Item 7. Management’s Discussion and Analysis
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and
analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this
annual report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including
those set forth under “Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary,” and elsewhere in this
annual report on Form 10-K.
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Overview
We are a blank check company
newly incorporated as a Cayman Islands exempted company with limited liability 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,
which we refer to throughout this report as our initial business combination.
On October 15, 2024, we consummated
our IPO of 5,000,000 units (the “Units”). Each Unit consists of one ordinary share, $0.0001 par value (“Ordinary Share”),
and one right (“Right”) to receive one-tenth (1/10) of one Ordinary Share upon the consummation of an initial business combination.
The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $50,000,000. Pursuant to that certain underwriting
agreement, dated October 10, 2024, we granted Lucid Capital Markets, LLC, the representative of the underwriters, a 45-day option to purchase
up to an additional 750,000 Units solely to cover over-allotments, if any (the “Over-Allotment Option”). Simultaneously with
the consummation of the IPO, the underwriters exercised the Over-Allotment Option in full, generating total proceeds of $7,500,000.
Simultaneously with the closing
of the IPO on October 15, 2024, we consummated the private placement (“Private Placement”) with Aurora Beacon LLC (the “Sponsor”)
of 254,375 units (the “Private Units”), generating total proceeds of $2,543,750. The Private Units are identical to the Units
sold in the IPO. Additionally, the Sponsor agreed not to transfer, assign, or sell any of the Private Units or underlying securities (except
in limited circumstances, as described in the Registration Statement) until 30 days after the completion of our initial business combination
or earlier if, subsequent to our initial business combination, we consummate a subsequent liquidation, merger, stock exchange or other
similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or
other property. The Sponsor was granted certain demand and piggyback registration rights in connection with the purchase of the Private
Units.
On October 15, 2024, a total
of $57,787,500 of the net proceeds from the sale of the Units in the IPO and the Private Placement were deposited in a trust account established
for the benefit of the Company’s public shareholders at JPMorgan Chase Bank, N.A. maintained by Continental Stock Transfer &
Trust Company, acting as trustee.
We paid a total of $1,006,250
in underwriting discounts (excluding deferred underwriting discount of $1,868,750) and $556,288 for other costs and expenses related to
the IPO.
We expect to continue to incur
significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an initial business combination
will be successful.
On January 27, 2025, we entered
into a merger agreement (the “Merger Agreement”), dated as of January 27, 2025, with HZJL Cayman Limited (“HZJL”)
for a business combination. Upon consummation of the transaction contemplated by the Merger Agreement, (i) RDAC will reincorporate by
merging with and into Xpand Boom Technology Inc., a Cayman Islands exempted company and wholly owned subsidiary of RDAC (“Xpand
Boom Technology”), and (ii) concurrently with the reincorporation merger, Xpand Boom Solution Inc., a Cayman Islands exempted company
and wholly owned subsidiary of Xpand Boom Technology, will be merged with and into HZJL, resulting in HZJL being a wholly owned subsidiary
of Xpand Boom Technology (the “Business Combination” and the transactions in connection with the Business Combination collectively,
the “Transaction”). Upon the closing of the Transaction, the parties plan to remain Nasdaq-listed under a new ticker symbol.
The Transaction, which has been
approved by the boards of directors of both RDAC and HZJL, is subject to regulatory approvals, the approvals by the shareholders of RDAC
and HZJL, respectively, and the satisfaction of certain other customary closing conditions, including, among others, a registration statement,
of which the proxy statement/prospectus forms a part, being declared effective by the U.S. Securities and Exchange Commission (the “SEC”),
and the approval by Nasdaq of the listing application of the combined company.
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Results of Operations
We have neither engaged in any
operations nor generated any revenue to date. Our only activities from inception to December 31, 2024 were organizational activities,
those necessary to prepare for and conduct the IPO, and since the closing of the IPO, the search for a prospective initial business combination.
We will not generate any operating revenue until after the completion of our initial business combination, at the earliest. We have generated
and will continue to generate non-operating income in the form of interest income on cash in bank and investments held in a trust account
established for the benefit of our public shareholders (the “Trust Account”), from the proceeds derived from the IPO. We incur
expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due
diligence expenses.
For the year ended December 31,
2024, we had a net income of $257,513, which consisted of interest earned on marketable securities held in the Trust Account of $543,046,
offset by formation and operational costs of $285,533.
Liquidity and Capital Resources
For the year ended December 31,
2024, cash used in operating activities was $326,033. Net income of $257,513 was affected by formation and operational costs of $285,533,
interest earned on marketable securities held in the Trust Account of $543,046. Changes in operating assets and liabilities provided $40,500
of cash from operating activities.
Our liquidity needs prior to
the consummation of the IPO were satisfied through the payment of $25,000 from the Sponsor to cover certain offering costs on our behalf
in exchange for issuance of founder shares, and the borrowing from the sponsor under an unsecured promissory note (see “Note 5-Related
Party Transactions” in the notes to our financial statements). We have repaid the unsecured promissory note in full on October 15,
2024. Subsequent to the consummation of the IPO, our liquidity has been satisfied through the net proceeds from the consummation of the
IPO and the private placement (as defined below) held outside of the trust account.
Following the IPO and the exercise
of the over-allotment option, a total of $57,787,500 of the net proceeds from the sale of the Units in the IPO and the Private Placement
were placed in the Trust Account. We paid a total of $1,006,250 in underwriting discounts (excluding deferred underwriting discount of
$1,868,750) and $556,288 for other costs and expenses related to the IPO.
As of December 31, 2024, we
had cash of $392,679 and marketable securities in the Trust Account of $58,330,546. We intend to use substantially all of the net proceeds
of the IPO, including the funds held in the Trust Account (less taxes payable and deferred underwriting commissions), to complete our
initial business combination. We may withdraw interest to pay taxes. During the period ended December 31, 2024, we did not withdraw any
of interest income from the trust account to pay for income taxes. To the extent that our capital stock is used in whole or in part as
consideration to effect our initial business combination, the remaining proceeds held in the Trust Account, as well as any other net proceeds
not expended, will be used as working capital to finance the operations of the target business. Such working capital funds could be used
in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing,
research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’
fees which we had incurred prior to the completion of our business combination if the funds available to us outside of the Trust Account
were insufficient to cover such expenses.
As of December 31, 2024, we
had cash of $392,679 outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or
similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements
of prospective target businesses, and structure, negotiate and complete a business combination.
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Based on the foregoing, management
believes that we will have sufficient working capital and borrowing capacity to meet our anticipated cash needs prior to our initial business
combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated
to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. However, we cannot provide any assurance that new financing will
be available. Over the time period prior to our initial business combination, we will be using the funds held outside of the Trust Account
for paying existing accounts payable, identifying and evaluating prospective initial business combination candidates, performing due diligence
on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the business combination.
Going Concern
In connection with our assessment
of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties
about an Entity’s Ability to Continue as a Going Concern,” management has determined that if we are unsuccessful in consummating
an initial business combination within the prescribed period of time from the closing of our IPO, the requirement that we cease all operations,
redeem the public shares, and thereafter liquidate and dissolve, raises substantial doubt about the ability to continue as a going concern
through January 15, 2026 (or July 15, 2026, if we extend the period of time to consummate a business combination as provided in our amended
and restated certificate of incorporation), the scheduled liquidation date of the Company if it does not complete a business combination
prior to such date. Management plans to complete a business combination before the mandatory liquidation date. However, there can be no
assurance that we will be able to consummate any business combination by January 15, 2026 (or, if extended, July 15, 2026). The accompanying
audited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America,
which contemplate the continuation of our Company as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets,
or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2024. We do not participate in transactions
that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet
financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any
non-financial assets.
Contractual Obligations
We do not have any long-term
debt, capital lease obligations, operating lease obligations, or long-term liabilities. The underwriters are entitled to a deferred fee
of 3.25% of the gross proceeds of the IPO upon closing of an initial business combination, or $1,868,750. The deferred fee will be paid
in cash upon the closing of the business combination from the amounts held in the Trust Account, subject to the terms of the underwriting
agreement.
Registration Rights
Pursuant to an agreement entered
into on October 10, 2024, our initial shareholders and their permitted transferees can demand that we register for resale the founder
shares, the private units and the underlying private shares and private rights, and the units issuable upon conversion of working capital
loans and the underlying ordinary shares and rights. The holders are entitled to make up to three demands, excluding short form demands,
that we register such securities. Notwithstanding anything to the contrary, any holder that is affiliated with an underwriter participating
in the IPO may only make a demand on one occasion and only during the five-year period beginning on the effective date of the registration
statement of which the Final Prospectus forms a part. In addition, the holders have certain “piggy-back” registration rights
on registration statements filed after our consummation of a business combination; provided that any holder that is affiliated with an
underwriter participating in the IPO may participate in a “piggy-back” registration only during the seven-year period beginning
on the effective date of the registration statement of which the Final Prospectus forms a part. We will bear the expenses incurred in
connection with the filing of any such registration statements.
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Critical Accounting Estimates
The preparation of audited financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the audited financial statements, and income and expenses during the periods reported. Actual results could
materially differ from those estimates. As of December 31, 2024, there were no critical accounting policies or estimates.
Recent Accounting Standards
In August 2020, the Financial
Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts
in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked
contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is
effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. The Company’s management does not believe the adoption of ASU 2020-06 will have a material impact on its financial
statements and disclosures.
In December 2023, the FASB
issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental
income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.
ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management
does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
Management does not believe
that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on
our audited financial statements.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company
we are not required to make disclosures under this Item.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information appears following
Item 15 of this annual report and is included herein by reference.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.