Item 1. Business
Item 1. Business Overview.
We are a blank check exempted
company incorporated in the Cayman Islands on January 18, 2024, for the purpose of entering into a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Our efforts
to identify a prospective target business will not be limited to a particular industry or geographic location. We intend to utilize cash
derived from the proceeds of our initial public offering (the “IPO”), our securities, debt or a combination of cash, securities
and debt, in effecting a business combination. We have not selected any target business for our initial business combination.
Initial Public Offering and Private Placement
On January 24, 2025, we consummated
our IPO of 6,000,000 units (“Units”). Each Unit consists of one ordinary share, $0.0001 par value per share (the “Ordinary
Share”), and one right (the “Rights”) to receive one-seventh of one ordinary Share upon the completion of the initial
business combination. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $60,000,000. On
January 24, 2025, substantially concurrently with the closing of the IPO, we completed the private sale (the “Private Placement”)
of 234,290 units (the “Private Units”) to our sponsor, Hercules Capital Management VII Corp (the “Sponsor”),
at a purchase price of $10.00 per Initial Private Unit, generating gross proceeds to us of $2,342,900. In connection with the offering
of the Units and the sale of Initial Private Units, the proceeds of $60,000,000 from the proceeds of the offering of the Units and the
sale of Initial Private Units were placed in the Trust Account (as defined below).
In connection with the IPO,
the Company issued a total of 210,000 Ordinary shares (the “Representative Shares”) to A.G.P./Alliance Global Partners, the
representative of the underwriters of the IPO. The Representative Shares are identical to the Ordinary Shares included in the Units,
except that the Representative has agreed not to transfer, assign, sell, pledge, or hypothecate any such Representative Shares, or subject
such Representative Shares to hedging, short sale, derivative, put or call transaction that would result in the economic disposition
of the securities by any person until 180 days immediately following the commencement of sales of the IPO pursuant to FINRA Rule 5110(e)(1),
subject to exceptions pursuant to FINRA Rule 5110(e)(2). The Representative has agreed to (i) vote for at a shareholder meeting of the
Company to approve a business combination or any amendment to the Company’s amended and restated memorandum and articles of association
to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a business combination, (ii)
waive the redemption rights until the completion of the business combination, in connection with the completion of the Company’s
initial business combination or a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and
articles of association to modify the substance or timing of our obligation to allow redemptions in connection with a business combination,
and (iii) waive the rights to liquidating distributions from the Trust Account with respect to the Representative Shares if the Company
fails to complete its initial business combination within the prescribed timeline as provided in the Company’s amended and restated
memorandum and articles of association, to the extent such Representative Shares held by the Representative and/or its designees, and
any of their permitted transferees.
The proceeds of $60,000,000
from the IPO and the sales of Private Units, were placed in a trust account (the “Trust Account”) established for the benefit
of our public shareholders and the underwriters of the IPO with Continental Stock Transfer & Trust Company acting as trustee.
Our management has broad
discretion with respect to the specific application of the proceeds of the IPO and the Private Placement that are held outside of the
Trust Account, although substantially all the net proceeds are intended to be applied generally towards consummating a business combination
and working capital.
Since our IPO, our sole
business activity has been identifying and evaluating suitable acquisition transaction candidates. We presently have no revenue and have
had losses since inception from incurring formation and operating costs. We have relied upon the sale of our securities and loans from
the Sponsor to fund our operations.
1
On March 10, 2025, the Sponsor
forfeited 225,000 Founder Shares (as defined below) for no consideration as the underwriters of the IPO did not exercise the over-allotment
option. As a result, the Sponsor currently holds 1,698,290 Ordinary Shares in total, including 1,464,000 Founder Shares and 234,290 Ordinary
Shares included in the Private Units. As of the date of this annual report, our insiders, including the Sponsor, our officers and directors
and a former director, collectively, hold 1,734,290 Ordinary Shares, representing 21.83% of the issued and outstanding shares of the Company.
On March 17, 2025, the Ordinary
Shares and Rights commenced trading on the Nasdaq Global Market (“Nasdaq”) under the symbols “COLA” and “COLAR,”
respectively Public Units not separated continue to trade on Nasdaq under the symbol “COLAU”. Holders of Public Units will
need to have their brokers contact the Company’s transfer agent, Continental Stock Transfer & Trust Company, in order to separate
the holders’ Public Units into Ordinary Shares and Rights.
On March 20, 2025, in connection
with the appointment of Mr. Cameron R. Johnson as the director of the Company, the Sponsor issued a share purchase option dated March
20, 2025 (the “Share Purchase Option”) to Mr. Johnson, entitling Mr. Johnson to acquire 12,000 Founder Shares upon the exercise
of the Share Purchase Option once the existing lock-up term on such Founder Shares expires pursuant to the terms and arrangements thereunder.
The Company has entered into an indemnity agreement with Mr. Johnson in connection with his appointment.
Business Strategy and Acquisition Criteria
The main goal of our management
is to create value for our shareholders though our experience by improving the operating efficiency of a target business, while implementing
revenue-driven and/or profit-engagement enhancement strategies and increase profit potential through additional acquisitions. Our efforts
to identify a prospective target will not be limited to a particular industry or geographic region. Consistent with our strategy, we
have identified the following general criteria and guidelines that we believe
are essential in evaluating prospective target businesses. While we intend to use these criteria and guidelines in evaluating prospective
businesses, we may deviate from these criteria and guidelines should we consider it appropriate to do so:
● Niche Deal Size
We intend to acquire emerging growth
companies that either grow into a position to generate cash or are already cash-generative. We believe we have greater access to companies
within this range and will bring additional value to help them to form a path to access capital markets.
