S-1/A: Twelve Seas III Files S-1/A for $150M IPO, Faces Going Concern Doubt

Twelve Seas Investment Company III, a blank check company, filed an S-1/A registration statement for a $150 million initial public offering, but its auditor expressed substantial doubt about its ability to continue as a going concern.

Summary

• Twelve Seas Investment Company III is a Cayman Islands exempted blank check company formed to effect a business combination with one or more businesses, focusing on global companies outside the U.S., particularly in the Pan-Eurasian region and Africa, with an emphasis on established profitable enterprises in oil and gas and other proven sectors.
• The company is offering 15,000,000 units at $10.00 per unit, with each unit consisting of one Class A ordinary share and one Share Right to receive one-tenth of a Class A ordinary share upon consummation of an initial business combination.
• The underwriters have a 45-day option to purchase up to an additional 2,250,000 units to cover over-allotments.
• The sponsor, Twelve Seas Sponsor LLC, and Cohen & Company Capital Markets (CCM) will purchase an aggregate of 450,000 private placement units (or up to 495,000 if the over-allotment option is exercised) at $10.00 per unit, totaling $4,500,000 (or up to $4,950,000).
• Of the gross proceeds, $150,000,000 (or $172,500,000 with over-allotment) will be placed into a U.S.-based trust account, to be invested in U.S. government treasury obligations or money market funds.
• The company has until 24 months from the closing of the offering to consummate an initial business combination, or it will liquidate and redeem public shares.
• As of September 30, 2025, the company had cash of $2,411 and a working capital deficit of $286,245, with a net loss of $108,822 for the nine months ended September 30, 2025.
• The independent registered public accounting firm's report contains an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.
• Public shareholders will incur an immediate and substantial dilution of approximately 99.20% (or $9.92 per share) upon closing of the offering, assuming no over-allotment and maximum redemption.
• The sponsor acquired founder shares at a nominal price of approximately $0.004 per share, and its investment could yield a substantial profit even if public shares decline significantly post-business combination.

Sentiment

Score: 2

Explanation: The company faces significant financial challenges, including a 'going concern' warning from its auditor and a substantial working capital deficit. The high dilution for public shareholders and the management team's poor track record with previous SPACs (multiple liquidations, one bankruptcy post-merger) indicate a very high-risk investment with a low probability of favorable returns for public investors. While the stated strategy of targeting profitable international companies in stable sectors is positive, the execution risk and historical performance are overwhelmingly negative.

Positives

• Management team possesses extensive cross-border investment experience, particularly in the Pan-Eurasian region and Africa, which is intended to provide a competitive advantage in identifying non-U.S. target companies.
• The company aims to acquire established profitable enterprises in oil and gas and other proven sectors, aligning with renewed investor interest in traditional energy sources.
• A U.S. public listing offers international target companies access to robust and liquid capital markets, a broad investor base, strong corporate governance, and global prestige.
• The SPAC merger structure offers more certainty over valuation and timing of listing, structural flexibility (e.g., earnouts, different stock classes), and the ability to merge multiple companies, compared to traditional IPOs.
• The sponsor has agreed to be liable for third-party claims that reduce the trust account below $10.00 per public share (with exceptions), providing some protection for public shareholders' trust funds.

