IPO and Financial Proceeds - The company completed its IPO on November 18, 2024, raising gross proceeds of $60 million from the sale of 6,000,000 units at $10.00 per unit[17]. - A private placement of 200,000 units was also completed, generating an additional $2 million in gross proceeds[18]. - The underwriters exercised the Over-Allotment Option, resulting in the sale of 900,000 additional units and generating $9 million in gross proceeds[19]. - Total proceeds from the IPO and related sales amounted to $69 million, which are held in a trust account for the benefit of public shareholders[20]. - The total proceeds of $69 million from the IPO, private placements, and option units were placed in a Trust Account for the benefit of public shareholders[100]. - The company intends to use substantially all net proceeds from the IPO for acquiring a target business and related expenses[106]. Business Combination and Strategy - The company has until November 18, 2025, to complete its initial business combination, with the possibility of extending this period up to May 18, 2026, by depositing $690,000 for each three-month extension[35]. - The company intends to acquire a target business with an aggregate fair market value of at least 80% of the trust account balance at the time of signing a definitive agreement[34]. - The management team aims to create shareholder value by partnering with strong management teams and targeting businesses with long-term revenue visibility[28]. - The company may structure its initial business combination to acquire 100% of the equity interests or assets of the target business[39]. - If the initial business combination is not completed within the specified time, the company will redeem 100% of its public shares for a pro rata portion of the funds in the trust account[38]. - The company has not yet selected a target business for its initial business combination and intends to pursue opportunities in various industries, particularly in China[96]. - The company has a limited timeframe of 12 to 18 months to complete its initial business combination, failing which it may have to liquidate[71]. Financial Performance and Condition - The company has no revenue and has incurred losses since inception, relying on the sale of securities and loans for funding operations[22]. - As of December 31, 2024, the company reported a net income of $142,877, primarily from interest income of $344,530, offset by formation and operating costs of $201,653[104]. - The company had cash of $646,720 and working capital of $450,875 as of December 31, 2024[105]. - The company does not plan to pay cash dividends prior to the completion of its initial business combination[85]. - The Company has incurred significant professional costs and transaction costs related to remaining publicly traded and pursuing a Business Combination, raising substantial doubt about its ability to continue as a going concern[109]. - As of December 31, 2024, the Company has no long-term debt, capital lease obligations, or long-term liabilities[112]. - The Company has not entered into any off-balance sheet financing arrangements or established any special purpose entities[110][111]. Regulatory and Compliance Risks - The company will not consider a business combination with any target whose financial statements are audited by an accounting firm that the PCAOB has been unable to inspect for two consecutive years, limiting potential acquisition candidates in China[41]. - The PRC government has significant authority to influence the operations of a China-based company, which may result in material changes to operations or significant depreciation of the combined company's securities[42]. - Recent PRC regulations require network platform operators with personal information of over one million users to apply for cybersecurity reviews before going public abroad, potentially hindering business combinations[44]. - The combined company may face legal and operational risks associated with having most operations in China, including regulatory approvals and potential government intervention[45]. - Dividends and distributions from a PRC subsidiary are subject to regulations and restrictions, which may complicate the payment of dividends to shareholders[46]. - The PCAOB's ability to inspect accounting firms in mainland China and Hong Kong remains uncertain, which could impact the trading of the combined company's securities on U.S. exchanges[47]. - The company may need to obtain approvals from the CSRC for a business combination with a China-based target, which cannot be guaranteed to be received in a timely manner[52]. - The Draft Rules proposed by the CSRC may impose new filing requirements for Chinese companies pursuing overseas listings, affecting the combined company's compliance[54]. - The National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) issued a Negative List for foreign investment, effective January 1, 2022, which requires domestic enterprises in prohibited industries to obtain approval before overseas listings[55]. - The PRC Cybersecurity Law mandates that personal information and important data collected by critical information infrastructure operators must be stored in China, affecting companies with over one million users when going public abroad[58]. - The PRC Data Security Law and the Personal Information Protection Law impose strict data security and privacy obligations, which may impact future business combinations involving data collection in China[58]. - The combined company's ability to pay dividends to shareholders will depend on the distributable profits of its PRC subsidiaries, which are subject to restrictions under PRC laws[61]. - The PRC government may impose restrictions on foreign currency access, potentially affecting the ability of PRC subsidiaries to pay dividends or repay loans in foreign currencies[63]. - The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) expanded CFIUS's jurisdiction, which may limit the company's ability to complete business combinations with U.S. businesses[69]. - CFIUS may require mandatory filings or impose conditions on business combinations, potentially delaying or blocking transactions[70]. Corporate Governance and Internal Controls - The principal executive office is located at 1412 Broadway, 21st Floor, Suite 21V, New York, NY 10018[72]. - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2024, and determined that controls were effective[126]. - There were no changes in internal control over financial reporting that materially affected the Company during the most recent fiscal quarter[130]. - The Company does not expect that recently issued accounting standards will have a material effect on its financial statements[117]. - The audit committee consists of independent directors, including Tianchen Cai as chairman, ensuring compliance with NASDAQ rules[140]. - The compensation committee is also composed solely of independent directors, with James Jiayuan Tong serving as chairman[144]. - The clawback policy, effective November 12, 2024, allows the compensation committee to require reimbursement of erroneously awarded compensation based on restated financial results[153]. - The company has adopted an Insider Trading Policy governing the trading of its securities by directors, officers, and employees[154]. - Directors owe fiduciary duties to the company, including a duty of loyalty and a duty to act in good faith[155]. - The company has not established specific minimum qualifications for directors but considers various factors such as integrity and professional reputation[151]. - The board of directors will consider director candidates recommended by shareholders for future elections[150]. - The company does not have a standing nominating committee, relying on independent directors to recommend nominees[149]. - The audit committee is responsible for overseeing the work of independent auditors and ensuring their independence[143]. - The audit committee will review and approve related party transactions to ensure independence and avoid conflicts of interest[190]. - The company has not yet adopted a formal policy for the review of related party transactions[188]. - The principal independent registered public accounting firm is Marcum Asia CPAs LLP[195]. - The company has established an audit committee to pre-approve all auditing and non-auditing services[199]. Shareholder Information - As of December 31, 2024, the company had 9,080,000 Ordinary Shares issued and outstanding[170]. - Mingyu (Michael) Li holds 1,655,000 Ordinary Shares, representing 18.2% of the total[171]. - The company issued 1,725,000 Founder Shares at a purchase price of approximately $0.0145 per share[177]. - The company has a promissory note agreement with the Sponsor for up to $500,000 to cover IPO expenses, but no amount has been drawn as of December 31, 2024[179]. - Amount due to related party as of December 31, 2024, was $254,484, representing advancements for formation and IPO expenses[182]. - The company has not drawn on Working Capital Loans, which could be up to $2,500,000 convertible into working capital units at $10.00 per unit upon business combination[185]. - The company will pay $10,000 per month for administrative support services until the initial business combination or liquidation[186]. - As of December 31, 2024, there were 1,725,000 Founder Shares issued and outstanding[178]. - The total audit fees billed by Marcum Asia for the year ended December 31, 2024, amounted to $116,905[196]. - No audit-related fees were paid to Marcum Asia for the year ended December 31, 2024[197]. - No tax planning or tax advice fees were paid to Marcum Asia for the year ended December 31, 2024[198]. - Up to $2,500,000 of loans from founders may be convertible into working capital units at a price of $10.00 per unit[200]. - The company has three independent directors as defined by NASDAQ listing standards[194].
Horizon Space Acquisition II Corp(HSPTU) - 2024 Q4 - Annual Report