● Industry Leadership
with Sustainable Competitive Advantage
We expect to focus on companies
that are or have the potential to become leaders in their verticals. We will look for companies with higher operating efficiency, stronger
brand recognition, broader distribution channels or any other characteristic that enable the company to achieve long-term competitive
position.
● Long-term Revenue
Visibility with Defensible Market Position
In management’s view, the target
companies should be close to an anticipated inflection point, such as those companies requiring additional management expertise, those
companies able to innovate by developing new products or services, or companies where we believe we have ability to achievement improved
profitability performance through an acquisition designed to help facilitate growth.
● Benefits from
Being a U.S. Public Company (Value Creation and Marketing Opportunities)
We intend to search target companies
that we believe will help offer attractive risk-adjusted equity returns for our shareholders. We intend to seek to acquire a target
on terms and in a manner that leverages our experience. Amount other criteria, we expect to evaluate financial returns based on (i) the
potential for organic growth in cash flows, (ii) the ability to achieve cost savings, (iii) the ability to accelerate growth,
including through the opportunity for follow-on acquisitions, and (iv) the prospects for creating value through other value creation
initiatives. We also plan to evaluate potential upside from future growth in the target business’ earnings and an improved capital
structure.
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
In the event that we decide
to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose
that the target business does not meet the above criteria and guidelines in our shareholder communications related to our initial business
combination, which would be in the form of proxy solicitation or tender offer materials that we would file with the U.S. Securities
and Exchange Commission (the “SEC”).
2
Effecting a Business Combination
In connection with any proposed
business combination, we will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose
at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against, or abstain from
voting on, the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account
(net of taxes payable and up to $100,000 of interest released to us to pay dissolution expenses) or (2) provide our public shareholders
with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote)
for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable and up
to $100,000 of interest released to us to pay dissolution expenses), in each case subject to the limitations described herein. Notwithstanding
the foregoing, our insiders, including the Sponsor and our officers and directors, have agreed, pursuant to written letter agreements
with us, not to convert any shares (including Founder Shares, private shares and any public shares acquired in or after the IPO) held
by them into their pro rata share of the aggregate amount then on deposit in the Trust Account. If we determine to engage in a tender
offer, such tender offer will be structured so that each shareholder may tender any or all of his, her or its public shares rather than
some pro rata portion of his, her or its shares. The decision as to whether we will seek shareholder approval of a proposed business
combination or will allow shareholders to sell their shares to us in a tender offer will be made by us based on a variety of factors
such as the timing of the transaction, or whether the terms of the transaction would otherwise require us to seek shareholder approval.
If we so choose and we are legally permitted to do so, we have the flexibility to avoid a shareholder vote and allow our shareholders
to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that case,
we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the
initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business combination only
if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority
of the issued and outstanding Ordinary Shares voted are voted in favor of the business combination.
We have until January
22, 2026 to consummate an initial business combination (the “Combination Period”). However, if we anticipate that we may
not be able to consummate our initial business combination by January 22, 2026, we may seek an amendment to our amended and restated
memorandum and articles of association to extend the period of time we have to complete an initial business combination beyond
January 22, 2026 and if we do so, we will provide our public shareholders with the opportunity to redeem all or a portion of their
public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account. and not previously released to us or necessary to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses). If we do not complete our initial business combination by January 22, 2026, we
may elect to do so in the future and there is no limit on the number of extensions that we may seek. If we are unable to consummate
our initial business combination within the Combination Period and decide not to seek any extension, we will, as promptly as
possible but not more than ten (10) business days thereafter, redeem 100% of our issued and outstanding public shares for a pro rata
portion of the funds held in the Trust Account, including a pro rata portion of any interest earned on the funds held in the Trust
Account and not previously released to us or necessary to pay our taxes (less up to $100,000 of interest to pay dissolution
expenses), and then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of
creditors which may take priority over the claims of our public shareholders. In the event of our liquidation and subsequent
dissolution and the public rights will expire and will be worthless.
If we are unable to consummate
our initial business combination within this time period, we will liquidate the Trust Account and distribute the proceeds held therein
to our public shareholders by way of redeeming their shares and dissolve. If we are forced to liquidate, we anticipate that we would
distribute to our public shareholders the amount in the Trust Account calculated as of the date that is two (2) days prior to the distribution
date (including any accrued interest net of taxes payable and up to $100,000 of interest released to us to pay dissolution expenses).
Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for
amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect
to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against
us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them
as an unlawful payment in the event we enter an insolvent liquidation. In the event of our liquidation and subsequent dissolution, the
public and private rights will expire and will be worthless.
3
Pursuant to NASDAQ listing
rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance
of the funds in the Trust Account (excluding taxes payable on the income earned on the Trust Account) at the time of the execution of
a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly
exceeds 80% of the Trust Account balance.
We currently anticipate structuring
a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
a business combination where we merge directly with the target business or where we acquire less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or shareholders or for other reasons, but we
will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital of a target. In this case, we could
acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders
immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, only the portion of such business or businesses that is owned or acquired is what will be
valued for purposes of the 80% of net assets test, assuming that we maintain a listing for our securities on NASDAQ. In order to consummate
such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of such businesses and/or seek
to raise additional funds through a private offering of debt or equity securities. Since we have no specific business combination under
consideration, we have not entered into any such fund-raising arrangement and have no current intention of doing so. The fair market
value of the target business will be determined by our board of directors based upon one or more standards generally accepted by the
financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to independently
determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment
banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to
acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment
banking firm, or another independent entity that commonly renders valuation opinions on the type of target business we are seeking to
acquire, as to the fair market value if our board of directors independently determines that the target business complies with the 80%
threshold.
We will not be required to
comply with the 80% fair market value requirement if we are delisted from Nasdaq. If Nasdaq delists our securities from trading on its
exchange, we would not be required to satisfy the fair market value requirement described above and could complete a business combination
with a target business having a fair market value substantially below 80% of the balance in the Trust Account.
