdaq may delist the company's securities from trading, limiting shareholders' ability to make transactions.
• Public Shareholders do not have any rights or interests in funds from the Trust Account, except under certain limited circumstances.
• Immediate and substantial dilution for Public Shareholders from the nominal purchase price paid by the Sponsor for the Founder Shares.
• Difficulties for shareholders in protecting their interests due to Cayman Islands incorporation and potential location of assets/management outside the U.S.
• Provisions in the Amended and Restated Articles may inhibit a takeover of the company.
• The Amended and Restated Articles provide that the courts of the Cayman Islands will be the exclusive forums for certain disputes, limiting shareholders' ability to obtain a favorable judicial forum.
• Uncertain U.S. federal income tax consequences for U.S. shareholders upon redemption of Public Shares.
• The terms of the Public Warrants may be amended adversely to holders with the approval of at least 50% of outstanding Public Warrants, without shareholder approval.
• The Warrant Agreement designates specific courts as the sole and exclusive forum for certain warrant-related actions, limiting warrant holders' ability to choose a judicial forum.
• A provision of the Warrant Agreement may make it more difficult to consummate an initial Business Combination.
• Warrants may have an adverse effect on the market price of Class A Ordinary Shares and make it more difficult to effectuate an initial Business Combination.
• Because each Unit contains one-half of one Warrant, the Units may be worth less than units of other SPACs.
• Warrant holders will not be permitted to exercise their Warrants unless the underlying Class A Ordinary Shares are registered and qualified or certain exemptions are available.
• Holders may only be able to exercise Public Warrants on a cashless basis under certain circumstances, receiving fewer Class A Ordinary Shares.
• Holders of Class A Ordinary Shares are not entitled to vote on continuing the company in a jurisdiction outside the Cayman Islands prior to the consummation of the initial Business Combination.
• The grant of registration rights to the Sponsor and other holders may make an initial Business Combination more difficult and adversely affect the market price of Class A Ordinary Shares.
• The company may be a passive foreign investment company (PFIC), which could result in adverse United States federal income tax consequences to U.S. shareholders.
• Taking advantage of emerging growth company and smaller reporting company exemptions could make securities less attractive to investors.
• Seeking to extend the Combination Period could have a material adverse effect on the amount held in the Trust Account and other adverse effects on the company.

Future Outlook

The company's primary future outlook is to complete an initial Business Combination by June 20, 2026. Management intends to identify and acquire an established business of scale with proven unit economics and capable management. Failure to complete a Business Combination by this deadline will result in the company ceasing operations, liquidating, and redeeming Public Shares, with Warrants expiring worthless. The company may seek shareholder approval to extend the Combination Period, which could lead to redemptions and affect Nasdaq listing. There is no assurance that plans to raise capital or consummate an initial Business Combination will be successful.

Management Comments

• "Our Management is pragmatic, measuring our success in both immediate and continuous financial return balanced across all stakeholders."
• "We believe in quality management teams that lead attractive target businesses."
• "Successful teams understand not only their craft, but the limitations in their businesses, and realize that efficient scaling requires a consistent onboarding of knowledge, expertise, and varied points of view, as well as capital, to continue winning the challenge of sustained extraordinary growth."
• "Unlocking value and growth potential for our investors, our Business Combination targets, and ourselves is a balanced multi-part equation crafted through an alignment of incentives and an incremental injection of value from and across all stakeholders."
• "We have been and continue to be entrepreneurs, managers, board members and investors in public and private enterprises that we find exciting."
• "It is with real knowledge of the successes and failures of talented and energetic creators that we offer our counsel as partners in seeking to unlock further growth and value, as well as our support and a matching of intense work ethic, to the managers of businesses we select for combination."

Industry Context

StockSavvy.ai notes that Lionheart Holdings operates as a Special Purpose Acquisition Company (SPAC), a segment of the market that has seen significant activity but also increased scrutiny and competition. The company's focus on acquiring established businesses with proven unit economics, rather than early-stage ventures, aligns with a more conservative SPAC strategy aimed at mitigating some inherent risks. However, the broader SPAC market has faced challenges, including negative public perception and increased difficulty in finding attractive targets, which could impact Lionheart Holdings' ability to complete its Business Combination. The explicit mention of the Nasdaq 36-Month Requirement highlights the regulatory pressures unique to SPACs.

