Broad Capital Acquisition p(BRAC) - 2024 Q4 - Annual Report

Part I Business Broad Capital Acquisition Corp. is a blank check company (SPAC) seeking a new business combination, with its deadline extended to January 2026 - The company is a blank check company formed for an initial business combination, completing its IPO on January 13, 2022[18][19] - The merger agreement with Openmarkets Group Pty Ltd., entered into on January 18, 2023, was terminated on February 12, 2025[24][25] - The business strategy targets high-growth companies in AI, machine learning, and aviation sectors within North America and Asia Pacific, excluding China, Hong Kong, or Macau[26][27][32] - The deadline for an initial business combination is extended to January 13, 2026, requiring monthly sponsor deposits into the trust account[65][84] IPO and Private Placement Details | Item | Details | | :--- | :--- | | IPO Date | January 13, 2022 | | Units Offered | 10,000,000 units at $10.00/unit | | Gross Proceeds (IPO) | $100,000,000 | | Over-Allotment | 159,069 units, generating $1,590,690 | | Sponsor Private Placement | 451,130 units at $10.00/unit, generating $4,511,300 | Risk Factors The company faces significant risks including failure to complete a business combination, Nasdaq delisting, internal control weaknesses, and going concern doubts - Substantial doubt exists about the company's ability to continue as a going concern if a business combination is not completed by January 13, 2026[119] - A material weakness in internal control over financial reporting was identified as of December 31, 2024, due to complex financial instruments and inadequate segregation of duties[119] - Nasdaq halted trading of the company's securities on January 22, 2025, and delisted them for non-compliance with minimum publicly held shares, limiting investor liquidity[113][123] - Potential conflicts of interest exist as the sponsor and management risk losing their entire investment if a business combination is not completed[113] Unresolved Staff Comments The company reports no unresolved staff comments - Not applicable[114] Cybersecurity The company manages cybersecurity risks through Board oversight and an incident response plan, acknowledging potential future material impacts - The Board and/or Audit Committee oversee cybersecurity risk, receiving periodic management reports on threats and mitigation efforts[116] - No cybersecurity incidents have had a material adverse effect to date, but future incidents could be material[117] Properties The company's executive offices are in Dallas, TX, with a monthly fee of $10,000 paid to an affiliate of its CEO for administrative services - The company pays an affiliate of its CEO $10,000 per month for office space and administrative support services[118] Legal Proceedings There is no current or contemplated litigation against the company, its officers, or directors - No litigation is currently pending or contemplated against the company[120] Mine Safety Disclosures This item is not applicable to the company - Not applicable[121] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Nasdaq halted trading of the company's securities on January 22, 2025, due to non-compliance, and no cash dividends are planned before a business combination - Nasdaq halted trading of all company securities on January 22, 2025, due to failure to maintain the minimum 1,100,000 publicly held shares for listing[123] - The company has not paid and does not plan to pay cash dividends prior to its initial business combination[125] Selected Financial Data This item is reserved and no information is provided - This item is reserved[131] Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a net loss of $1.12 million in FY 2024, faces strained liquidity with $585 cash, and has substantial doubt about its going concern ability Results of Operations (2024 vs. 2023) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net Loss | $(1,122,587) | $(513,919) | | Operating Costs | $(1,575,281) | $(2,409,672) | | Interest Earned on Trust | $894,070 | $2,752,194 | | Net Loss per Share | $(0.24) | $(0.06) | Liquidity and Capital Resources (as of Dec 31, 2024) | Item | Amount ($) | | :--- | :--- | | Cash in Operating Account | $585 | | Cash in Trust Account | $20,521,640 | | Outstanding Working Capital Loan | $1,267,408 | | Outstanding Extension Loan | $3,503,628 | - Management concluded substantial doubt exists about the company's ability to continue as a going concern due to insufficient cash and the looming business combination deadline[147][149] - Contractual obligations include a $10,000 monthly fee to the sponsor and a deferred underwriting commission of $3,555,674 payable upon a business combination[150][152] Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is limited, with trust account funds moved from marketable securities to an interest-bearing demand deposit account on January 4, 2024 - On January 4, 2024, all trust account funds were moved from marketable securities to an interest-bearing demand deposit account[158] Financial Statements and Supplementary Data This section refers to the financial statements and supplementary data located after Item 15 of the report - The financial statements and supplementary data are incorporated by reference and appear after Item 15[159] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[160] Controls and Procedures Management concluded disclosure controls were ineffective as of December 31, 2024, due to a material weakness in internal control over financial reporting, with remediation plans underway - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period[161] - A material weakness in internal control over financial reporting was identified as of December 31, 2024, due to inadequate segregation of duties and insufficient written policies[164] - Remediation plans include enhancing board composition post-business combination, consulting third-party experts, and considering additional staff[165] Other Information The company intends