Working Capital Loans
In order to meet our working
capital needs until completion of an initial business combination, our insiders, officers and directors or their affiliates may, but
are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion
(the “Working Capital Loans”). The notes would either be paid upon consummation of our initial business combination, without
interest, or, at the lender’s discretion, up to $3,000,000 of the notes may be converted upon consummation of our business combination
into working capital units at a price of $10.00 per unit, or the “working capital units.” In addition, if we hold a shareholder
meeting to seek shareholders’ approval for an amendment to the then existing memorandum and articles of association, as amended,
to modify the amount of time or substance we have to consummate an initial business combination, our insiders, officers and directors
or their affiliates or designees may, but not obligated to, loan us funds in support of our potential extension to allow additional
time for us to complete an initial business combination which will be evidenced in extension convertible notes to be repaid in cash or
$10.00 per unit, or the “extension units,” at the closing of our initial business combination. The working capital units
and the extension units, if any, would be identical to the Private Units sold in the private placement. If we do not complete our initial
business combination, the loans would be repaid out of funds not held in the Trust Account, and only to the extent available. The terms
of such loans by our insiders, officers and directors or their affiliates, if any, have not been determined and no written agreements
exist with respect to such loans.
As of December 31, 2024 and
through the date of filing of this Annual Report on Form 10-K, the Company had no borrowings under these loans.
4
Risks Related to Our Possible Business Combination
with a PRC Target Company
Although there is no restriction
or limitation on what industry or geographic region our target operates in, because of our significant ties to China, we may pursue a
business combination with a company being based in or having the majority of the company’s operations in China (a “PRC Target
Company”). If we complete a business combination with a PRC Target Company, we may be subject to risks due to uncertainty of the
interpretation and the application of the PRC laws and regulations following the business combination. In particular, PRC laws and regulations
restrict foreign ownership in certain industries. If the PRC Target Company is in any of those restricted industries, neither the post-combination
entity nor its subsidiaries may own any equity interest in the PRC Target Company or its operating subsidiaries but rather may establish
a wholly foreign-owned enterprise (“WFOE”) in PRC to enter into the a series of contractual arrangements (the “VIE
Agreements”) with the PRC Target Company (to that extent, the PRC Target Company is known as a variable interest entity, or a VIE)
and the VIE’s shareholders.
VIE Agreements normally include:
(i) certain power of attorney agreements, a share pledge agreement and certain loan agreements; (ii) an exclusive business
cooperation agreement which allows the post-combination entity to receive substantially all of the economic benefits from the VIE; and
(iii) certain exclusive option agreements and certain spouse consent letters which provide the WFOE with an exclusive option to
purchase all or part of the equity interests in and/or assets of the VIE when and to the extent permitted by PRC laws (such arrangements
are referred as a “VIE structure”). The post-combination entity, through a VIE structure, can consolidate the financial results
of the VIE in its consolidated financial statements as a primary beneficiary in accordance with accounting principles generally accepted
in the United States of America, or GAAP, or international financial reporting standards as issued by the International Accounting
Standards Board, or IFRS, for accounting purpose. The post-combination entity or its shareholders do not directly or indirectly hold
equity interests in the VIE, and therefore, a VIE structure is subject to risks due to the uncertainty of the interpretation and the
application of the PRC laws and regulations, including but not limited to limitations on foreign ownership of business in a restricted
industry, regulatory review of overseas listings of PRC companies through a special purpose vehicle, and the validity and enforcement
of the VIE Agreements. The VIE structure is also subject to the risks of uncertainty about any future actions of the PRC government in
this regard that could disallow the VIE structure, which would likely result in a material change in the post-combination entity’s
operations and may cause the value of our Ordinary Shares to depreciate significantly or become worthless.
VIE structure may not be
as effective as equity ownership and the company may incur substantial costs to enforce the terms of the arrangements. Since the post-combination
entity and its stockholders do not directly own equity interest in VIE and the shareholders of VIE still own the shares of VIE after
the business combination, the VIE structure has its inherent risks that may affect your investment, including less effectiveness and
certainties than equity ownership and potential substantial costs to enforce the terms of the VIE Agreements. The VIE shareholders may
not act in the best interests of the WFOE or the post-combination entity, or may not perform their obligations under the VIE Agreements.
If the VIE or the VIE shareholders breach their contractual obligations under the VIE Agreements, the post-business combination company
may have difficulty in enforcing any rights it may have under the VIE Agreements with the VIE and/or its founders and owners because
all of the VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC, where the
legal environment in the PRC is not as developed as in the United States. The post-combination entity may have to incur substantial
costs and expend significant resources to enforce such VIE Agreements in reliance on legal remedies under PRC law. In connection with
litigation, arbitration or other judicial or dispute resolution proceedings, assets under the name of any of record holder of equity
interest in the VIE, including such equity interest of such record holder, may be put under court custody. As a consequence, we cannot
be certain that the equity interest will be disposed pursuant to the VIE Agreements or that the ownership by the record holder of such
equity interest will be unchallenged. In addition, if we acquire a PRC Target Company through VIE Agreements, investors in our Ordinary
Shares following a business combination would not hold equity interests in the VIE domiciled in China and would instead hold equity interests
in a holding company. You may never hold equity interests in the VIE.
5
All of the VIE Agreements
may be governed by and interpreted in accordance with PRC law, and disputes arising from these VIE Agreements may be resolved in court
or through arbitration in China in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in some
other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit the post-combination ability
to enforce the VIE Agreements. As at the date of this Annual Report, there are very few precedents and little official guidance as to
how VIE Agreements should be interpreted or enforced under PRC law. The VIE Agreements have not been widely tested in a court of law
in the PRC and there remain significant uncertainties regarding the ultimate outcome of arbitration should legal action become necessary.
