Columbus Acquisition Corp(COLA) - 2024 Q4 - Annual Report

PART I Business Overview Columbus Acquisition Corp, a blank check company formed in January 2024, seeks a business combination, focusing on emerging growth companies, with potential risks from PRC targets - Columbus Acquisition Corp is a blank check exempted company incorporated on January 18, 2024, for the purpose of effecting a business combination[16] - The company's business strategy focuses on acquiring emerging growth companies that are or have the potential to become industry leaders, possess sustainable competitive advantages, and offer long-term revenue visibility, with an emphasis on value creation through organic growth, cost savings, and additional acquisitions[25] - The company has until January 22, 2026, to consummate an initial business combination, after which it may liquidate if no extension is sought or approved[30] - Due to significant ties to China (CEO and CFO residing in China, Sponsor's director being Canadian citizen residing in China), the company acknowledges potential risks if it pursues a business combination with a PRC Target Company, including uncertainties in PRC laws, foreign ownership restrictions, and the enforceability of VIE structures[37][47][48] Business Overview Columbus Acquisition Corp, a Cayman Islands blank check company formed in January 2024, seeks a business combination, having generated no revenue and incurred losses from operating costs - The company is a blank check exempted company incorporated on January 18, 2024, for the purpose of effecting a business combination[16] - Since its IPO, the company's sole business activity has been identifying and evaluating suitable acquisition transaction candidates, with no revenue and losses incurred from inception[21] Initial Public Offering and Private Placement The company completed its IPO and a concurrent private placement in January 2025, raising $60 million for the Trust Account, with the Sponsor later forfeiting 225,000 Founder Shares IPO and Private Placement Details | Event | Date | Details | |---|---|---| | IPO Consummation | January 24, 2025 | 6,000,000 units sold at $10.00/unit, gross proceeds $60,000,000 | | Private Placement | January 24, 2025 | 234,290 units sold to Sponsor at $10.00/unit, gross proceeds $2,342,900 | | Trust Account Funding | January 24, 2025 | $60,000,000 from IPO and Private Placement placed in Trust Account | | Representative Shares Issued | IPO Closing | 210,000 Ordinary Shares issued to underwriters | | Founder Shares Forfeiture | March 10, 2025 | Sponsor forfeited 225,000 Founder Shares | | Ordinary Shares & Rights Trading | March 17, 2025 | Commenced trading on Nasdaq under 'COLA' and 'COLAR' | Business Strategy and Acquisition Criteria The company's strategy focuses on creating shareholder value through acquisitions of emerging growth companies with industry leadership and long-term revenue visibility - The main goal is to create shareholder value by improving operating efficiency, implementing revenue-driven/profit-engagement enhancement strategies, and increasing profit potential through additional acquisitions[25] - Acquisition criteria include targeting emerging growth companies with niche deal sizes, industry leadership, sustainable competitive advantages, long-term revenue visibility, and benefits from being a U.S. public company[25] Effecting a Business Combination An initial business combination requires at least $5,000,001 in net tangible assets, a majority shareholder vote, and must be completed by January 22, 2026, with the target valued at least 80% of the Trust Account - The company will consummate its initial business combination only if it has net tangible assets of at least $5,000,001 and, if shareholder approval is sought, a majority of outstanding Ordinary Shares are voted in favor[29] - The deadline to consummate an initial business combination is January 22, 2026, with provisions for extension or liquidation if unsuccessful[30] - The target business must have a fair market value equal to at least 80% of the funds in the Trust Account, unless the company is delisted from Nasdaq[32][34] Working Capital Loans Working Capital Loans from insiders are non-interest bearing, repayable upon business combination or convertible into units at $10.00 each, with no outstanding borrowings as of December 31, 2024 - Working Capital Loans may be provided by insiders, officers, or their affiliates to cover working capital needs until a business combination is completed[35] - These loans are non-interest bearing and can be repaid upon consummation of a business combination or converted into working capital units at $10.00 per unit[35] - As of December 31, 2024, and through the filing date, the Company had no borrowings under these loans[36] Risks Related to Our Possible Business Combination with a PRC Target Company Pursuing a PRC Target Company exposes the company to risks from uncertain PRC laws, foreign ownership