Oak Woods Acquisition (OAKU) - 2024 Q4 - Annual Report

PART I Item 1. Business Oak Woods Acquisition Corporation, a blank check company incorporated in 2022, completed its IPO in 2023 and is pursuing a business combination with Huajin (China) Holdings Limited, an elderly and healthcare services provider, with a deadline extended to September 28, 2025 - Oak Woods Acquisition Corporation is a blank check company (SPAC) incorporated on March 11, 2022, in the Cayman Islands, formed to pursue a business combination[22][77][223] - The company consummated its Initial Public Offering (IPO) on March 28, 2023, raising $57,500,000, and a simultaneous private placement of $3,431,250[25][68][90] - As of March 28, 2023, $58,506,250 of net proceeds from the IPO and private placement were deposited into a Trust Account for public shareholders[27][69][229] - The company entered into a Merger Agreement with Huajin (China) Holdings Limited, an elderly and healthcare services provider, on August 11, 2023[29][78][80] - The deadline to complete a business combination has been extended multiple times, most recently to September 28, 2025, through shareholder approvals and sponsor deposits into the Trust Account[32][34][86] Class A Ordinary Share Redemptions | Date | Shares Redeemed | Per Share Price ($) | Amount Paid from Trust Account ($) | | :--- | :--- | :--- | :--- | | Sep 26, 2024 | 1,492,646 | $11.20 | $16,641,342 | | Mar 25, 2025 | 679,929 | $11.56 | $7,859,455 | - The company is classified as an "emerging growth company" and "smaller reporting company," which allows for reduced disclosure obligations[48][51][252] Item 1A. Risk Factors The company faces various risks, including lack of operating history, potential delays in Trust Account distributions, limited voting rights, and dependence on key personnel, as detailed in its Form S-4 filing - Detailed risk factors are incorporated by reference from the Company's registration statement on Form S-4 (amendment no. 8) filed with the SEC on January 17, 2025[53] - Principal risks include lack of operating history, delays in Trust Account distributions, limited shareholder voting rights, potential for equity/debt issuance, third-party claims, negative interest rates, dependence on key personnel, conflicts of interest, delisting risk, and risks associated with a foreign jurisdiction target[52] Item 1B. Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[54] Item 1C. Cybersecurity As a blank check company, the company perceives no significant cybersecurity risks and lacks formal risk management programs, with board oversight for potential threats - The company, as a blank check entity, does not believe it faces significant cybersecurity risks[55] - No formal cybersecurity risk management programs or processes have been adopted[55] - The board of directors is generally responsible for the oversight of risks from cybersecurity threats[55] Item 2. Properties The company does not own any real estate, renting its executive offices in Nepean, Ontario, Canada, on a month-to-month basis, which are deemed adequate - The company does not own any real estate or other physical properties[56] - Principal executive offices are rented at 101 Roswell Drive, Nepean, Ontario, Canada, for $5,000 per month on a month-to-month basis[45][56] Item 3. Legal Proceedings To management's knowledge, no litigation is currently pending against the company, its officers, directors, or property - There is no litigation currently pending against the company, its officers, directors, or property[57] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[58] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's units, shares, rights, and warrants trade on NASDAQ, with no cash dividends paid or intended before a business combination, following its March 2023 IPO and private placement - The company's units (OAKUU), Class A ordinary shares (OAKUO), rights (OAKUR), and warrants (OAKUW) are traded on the NASDAQ Capital Market[61] - Units commenced public trading on March 24, 2023, while ordinary shares, rights, and warrants commenced separate public trading on May 19, 2023[61] - The company has not paid any cash dividends on its shares to date and does not intend to pay cash dividends prior to the completion of a Business Combination[65] - Gross proceeds from the IPO were $57,500,000, and from the private placement were $3,431,250, with $58,506,250 deposited into a Trust Account[68][69] - The company paid $1,150,000 in underwriting commissions and has a deferred commission of $2,012,500 payable upon completion of its initial business combination[71] Item 6. [Reserved] This item is reserved and not required - This item is not required[74] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The blank check company, with no operating revenues, reported decreased net income in 2024 due to higher costs, faces a working capital deficit, and has substantial doubt about its going concern ability without additional financing or completing the Huajin business combination by September 28, 2025 - The company has not engaged in any operations or generated operating revenues to date, with income primarily from interest on investments held in the Trust Account[79][87] - The proposed merger with Huajin (China) Holdings Limited involves an agreed