Furthermore, VIE Agreements may not be enforceable in China if the PRC government authorities or courts take a view that such VIE Agreements
contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In addition, there is uncertainty as
to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil
liability provisions of the securities laws of the United States or any state. In the event that the post-combination entity is unable
to enforce the VIE Agreements, the post-combination entity may not be able to consolidate the financial results of the VIE through the
VIE Agreements, which will have a material adverse effect on its financial condition and results of operations.
Although the PRC authorities
do not require permission to entering into the VIE Agreements, the General Office of the Central Committee of the Communist Party of
China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities
Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021, pursuant to which the PRC
government will strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas
listings of Chinese companies. The Opinions and any related implementing rules to be enacted may subject the VIE structure to compliance
requirements in the future. Given the current regulatory environment in the PRC, uncertainty of different interpretations and enforcement
of the rules and regulations in the PRC may be adverse to our business combination with a PRC Target Company or the post-business combination
company, which requirements may take place quickly with little advance notice.
On February 17, 2023, the
Chinese Securities Regulatory Commission (the “CSRC”) issued the New Administrative Rules Regarding Overseas Listings, which
came into effect since March 31, 2023. According to the New Administrative Rules Regarding Overseas Listings, among other things, a domestic
company in the PRC that seeks to offer and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per
requirement of the Trial Administrative Measures. An issuer is a domestic company in the PRC if the following criteria are met at the
same time: (a) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited
consolidated financial statements for the most recent accounting year comes from PRC domestic companies, and (b) the main parts of the
issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or
the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. Where
a domestic company seeks to directly offer and list securities in overseas markets, the issuer shall file with the CSRC. Where a domestic
company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity,
which shall, as the domestic responsible entity, file with the CSRC. If, we acquire a PRC Target Company, we may be required to comply
with the New Administrative Rules Regarding Overseas Listings and complete the filing with the CSRC, to continue listing on U.S. exchanges
or issue securities to foreign investors post business combination with a PRC Target Company. Since the New Administrative Rules Regarding
Overseas Listings are newly promulgated, and the interpretation and implementation thereof involves uncertainties, we cannot assure that
we will be able to complete the relevant filings in a timely manner or fulfil all the regulatory requirements thereunder.
On February 24, 2023, the
CSRC promulgated the Confidentiality and Archives Administration Provisions, which also became effective on March 31, 2023. The Confidentiality
and Archives Administration Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting
archives for securities companies, securities service providers, overseas regulators and other entities and individuals in connection
with overseas offering and listing, including without limitation to, domestic companies that carry out overseas offering and listing
(either in direct or indirect means) with regards to protection of any state secret and working secret of government agencies, requirement
to obtain approval to publicly disclose or provide any documents and materials that contain state secrets or working secrets of government
agencies. Further, according to the Measures for Cybersecurity Review, which was promulgated on December 28, 2021 and became effective
on February 15, 2022, online platform operators holding more than one million users/users’ individual information shall be subject
to cybersecurity review before listing abroad. If we acquire a PRC Target Company, we will be required to comply with Confidentiality
and Archives Administration Provisions, potential cybersecurity review, and other regulations may be promulgated by the CAC or other
PRC authorities. There is uncertainty how the new provisions will be interpreted and implemented in the future, and we may be required
to perform additional procedures in connection with the provision of accounting archives.
6
The governing PRC laws and
regulations are sometimes vague and uncertain and can change quickly with little advance notice, which may result in a material change
in the post-combination entity’s operations, cause the value of our shares following the business combination to significantly
decline or be worthless, or substantially limit or completely hinder the post-combination entity’s ability to offer or continue
to offer securities to investors. For instance, the PRC government recently initiated a series of regulatory actions and statements to
regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market,
enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of
cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. However, since these statements and regulatory actions
are new, it is uncertain how soon Chinese legislative or administrative regulation making bodies will respond and what existing or new
laws, regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such
modified or new laws and regulations will have on our capability to acquire or merge with a PRC Target Company, as well as the post-combination
entity’s ability to conduct its business, accept foreign investments, or list on a U.S. stock exchange.
The Chinese government may
intervene or influence the operations of the PRC operating entities at any time and may exert more control over offerings conducted overseas
and/or foreign investment in China-based issuers, which could result in a material change in the operations of the PRC operating entities
and/or the value of our securities. In addition, any actions by the Chinese government to exert more oversight and control over offerings
that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Changes in China’s economic, political or social conditions, as well as possible interventions and influences of any government
policies and actions; as well as uncertainties with respect to the PRC legal system could have a material adverse effect on our operation
and the value of our securities. For instance, (i) as the date hereof, we and our directors and officers are not required to obtain any
permission from the CSRC, CAC, or any other China authorities, nor received any objection, restriction, or were denied approval from
Chinese authorities to list our securities in U.S. exchanges, however, we cannot guarantee that PRC authorities may initiate any change
in its law, rules or regulations, or governmental policies that would require permission or scrutiny from relevant PRC authorities before
our listing; or any law, regulation, rules and policies will become effective and enforceable after our listing that could substantially
affect our operation and the value of our securities may depreciate quickly even become worthless. Such future administrative measure
or actions may have material adverse effects on the offering of our securities to investors, our proposed listing in the U.S., our business
operation, our capability to acquire or merge with a PRC Target Company. For example, in the event that it is required that we should
obtain permission from the Chinese government to offer our securities to investors or list on U.S. exchanges, it is unpredictable whether
such permission can be obtained by us, as the case may be, or, if permission is obtained, whether it could be later denied or rescinded.
If we, including our directors and officers, do not receive or maintain such permissions or approvals, or inadvertently conclude that
such permissions or approvals are not required, it could significantly limit or completely hinder our ability to offer or continue to
offer our securities to investors, list in the U.S. and cause the value of our securities to significantly decline or become worthless.
