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[36]. - An additional $7.5 million was generated from the full exercise of the over-allotment option, bringing total proceeds to $57.5 million[36]. - A private placement of 254,375 units generated total proceeds of $2,543,750, with the sponsor agreeing to restrictions on transfer for 30 days post-initial business combination[37]. - A total of $57,787,500 from the IPO and private placement proceeds was deposited in a trust account for public shareholders, with specific conditions for fund release[38]. - The trust account initially holds $58,287,500, which includes approximately $1,868,750 for deferred underwriting discounts, assuming no redemptions occur[152]. - The company incurred $1,006,250 in underwriting discounts and $556,288 in other IPO-related costs[180]. - The underwriters are entitled to a deferred fee of 3.25% of the gross proceeds of the IPO, amounting to $1,868,750, payable upon closing of a business combination[198]. Regulatory Environment - The company has not received any regulatory objections from the China Securities Regulatory Commission (CSRC) regarding the IPO as of the report date[51]. - The company may face significant regulatory risks from the PRC government, which could impact its ability to conduct business combinations and operations in China[45]. - The company is subject to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, which may impose additional compliance requirements[50]. - The PRC government has implemented new regulatory measures that could significantly impact business operations for companies with a majority of their operations in China, potentially leading to material changes in operations and a decline in share value[77]. - Recent regulatory actions include increased scrutiny on cybersecurity, anti-monopoly enforcement, and restrictions on foreign investments, which may adversely affect the ability to conduct business in China[78]. - The China Securities Regulatory Commission (CSRC) has introduced the Trial Administrative Measures for overseas securities offerings, which require compliance if certain criteria are met, including if 50% or more of the issuer's revenue comes from PRC domestic companies[82]. Business Combination Strategy - 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[62]. - The transaction is subject to regulatory approvals and shareholder approvals, with a requirement for a registration statement to be declared effective by the SEC[63]. - The company intends to pursue targets focused on green and sustainable business, new energy, and cutting-edge technologies, primarily in North America, Europe, and the Asia Pacific regions[86]. - The target size for acquisitions is intended to be between $500 million and $2 billion, focusing on companies with significant revenue growth[98]. - The strategy includes targeting businesses in high-growth sectors such as green and sustainable businesses, new energy, and artificial intelligence applications[99]. - The initial business combination must involve target businesses with a fair market value of at least 80% of the trust account balance[112]. - The company intends to acquire 100% of the equity interest or assets of the target business, ensuring majority control[113]. Financial Performance and Concerns - For the year ended December 31, 2025, the company reported a net income of $1,573,962, primarily from interest income of $2,389,246[188]. - As of December 31, 2025, the company had cash of $37,174 and a working capital deficit of $382,105, raising substantial doubt about its ability to continue as a going concern[155]. - The company has not generated any operating revenue to date and will not until after completing its initial business combination[187]. - Management has determined substantial doubt about the company's ability to continue as a going concern through January 15, 2026, if an initial business combination is not completed[196]. - The company has no long-term debt, capital lease obligations, or operating lease obligations as of December 31, 2025[198]. Shareholder Rights and Redemption - Public shareholders will have the opportunity to redeem shares at a per-share price initially anticipated to be $10.05[132]. - Redemption rights will be limited to 20% of the shares sold in the IPO for any public shareholder acting in concert with others[134]. - Initial shareholders and officers will not have redemption rights for any ordinary shares owned by them[135]. - Shareholders may withdraw redemption requests at any time up to the vote on the proposed business combination[139]. - If the initial business combination is not approved, public shareholders who elected to redeem their shares will not be entitled to the pro rata share of the trust account[140]. - A total of 5,668,070 ordinary shares were tendered for redemption during the EGM held on November 20, 2025[142]. - The per-share redemption amount upon dissolution is estimated to be approximately $10.05, subject to claims from creditors which may reduce this amount[145]. Management and Governance - The management team has extensive experience in public companies and financial management, which is expected to aid in identifying suitable acquisition targets[69]. - The management team aims to create shareholder value by guiding emerging high-growth companies towards commercialization[106]. - The management team is well positioned to capitalize on acquisition opportunities in emerging markets driven by innovative technologies or novel business models[228]. - The audit committee is composed of three independent members, ensuring compliance with NASDAQ listing standards and SEC rules[230]. - Chengming Dou qualifies as an "audit committee financial expert" as defined by SEC rules, enhancing the committee's oversight capabilities[231]. - The audit committee is responsible for pre-approving all audit and non-audit services provided by independent registered public accounting firms[232]. - The nominating committee oversees the selection of board nominees, ensuring candidates have notable achievements and high ethical standards[233]. Due Diligence and Evaluation - The evaluation of prospective target businesses includes assessing financial performance, growth potential, and market alignment[99][102]. - The company has identified various parameters for evaluating target businesses, including innovative technologies and strong ESG standards[101][97]. - The due diligence process for evaluating HZJL included meetings with management, document reviews, and financial information assessments[104]. - The agreement's consummation is conditioned on various factors, including shareholder approval and SEC declaration of the Registration Statement as effective[122]. - HZJL's obligations to close the transaction depend on the Purchaser Parties' compliance with the agreement and no material adverse effects on them[123]. - The Purchaser Parties' obligations to close are contingent upon HZJL's compliance with the agreement and receipt of necessary governmental approvals[124].
Rising Dragon Acquisition Corp.(RDACU) - 2025 Q4 - Annual Report