Negatives

• The company is a blank check company with no operating history, no revenues, and no selected business combination target, making it a highly speculative investment.
• The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a going concern due to insufficient cash and working capital.
• Public shareholders face an immediate and substantial dilution of approximately 99.20% (or $9.92 per share) upon closing of the offering, assuming no over-allotment and maximum redemption.
• The sponsor acquired founder shares at a nominal price of approximately $0.004 per share, creating a significant incentive for management to complete a business combination even if it is unprofitable for public shareholders.
• The implied value per public share upon consummation of an initial business combination is estimated at $7.06, representing a 26.5% decrease from the initial offering price of $10.00 per unit.
• The management team's prior SPAC experiences include several liquidations (Twelve Seas Investment Company II, Quadro Acquisition One Corp., Global Blockchain Acquisition Corp., Ruslan Acquisition Corp.) and one business combination (TLG Acquisition One Corp. with Electriq Power) that resulted in the combined company filing for Chapter 7 bankruptcy.
• There are potential conflicts of interest due to officers and directors having fiduciary duties to other entities and their financial interests in completing a business combination to avoid their founder shares and private placement units expiring worthless.
• The company's ability to complete a business combination is limited to 24 months, which may give target businesses leverage in negotiations and limit due diligence time.
• The deferred underwriting commissions of $6,000,000 (or up to $6,900,000) are only payable upon completion of a business combination, creating an incentive for underwriters to push for a deal.
• Public shareholders may not have an opportunity to vote on the proposed business combination, and even if a vote is held, the initial shareholders' voting power (25% of ordinary shares) increases the likelihood of approval.
• The company may issue additional shares or incur substantial debt to complete a business combination, further diluting existing shareholders or increasing leverage.
• The company's focus on a single business post-combination could lead to a lack of diversification and increased exposure to economic, competitive, and regulatory risks.

Risks

• The company is a blank check company with no operating history and no revenues, providing no basis to evaluate its ability to achieve its business objective.
• Public shareholders may not be afforded an opportunity to vote on the proposed initial business combination, and even if a vote is held, founder share holders' participation may lead to approval despite public shareholder dissent.
• The only opportunity for public shareholders to effect their investment decision regarding a potential business combination may be limited to exercising their right to redeem their shares from the company for cash.
• The independent registered public accounting firm's report contains an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.
• The sponsor will control the appointment of the board of directors until the consummation of the initial business combination and will hold a substantial interest, potentially exerting influence in a manner not supported by public shareholders.
• The ability of public shareholders to redeem their shares for cash may make the company's financial condition unattractive to potential business combination targets, which may make it difficult to secure a deal.
• High redemption rates and deferred underwriting compensation may prevent the company from completing the most desirable business combination or optimizing its capital structure, and may substantially dilute public shareholders' investment.
• The 24-month completion window may give potential target businesses leverage in negotiations and limit due diligence time, potentially leading to a less valuable business combination.
• If shareholder approval of the initial business combination is sought, the sponsor, initial shareholders, directors, officers, advisors, and their affiliates may elect to purchase public shares or Share Rights, which could influence a vote and reduce the public float.
• Public shareholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances, forcing them to sell shares/rights at a potential loss to liquidate their investment.
• Nasdaq may delist the company's securities, limiting investors' ability to transact and subjecting the company to additional trading restrictions.
• The nominal purchase price paid by the sponsor for founder shares results in significant dilution to the implied value of public shares upon business combination, and the sponsor is likely to profit even if the share price declines.
• The value of founder shares post-business combination is likely to be substantially higher than their nominal purchase price, even if public shares trade below $10.00.
• Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
• Past performance by the management team is not indicative of future performance, and several prior SPACs managed by the team have underperformed or liquidated.
• Anti-dilution protection for founder shares means any equity or equity-linked securities issued in a business combination would be disproportionately dilutive to Class A ordinary shares.
• The company may be classified as a Passive Foreign Investment Company (PFIC), leading to adverse U.S. federal income tax consequences for U.S. investors.
• To mitigate PFIC risk, the company may liquidate trust account investments into cash, potentially reducing interest income available for public shareholders upon redemption or liquidation.
• If the initial business combination involves a U.S. company, a 1% U.S. federal excise tax could be imposed on redemptions of Class A ordinary shares, reducing cash available.
• Being deemed an investment company under the Investment Company Act could impose burdensome compliance requirements and restrict activities, making a business combination difficult.
• Changes in laws or regulations, or non-compliance, may adversely affect the business and ability to complete a business combination.
• Reincorporation in another jurisdiction may result in taxes for shareholders or Share Right holders and may limit the ability to enforce legal rights.
• Uncertain U.S. federal income tax consequences for investors due to the nature of units and redemption rights.
• Terms of Share Rights may be amended adversely to holders with approval of at least 50% of outstanding Share Rights.
• Exclusive forum provisions in the right agreement may limit Share Right holders' ability to obtain a favorable judicial forum.
• The grant of registration rights to the sponsor, CCM, and other private placement holders may make a business combination more costly or difficult and adversely affect the market price of Class A ordinary shares.
• Cyber incidents or attacks could result in information theft, data corruption, operational disruption, and/or financial loss.
• Current global geopolitical conditions (e.g., armed conflicts, sanctions) may materially adversely affect the search for a target or the performance of a post-business combination company.
• If the net proceeds outside the trust account are insufficient, the company will depend on loans from the sponsor or management, who are not obligated to provide funds.
• If third parties bring claims against the company, the proceeds held in the trust account could be reduced, leading to a per-share redemption amount less than $10.00.
• Directors may decide not to enforce indemnification obligations of the sponsor, resulting in a reduction in the amount of funds in the trust account available for public shareholders.
• The company may not have sufficient funds to satisfy indemnification claims of its directors and officers.
• If the company files for bankruptcy or insolvency, creditors' claims may have priority over shareholders' claims, reducing the per-share amount received by shareholders in liquidation.
• The company may not hold an annual general meeting until after the consummation of its initial business combination, delaying the opportunity for public shareholders to discuss company affairs with management.
• The company is not limited to evaluating a target business in a particular industry sector, making it difficult for investors to ascertain the merits or risks of any particular target business's operations.
• The company may seek business combination opportunities in industries or sectors that may be outside of its management's areas of expertise.
• The company may enter into its initial business combination with a target that does not meet its identified general criteria and guidelines.
• The company is not required to obtain an opinion from an independent investment banking firm or another independent entity regarding fairness of the price paid for a non-affiliated business, relying on the board's judgment.
• The company may issue its shares to investors in connection with its initial business combination at a price which is less than the prevailing market price of its shares at that time.
• Since only holders of Class B ordinary shares will have the right to vote on the appointment of directors, Nasdaq will consider the company a controlled company, potentially allowing exemptions from certain corporate governance requirements.
• Resources could be wasted in researching business combinations that are not completed.
• The company may engage in a business combination with one or more target businesses that have relationships with entities affiliated with its sponsor, officers, directors, or existing holders, which may raise potential conflicts of interest.
• The determination of the offering price of the units and the size of the offering is more arbitrary than the pricing of securities of an operating company.
• There is currently no market for the company's securities and a market may not develop, which would adversely affect the liquidity and price of its securities.
• Because the company is incorporated under the laws of the Cayman Islands, shareholders may face difficulties in protecting their interests and enforcing their rights through the U.S. Federal courts.
• Provisions in the amended and restated memorandum and articles of association may inhibit a takeover of the company, which could limit the price investors might be willing to pay in the future for Class A ordinary shares and could entrench management.
• The company's amended and restated memorandum and articles of association provide that the courts of the Cayman Islands will be the exclusive forums for certain disputes, which could limit shareholders' ability to obtain a favorable judicial forum.
• Recent increases in inflation in the United States and elsewhere could make it more difficult for the company to complete its initial business combination.