As of the date of this Annual Report, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities
in connection with any permissions may be required from the PRC authorities; and (ii) currently and prior to the consummation of our
initial business combination, our operation involves searching and identifying suitable targets, conducting due diligence on targets,
negotiating and consummating our initial business combination. Though we are not restricted or prohibited from such business activities
in China, we are subject to risks and uncertainties about future actions of the PRC government or law enforcement to refrain our activities
or operation in China, which would likely result in a material change in our operations, significantly limit or hinder our ability to
offer or continue to offer our securities, and cause the value of our securities may depreciate significantly or become worthless.
7
As a blank check company
incorporated for the purpose of effecting a business combination, we have significant ties to China. Dr. Fen “Eric” Zhang,
our Chief Executive Officer, who is also the sole director of the Sponsor, is a Canadian citizen but currently resides in China for business
purposes, and our Chief Financial Officer, Ms. Jie “Janet” Hu, is a Chinese citizen located in China. Because of our significant
ties to China, we may be a less attractive partner to a non-China-based target company and such perception may potentially limit or negatively
impact our search for an initial business combination; or may therefore make it more likely for us to consummate a business combination
with a PRC Target Company.
Further, it is uncertain
whether any officers and directors of the post-combination entity will be located inside the United States. As a result, it may be difficult,
or in some cases impossible, for investors in the United States to enforce their legal rights, to effect service of process upon those
officers and directors (prior to or after the business combination) located outside the United States, or to enforce judgments of U.S.
courts seeking to impose civil liabilities and criminal penalties on them under U.S. securities laws. In particular, the PRC does not
have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States and many other countries
and regions, and you may have to incur substantial costs and contribute significant time to enforce civil liabilities and criminal penalties
in reliance on legal remedies under PRC laws. Therefore, recognition and enforcement in the PRC of judgements of U.S. courts in relation
to any matter not subject to a binding arbitration provision may be difficult or impossible.
PRC Limitations on Overseas Listing and Share
Issuances If We Acquire a PRC Target Company (Post-Business Combination)
The New Administrative Rules Regarding
Overseas Listing
On February 17, 2023, the
CSRC issued the New Administrative Rules Regarding Overseas Listings, which came into effect since March 31, 2023. According to the New
Administrative Rules Regarding Overseas Listings, among other things, a domestic company in the PRC that seeks to offer and list securities
in overseas markets shall fulfill the filing procedure with the CSRC as per requirement of the Trial Administrative Measures. An issuer
is a domestic company in the PRC if the following criteria are met at the same time: (a) 50% or more of the issuer’s operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent
accounting year comes from PRC domestic companies, and (b) the main parts of the issuer’s business activities are conducted in
mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation
and management are mostly Chinese citizens or domiciled in mainland China. Where a domestic company seeks to directly offer and list
securities in overseas markets, the issuer shall file with the CSRC. Where a domestic company seeks to indirectly offer and list securities
in overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file
with the CSRC. Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the
relevant application is submitted overseas. If an issuer offers securities in the same overseas market where it has previously offered
and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed. Upon occurrence
of any material event, such as change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other
relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting, after an
issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working days
after the occurrence and public disclosure of such event. Further, an overseas securities company that serves as a sponsor or lead underwriter
for overseas securities offering and listing by domestic companies shall file with the CSRC within 10 working days after signing its
first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its business
activities in the previous year associated with overseas securities offering and listing by domestic companies. If an overseas securities
company has entered into engagement agreements before the effectuation of the Trial Administrative Measures and is serving in practice
as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies, it shall file with the CSRC within
30 working days after the Trial Administrative Measures take effect. However, pursuant to the New Administrative Rules Regarding Overseas
Listings and the Notice on the Arrangement for Filing-based Administration of Overseas Offering and Listing by Domestic Companies issued
by the CSRC on February 17, 2023, if the indirect overseas securities offering and listing by a domestic company had been approved by
the overseas regulator or stock exchange, such as the registration statement had been declared effective in the case of the U.S. market,
prior to the effectuation of the Trial Administrative Measures, and the indirect overseas securities offering and listing will be completed
before September 30, 2023 without the need to go through the regulatory procedure of the overseas regulator or stock exchange for offering
and listing once again, then such company is not required to file with the CSRC in accordance with the Trial Administrative Measures
immediately but shall be required to do so if it involves in re-financing and other filing matters in the future.
8
As a blank check company
incorporated in Cayman Islands rather than in China and currently our company does not own or control any equity interest in any PRC
company or operate any business in China, we did not generate any revenue or profit nor have any asset in China or from any operation
in China as of the date of this Annual Report. As a result, we believe that we do not meet the criteria (a) of a domestic company in
the PRC as set forth in New Administrative Rules Regarding Overseas Listings and accordingly are not required to file with the CSRC for
the offering. If, however, we acquire a PRC Target Company, we may be required to comply with the New Administrative Rules Regarding
Overseas Listings and complete the filing with the CSRC, to continue listing on U.S. exchanges or issue securities to foreign investors
post business combination with a PRC Target Company. Since the New Administrative Rules Regarding Overseas Listings are newly promulgated,
and the interpretation and implementation thereof involves uncertainties, we cannot assure that we will be able to complete the relevant
filings in a timely manner or fulfil all the regulatory requirements thereunder.
