Bowen Acquisition p(BOWN) - 2023 Q4 - Annual Report

PART I Business This part covers the company's SPAC business model, proposed acquisition, and a detailed analysis of associated risks, including operational, management, and international considerations - The Company is a blank check company incorporated on February 17, 2023, for the purpose of effecting a Business Combination, intending to focus its search on target businesses in Asia while avoiding variable interest entity (VIE) structures[76][112][705] - On January 18, 2024, the Company entered into a Business Combination Agreement with Qianzhi Group Holding (Cayman) Limited and its subsidiary, Shenzhen Qianzhi BioTechnology Co. Ltd., involving a merger where Qianzhi will become a wholly-owned subsidiary of Bowen[109][80][612] - The Company has until October 14, 2024 (15 months from IPO), or January 14, 2025 (18 months) if extended, to complete an initial business combination, with failure resulting in redemption of public shares and liquidation[136][708] - Public Shareholders have redemption rights, allowing them to redeem their shares for cash upon completion of a business combination, provided the company's net tangible assets remain at least $5,000,001 post-redemption[125][129][154] IPO and Trust Account Details | Item | Details | | :--- | :--- | | IPO Date | July 14, 2023 (Initial) & July 18, 2023 (Over-allotment) | | Units Sold | 6,900,000 Public Units (including over-allotment) | | Price per Unit | $10.00 | | Gross Proceeds (Public) | $69,000,000 | | Private Placement | 361,500 units at $10.00/unit for gross proceeds of $3,615,000 | | Trust Account Balance | $69,690,000 ($10.10 per Unit) upon closing | | Cash & Trust Investments (as of 12/31/2023) | Operating Cash: $426,913; Investments in Trust: $71,419,358 | Risk Factors The company faces significant risks typical of a SPAC, including the potential inability to complete a business combination within the required timeframe, which would render securities worthless Risks Relating to Searching for and Consummating a Business Combination Key risks include the lack of operating history, intense competition from other SPACs, and the pressure of the dissolution deadline which may give target businesses negotiating leverage - The company is a new entity with no operating history, making it difficult for investors to evaluate its ability to achieve its business objective[148][177] - Intense competition from a growing number of other SPACs and private equity funds may make it harder and more costly to find and consummate an attractive business combination[192][204][205] - The requirement to complete a business combination by October 2024 (or January 2025 if extended) gives potential targets leverage in negotiations and may reduce the time available for due diligence[61][217][250] - The redemption rights of public shareholders may make the company's financial condition unattractive to targets or prevent the completion of a deal if too many shares are redeemed, potentially causing net tangible assets to fall below the required $5,000,001 threshold[151][180][198] - The company's ability to complete a business combination may be limited because a majority of its directors and officers have significant ties to China, and certain of its Sponsors' partners are non-U.S. persons, which could trigger CFIUS review for U.S. targets[35][275][276] Risks Related to Our Management Management-related risks center on potential conflicts of interest, as officers and directors have other business affairs, including roles in other SPACs, which may divert their time and attention - Officers and directors allocate their time to other businesses, including other SPACs, creating potential conflicts of interest in how much time they devote to the company and in presenting potential targets[7][8][37] - Initial shareholders, including Sponsors, will lose their entire investment if a business combination is not completed, and this financial interest may influence their motivation to select a target and complete a deal, even if it is not advantageous for public shareholders[13][14] - Management may negotiate employment or consulting agreements with a target business, creating personal financial interests that could conflict with the goal of finding the most advantageous business combination for shareholders[6][56] Post-Business-Combination Risks Post-combination, the company may face risks such as needing to write-down or write-off assets discovered after the deal, which could negatively impact financial condition - The company may be forced to write-down assets or incur impairment charges post-combination if due diligence fails to uncover all material issues, which could negatively affect the stock price[18][19] - The success of the post-combination business will depend on its ability to adapt to rapidly changing technology, evolving industry standards, and changing customer preferences[23][24][186] - If the company acquires a technology business, it will be subject to specific risks including vulnerability to cyberattacks, failure to protect intellectual property, and the need to comply with a complex and evolving regulatory environment[187][188] Risks Related to Acquiring and Operating a Business Outside of the United States This section details extensive risks associated with acquiring a non-U.S. business, with a strong focus on China, including navigating unpredictable legal systems, currency fluctuations, and political instability - Acquiring a business outside the U.S. exposes the company to risks such as currency fluctuations, political instability, challenging legal systems, and different employment and tax regulations[189][4][295] - A business combination with a PRC-based company may be subject to review by the Cyberspace Administration of China (CAC), especially if it handles data for over one million users, which could delay or prevent a transaction[102][356][413] - The China Securities Regulatory Commission (CSRC) has new rules (Trial Administrative