restrictions, VIE structure enforceability, new overseas listing rules, and potential government intervention - The company's significant ties to China make it more likely to pursue a business combination with a PRC Target Company, which entails risks due to the uncertainty of PRC laws and regulations[37][47] - Acquiring a PRC Target Company may necessitate a Variable Interest Entity (VIE) structure, which carries inherent risks such as less effectiveness than equity ownership, potential difficulties in enforcing contractual obligations under PRC law, and substantial costs[38][39][41] - New PRC regulations, including the New Administrative Rules Regarding Overseas Listings (CSRC) and Confidentiality and Archives Administration Provisions, may require additional compliance, filings, and cybersecurity reviews, potentially limiting the company's ability to list or offer securities and causing share value depreciation[43][44][45][46] PRC Limitations on Overseas Listing and Share Issuances If We Acquire a PRC Target Company (Post-Business Combination) Acquiring a PRC Target Company may subject the entity to new PRC overseas listing rules and cybersecurity reviews, potentially hindering its ability to offer securities or maintain its U.S. listing - If a PRC Target Company is acquired, the company may need to comply with the New Administrative Rules Regarding Overseas Listings, requiring filings with the CSRC, which are newly promulgated and involve interpretation uncertainties[49][50] - The Confidentiality and Archives Administration Provisions and Measures for Cybersecurity Review may also apply, potentially requiring approvals for document disclosure and cybersecurity reviews for online platform operators with over one million users[51] - Failure to comply with new regulatory requirements or denial of necessary permissions from Chinese authorities could significantly limit the ability to offer securities, complete a business combination, or continue listing on U.S. exchanges[52] Transfers of Cash to and from Our Post-Combination Entity If We Acquire a PRC Target Company (Post-Business Combination) Post-acquisition of a PRC Target Company, cash transfers for dividends and debt servicing are subject to PRC foreign currency regulations, statutory reserve requirements, and potential withholding tax - The post-combination entity's ability to pay dividends and service debt may rely on payments from PRC subsidiaries, which are subject to PRC government regulations on foreign currency conversion and remittance[54][55][56] - PRC subsidiaries are required to set aside statutory reserve funds (10% of after-tax profits until 50% of registered capital), which are not distributable as cash dividends except in liquidation[58] - Cash dividends paid to overseas stockholders may be subject to PRC withholding tax at a rate of up to 10.0% if the post-combination entity is considered a PRC tax resident enterprise[59] PCAOB PCAOB inspection restrictions historically posed delisting risks under HFCAA for PRC targets, though full access was secured in December 2022, future uncertainties remain due to annual reassessments - The Holding Foreign Companies Accountable Act (HFCAA) and Accelerating Holding Foreign Companies Accountable Act (AHFCAA) could restrict the company's ability to consummate a business combination with a target if its auditor is not subject to PCAOB inspections for two consecutive years, potentially leading to delisting[61][62][71] - Although the PCAOB determined in December 2022 that it secured complete access to inspect audit firms in mainland China and Hong Kong, it will annually reassess this access, meaning future uncertainties could still affect the company's prospects with a PRC Target Company[68][69][70] Enforceability of Civil Liability Enforcing U.S. legal rights or judgments against executive officers and directors located outside the U.S., particularly in the PRC, may be difficult and costly due to a lack of reciprocal treaties - Certain executive officers and directors are located outside the U.S. (China, Switzerland), which may make it difficult for U.S. investors to enforce legal rights, effect service of process, or enforce U.S. court judgments[74] - The PRC does not have treaties for reciprocal recognition and enforcement of judgments with the United States, potentially leading to substantial costs and difficulties in enforcing civil liabilities under PRC laws[75] U.S. Foreign Investment Regulations As a potential 'foreign person,' the company's business combinations with U.S. businesses in sensitive sectors may face CFIUS review, potentially delaying or blocking transactions and limiting target options - The company may be considered a 'foreign person' under U.S. foreign investment regulations due to its leadership's ties to China, potentially subjecting business combinations with U.S. businesses in sensitive industries to CFIUS review[76][77] - CFIUS review could block or delay an initial