Confidentiality and Archives Administrative
Provisions and Measures for Cybersecurity Review
On February 24, 2023, the
CSRC promulgated the Confidentiality and Archives Administration Provisions, which also became effective on March 31, 2023. The Confidentiality
and Archives Administration Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting
archives for securities companies, securities service providers, overseas regulators and other entities and individuals in connection
with overseas offering and listing, including without limitation to, domestic companies that carry out overseas offering and listing
(either in direct or indirect means) and the securities companies and securities service providers (either incorporated domestically
or overseas) that undertake relevant businesses shall not leak any state secret and working secret of government agencies, or harm national
security and public interest, and a domestic company shall first obtain approval from competent authorities according to law, and file
with the secrecy administrative department at the same level, if it plans to, either directly or through its overseas listed entity,
publicly disclose or provide any documents and materials that contain state secrets or working secrets of government agencies. Working
papers produced in the Chinese mainland by securities companies and securities service providers in the process of undertaking businesses
related to overseas offering and listing by domestic companies shall be retained in the Chinese mainland. Where such documents need to
be transferred or transmitted to outside the Chinese mainland, relevant approval procedures stipulated by regulations shall be followed.
Further, according to the Measures for Cybersecurity Review, which was promulgated on December 28, 2021 and became effective on February
15, 2022, online platform operators holding more than one million users/users’ individual information shall be subject to cybersecurity
review before listing abroad. As we are a blank check company and are not involved in the collection of personal data of at least 1 million
users or implicate cybersecurity, we do not believe that we are a “network platform operator(s)”, or subject to the cybersecurity
review of the Cyberspace Administration of China (the “CAC”), nor subject to Confidentiality and Archives Administration
Provisions for the offering. As of the date of this Annual Report, we have not received any inquiry, notice, warning, sanction or any
regulatory objection to the IPO from any relevant PRC authorities. If we acquire a PRC Target Company, we will be required to comply
with Confidentiality and Archives Administration Provisions and other regulations may be promulgated by the CAC or other PRC authorities.
There is uncertainty how the new provisions will be interpreted and implemented in the future, and we may be required to perform additional
procedures in connection with the provision of accounting archives.
Additionally, if we acquire
a PRC Target Company, we may be subject to any new rules, regulations or requirements promulgated by the PRC Authorities regarding Overseas
Listing and Share Issuances for domestic companies in the PRC. Any failure of us to fully comply with new regulatory requirements may
significantly limit or completely hinder our ability to offer or continue to offer our securities in connection with a business combination,
or to complete a business combination at all. If approval is required in the future and we were denied permission from Chinese authorities
to list on U.S. exchanges, we will not be able to continue listing on a U.S. exchange, which would materially affect the interest of
our investors. It is uncertain when and whether we will be required to obtain permission from the PRC government to continue to list
on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Our operations may
be adversely affected in the future, directly or indirectly, by existing or future laws and regulations relating to the PRC Target Company’s
business or industry and oversea listing and share issuance.
9
Transfers of Cash to and from Our Post-Combination
Entity If We Acquire a PRC Target Company (Post-Business Combination)
We are a blank check company
with no operations of our own and no subsidiaries except searching for a suitable target to consummate an initial business combination.
As of the date of this Annual Report, we do not have cash management policies and procedures that dictate how funds are transferred.
As of the date of this Annual Report, no transfers, dividends, or distributions have been made by us.
There is no restriction in
the geographic location of targets that we can pursue, although we intend to initially prioritize geographic locations in Asia and North
America. We currently do not have any PRC subsidiaries or China operations, do not have any specific business combination under consideration
and have not (nor has anyone on our behalf), directly or indirectly, contacted any prospective target business or had any substantive
discussions, formal or otherwise, with respect to such a transaction. However, because of our significant ties to China, we may pursue
a business combination with a PRC Target Company which might require a VIE structure. As a result, although other means are available
for the post-combination entity to obtain financing at the holding company level, the post-combination entity’s ability to pay
dividends to its shareholders and to service any debt it may incur may depend upon dividends paid by the PRC Target Company’s subsidiaries.
If any of the post-combination entity’s subsidiaries incurs debt on its own in the future, the instruments governing such debt
may restrict its ability to pay dividends to the post-combination entity. In addition, the PRC subsidiaries of the post-combination entity
and VIE are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except
in the event of a solvent liquidation of the companies.
In order for the post-combination
entity to pay dividends to its stockholders, the post-combination entity will rely on payments made from the VIE to the PRC subsidiary
of the post-combined entity, a wholly foreign-owned enterprise (“WFOE”), pursuant to the VIE Agreements, and the distribution
of such payments from the WFOE to the post-combination entity as dividends from the subsidiaries of the post-combined entity. Such dividends
and other distributions may be subject to the PRC government’s regulations relating to the conversion of Renminbi into foreign
currencies and the remittance of such currencies out of the PRC, which may limit the post-combination entity’s PRC subsidiaries’
ability to distribute earnings to the post-combination entity or may otherwise adversely affect the post-combination entity. Furthermore,
even though the post-combination entity may wish to transfer cash proceeds raised from overseas financing activities, including the IPO,
to its PRC subsidiaries via capital contribution or shareholder loans, the PRC government’s regulations relating to foreign exchange
may limit the post-combination entity’s ability to make loans to or inject capital into its PRC subsidiaries or the ability of
its PRC subsidiaries to pay back such loans to the post-combination entity.
Investment in Chinese companies,
which are governed by the Foreign Investment Law, and the dividends and distributions from a China-based operating company are subject
to regulations and restrictions on dividends and payment to parties outside of China. Furthermore, if certain procedural requirements
are satisfied, the payment in foreign currencies on current account items, including profit distributions and trade and service related
foreign exchange transactions, can be made without prior approval from the State Administration of Foreign Exchange (the “SAFE”)
or its local branches. However, where RMB would be converted into foreign currency and remitted out of China to pay capital expenses,
such as the repayment of loans denominated in foreign currencies, approval from or registration with competent government authorities
or its authorized banks is required. The PRC government may take measures at its discretion from time to time to restrict access to foreign
currencies for current account or capital account transactions. If the foreign exchange control regulations prevent the VIE or PRC subsidiaries
of the combined company from obtaining sufficient foreign currencies to satisfy their foreign currency demands, the VIE or PRC subsidiaries
of the combined company may not be able to pay dividends or repay loans in foreign currencies to their offshore intermediary holding
companies and ultimately to the post-combination company. We cannot assure you that new regulations or policies will not be promulgated
in the future, which may further restrict the remittance of RMB into or out of the PRC. We cannot assure you, in light of the restrictions
in place, or any amendment to be made from time to time, that the PRC subsidiaries of the post-combination company will be able to satisfy
their respective payment obligations that are denominated in foreign currencies, including the remittance of dividends outside of the
PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency
for the payment of dividends from our subsidiaries or the VIE, if any.