Measures) requiring filings for overseas listings of Chinese companies, and uncertainty about their application could delay or block a business combination[393][394][395] - The Chinese government exercises substantial control over its economy and may intervene in business operations, which could result in material changes to the post-combination company's operations and value[74][417][423] - The Holding Foreign Companies Accountable Act (HFCAA) could lead to the delisting of the company's securities if the PCAOB is unable to inspect its auditor for two consecutive years, a risk particularly relevant for companies with operations in China[412][445][477] General Risks General risks include a material weakness in internal control over financial reporting due to a lack of qualified SEC reporting professionals, and challenges related to the company's Cayman Islands incorporation - A material weakness in internal control over financial reporting has been identified as of December 31, 2023, due to a lack of qualified SEC reporting professionals, which could adversely affect the ability to report financial results accurately and timely[451][452][482] - The company is incorporated in the Cayman Islands, which may make it difficult for U.S. investors to enforce judgments from U.S. courts or protect their rights, as Cayman Islands law is less developed in certain areas of shareholder protection[456][486][487] - As an "emerging growth company" and "smaller reporting company," the company is exempt from certain disclosure and compliance requirements (e.g., auditor attestation of internal controls), which could make its securities less attractive to some investors[69][461][492] - There is a risk the company could be deemed an "investment company" under the Investment Company Act, which would restrict its activities and could force liquidation if not resolved[464][494][524] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - Not applicable[469] Cybersecurity The company states that as a blank check company with no business operations, it does not face significant cybersecurity risk - The company believes it does not face significant cybersecurity risk due to its nature as a blank check company with no current business operations[528] - The Audit Committee of the Board oversees cybersecurity risk and receives regular management reports on the matter[503] - To date, the company has not experienced any cybersecurity attacks[529] Properties The company's executive offices are located in New York, NY, and it pays a monthly fee of $10,000 to an affiliate, Bowen Holding LP, for office space and administrative services - The company utilizes office space at 420 Lexington Avenue, Suite 2446, New York, New York 10170, provided by Bowen Holding LP for a monthly fee of $10,000[146][504] Legal Proceedings There is no material litigation, arbitration, or governmental proceeding currently pending against the company or its management team - There is no material litigation pending against the company[505] Mine Safety Disclosures This item is not applicable to the company - Not applicable[506] PART II This part provides information on the company's Nasdaq listings, financial condition and results of operations, market risk disclosures, audited financial statements, and the effectiveness of internal controls Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's units, ordinary shares, and rights are listed on the Nasdaq Stock Market under the symbols BOWNU, BOWN, and BOWNR, respectively - The company's securities are listed on Nasdaq: Units (BOWNU), Ordinary Shares (BOWN), and Rights (BOWNR)[507] - No cash dividends have been paid to date, and none are intended to be paid prior to the completion of the initial business combination[509] - The company issued 1,725,000 Founder Shares to its sponsors for $25,000 and 180,000 EBC Founder Shares to EarlyBirdCapital for $2,520 in unregistered transactions exempt under Section 4(a)(2) of the Securities Act[533] - The company sold 361,500 Private Placement Units (including over-allotment) at $10.00 per unit to its sponsor and EarlyBirdCapital in a private placement concurrent with the IPO, also exempt from registration under Section 4(a)(2)[534][318] Management's Discussion and Analysis of Financial Condition and Results of Operations For the period from inception (February 17, 2023) to December 31, 2023, the company had a net income of $1.48 million, primarily due to $1.73 million in interest earned on investments held in the trust account Financial Performance and Position | Financial Metric | Value (as of Dec 31, 2023) | | :--- | :--- | | Net Income | $1,484,790 | | Loss from Operations | ($244,568) | | Interest Earned on Trust Investments | $1,729,358 | | Cash | $426,913 | | Working Capital | $402,534 | | Investments held in trust account | $71,419,358 | - The company's management has concluded that there is substantial doubt about its ability to continue as a going concern due to having incurred significant costs, expecting to incur more, and the risk of liquidation if a Business Combination is not completed within the required timeframe[541][703][683] - The company has no off-balance sheet arrangements[290][567] - The holders of Founder Shares and Private Placement Units are entitled to registration rights, requiring the company to register their securities for resale after the business combination[568][750] Quantitative and Qualitative Disclosures About Market Risk This item is not required for smaller reporting companies, and thus no information is provided - Not required for smaller reporting companies[572] Financial Statements and Supplementary Data This section contains the audited consolidated financial statements for the period from February 17, 2023 (inception) to December 31, 2023, and the report of the independent registered public accounting firm, UHY LLP Consolidated Financial Position | Account | Balance (as of Dec 31, 2023) | | :--- | :--- | | Assets | | | Total Current Assets | $506,394 | | Investments held in trust account | $71,419,358 | | Total Assets | $71,925,752 | | Liabilities & Equity | | | Total Current Liabilities | $103,860 | | Ordinary shares subject to possible redemption | $71,419,358 | | Total Shareholders' Equity | $402,534 | - The independent auditor's report from UHY LLP includes a paragraph highlighting substantial doubt about the Company's ability to continue as a going concern[683] - Subsequent to the balance sheet date, on January 18, 2024, the Company entered into a definitive Agreement and Plan of Reorganization for a business combination with Shenzhen Qianzhi BioTechnology Co. Ltd. and Qianzhi Group Holding (Cayman) Limited[611][612] - The company accounts for ordinary shares subject to possible redemption as temporary equity, measured at redemption value, with 6,900,000 shares valued at $71,419,358 as of December 31, 2023[728][690] Controls and Procedures The company's management, including the CEO and CFO, concluded that as of December 31, 2023, disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2023[575] - The ineffectiveness is attributed solely to a material weakness in internal control over financial reporting related to the company's lack of qualified SEC reporting professionals[575][482] - The annual report does not include a management's assessment report on internal control over financial reporting, as permitted for newly public companies[549][749] PART III This part details the company's corporate governance structure, executive compensation policies, beneficial ownership of securities, related party transactions, and fees paid to the independent auditor Directors, Executive Officers and Corporate Governance This section provides information on the company's directors and executive officers, including their backgrounds and qualifications, and outlines the board's structure and established committees Board of Directors and Executive Officers | Name | Position | | :--- | :--- | | Na Gai | Chairwoman of the Board of Directors | | Jiangang Luo | Chief Executive Officer | | Jing Lu | Chief Financial Officer | | Lawrence Leighton | Independent Director | | Wei Li | Independent Director | | Jun Zhang | Independent Director | - The board of directors is divided into three classes with staggered three-year terms[557] - The board has determined that Lawrence Leighton, Wei Li, and Jun Zhang are independent directors, and the Audit Committee and Compensation Committee are composed entirely of these independent directors[559][584][585] - The company adopted a Code of Ethics effective July 11, 2023, which applies to all executive officers, directors, and employees[621] Executive Compensation No executive officers have received cash compensation for their services, and an affiliate of the sponsors, Bowen Holding LP, is paid $10,000 per month for office space and administrative services - No executive officer has received any cash compensation for services rendered[623] - The company pays Bowen Holding LP, an affiliate, a fee of $10,000 per month for office space and secretarial services[623] - Officers, directors, and their affiliates will be reimbursed for out-of-pocket expenses incurred on the company's behalf, with no limit on the amount[624] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details the beneficial ownership of the company's ordinary shares, with primary owners being the sponsors, Createcharm Holdings Ltd (16.3%) and Bowen Holding LP (6.2%) Beneficial Ownership of Ordinary Shares | Beneficial Owner | Percentage of Outstanding Ordinary Shares | | :--- | :--- | | Createcharm Holdings Ltd | 16.3% | | Bowen Holding LP | 6.2% | | Periscope Capital Inc. | 5.4% | | Bulldog Investors, LLP | 5.09% | | Spring Creek Capital, LLC | 5.15% | - Createcharm Holdings Ltd is controlled by Na Gai, the company's Chairwoman[632] - The Founder Shares are held in escrow and are subject to transfer restrictions until six months after the consummation of the initial business combination[638] Certain Relationships and Related Transactions, and Director Independence This section outlines transactions between the company and its related parties, including the sponsors' purchase of Founder Shares and Private Placement Units, and administrative service agreements - Sponsors purchased 1,725,000 Founder Shares for $25,000 and an aggregate of 361,500 Private Placement Units for $3,615,000[646][647] - Sponsors provided a non-interest bearing loan of up to $300,000 for IPO expenses, which was due at closing and has expired[650] - The company pays an affiliate $10,000 per month for administrative services and has engaged another affiliate, TenX Global Capital, for accounting and financial reporting services[651][652] - The company has adopted a Related Party Policy requiring the audit committee to review and approve transactions exceeding $120,000 involving related parties[655][658] Principal Accountant Fees and Services The company's independent registered public accounting firm is UHY LLP, and for the period from inception through December 31, 2023, total fees paid were for audit and audit-related services Fees Paid to UHY LLP | Fee Type | Amount (Inception to 12/31/2023) | | :--- | :--- | | Audit Fees | $117,000 | | Audit-Related Fees | $39,351 | | Tax Fees | $0 | | All Other Fees | $0 | - The audit committee has a pre-approval policy for all auditing and permitted non-audit services provided by the auditors[665] PART IV This part lists all exhibits and financial statement schedules filed as part of the annual report Exhibits, Financial Statement Schedules This section lists the documents filed as part of the Form 10-K, including the financial statements and various exhibits - The report includes the company's consolidated financial statements and notes for the period ended December 31, 2023[668][672] - A list of exhibits filed with the report is provided, including the Business Combination Agreement, corporate governance documents, and various agreements related to the IPO and private placements[673][669]