business combination, impose conditions, or require divestment, limiting the pool of potential targets and potentially leading to liquidation if approvals are not obtained within the limited timeframe[77][78] Facilities The company's executive offices are in Singapore, with a monthly payment of $10,000 to the Sponsor for space and support, deemed adequate for current operations Employees The company has two officers, Dr. Fen "Eric" Zhang (CEO) and Ms. Jie "Janet" Hu (CFO), who dedicate time as needed, with no full-time employees planned before a business combination - The company has two officers, Dr. Fen "Eric" Zhang (CEO) and Ms. Jie "Janet" Hu (CFO), who are not obligated to devote specific hours but will dedicate time as needed for business combination efforts[81] - The company does not intend to have any full-time employees prior to the completion of its initial business combination[81] Risk Factors As a smaller reporting company, Columbus Acquisition Corp refers to IPO prospectus risk factors, noting no material changes since filing, with potential for additional factors in future SEC filings - As a smaller reporting company, the registrant is not required to include risk factors in this Annual Report but refers to those disclosed in its IPO prospectus (File No. 333-283278)[82] - No material changes to the risk factors disclosed in the prospectus have occurred as of the date of this Annual Report, though additional factors may be disclosed in future SEC filings[82] Unresolved Staff Comments There are no unresolved staff comments - There are no unresolved staff comments[83] Cybersecurity As a SPAC with no business operations, the company faces no significant cybersecurity risk, lacks a formal program, and has encountered no incidents since its IPO - As a special purpose acquisition company with no business operations, the company does not consider itself to face significant cybersecurity risk[84] - The company has not adopted a formal cybersecurity risk management program; management is responsible for assessing and reporting incidents to the board[85] - No cybersecurity incidents have been encountered since the IPO as of the report date[86] Properties Columbus Acquisition Corp does not own material real estate or physical properties, with its principal executive offices located in Singapore - The company does not own any real estate or other physical properties materially important to its operations[87] - Principal executive offices are located at 14 Prudential Tower, Singapore, 049712[87] Legal Proceedings The company is not involved in any material litigation or legal proceedings and is unaware of any legal exposures that could materially affect its business or financial condition - The company is not currently a party to any material litigation or other legal proceedings[88] - The company is not aware of any legal proceeding, investigation, claim, or other legal exposure with a more than remote possibility of a material adverse effect[88] Mine Safety Disclosures This item is not applicable to Columbus Acquisition Corp - Not applicable[89] PART II Market for Registrant's Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities Columbus Acquisition Corp's Units, Ordinary Shares, and Rights trade on Nasdaq, with no cash dividends paid or equity compensation plans authorized, and no issuer purchases of equity securities Trading Information | Security Type | Trading Symbol | Exchange | |---|---|---| | Units | COLAU | The Nasdaq Global Market | | Ordinary Shares | COLA | The Nasdaq Global Market | | Rights | COLAR | The Nasdaq Global Market | Holders of Record | Security Type | Holders of Record (as of report date) | |---|---| | Units | 2 | | Separately Traded Ordinary Shares | 6 | | Separately Traded Rights | 1 | - The company has not paid any cash dividends on its Ordinary Shares to date and does not intend to prior to the completion of its initial business combination[93] - No securities are authorized for issuance under equity compensation plans[94] - The company has not made any purchases of its equity securities by the issuer and affiliated purchasers[99] Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings The company issued 1,437,500 Founder Shares to the Sponsor for $25,000, and in January 2025, completed an IPO of 6,000,000 Units and a private placement of 234,290 Private Units, with $60 million placed in the Trust Account - The company issued 1,437,500 Ordinary Shares (Founder Shares) to the Sponsor for $25,000, with up to 225,000 shares subject to forfeiture if the over-allotment option is not exercised[95] IPO and Private Placement Details | Event | Date | Details | |---|---|---| | IPO Consummation | January 24, 2025 | 6,000,000 Units, gross proceeds $60,000,000 | | Private Placement | January 24, 2025 | 234,290 Private Units to Sponsor, gross proceeds $2,342,900 | | Trust Account Funding | January 24, 2025 | $60,000,000 from IPO and Private Placement | | Founder Shares Forfeiture | March 10, 2025 | 225,000 Founder Shares forfeited by Sponsor | Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations Columbus Acquisition Corp, a blank check company, reported a net loss of $77,094 for 2024, completed its IPO in January 2025, and faces substantial doubt about its going concern ability without additional financing or a timely business combination - The company is a blank check company formed on January 18, 2024, with no operating revenues to date, and expects to incur significant costs in pursuit of acquisition plans[102][103][109] Key Financial Metrics (as of Dec 31, 2024) | Metric | Value | |---|---| | Net Loss (Jan 18, 2024 - Dec 31, 2024) | $77,094 | | Working Capital Deficit | $252,128 | | Cash | $0 | | Proceeds outside Trust Account (post-IPO) | $1,007,756 | - The company's liquidity condition raises substantial doubt about its ability to continue as a going concern, requiring additional capital or a successful business combination by January 22, 2026[115][116] Overview Columbus Acquisition Corp, a Cayman Islands blank check company formed in January 2024, seeks a business combination, initially focusing on Asia, and anticipates significant acquisition-related costs - The company is a blank check company formed on January 18, 2024, for the purpose of effecting a business combination, with an initial focus on Asia[102] - The company has not selected any target business and expects to incur significant costs in pursuit of its acquisition plans[102][103] Initial Public Offering and Private Placement On January 24, 2025, the company completed its IPO of 6,000,000 units and a private placement of 234,290 units, placing $60 million in a Trust Account, with the Sponsor later forfeiting 225,000 Founder Shares IPO and Private Placement Details | Event | Date | Details | |---|---|---| | IPO Consummation | January 24, 2025 | 6,000,000 Units at $10.00/Unit, gross proceeds $60,000,000 | | Private Placement | January 24, 2025 | 234,290 Private Units to Sponsor at $10.00/Unit, gross proceeds $2,342,900 | | Trust Account Funding | January 24, 2025 | $60,000,000 from IPO and Private Placement | | Founder Shares Forfeiture | March 10, 2025 | Sponsor forfeited 225,000 Founder Shares | Results of Operations and Known Trends or Future Events From inception to December 31, 2024, the company generated no revenue, reporting a net loss of $77,094 from operating costs, and expects increased public company expenses post-IPO - The company has not engaged in operations or generated revenues to date, with activities limited to organizational and IPO preparation[109] Financial Performance (Jan 18, 2024 - Dec 31, 2024) | Metric | Value | |---|---| | Net Loss | $77,094 | | Formation and Operating Costs | $77,094 | - Post-IPO, the company expects increased expenses as a public company and for target search, with non-operating income from interest on cash and cash equivalents[109] Liquidity and Capital Resources As of December 31, 2024, the company had no cash and a working capital deficit of $252,128, raising substantial doubt about its going concern ability without additional financing or a timely business combination Liquidity Metrics (as of Dec 31, 2024) | Metric | Value | |---|---| | Cash | $0 | | Working Capital Deficit | $252,128 | | Funds outside Trust Account (post-IPO) | $1,007,756 | - The company intends to use IPO proceeds and Trust Account funds for target acquisition and related expenses, with remaining proceeds for target business operations[111] - The company's liquidity condition raises substantial doubt about its ability to continue as a going concern, necessitating additional capital or a successful business combination by January 22, 2026[115][116] Off-Balance Sheet Financing Arrangements As of December 31, 2024, Columbus Acquisition Corp had no off-balance sheet arrangements, obligations, assets, or liabilities with unconsolidated entities or financial partnerships - As of December 31, 2024, the company had no obligations, assets, or liabilities considered off-balance sheet arrangements[117] - The company has not entered into any off-balance sheet financing arrangements, established special purpose entities, guaranteed debt, or purchased non-financial assets[117] Contractual Obligations As of December 31, 2024, the company had no long-term debt or lease obligations, but holders of Founder Shares, Private Units, and Working Capital Loans are entitled to company-borne registration rights - As of December 31, 2024, the company had no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[118] - Holders of Founder Shares, Private Units, and any Ordinary shares from Working Capital Loans are entitled to registration rights, with the company bearing the expenses[119] Critical Accounting Estimates While financial statement preparation involves estimates, the company has not identified any critical accounting estimates that could materially differ from actual results - Management makes estimates