valuation of $250,000,000, with consideration in Class A Ordinary Shares[81] - The deadline for completing the business combination has been extended to September 28, 2025, through multiple shareholder approvals and sponsor deposits into the Trust Account[85][86] - Management has determined that conditions raise substantial doubt about the company's ability to continue as a going concern due to a working capital deficit and reliance on additional financing or successful completion of the business combination[99][248] Results of Operations Non-operating income from Trust Account interest contributed to net income, which significantly decreased from $1,308,097 in 2023 to $191,545 in 2024, primarily due to higher operating costs Net Income | Year | Amount ($) | | :--- | :--- | | 2024 | $191,545 | | 2023 | $1,308,097 | Interest Income Earned on Investments Held in Trust Account | Year | Amount ($) | | :--- | :--- | | 2024 | $2,940,555 | | 2023 | $2,258,904 | Formation and Operating Costs | Year | Amount ($) | | :--- | :--- | | 2024 | $2,746,762 | | 2023 | $1,029,342 | Changes in Fair Value of Warrant Liabilities | Year | Amount ($) | | :--- | :--- | | 2024 | $(8,100) | | 2023 | $53,500 | Liquidity and Capital Resources The company's liquidity relies on Trust Account proceeds and sponsor loans, reporting a working capital deficit of $4,388,114 as of December 31, 2024, necessitating additional capital for operations and the business combination Cash Held Outside Trust Account | Year | Amount ($) | | :--- | :--- | | 2024 | $4,637 | | 2023 | $367,321 | - As of December 31, 2024, the company had a working capital deficit of $4,388,114[94] - The company relies on loans from its Sponsor or affiliates to fund working capital deficiencies or transaction costs[94][99] - Huajin made a deposit of $330,969 to the Company in connection with the Business Combination[95] Contractual Obligations The company has various contractual obligations, including registration rights, sponsor promissory notes for extensions and operations, an administrative services agreement, underwriting commissions, and a financial advisory agreement - Holders of founder shares, private placement units, and securities from working capital loans are entitled to registration rights[102] Promissory Notes from Related Parties (Extension Loans) | Year | Amount ($) | | :--- | :--- | | 2024 | $1,265,000 | | 2023 | $0 | Promissory Notes from Related Parties (Operation Loans) | Year | Amount ($) | | :--- | :--- | | 2024 | $980,150 | | 2023 | $0 | - The company is obligated to pay its sponsor a monthly fee of $10,000 for administrative services, with accrued expenses of $120,000 in 2024 and $90,000 in 2023[111][112] - A deferred underwriting fee of $2,012,500 is payable to the underwriters upon completion of a business combination[114] - AsianLegend, the financial advisor, receives a cash fee of $100,000 per month and 5% of Class A Ordinary Shares issued to Huajin shareholders upon business combination, with accrued expenses of $1,500,000 in 2024 and $300,000 in 2023[115] Item 7A. Quantitative and Qualitative Disclosures about Market Risk This disclosure is not required for smaller reporting companies - This disclosure is not required for smaller reporting companies[120] Item 8. Financial Statements and Supplementary Data Financial statements and supplementary data are presented following Item 15 of this report - Financial statements and supplementary data are presented following Item 15 of this Report[121] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There are no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[122] Item 9A. Control and Procedures Management concluded that internal control over financial reporting was ineffective as of December 31, 2024, due to a material weakness in trust investment activity, with remediation focused on timely reconciliation - Management concluded that internal control over financial reporting was ineffective as of December 31, 2024[126] - The ineffectiveness was due to a material weakness related to the non-identification of delays and errors in trust investment activity[126] - The company plans to remediate the material weakness by ensuring timely reconciliation of Trust Account statements with associated monthly investment statements[126] Item 9B. Other Information There is no other information to report under this item - There is no other information to report[128] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections There are no disclosures regarding foreign jurisdictions that prevent inspections - There are no disclosures regarding foreign jurisdictions that prevent inspections[129] PART III Item 10. Directors, Executive Officers and Corporate Governance The company's four-member board, including CEO Lixin Zheng and three independent directors, has established audit, nominating, and compensation committees, all composed of independent directors, and adopted a code of conduct and ethics - The board of directors consists of four members: Lixin Zheng (CEO, CFO, Chairman & Director) and independent directors John O'Donnell, Mitchell Cariaga, and Lauren Simmons[131][142] - All three independent directors (John O'Donnell, Mitchell Cariaga, Lauren Simmons) meet Nasdaq's independence standards[145] - The company has