IPO and Fundraising - The company completed its IPO on October 15, 2024, raising gross proceeds of $50 million from the sale of 5,000,000 units at an offering price of $10.00 per unit[37]. - An additional $7.5 million was generated from the full exercise of the over-allotment option, bringing total proceeds to $57.5 million[37]. - A private placement with Aurora Beacon LLC generated total proceeds of $2,543,750 from the sale of 254,375 private units[38]. - A total of $57,787,500 from the IPO and private placement proceeds was deposited in a trust account for the benefit of public shareholders[39]. - The trust account initially held $50,750,000, which could increase to $58,287,500 if the over-allotment option is fully exercised[143]. - The company generated gross proceeds of $50,000,000 from the IPO by selling 5,000,000 units at $10.00 per unit[161]. - An additional 750,000 units were sold under the Over-Allotment Option, generating total proceeds of $7,500,000[168]. - As of December 31, 2024, the company had cash of $392,679 and marketable securities in the Trust Account totaling $58,330,546[179]. Business Combination and Acquisition Strategy - The company intends to pursue target businesses with significant revenue growth, valued between $500 million and $2 billion[92]. - The focus is on high-growth industries such as green and sustainable businesses, new energy, cutting-edge technologies, artificial intelligence applications, business software, and healthcare products[93]. - The company aims to identify and complete mergers or acquisitions with firms that complement its team's expertise and capabilities[90]. - The evaluation of prospective target businesses includes parameters such as proven financial performance, growth potential, and competitive advantage[94]. - The company has evaluated approximately three business combination opportunities in Asia and Europe across various sectors before deciding to move ahead with HZJL[91]. - The merger agreement involves the acquisition of HZJL, with HZJL's shareholders receiving 35 million ordinary shares of Xpand Boom Technology, plus potential earn-out consideration of up to 20 million shares based on revenue targets[64]. - The initial business combination must involve target businesses with a fair market value of at least 80% of the trust account balance at the time of the agreement[106]. - The Purchaser intends to acquire 100% of the equity interest or assets of the target business, potentially resulting in existing shareholders owning less than a majority of the post-combination shares[107]. - The Purchaser aims to identify target companies with significant expansion opportunities and attractive risk-adjusted equity returns[102]. Regulatory and Compliance Risks - The company will not conduct an initial business combination with any target company that operates through variable interest entities (VIEs), limiting the pool of potential acquisition candidates in China[42]. - The company is subject to significant regulatory risks from the PRC government, which may impact its ability to search for and complete a business combination[49]. - The PRC government has recently implemented new regulations that could affect business operations and foreign investments, creating uncertainty for potential business combinations[50]. - The company believes it is not required to obtain approvals from PRC government authorities for its IPO or to search for a target company, but future regulatory changes could impose new requirements[53]. - The combined company may face restrictions on paying dividends due to PRC laws, which allow dividends only from distributable profits[54]. - PRC companies must set aside at least 10% of after-tax profits for statutory reserve funds, potentially limiting available distributable profits for dividends[55]. - The ability of PRC subsidiaries to pay dividends or repay loans in foreign currencies may be hindered by foreign exchange control regulations[57]. - Recent PRC regulatory actions may create uncertainties that could adversely affect the operations of any post-business combination company[73]. - The PRC government has significant authority to influence business operations, which may impact the combined company's ability to conduct business and accept foreign investments[75]. - New policies from the PRC government could adversely affect potential business combinations and the financial condition of the combined company[76]. - Current PRC regulations restrict the payment of dividends from PRC subsidiaries to offshore entities, which may affect the combined company's ability to distribute profits[84]. - The PRC government imposes controls on the conversion of RMB into foreign currencies, potentially impacting the ability to remit dividends or payments to offshore entities[86]. Management and Governance - The management team has significant experience in public companies and financial management, which is expected to aid in identifying suitable acquisition targets[66][68]. - Lulu Xing appointed as CEO and Chairman of the Board since March 2024[204]. - Wenyi Shen appointed as CFO since March 2024, with over ten years of experience in investment banking and private equity[206]. - The company has established an audit committee consisting of independent directors Kun-Lin Liu, Yucan Zhang, and Chengming Dou[220]. - Chengming Dou serves as the chair of the audit committee and qualifies as an "audit committee financial expert" as defined by SEC rules[221]. - The board of directors includes a diverse range of experienced professionals in corporate governance and financial accounting[217]. - The company emphasizes the importance of independent directors in governance and oversight functions[219]. - The audit committee is responsible for overseeing the work of independent registered public accounting firms and ensuring compliance with regulations[222]. - The company has established a Compensation Committee consisting of Kun-Lin Liu, Yucan Zhang, and Chengming Dou, with Yucan Zhang as the chair[227]. - The Compensation Committee is responsible for reviewing and approving the CEO's compensation based on annual corporate goals and objectives[227]. - The company has adopted a Code of Ethics applicable to all directors, officers, and employees, which is available upon request[229]. - An Insider Trading Policy has been implemented to promote compliance with insider trading laws and regulations[230]. Financial Performance and Concerns - For the year ended December 31, 2024, the company reported a net income of $257,513, primarily from interest earned on marketable securities[175]. - Total cash used in operating activities for the year was $326,033, with changes in operating assets and liabilities providing $40,500 of cash[176]. - The company incurred $1,006,250 in underwriting discounts and $556,288 in other costs related to the IPO[170]. - The company has no long-term debt or off-balance sheet financing arrangements as of December 31, 2024[183]. - Management has expressed substantial doubt about the company's ability to continue as a going concern if an initial business combination is not completed by January 15, 2026[182]. - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a going concern[146]. - The company has not paid any cash dividends to date and does not intend to do so prior to completing an initial business combination[155]. - The company has not taken steps to secure third-party financing for future business combinations[143]. Shareholder Rights and Redemption - If the company fails to complete an initial business combination within the required timeframe, it may liquidate and public shareholders could receive only $10.05 per share or less[40]. - Public shareholders can redeem shares for a per-share price of approximately $10.05, based on the amount in the trust account[125]. - The company has 15 months from the IPO closing to complete a business combination, extendable up to 21 months with additional deposits of $165,000 per month[134]. - If the business combination is not completed, public shareholders will receive their pro rata share from the trust account, estimated at $10.05 per share[137]. - Initial shareholders have agreed to waive their redemption rights for founder shares if the business combination is not completed within the specified period[136]. - A public shareholder is restricted from seeking redemption rights for 20% or more of the shares sold in the IPO[127]. - The company will cease operations and distribute the trust account funds if the business combination is not consummated within the allotted time[135]. - The trust account may be subject to claims from creditors, which could affect the actual redemption amount for shareholders[138]. - The company will seek agreements from third parties to waive claims against the trust account, but there is no guarantee these will be executed[138]. Conflicts of Interest - Potential conflicts of interest exist as officers and directors may not commit their full time to the company's affairs[232]. - The company’s officers and directors may face conflicts of interest when evaluating business combinations if their retention is a condition of the agreement[235]. - Directors and officers owe fiduciary duties under Cayman Islands law, including acting in good faith and exercising independent judgment[236]. - Initial shareholders have agreed to waive their right to liquidating distributions on founder shares if the initial business combination is not completed within the required time[234].
Rising Dragon Acquisition Corp.(RDACU) - 2024 Q4 - Annual Report