Incorporation and IPO - The company was incorporated in the Cayman Islands on September 28, 2023, for tax-neutrality and administrative flexibility[18]. - In October 2023, the company issued 17,250,000 shares of common stock at approximately $0.0145 per share, totaling $25,000[22]. - The company completed its IPO on March 20, 2024, selling 6,900,000 units at $10.00 per unit, generating total gross proceeds of $69,000,000[23]. - A total of $69,345,000 from the IPO and Private Placement was placed in a U.S.-based trust account for public shareholders[26]. - The company has granted underwriters a 45-day option to purchase an additional 1,035,000 units to cover over-allotments[23]. - The company generated gross proceeds of $69,000,000 from the IPO of 6,900,000 units at a price of $10.00 per unit[160]. - A total of $69,345,000 from the IPO and private placement was placed in a trust account for the benefit of public shareholders[146]. Financial Performance and Funding - The company currently has no revenue and has incurred losses since inception, relying on securities sales and loans for funding[28]. - The company incurred a net loss of $18,853 for the year ended November 30, 2023, due to formation and operating costs[159]. - For the year ended November 30, 2024, the company reported a net income of $1,915,703, primarily from interest income of $2,491,779[158]. - The company has incurred a loan of $250,000 from the Sponsor to satisfy liquidity needs prior to the IPO[164]. - The company expects to incur significant professional costs and transaction costs in pursuit of a Business Combination, raising substantial doubt about its ability to continue as a going concern[166]. - The company plans to use substantially all net proceeds from the IPO for its initial business combination and related expenses[163]. Business Strategy and Acquisition Plans - The management team aims to identify attractive acquisition opportunities across various industries and geographic locations[21]. - The company intends to focus on private companies with compelling economics and clear paths to positive operating cash flow for its initial business combination[41]. - The company aims to acquire businesses with significant revenue and earnings growth potential through new product development and increased production capacity[45]. - The company intends to structure its initial business combination so that the post-transaction entity will own or acquire at least 50% of the target business's voting securities[52]. - The company must ensure that the target business has an aggregate fair market value equal to at least 80% of the trust account balance at the time of signing a definitive agreement[50]. - The company intends to conduct thorough due diligence on prospective target businesses, including financial and operational reviews[78]. - The company has not selected a specific business combination target and has not initiated substantive discussions with any potential targets[154]. Management and Governance - The company has two officers and does not have any employees obligated to devote specific hours to its matters[130]. - The board of directors consists of four members, three of whom are independent under SEC and Nasdaq rules[201]. - The audit committee is composed of independent directors, with Mr. Miller serving as chairman, and is responsible for reviewing financial statements and monitoring auditor independence[209]. - The compensation committee, chaired by Mr. McCabe, oversees executive compensation and approves reimbursement of expenses incurred by management in identifying potential target businesses[213]. - The company has determined that Mr. Brandon Miller qualifies as an "audit committee financial expert" under SEC rules[212]. - The company has established an audit committee charter detailing its principal functions, including risk management and compliance monitoring[210]. - The compensation committee may retain external advisers and will consider their independence before engagement[215]. Shareholder Rights and Redemption - The redemption price for public shareholders upon completion of the initial business combination is expected to be approximately $10.00 per public share, potentially increasing by up to $0.10 if the sponsor extends the time to consummate the business combination[94]. - The company will not redeem public shares if it would cause net tangible assets to fall below $5,000,001, ensuring compliance with SEC regulations[104]. - Shareholder approval may be required for the initial business combination, depending on legal or stock exchange rules[85]. - The company plans to limit public shareholders from seeking redemption rights for more than 15% of the shares sold in the offering, to prevent a small group from blocking the business combination[105]. - The tender offer for redemptions will remain open for at least 20 business days, and the company will not complete the initial business combination until the expiration of this period[98]. - Shareholders must exercise their redemption rights to receive funds from the trust account, which will only be available upon completion of the business combination or other specified conditions[123]. Risks and Challenges - The company may face intense competition from other entities with similar business objectives, which may limit its ability to acquire larger target businesses[53]. - The company may face risks if it completes a business combination with financially unstable or early-stage companies[77]. - The company may not have the resources to diversify its operations, which could increase risks associated with a single line of business[80]. - Any claims against the trust account by creditors may reduce the amount available for shareholder redemption, potentially below the expected $10.05 per share[120]. - If bankruptcy occurs, the trust account proceeds may be subject to claims that could diminish the redemption amount for shareholders[122]. - The company has not identified any significant cybersecurity risks that could materially affect its business strategy or financial condition[133]. Compliance and Reporting - The company is classified as an "emerging growth company" and will remain so until it has total annual gross revenue of at least $1.235 billion or the market value of its ordinary shares held by non-affiliates exceeds $700 million[66]. - The company is also a "smaller reporting company," which allows it to provide only two years of audited financial statements until certain thresholds are met[67]. - The company does not expect any material exposure to interest rate risk due to the short-term nature of its investments[175]. - The company is evaluating the benefits of relying on reduced reporting requirements under the JOBS Act as an emerging growth company[174]. - Management assessed that the internal control over financial reporting was not effective as of November 30, 2024, due to material weaknesses[183].
Black Hawk Acquisition Corporation(BKHA) - 2024 Q4 - Annual Report