established an audit committee (chaired by Mitchell Cariaga), a nominating committee (chaired by Lauren Simmons), and a compensation committee (chaired by John O'Donnell), all composed solely of independent directors[146][147][149][155] - The company has adopted a code of conduct and ethics applicable to its directors, officers, and employees[157] Item 11. Executive Compensation No compensation is paid to the sponsor, officers, or directors before the business combination, except for expense reimbursement, with post-combination compensation determined by the combined company's board, and a Clawback Policy adopted for erroneously awarded compensation - No compensation is paid to the sponsor, officers, and directors, or their affiliates, prior to or in connection with the consummation of the initial business combination, except for reimbursement of out-of-pocket expenses[161][181] - Post-completion compensation for management team members will be determined by the combined company's board of directors[162] - The board of directors has adopted a Clawback Policy to recoup certain executive compensation in the event of an accounting restatement due to material noncompliance with financial reporting requirements[164] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of April 29, 2025, the company had 6,037,979 Ordinary Shares outstanding, with Whale Bay International Company Limited as the largest beneficial owner at 18.30%, and initial shareholders collectively owning 20% post-IPO, agreeing to vote for business combinations and waive redemption rights - As of April 29, 2025, there were 6,037,979 Ordinary Shares outstanding, comprising 4,600,479 Class A Ordinary Shares and 1,437,500 Class B Ordinary Shares[166] Beneficial Ownership of Ordinary Shares (Greater than 5%) as of April 29, 2025 | Name | Class A Ordinary Shares | Class B Ordinary Shares | Aggregated Ordinary Shares | Percentage of Outstanding (%) | | :--- | :--- | :--- | :--- | :--- | | Whale Bay International Company Limited | 343,125 | 637,500 | 980,625 | 18.30% | | Space Frontier Investment Holding Limited | — | 420,000 | 420,000 | 7.84% | | Karpus Investment Management | 410,703 | — | 410,703 | 7.67% | | Meteora Capital, LLC | 453,153 | — | 453,153 | 8.46% | | First Trust Merger Arbitrage Fund | 548,260 | — | 548,260 | 10.23% | | First Trust Capital Management L.P. | 570,368 | — | 570,368 | 10.65% | | Mizuho Financial Group, Inc. | 414,095 | — | 414,095 | 7.73% | | Wolverine Asset Management LLC | 313,269 | — | 313,269 | 5.85% | - Initial shareholders beneficially owned 20% of the outstanding Class A ordinary shares post-IPO and have agreed to vote in favor of any proposed business combination and waive redemption rights for their founder shares[170][171] Item 13. Certain Relationships and Related Transactions, and Director Independence The company engages in various related party transactions, primarily with its sponsor, Whale Bay International Company Limited, including founder shares, private placement units, non-interest bearing promissory notes, and an administrative services agreement, all reviewed by the audit committee - 1,437,500 founder shares (Class B ordinary shares) were issued to initial shareholders for an aggregate purchase price of $25,000[176] - The sponsor purchased 343,125 private placement units for $3,431,250, which are subject to transfer restrictions and non-redeemable by the company[178] - The company pays an affiliate of its sponsor $10,000 per month for administrative support, with $210,000 in service fees payable as of December 31, 2024[180][112] Promissory Notes from Related Parties (as of December 31, 2024) | Type | Amount ($) | | :--- | :--- | | Working Capital/Operations Loans | $980,150 | | Extension Loans | $1,265,000 | - The audit committee is responsible for reviewing and approving all related-party transactions to ensure terms are no less favorable than those available from unaffiliated third parties[197] Item 14. Principal Accounting Fees and Services The company paid Marcum Asia CPAs LLP $120,000 in audit fees for 2024 and $113,300 for 2023, with no other fees, and the audit committee pre-approves all auditing and permitted non-audit services - Marcum Asia CPAs LLP served as the company's independent registered public accounting firm[200] Audit Fees Paid to Marcum Asia CPAs LLP | Year | Amount ($) | | :--- | :--- | | 2024 | $120,000 | | 2023 | $113,300 | - No audit-related fees, tax fees, or other fees were paid to Marcum Asia CPAs LLP for the years ended December 31, 2024, and 2023[202][203] - The audit committee pre-approves all auditing services and permitted non-audit services[204] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists all exhibits filed as part of the Form 10-K, including the Independent Auditor's Report, consolidated financial statements, and various agreements like the Merger Agreement and organizational documents - The report includes the Report of Independent Registered Public Accounting Firm and the Consolidated Financial Statements (Balance Sheets, Statements of Operations, Changes in Shareholders' Deficit, Cash Flows, and Notes)[206] - Key exhibits include the Merger Agreement and its amendments, Memorandum and Articles of Association, specimen certificates for units, shares, warrants, and