Future Outlook

The company intends to focus its search for an initial business combination on global companies located outside the United States, with an emphasis on established profitable enterprises in oil and gas and other proven sectors in the Pan-Eurasian region and Africa. It believes its management team's extensive cross-border investment experience will enable it to identify attractive foreign companies suitable for a U.S. public listing. The company expects to incur increased expenses as a public company and will generate non-operating income from interest on trust account proceeds. It plans to complete a business combination within 24 months from the offering's closing, or liquidate.

Management Comments

• "We believe that the extensive cross-border investment experience of our management team will allow us to identify attractive foreign companies suitable for an initial business combination with us."
• "Our management team has a track record of creating value for shareholders by acquiring attractive businesses at disciplined valuations, investing in growth while fostering financial discipline and ultimately improving financial results."
• "We are confident that our management team’s global investment experience and understanding of the business, cultural and economic distinctions across the diverse target geographies will allow us to identify strong merger candidates and to successfully complete an initial business combination with a high-quality acquisition target."
• "We believe that specializing in international opportunities will provide us with a competitive advantage over other U.S.-listed SPACs and will enable us to identify an attractive business combination candidate that will thrive as a publicly traded company."
• "We believe that the non-U.S. opportunity for a U.S.-listed SPAC such as ours will continue to broaden as SPACs gain even greater acceptance by potential targets and investors alike."
• "Our mission is to create attractive risk-adjusted returns for our shareholders."