and assumptions in preparing financial statements, and actual results may differ[120][121] - The company has not identified any critical accounting estimates[121] Recent Accounting Standards The company adopted ASU No. 2023-07 (Segment Reporting) as of December 31, 2024, and expects no material impact from ASU 2023-09 (Income Taxes) due to its Cayman Islands entity status - The company adopted ASU No. 2023-07, Segment Reporting, as of December 31, 2024[122] - The company is evaluating ASU 2023-09, Income Taxes, effective after December 15, 2024, but does not expect a material impact due to not being subject to income taxes as a Cayman Island entity[123] Quantitative and Qualitative Disclosures About Market Risk As of December 31, 2024, the company had no market or interest rate risk, and post-IPO Trust Account investments are not expected to create material exposure - As of December 31, 2024, the company was not subject to any market or interest rate risk[125] - Post-IPO, net proceeds in the Trust Account are deposited in interest-bearing bank accounts, and due to the short-term nature of these investments, no material exposure to market or interest rate risk is expected[125] Financial Statements and Supplementary Data The financial statements, prepared under US GAAP, include an auditor's report highlighting substantial doubt about the company's going concern ability due to its SPAC nature and business combination deadline - The financial statements are presented in conformity with US GAAP and include an independent auditor's report[130][168] - The auditor's report highlights a substantial doubt about the company's ability to continue as a going concern due to its status as a SPAC and the January 22, 2026 deadline for a business combination[131] Key Financial Figures Balance Sheet (as of December 31, 2024): | Item | Amount | |---|---| | Total Assets | $200,034 | | Total Liabilities | $252,128 | | Total Shareholder's Deficit | $(52,094) | Statement of Operations (Jan 18, 2024 - Dec 31, 2024): | Item | Amount | |---|---| | Formation and Operating Costs | $77,094 | | Net Loss | $(77,094) | | Basic and Diluted Net Loss Per Ordinary Share | $(0.05) | Statement of Cash Flows (Jan 18, 2024 - Dec 31, 2024): | Item | Amount | |---|---| | Net Cash Used in Operating Activities | $(74,678) | | Net Cash Provided by Financing Activities | $74,678 | | Net Change in Cash | $0 | | Cash, End of Period | $0 | Report of Independent Registered Public Accounting Firm Marcum Asia CPAs LLP issued a fair opinion on the financial statements, including an explanatory paragraph on substantial doubt about the company's going concern ability due to its business combination deadline - Marcum Asia CPAs LLP audited the financial statements and expressed a fair opinion[130] - An explanatory paragraph on going concern notes substantial doubt about the company's ability to continue due to the business combination deadline of January 22, 2026, and lack of assured capital[131] Balance Sheet As of December 31, 2024, the company reported total assets of $200,034, total liabilities of $252,128, and a total shareholder's deficit of $(52,094) Balance Sheet (as of December 31, 2024) | Item | Amount | |---|---| | Cash | $0 | | Deferred Offering Costs | $200,034 | | Total Assets | $200,034 | | Accounts Payable and Accrued Expenses | $2,416 | | Promissory Note – Related Party | $249,712 | | Total Current Liabilities | $252,128 | | Total Liabilities | $252,128 | | Ordinary Shares | $150 | | Additional Paid-in Capital | $24,850 | | Accumulated Deficit | $(77,094) | | Total Shareholder's Deficit | $(52,094) | | Total Liabilities and Shareholder's Deficit | $200,034 | Statement of Operations For the period ended December 31, 2024, the company reported a net loss of $77,094 from formation and operating costs, resulting in a basic and diluted net loss of $(0.05) per ordinary share Statement of Operations (Jan 18, 2024 - Dec 31, 2024) | Item | Amount | |---|---| | Formation and Operating Costs | $77,094 | | Net Loss | $(77,094) | | Basic and Diluted Weighted Average Ordinary Shares Outstanding | 1,500,000 | | Basic and Diluted Net Loss Per Ordinary Share | $(0.05) | Statement of Changes in Shareholder's Deficit For the period ended December 31, 2024, the shareholder's deficit increased to $(52,094), primarily due to the issuance of Founder Shares and a net loss of $77,094 Statement of Changes in Shareholder's Deficit (Jan 18, 2024 - Dec 31, 2024) | Item | Shares | Amount (Ordinary Shares) | Additional Paid-in Capital | Accumulated Deficit | Total Shareholder's Deficit | |---|---|---|---|---|---| | Balance – January 18, 2024 (Inception) | — | $— | $— | $— | $— | | Founder Shares issued to Initial Shareholder | 1,500,000 | $150 | $24,850 | $— | $25,000 | | Net Loss | — | $— | $— | $(77,094) | $(77,094) | | Balance – December 31, 2024 | 1,500,000 | $150 | $24,850 | $(77,094) | $(52,094) | Statement of Cash Flows For the period ended December 31, 2024, net