Comparison to Industry Standards

• As a blank check company, Lionheart Holdings has no operating history or revenue, which is standard for SPACs prior to a business combination.
• The initial Trust Account size of $230 million is comparable to many mid-sized SPACs that target businesses with enterprise values greater than their initial capital.
• The redemption price of $10.70 per Public Share as of December 31, 2025, indicates a slight appreciation from the initial $10.00 IPO price, which is a positive for public shareholders compared to some SPACs that trade below trust value.
• The June 20, 2026, deadline for a business combination is within the typical 24-month to 36-month timeframe for SPACs, aligning with Nasdaq's 36-Month Requirement. Many SPACs face similar time constraints and the associated pressure to find a suitable target.

Management Changes

Corporate Governance

Legal Proceedings

• Shareholder Litigation (Stanley v. Lionheart Equities, LLC, No. 20250505LWW) filed on May 7, 2025, in the Court of Chancery of the State of Delaware, naming Lionheart Equities, LLC (Sponsor of Lionheart Acquisition Corporation II) and certain current directors and officers as defendants, alleging fiduciary-duty breaches and unjust enrichment. The case is ongoing.
• Roger Meltzer, a director, was named as a defendant in three consolidated derivative lawsuits related to his service as a director of Hain Celestial Group, alleging breach of fiduciary duty and violations of Sections 14(a) and 29(b) of the Exchange Act. This action is stayed pending an appeal in a related securities class action.

Related Party Transactions

• Sponsor (Lionheart Sponsor, LLC) paid $25,000 for 7,666,667 Founder Shares (Class B Ordinary Shares) on March 15, 2024.
• Sponsor purchased 4,000,000 Private Placement Warrants and Cantor purchased 2,000,000 Private Placement Warrants for an aggregate of $6,000,000 simultaneously with the IPO.
• The company reimburses an affiliate of the Sponsor $15,000 per month for office space, utilities, and administrative support under an Administrative Services Agreement, incurring $180,000 in 2025.
• The Sponsor loaned the company up to $300,000 via an IPO Promissory Note on March 8, 2024, which was repaid in full ($180,000 outstanding) on June 20, 2024.
• The Sponsor or its affiliates may provide Working Capital Loans of up to $1,500,000, convertible into warrants, to finance transaction costs; no such loans were outstanding as of December 31, 2025.
• The company incurred legal fees of $125,000 in 2025 from Jessica L. Wasserstrom, LLC (Wasserstrom), an entity whose principal is Chief Legal Officer of Lionheart Capital (an affiliate of the Sponsor). A balance of $200,000 in deferred legal fees is payable upon Business Combination.

Stakeholder Impact

• **Shareholders (Public)**: Face significant risk of losing investment if a Business Combination is not completed by June 20, 2026, as Public Shares would be redeemed at a pro-rata share of the Trust Account (currently $10.70 per share), and Warrants would expire worthless. They also face potential dilution from future equity issuances for a Business Combination.
• **Shareholders (Sponsor/Founder)**: Risk losing their entire $25,000 investment in Founder Shares if no Business Combination is completed, but stand to make substantial profit if a combination occurs, even if Public Shares decline. They also control the appointment of the Board of Directors until a Business Combination.
• **Warrant Holders**: Face the risk of their Warrants expiring worthless if no Business Combination is completed by the deadline.
• **Employees (Management Team)**: Their future roles and compensation are uncertain post-Business Combination, and their ability to remain with the combined company may influence their decisions.
• **Creditors**: The Trust Account is generally protected from creditor claims, but there's a risk that claims could reduce the funds available for Public Shareholders if waivers are not obtained or enforced, or in bankruptcy scenarios.

Next Steps

• Continue searching for and evaluating prospective target businesses for an initial Business Combination.
• Potentially seek additional financing through private offerings of debt or equity securities to complete a Business Combination.
• Potentially seek shareholder approval to amend the Amended and Restated Articles to extend the Combination Period beyond June 20, 2026.
• If a Business Combination is not consummated by June 20, 2026, the company will cease operations, liquidate, and redeem Public Shares.

Key Dates

Recommendation

The explicit 'substantial doubt about our ability to continue as a going concern' and the rapidly approaching deadline of June 20, 2026, for completing a Business Combination, without any target identified, present an extremely high level of risk. While the Trust Account offers some downside protection for public shares, the Warrants are likely to expire worthless, and the overall uncertainty makes the stock a speculative 'sell' for risk-averse investors. Even for risk-tolerant investors, the lack of a clear path forward and the going concern warning are significant red flags.

Keywords

SPAC, Blank Check Company, Business Combination, Lionheart Holdings, 10-K, SEC Filing, Trust Account, Warrants, Going Concern, Liquidation, Corporate Governance, Financial Reporting, Investment, Nasdaq, Redemption Rights, Founder Shares, Private Placement