Industry Context

The filing highlights a trend of increasing foreign-domiciled IPOs on U.S. exchanges, with approximately 52% since 2023, and over 40% of the one hundred most recently completed SPAC mergers involving foreign targets as of December 31, 2024. This suggests a growing acceptance of U.S. listings and SPACs as a viable alternative for international companies seeking access to robust capital markets, strong corporate governance, and increased visibility. The company's strategy to focus on the Pan-Eurasian region and Africa, particularly in natural resources and related sectors, aligns with a perceived 'renewed interest in the traditional sources of energy.' However, the document also acknowledges the competitive landscape among SPACs and the potential for attractive targets to become scarcer or demand improved financial terms.

Comparison to Industry Standards

• Twelve Seas I, a prior SPAC led by CEO Dimitri Elkin, completed a $1.0 billion business combination with Brooge Holdings (an oil storage company in UAE) in December 2019. However, 82.1% of its public shares were redeemed, and Brooge Holdings later traded OTC at $5.10 per share as of November 7, 2025, indicating significant post-merger underperformance.
• Global Blockchain Acquisition Corp. (Nasdaq: GBBK), where CFO Jonathan Morris served, liquidated in April 2025 after going public in May 2022, with 96% of its public shares redeemed following extension votes.
• TLG Acquisition One Corp. (TLG), where CFO Jonathan Morris served as Chief Development Officer, completed a business combination with Electriq Power in August 2023. However, 99.5% of TLG's public shares were redeemed, and the combined company filed for Chapter 7 bankruptcy in May 2024.
• Quadro Acquisition One Corp., where CEO Dimitri Elkin was CEO and CFO Jonathan Morris and Director Nominee Gregory Nelson were Directors, liquidated in May 2024.
• Ascendant Digital Acquisition Corp., where Director Nominee Bob Foresman served, completed a business combination in July 2021 with Beacon Street Group LLC (now MarketWise Inc., NASDAQ: MKTW). While MarketWise traded at $17.00 per share as of November 10, 2025, 93.6% of Ascendant Digital Acquisition Corp.'s public shares were redeemed in its initial business combination.
• Ascendant Digital Acquisition Corp. III, where Director Nominee Bob Foresman served, liquidated in February 2023.
• ESH Acquisition Corp. (Nasdaq: ESHA), where CFO Jonathan Morris currently serves, is searching for a business combination, but experienced 91.3% redemption of public shares in a December 2024 extension vote.
• The company's management team has a history of involvement in SPACs that have either liquidated or experienced very high redemption rates and/or significant post-merger underperformance, which is worse than the general SPAC industry average, where high redemptions are common but not always leading to bankruptcy or significant value destruction.

Management Changes

Corporate Governance

Legal Proceedings

• No material litigation, arbitration, or governmental proceeding is currently pending against the company or any members of its management team in their capacities as such.
• A shareholder class action lawsuit has been filed against Brooge Energy Limited (NASDAQ: BROG), a company that resulted from a prior business combination of Twelve Seas Investment Company (led by CEO Dimitri Elkin), alleging materially false and misleading statements and/or failure to disclose material adverse information.

Related Party Transactions

• Twelve Seas Sponsor LLC (the sponsor) paid $25,000 for 5,692,500 founder shares (Class B ordinary shares), at approximately $0.004 per share.
• The sponsor has committed to purchase 300,000 private placement units (or up to 322,500 units if over-allotment exercised) at $10.00 per unit, totaling $3,000,000 (or up to $3,225,000).
• Cohen & Company Capital Markets (CCM), the representative of the underwriters, has committed to purchase 150,000 private placement units (or up to 172,500 units) at $10.00 per unit, totaling $1,500,000 (or up to $1,725,000).
• Twelve Seas Capital Inc., an affiliate of the sponsor, will be reimbursed $10,000 per month for office space, utilities, and secretarial/administrative support.
• The sponsor loaned the company up to $300,000 to cover offering-related and organizational expenses, which will be repaid upon the closing of the offering.
• The sponsor, an affiliate of the sponsor, or certain officers and directors may loan the company up to $1,500,000 for working capital to finance transaction costs, convertible into private placement units at $10.00 per unit at the lender's option.
• The sponsor, officers, directors, or their affiliates may be paid finders fees, advisory fees, consulting fees, or success fees for services rendered in connection with completing an initial business combination.
• Independent directors will receive an indirect interest in an aggregate of 250,000 founder shares through membership interests in the sponsor for their services.

Stakeholder Impact

• **Shareholders (Public)**: Face immediate and substantial dilution (99.20% or $9.92 per share) and potential further dilution from founder share anti-dilution rights and future capital raises. May experience a significant decrease in share value post-business combination. Their redemption rights are subject to limitations, and they may not have a vote on the business combination. Funds in the trust account are subject to creditor claims.
• **Shareholders (Sponsor/Initial)**: Acquired founder shares at a nominal price ($0.004 per share) and private placement units at $10.00 per unit. They are likely to make a substantial profit even if public shares decline significantly. They hold significant voting power (25% of ordinary shares post-IPO) and control board appointments pre-business combination, creating potential conflicts of interest.
• **Employees (Post-Business Combination)**: The filing mentions the possibility of recruiting additional managers to supplement incumbent management of a target business, and that current key personnel may negotiate employment or consulting agreements. The success of the combined entity will impact job security and potential compensation.
• **Customers/Suppliers (Target Business)**: The success of the combined entity, particularly if it involves operational improvements or expansion, could impact relationships with customers and suppliers. However, the filing does not provide specific details on this impact.
• **Creditors**: The trust account funds are subject to claims of creditors, which could reduce the amount available for public shareholder redemptions if the company liquidates without a business combination. The sponsor has agreed to indemnify the company against certain third-party claims, but its ability to satisfy these obligations is not guaranteed.

Next Steps

• Complete the initial public offering of 15,000,000 units at $10.00 per unit.
• Deposit $150,000,000 (or $172,500,000 if over-allotment exercised) into a U.S.-based trust account.
• Invest funds in the trust account in U.S. government treasury obligations or money market funds, with the option to liquidate to cash to mitigate Investment Company Act risk.
• Identify and consummate an initial business combination with one or more target businesses within 24 months from the closing of the offering (or extended period with shareholder approval).
• Apply to have units listed on The Nasdaq Global Market under the symbol TWLVU, with Class A ordinary shares (TWLV) and Share Rights (TWLVR) expected to trade separately on the 52nd day post-prospectus date.
• Repay up to $300,000 in loans from the sponsor for offering-related and organizational expenses upon consummation of the offering.
• Establish and maintain an audit committee and compensation committee with independent directors.
• Comply with internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2026.

Key Dates

Recommendation

The filing presents a highly unfavorable investment profile. The 'going concern' warning from the auditor, coupled with a significant working capital deficit and a history of net losses, indicates severe financial distress. Public shareholders face an immediate and substantial dilution of nearly 100%, and the projected post-business combination share value is significantly below the offering price. The management team's track record with previous SPACs, including multiple liquidations and one bankruptcy post-merger, raises serious concerns about their ability to execute a successful business combination. The inherent conflicts of interest due to the sponsor's nominal cost basis for founder shares and control over board appointments further disadvantage public investors. Given these overwhelming risks and the high probability of capital loss, a 'strong sell' recommendation is warranted for any public shares acquired.

Keywords

SPAC, Blank Check Company, IPO, Merger, Acquisition, Business Combination, Twelve Seas Investment Company III, Dimitri Elkin, Jonathan Morris, Cayman Islands, SEC Filing, S-1/A, Dilution, Going Concern, Trust Account, Private Placement, Founder Shares, Class A Ordinary Shares, Share Rights, Corporate Governance, Risk Factors, Natural Resources, Oil and Gas, Pan-Eurasian Region, Africa, Nasdaq Listing