cash used in operating activities was $(74,678), offset by financing activities, resulting in no net change in cash and a $0 cash balance Statement of Cash Flows (Jan 18, 2024 - Dec 31, 2024) | Item | Amount | |---|---| | Net Loss | $(77,094) | | Changes in Operating Assets and Liabilities (Accounts payable and accrued expenses) | $2,416 | | Net Cash Used in Operating Activities | $(74,678) | | Payment of Operating Expenses via Promissory Note – Related Party | $74,678 | | Net Cash Provided by Financing Activities | $74,678 | | Net Change in Cash | $0 | | Cash, End of Period | $0 | | Deferred Offering Costs paid by Sponsor in exchange for issuance of ordinary shares | $25,000 | | Deferred Offering Costs paid via Promissory Note – Related Party | $175,034 | Notes to Financial Statements The notes detail the company's organization, IPO, related party transactions, and accounting policies, with subsequent events including the IPO closing, promissory note repayment, and Founder Share forfeiture - The company is a blank check company incorporated on January 18, 2024, with significant ties to China, potentially making a PRC Target Company more likely[151] - The IPO closed on January 24, 2025, raising $60,000,000, with concurrent private placement of 234,290 units to the Sponsor for $2,342,900, and proceeds placed in a Trust Account[155][156] - The company's liquidity condition raises substantial doubt about its ability to continue as a going concern, requiring new financing or a business combination by January 22, 2026[166] - Subsequent events include the IPO closing, repayment of the Promissory Note ($254,544), forfeiture of 225,000 Founder Shares, commencement of separate trading for Ordinary Shares and Rights, and the appointment of Mr. Cameron R. Johnson as an independent director[212][213][214][215] PART III Directors, Executive Officers and Corporate Governance The company's leadership includes CEO Dr. Fen "Eric" Zhang and CFO Ms. Jie "Janet" Hu, with an independent board, audit and compensation committees, a Code of Ethics, and a clawback policy, while acknowledging potential conflicts of interest Officers and Directors | Name | Age | Title | |---|---|---| | Fen "Eric" Zhang | 60 | Chief Executive Officer and Chairman of the Board of Directors | | Jie "Janet" Hu | 31 | Chief Financial Officer | | Cameron R. Johnson | 45 | Independent Director | | Kevin McKenzie | 52 | Independent Director | | Qian "Hebe" Xu | 43 | Independent Director | - The board of directors consists of four members, divided into two classes, with terms expiring at the first and second annual general meetings[238] - The company has an audit committee and a compensation committee, both comprised solely of independent directors, and has adopted a Code of Ethics and a clawback policy[240][241][243][249][250] - Potential conflicts of interest exist due to officers' and directors' involvement with other SPACs and their ownership of Founder Shares, which could influence business combination decisions[254][257] Officers and Directors The executive team includes CEO Dr. Fen "Eric" Zhang and CFO Ms. Jie "Janet" Hu, supported by independent directors Mr. Cameron R. Johnson, Mr. Kevin McKenzie, and Ms. Qian "Hebe" Xu, all bringing diverse expertise - Dr. Fen "Eric" Zhang, CEO and Chairman, has over a decade of experience in investment banking and fund management, with 20+ years of industrial experience[227][228][229] - Ms. Jie "Janet" Hu, CFO, possesses comprehensive financial expertise and investment operations experience, including roles at Hercules Capital Group and PricewaterhouseCoopers[230] - Independent directors Mr. Cameron R. Johnson, Mr. Kevin McKenzie, and Ms. Qian "Hebe" Xu bring diverse expertise in consulting, global private equity, and US-China cross-border transactions, respectively[231][233][236] Number and Terms of Office of Officers and Directors The board comprises four members across two classes with staggered terms, with Class I directors serving until the first annual meeting and Class II until the second, while officers serve at the board's discretion - The board of directors consists of four members, divided into two classes with staggered terms[238] - Class I directors (Mr. Cameron R. Johnson, Mr. Kevin McKenzie, Ms. Qian (Hebe) Xu) have terms expiring at the first annual general meeting, and Class II director (Dr. Fen "Eric" Zhang) has a term expiring at the second[238] - Officers are appointed by the board of directors and serve at its discretion, not for specific terms[239] Committees of the Board of Directors The company has an audit committee, chaired by Mr. Cameron R. Johnson, and a compensation committee, chaired by Mr. Kevin McKenzie, both composed of independent directors as per NASDAQ rules - The board has two standing committees: an audit committee and a compensation committee, both required to be comprised solely of independent directors under NASDAQ rules[240] - The audit committee, chaired by Mr. Cameron R. Johnson, oversees financial statements, auditor independence, risk assessment, and related-party transactions[241][242][244] - The compensation committee, chaired by Mr. Kevin McKenzie, reviews and approves executive compensation, policies, and incentive plans[243][244] Director Nominations The company lacks a standing nominating committee, with independent directors recommending nominees based on educational background, professional experience, business knowledge, integrity, and independence - The company does not have a standing nominating committee; a majority of independent directors may recommend nominees[246] - The board considers educational background, diversity of professional experience, business knowledge, integrity, reputation, independence, and ability to represent shareholder interests for director nominees[248] Code of Ethics A Code of Ethics and business conduct applies to directors, officers, and employees, with amendments or waivers disclosed in a Form 8-K - A Code of Ethics and business conduct has been adopted for directors, officers, and employees, available on the SEC's website[249] - Amendments or waivers to certain provisions of the Code of Ethics will be disclosed in a Current Report on Form 8-K[249] Clawback Policy Effective January 22, 2025, a clawback policy allows the Compensation Committee to recover erroneously awarded executive compensation based on restated financial results due to misconduct - A clawback policy, effective January 22, 2025, applies to executive officers to comply with Nasdaq rules[250] - The policy grants the Compensation Committee discretion to require reimbursement of erroneously awarded compensation based on restated financial results due to misconduct[250] Conflicts of Interest Potential conflicts arise from insiders' Founder Share ownership and involvement with other SPACs, though the company expects priority for acquisition opportunities over subsequently formed SPACs by its Sponsor and officers - Directors and officers owe fiduciary duties under Cayman Islands law, but the company's articles renounce interest in corporate opportunities presented to them by other entities[251][252][253] - Significant conflicts of interest may arise from insiders' ownership of Founder Shares (purchased at $0.018 per share) and their involvement with other SPACs, potentially influencing business combination decisions[257] - The company expects to have priority over any other special purpose acquisition companies subsequently formed by the Sponsor and its officers or directors with respect to acquisition opportunities[254][255][259] Section 16(a) Beneficial Ownership Reporting Compliance All Section 16(a) reports for executive officers, directors, and greater than 10% beneficial owners were timely filed for the fiscal year ended December 31, 2024 - All Section 16(a) forms required to be filed by executive officers, directors, and greater than 10% beneficial owners were timely filed for the fiscal year ended December 31, 2024[262] Executive Compensation No cash compensation has been paid to officers or directors to date, except for Founder Share transfers and a Share Purchase Option, with out-of-pocket expenses reimbursed and future compensation determined post-business combination - No cash compensation has been paid to officers or directors for services rendered, except for the transfer of Founder Shares to independent directors and a Share Purchase Option to Mr. Cameron Johnson[264] - Out-of-pocket expenses incurred by officers, directors, and advisors for company activities will be reimbursed[264] - Post-business combination, directors or management may receive consulting or management fees, with compensation determined by the combined company's board or a compensation committee[265] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of the report date, 7,944,290 Ordinary Shares were outstanding, with Dr. Fen "Eric" Zhang and Hercules Capital Management VII Corp each beneficially owning 21.4%, and all executive officers and directors as a group owning 21.7% - As of the report date, there were 7,944,290 Ordinary Shares issued and outstanding[269] Beneficial Ownership of Ordinary Shares (as of report date) | Name | Number of Ordinary Shares Beneficially Owned | Percentage of Outstanding Ordinary Shares | |---|---|---| | Fen "Eric" Zhang | 1,698,290 | 21.4% | | Jie "Janet" Hu | — | — | | Cameron R. Johnson | — | — | | Kevin McKenzie | 12,000 | * | | Qian "Hebe" Xu | 12,000 | * | | All executive officers and directors as a group (5 individuals) | 1,722,290 | 21.7% | | Hercules Capital Management VII Corp | 1,698,290 | 21.4% | *Less than one percent Founder Shares The Sponsor initially acquired 1,437,500 Founder Shares for $25,000, later forfeiting 225,000 shares, with 36,000 transferred to independent directors and a 12,000 share option issued to Mr. Johnson - The Sponsor initially acquired 1,437,500 Founder Shares for $25,000, later amended to 1,725,000 shares, with 225,000 subject to forfeiture[271] - On January 22, 2025, 36,000 Founder Shares were transferred to independent directors for their board service[272] - On March 10, 2025, the Sponsor forfeited 225,000 Founder Shares. On March 20, 2025, a Share Purchase Option for 12,000 Founder Shares was issued to Mr. Johnson[273][274] Private Units Concurrently with the IPO, 234,290 Private Units were sold to the Sponsor at $10.00 per unit - Simultaneously with the IPO, 234,290 Private Units were sold to the Sponsor at $10.00 per unit[275] Promissory Note — Related Party The Sponsor loaned the company up to $500,000 for IPO expenses, with $254,544 outstanding and fully repaid upon the IPO closing, terminating the note - The Sponsor agreed to loan the company up to $500,000 for IPO expenses[276] - As of January 24, 2025, $254,544 was outstanding and fully repaid upon the IPO closing, terminating the Promissory Note[276][278] Working Capital Loans The Sponsor, officers, or affiliates may provide Working Capital Loans up to $3 million for business combination transaction costs, repayable or convertible into units, with no outstanding borrowings as of December 31, 2024 - The Sponsor, officers, or their affiliates may loan funds, up to $3,000,000, for transaction costs related to an initial business combination[279] - These loans can be repaid upon consummation of a business combination or converted into working capital units, identical to Private Units[279] - As of December 31, 2024, the company had no borrowings under Working Capital Loans[280] Extension Fees To extend the business combination period, the Sponsor or affiliates may provide convertible loans, repayable in cash or convertible into extension units at $10.00 per unit, with no outstanding fees as of December 31, 2024 - To extend the business combination period, the Sponsor or affiliates may loan funds, evidenced by extension convertible notes[281] - These notes would be repaid in cash or converted into extension units (identical to Private Units) at $10.00 per unit upon closing a business combination[281] - As of December 31, 2024, there were no extension fees[281] Administrative Services Agreement Commencing January 22, 2025, the company pays the Sponsor $10,000 monthly for office space and support, with the agreement terminating upon business combination completion or Trust Account liquidation - Commencing January 22, 2025, the company pays the Sponsor $10,000 per month for office space, utilities, and administrative support[282] - This Administrative Services Agreement terminates upon completion of a business combination or liquidation of the Trust Account[282] Policy for Approval of Related Party Transactions While no formal policy exists, the company's code of ethics requires avoiding conflicts of interest, and the audit committee will be responsible for reviewing and approving related party transactions - The company has not yet adopted a formal policy for related party transactions but has a code of ethics requiring avoidance of conflicts of interest[283][284] - The audit committee, once established, will be responsible for reviewing and approving related party transactions, requiring an affirmative majority vote[285] Director Independence A majority of the board, including Mr. Cameron R. Johnson, Mr. Kevin McKenzie, and Ms. Qian "Hebe" Xu, are independent directors under Nasdaq and SEC rules, holding regular meetings without other directors - A majority of the board (Mr. Cameron R. Johnson, Mr. Kevin McKenzie, and Ms. Qian "Hebe" Xu) are deemed "independent directors" under Nasdaq listing standards and SEC rules[288] - Independent directors hold regularly scheduled meetings at which only independent directors are present[288] Principal Accountant Fees and Services Marcum Asia CPAs LLP served as the independent auditor, with audit fees totaling $115,000 for the period ended December 31, 2024, and all services are pre-approved by the board or audit committee - Marcum Asia CPAs LLP acted as the independent registered public accounting firm[289] Fees Paid to Marcum Asia CPAs LLP (Jan 18, 2024 - Dec 31, 2024) | Fee Type | Amount | |---|---| | Audit Fees | $115,000 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | - All auditing and non-audit services are pre-approved by the Board of Directors or the audit committee[295] PART IV Exhibits, Financial Statement Schedules This section incorporates financial statements from Item 8 and lists comprehensive exhibits, including organizational documents, specimen certificates, and various agreements, filed with the Annual Report on Form 10-K - Financial statements are incorporated by reference from Item 8[297] - A comprehensive list of exhibits is filed as part of or incorporated by reference into the Annual Report on Form 10-K, including organizational documents, specimen certificates, and various agreements[298][299][301] Form 10-K Summary This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[300]