to deposit funds into the trust account to facilitate monthly extensions of its termination date, as approved by stockholders - The company intends to deposit $3,036 into the trust account during the week of April 13, 2025, to extend its termination date[169] Part III Directors, Executive Officers, and Corporate Governance The company's governance structure includes CEO Johann Tse and CFO Rongrong Jiang, four independent directors, three standing committees, and a Code of Ethics Executive Officers and Directors | Name | Position | | :--- | :--- | | Johann Tse | Chief Executive Officer & Director | | Rongrong "Rita" Jiang | Chief Financial Officer & Director | | Nicholas Shao | Independent Director | | Wayne Trimmer | Independent Director | | Teck-Yong Heng | Independent Director | | Keith Adams | Independent Director | - The Board of Directors has three standing committees: Audit, Compensation, and Corporate Governance and Nominating, each with independent director memberships[188][189][192][196] - The company adopted a Code of Ethics, and its charter guides director nominee selection, emphasizing diversity and relevant experience[199][200] Executive Compensation No cash compensation was paid to officers or directors in FY 2024; the company pays its Sponsor $10,000 monthly for administrative support - No officers or directors received any cash compensation for services rendered in fiscal year 2024[202] - The company pays its Sponsor $10,000 per month for office space and administrative support, ceasing upon business combination completion[202] - Officers and directors will be reimbursed for out-of-pocket expenses incurred on behalf of the company[202] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of April 15, 2025, Broad Capital LLC, the sponsor, beneficially owns 98.2% of common stock, granting effective control over stockholder matters Beneficial Ownership (as of April 15, 2025) | Beneficial Owner | Number of Shares | Percentage of Class | | :--- | :--- | :--- | | Broad Capital LLC (Sponsor) | 3,036,010 | 98.2% | | Johann Tse (CEO) | 3,036,010 | 98.2% | | Rita Jiang (CFO) | 3,036,010 | 98.2% | | All executive officers and directors as a group | 3,036,010 | 98.2% | Certain Relationships and Related Transactions, and Director Independence The company has significant related-party transactions with its sponsor, Broad Capital LLC, including share purchases, loans totaling $4.77 million, and monthly administrative fees - The sponsor, Broad Capital LLC, purchased 2,875,000 insider shares for $25,000 and 451,130 placement units for approximately $4.5 million[211][214] Loans from Sponsor (as of Dec 31, 2024) | Loan Type | Amount Outstanding ($) | | :--- | :--- | | Working Capital Loans | $1,267,408 | | Extension Loans | $3,503,628 | - The company pays the sponsor $10,000 per month for office space and administrative support, with $350,000 accrued and unpaid as of December 31, 2024[223] - The board of directors has determined that Keith Adams, Wayne Trimmer, Nicholas Shao, and Teck-Yong Heng are independent directors[229] Principal Accounting Fees and Services MaloneBailey, LLP served as the principal accountant, with audit fees totaling $130,000 in FY 2024, up from $65,000 in FY 2023 Accounting Fees Paid to MaloneBailey, LLP | Fee Type | FY 2024 ($) | FY 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $130,000 | $65,000 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | Part IV Exhibits, Financial Statement Schedules This section lists documents filed with the Form 10-K, including the auditor's report, financial statements, and various exhibits, with schedules omitted - The report includes the auditor's report and financial statements starting on page F-2[236] - A full list of exhibits, including key agreements and charter amendments, is provided in the Exhibit Index[358] Form 10-K Summary This item is not applicable - Not applicable[238] Financial Statements Report of Independent Registered Public Accounting Firm The auditor's opinion confirms fair presentation of financial statements but highlights a going concern matter due to the risk of liquidation if a business combination is not completed - The auditor's opinion states the financial statements are fairly presented in conformity with GAAP[241] - A 'Going Concern Matter' is explicitly raised, citing substantial doubt about the company's ability to continue operations without a business combination[242] Financial Statements Data Financial statements show total assets decreased to $20.5 million in 2024, with a net loss of $1.12 million, and negative cash from operations due to redemptions Balance Sheet Summary (as of Dec 31) | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Total Assets | $20,522,225 | $50,817,322 | | Cash held in trust account | $20,521,640 | $50,772,949 | | Total Liabilities | $13,304,617 | $10,462,846 | | Common Stock subject to redemption | $19,830,933 | $50,095,136 | | Total Stockholders' Deficit | $(12,613,325) | $(9,740,660) | Statement of Operations Summary (Year Ended Dec 31) | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Loss from Operations | $(1,752,336) | $(2,609,672) | | Interest earned on trust | $894,070 | $2,752,194 | | Net Loss | $(1,122,587) | $(513,919) | Notes to Financial Statements Notes detail the company's blank check operations, business combination deadline extensions, significant stockholder redemptions, and a $895,904 excise tax liability on redemptions - The business combination deadline was extended to January 13, 2026, with monthly trust account deposits, leaving 101,216 public shares after January 2025 redemptions[288][290] - The merger agreement with Openmarkets was terminated on February 12, 2025[275][355] - An excise tax liability of $895,904 was recorded as of December 31, 2024, related to the 1% tax on stock redemptions under the Inflation Reduction Act of 2022[315] - $515,000 of trust funds intended for taxes were used for operating expenses, creating a corresponding balance sheet liability[304]