10
Current PRC regulations permit
the indirect subsidiaries of the post-combination entity to pay dividends to the post-combination entity only out of their accumulated
profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the subsidiaries of
the post-combination company in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory
reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside
a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the
discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital
and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash
dividends except in the event of liquidation.
Cash dividends, if any, on
our common stock will be paid in U.S. dollars. If the post-combination entity is considered a PRC tax resident enterprise for tax purposes,
any dividends the post-combination entity pay to its overseas stockholders may be regarded as China-sourced income and as a result may
be subject to PRC withholding tax at a rate of up to 10.0%.
PCAOB
The United States Public
Company Accounting Oversight Board (“PCAOB”) is currently unable to conduct inspections on accounting firms in the PRC without
the approval of the Chinese government authorities. The auditor and its audit work in the PRC may not be inspected fully by the PCAOB.
Inspections of other auditors conducted by the PCAOB outside China have at times identified deficiencies in those auditors’ audit
procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality.
The lack of PCAOB inspections of audit work undertaken in China prevents the PCAOB from regularly evaluating the PRC auditor’s
audits and its quality control procedures. As a result, shareholders may be deprived of the benefits of PCAOB inspections if we complete
a business combination with such companies.
Future developments in U.S.
laws may restrict our ability or willingness to complete certain business combinations with certain companies. For instance, the enacted
Holding Foreign Companies Accountable Act (the “HFCAA”) would restrict our ability to consummate a business combination with
a target business unless that business met certain standards of the PCAOB and would require delisting of a company from U.S. national
securities exchanges if the PCAOB is unable to inspect its public accounting firm for three consecutive years. The HFCAA also requires
public companies to disclose, among other things, whether they are owned or controlled by a foreign government, specifically, those based
in China.
We may not be able to consummate
a business combination with a favored target business due to these laws. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating
Holding Foreign Companies Accountable Act (“AHFCAA”), which, if signed into law, would amend the HFCAA and require the SEC
to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections
for two consecutive years instead of three consecutive years.
The documentation we may
be required to submit to the SEC proving certain beneficial ownership requirements and establishing that we are not owned or controlled
by a foreign government in the event that we use a foreign public accounting firm not subject to inspection by the PCAOB or where the
PCAOB is unable to completely inspect or investigate our accounting practices or financial statements because of a position taken by
an authority in the foreign jurisdiction could be onerous and time consuming to prepare. The HFCAA mandates the SEC to identify issuers
of SEC-registered securities whose audited financial reports are prepared by an accounting firm that the PCAOB is unable to inspect due
to restrictions imposed by an authority in the foreign jurisdiction where the audits are performed. If such identified issuer’s
auditor cannot be inspected by the PCAOB for three consecutive years, the trading of such issuer’s securities on any U.S. national
securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited.
On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified
issuer will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process
to be subsequently established by the SEC.
11
On November 5, 2021, the
SEC approved the PCAOB’s Rule 6100, Board Determinations Under the HFCAA. Rule 6100 provides a framework for the PCAOB to use when
determining, as contemplated under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting
firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the
SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants
that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located
in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in
foreign jurisdictions.
On December 16, 2021, the
PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting
firms headquartered in: (i) mainland China, and (ii) Hong Kong. Our auditor, Marcum Asia CPAs LLP, headquartered in New York City, is
an independent registered public accounting firm registered with the PCAOB and is subject to laws in the United States pursuant to which
the PCAOB conducts regular inspections to assess Marcum Asia CPAs LLP’s compliance with applicable professional standards. The
PCAOB currently has access to inspect the working papers of our auditor. Our auditor is not headquartered in mainland China or Hong Kong
and was not identified in this report as a firm subject to the PCAOB’s determination.
On August 26, 2022, the CSRC,
the Ministry of Finance of the PRC, and PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations
of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB has independent discretion to select any issuer audits
for inspection or investigation and has the unfettered ability to transfer information to the SEC. However, uncertainties still exist
whether this new framework will be fully complied with. According to the PCAOB, its December 2021 determinations under the HFCAA remain
in effect. The PCAOB is required to reassess these determinations by the end of 2022. Under the PCAOB’s rules, a reassessment of
a determination under the HFCAA may result in the PCAOB reaffirming, modifying or vacating the determination.
On December 15, 2022, the
PCAOB determined that it has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland
China and Hong Kong and voted to vacate its December 2021 determinations to the contrary. To ensure ongoing access for inspections and
investigations, the PCAOB will determine annually whether it can inspect and investigate completely audit firms in mainland China and
Hong Kong. Additionally, the PCAOB has also identified numerous deficiencies at audit firms in mainland China and Hong Kong, as has been
the case in other jurisdictions in the first year of PCAOB inspection. The PCAOB intends to release inspection reports in the first half
of next year detailing findings from their inspections of these audit firms.