rights, and various agreements such as the Warrant Agreement, Right Agreement, Investment Management Trust Agreement, and Registration Rights Agreement[341][344] Item 16. Form 10-K Summary This item is not applicable - This item is not applicable[338] Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Marcum Asia CPAs LLP issued an unqualified opinion on the 2024 and 2023 consolidated financial statements but noted a "Going Concern" issue due to the SPAC's business combination deadline of September 28, 2025, and uncertainty of capital - Marcum Asia CPAs LLP issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2024, and 2023[208][213] - The report includes an explanatory paragraph on "Going Concern," noting substantial doubt about the company's ability to continue due to its SPAC nature, the deadline for a business combination (September 28, 2025), and the uncertainty of securing necessary approvals or additional capital[209] Consolidated Balance Sheets As of December 31, 2024, total assets decreased to $48.43 million from $61.20 million in 2023, primarily due to reduced Trust Account investments, while total liabilities increased to $6.42 million, resulting in a worsened shareholders' deficit of $(6.42) million Consolidated Balance Sheet Highlights | Metric | Dec 31, 2024 ($) | Dec 31, 2023 ($) | | :--- | :--- | :--- | | Total Assets | $48,434,004 | $61,199,425 | | Investments held in the Trust Account | $48,084,367 | $60,765,154 | | Total Liabilities | $6,422,251 | $2,837,875 | | Shareholders' Deficit | $(6,417,614) | $(636,175) | | Class A ordinary shares subject to possible redemption | $48,429,367 | $58,997,725 | Consolidated Statements of Operations Net income significantly decreased to $191,545 in 2024 from $1,308,097 in 2023, primarily driven by a substantial increase in formation and operating costs to $2,746,762 and a negative change in warrant liabilities Consolidated Statements of Operations Highlights | Metric | Year Ended Dec 31, 2024 ($) | Year Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | | Net income | $191,545 | $1,308,097 | | Formation and operating costs | $2,746,762 | $1,029,342 | | Interest income earned on investments held in Trust Account | $2,940,555 | $2,258,904 | | Changes in fair value of warrant liabilities | $(8,100) | $53,500 | | Basic and diluted net income per redeemable Class A ordinary share | $0.30 | $0.69 | Consolidated Statements of Changes in Shareholders' Deficit The total shareholders' deficit significantly increased from $(636,175) in 2023 to $(6,417,614) in 2024, primarily due to a substantial accretion of redeemable ordinary shares to redemption value of $(5,972,984) Shareholders' Deficit and Accretion | Metric | Year Ended Dec 31, 2024 ($) | Year Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | | Total Shareholders' Deficit | $(6,417,614) | $(636,175) | | Accretion of redeemable ordinary shares to redemption value | $(5,972,984) | $(7,418,245) | Consolidated Statements of Cash Flows Net cash used in operating activities increased to $(1,342,834) in 2024, while investing activities provided $15,621,342 from Trust Account redemptions, and financing activities used $(14,641,192) due to public share redemptions Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Year Ended Dec 31, 2024 ($) | Year Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,342,834) | $(650,771) | | Net cash provided by (used in) investing activities | $15,621,342 | $(58,506,250) | | Net cash (used in) provided by financing activities | $(14,641,192) | $59,490,864 | | Payment of redemption of public shares | $(16,541,342) | — | Notes to Consolidated Financial Statements The notes detail the company's organization, business operations, accounting policies, blank check status, proposed Huajin merger, going concern considerations, IPO, private placement, related party transactions, commitments, and fair value measurements for financial instruments - The company is a blank check company formed on March 11, 2022, for the purpose of a business combination, with no operations other than those related to the prospective merger[223][225] - A Merger Agreement with Huajin (China) Holdings Limited was entered into on August 11, 2023, with Huajin surviving as a wholly-owned subsidiary[224][241] - Management has determined that conditions raise substantial doubt about the company's ability to continue as a going concern due to capital needs and the uncertainty of completing a business combination by September 28, 2025[248] Promissory Notes from Related Parties (as of December 31, 2024) | Type | Amount ($) | | :--- | :--- | | Extension Loans | $1,265,000 | | Operation Loans | $980,150 | - The company has an administrative services agreement to pay its sponsor a monthly fee of $10,000, with accrued expenses of $120,000 in 2024 and $90,000 in 2023[295][296] - A financial advisory agreement with Asian Legend International Investment Holding Limited entails a $100,000 monthly cash fee and 5% of Class A Ordinary Shares issued to Huajin shareholders upon business combination, with accrued expenses of $1,500,000 in 2024 and $300,000 in 2023[300] - Private Warrants were reclassified from Level 3 to Level 2 in fair value hierarchy in 2023, with changes in fair value of $(8,100) in 2024 and $53,500 in 2023[331]