However, in the event that
we complete a business combination with a PRC Target Company and PCAOB is not able to fully conduct inspections of the post-combination
entity’s auditor’s work papers in mainland China or Hong Kong, it could cause us to fail to be in compliance with U.S. securities
laws and regulations, we could cease to be listed on a U.S. securities exchange, and U.S. trading of our shares could be prohibited under
the HFCAA. Any of these actions, or uncertainties in the market about the possibility of such actions, could adversely affect our prospects
to successfully complete a business combination with a PRC Target Company, our access to the U.S. capital markets and the price of our
shares.
On December 29, 2022, a legislation
entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”), was signed into law
by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to the AHFCAA, which reduces
the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.
Future developments in respect
of increased U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative
process and the regulatory developments are subject to the rule-making process and other administrative procedures.
Other developments in U.S.
laws and regulatory environment, including but not limited to executive orders such as Executive Order (E.O.) 13959, “Addressing
the Threat from Securities Investments That Finance Communist Chinese Military Companies,” may further restrict our ability to
complete a business combination with certain China-based businesses.
12
Enforceability of Civil Liability
Certain of our executive
officers and directors are located outside the U.S. Our Chief Executive Officer, Dr. Fen “Eric” Zhang, who is also our director,
our Chief Financial Officer, Ms. Jie “Janet” Hu, and our director Mr. Cameron R. Johnson, are located in China, and our director,
Mr. Kevin McKenzie, are located in Switzerland. Further, there is uncertainty if any officers and directors of the post-combination entity
will be located outside the Unites States. As a result, it may be difficult, or in some cases not possible, for investors in the United
States to enforce their legal rights, to effect service of process upon those officers and directors (prior to or after the business combination)
located outside the United States, to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties
on them under United States securities laws.
In particular, the PRC
does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States and many
other countries and regions, and you may have to incur substantial costs and contribute significant time to enforce civil liabilities
and criminal penalties in reliance on legal remedies under PRC laws. Therefore, recognition and enforcement in the PRC of judgement of
United States courts in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.
U.S. Foreign Investment Regulations
Dr. Fen “Eric”
Zhang, our Chief Executive Officer and Chairman, is the sole director of the Sponsor and as such is deemed to have sole voting and investment
discretion with respect to our shares held by the Sponsor. There are two types of securities of the Sponsor issued and outstanding, ordinary
shares and Series A preferred shares. Dr. Fen “Eric” Zhang holds all the issued and outstanding ordinary shares and, eight
holders, including Dr. Zhang, hold all the issued and outstanding Series A preferred shares. The holders of Series A preferred shares
have no voting rights with respect to any matters of the Sponsor subject to certain exception. In the event of dissolution of our Sponsor
after the closing of the IPO, the holders of Sponsor’s ordinary shares and Series A preferred shares are entitled to distribution
of assets and funds of the Sponsor legally available for distribution, pro rata, including, the Company’s Founder Shares and Private
Units held by the Sponsor if those securities have not been disposed by the Sponsor and are legally available for distribution during
the dissolution. Dr. Zhang and one holder of the Sponsor’s Series A preferred shares are Canadian citizens and the other six holders
are Chinese citizens. As of the date of this Annual Report, the Sponsor owns approximately 21.38% of our issued and outstanding
shares.
Controlling or non-controlling
investments in U.S. businesses that produce, design, test, manufacture, fabricate or develop one or more critical technologies in one
of 27 identified industries — including aviation, defense, semiconductors, telecommunications and biotechnology — are subject
to a mandatory filing with the Committee on Foreign Investment in the U.S. (“CFIUS”). In addition, CFIUS is an interagency
committee authorized to review certain transactions involving foreign investment in the United States by foreign persons in order to
determine the effect of such transactions on the national security of the United States. Because we may be considered a “foreign
person” under such rules and regulations, any proposed business combination between us and a U.S. business engaged in a regulated
industry or which may affect national security, we could be subject to such foreign ownership restrictions and/or CFIUS review. The scope
of CFIUS was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) to include certain non-passive,
non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S. business.
FIRRMA, and subsequent implementing regulations that are now in force, also subject certain categories of investments to mandatory filings.
If our potential initial business combination with a U.S. business falls within the scope of foreign ownership restrictions, we may be
unable to consummate a business combination with such business. In addition, if our potential business combination falls within CFIUS’s
jurisdiction, we may be required to make a mandatory filing or determine to submit a voluntary notice to CFIUS, or to proceed with the
initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial business combination.
CFIUS may decide to block or delay our initial business combination, impose conditions to mitigate national security concerns with respect
to such initial business combination or order us to divest all or a portion of a U.S. business of the combined company if we had proceeded
without first obtaining CFIUS clearance. The foreign ownership limitations, and the potential impact of CFIUS, may limit the attractiveness
of a transaction with us or prevent us from pursuing certain initial business combination opportunities that we believe would otherwise
be beneficial to us and our shareholders. As a result, the pool of potential targets with which we could complete an initial business
combination may be limited and we may be adversely affected in terms of competing with other special purpose acquisition companies which
do not have similar foreign ownership issues.
Moreover, the process of
government review, whether by CFIUS or otherwise, could be lengthy. Because we have only a limited time to complete our initial business
combination our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we liquidate,
our public shareholders may only receive $10.00 per share initially, and our rights will expire worthless. This will also cause you to
lose any potential investment opportunity in a target company and the chance of realizing future gains on your investment through any
price appreciation in the combined company.
Facilities
Our executive offices are
located at 14 Prudential Tower, Singapore, 049712 and our telephone number is (+1) 949 899 1827. Commencing on January 22, 2025,
we make $10,000 per month payment to the Sponsor for office space, utilities and secretarial and administrative support. We consider
our current office space adequate for our current operations.
13
Employees
We currently have Dr. Fen
“Eric” Zhang as the Chief Executive Officer and Mr. Jie “Janet” Hu as the Chief Financial Officer. They are not
obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary
to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for our initial business combination and the stage of the initial business
combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination.