Oak Woods Acquisition Corp SEC 10-K Report

Oak Woods Acquisition Corporation, a blank check company incorporated in the Cayman Islands, has released its Form 10-K report, detailing its financial performance, business activities, strategic initiatives, and the challenges it faces. The company, which aims to merge with Huajin (China) Holdings Limited, a provider of elderly care and health care services, has outlined its efforts and progress in this comprehensive annual report.

Financial Highlights

For the year ended December 31, 2024, Oak Woods Acquisition Corp reported a net income of $191,545. This was primarily driven by interest income of $5,852 from the operating account and $2,940,555 from investments held in the Trust Account, partially offset by formation and operating costs of $2,746,762 and an upward change in the fair value of warrant liabilities of $400. In comparison, the net income for the year ended December 31, 2023, was $1,308,097, resulting from interest income of $25,035 on the operating account, $2,258,904 on the Trust Account, and a downward change in the fair value of warrant liabilities of $53,500, offset by formation and operating costs of $1,029,342.

Basic and diluted net income per ordinary share for redeemable Class A ordinary shares was $0.30 for 2024, down from $0.69 in 2023. For non-redeemable Class A ordinary shares and Class B ordinary shares, the company reported a basic and diluted net loss per share of $(0.81) for 2024, compared to $(1.01) for 2023.

Business Highlights

Oak Woods Acquisition Corporation's primary business activity since its IPO has been identifying and evaluating suitable acquisition candidates. The company is actively pursuing a business combination with Huajin (China) Holdings Limited, with the merger agreement initially signed on August 11, 2023, and amended to extend the termination date to September 28, 2025. The proposed merger aims to create a wholly-owned subsidiary focusing on expanding health care services to the elderly and providing smart home care solutions in local communities.

The company is incorporated in the Cayman Islands and maintains its principal executive offices in Nepean, Ontario, Canada. The proposed business combination with Huajin will expand its operational focus to include the Chinese market. Oak Woods Acquisition Corporation has one executive officer who serves as both the Chief Executive Officer and Chief Financial Officer, adjusting their time commitment based on the stage of the business combination process. The company rents its principal executive office space from an unaffiliated third party at a rent of $5,000 per month on a month-to-month basis, which is considered adequate for current operations.

Strategic Initiatives

Oak Woods Acquisition Corporation is focused on completing a business combination with Huajin (China) Holdings Limited. The company has entered into a Merger Agreement and Plan of Reorganization, with the merger expected to result in Huajin becoming a wholly-owned subsidiary. To support this transaction, the company has engaged Asian Legend International Investment Holding Limited to assist in obtaining shareholder approval for the business combination.

The company has extended its timeline to complete the business combination multiple times, requiring deposits into the Trust Account to secure these extensions. As of December 31, 2024, the company had promissory notes as extension loans totaling $1,265,000 and operation loans of $980,150 due to related parties. Additionally, the company has raised $3,431,250 from its sponsor, Whale Bay International Company Limited, through the sale of private units and issued unsecured promissory notes to its sponsor to support operations and extend the business combination timeline.

Looking ahead, the company plans to continue its efforts to complete the business combination with Huajin by the extended deadline of September 28, 2025. It may need to raise additional capital through loans or investments from its sponsor or other parties to meet working capital needs and transaction costs. The company acknowledges the risk of not completing the business combination within the specified timeframe, which could lead to liquidation. Management is focused on securing the necessary approvals and capital to ensure the successful completion of the merger.

Challenges and Risks

Oak Woods Acquisition Corporation faces several risks, including the lack of an operating history, which makes it difficult to predict future performance. The company has not generated any revenue and has incurred losses since its inception. Its operations are dependent on identifying and successfully merging with a target business, which is inherently uncertain and risky.

Key risks include the potential delay in receiving distributions from the Trust Account, the possibility that shareholders may not have the opportunity to vote on the proposed business combination, and the risk associated with the issuance of equity and/or debt securities to complete a business combination. The company also faces a lack of working capital and potential third-party claims that could reduce the per-share redemption price. Additionally, there is a risk of negative interest rates for securities in which the company invests the funds held in the Trust Account.

Shareholders may be held liable for claims by third parties against the company, and there is a risk of failure to enforce the sponsor’s indemnification obligations. The company is dependent on key personnel, and there are conflicts of interest involving the sponsor, officers, and directors. The potential delisting of securities by Nasdaq poses a significant risk, as does the dependence on a single target business with a limited number of products or services. The company’s competitors may have advantages in seeking business combinations, and there is uncertainty regarding the ability to obtain additional financing. The warrants and registration rights could adversely affect the market price of the company’s ordinary shares. Business combinations with companies located in foreign jurisdictions may present additional risks, including changes in laws or regulations and tax consequences.

The company has not commenced any operations except for activities related to the prospective merger with Huajin. It has incurred significant professional costs to remain publicly traded and expects to incur significant transaction costs in pursuit of a business combination. The company’s liquidity and capital resources are limited, and it may need to raise additional capital through loans or investments from its sponsor or third parties. There is no assurance that the company will complete its initial business combination within the specified time frame, which raises substantial doubt about its ability to continue as a going concern. The company’s financial condition is dependent on the successful completion of a business combination, and failure to do so could result in liquidation.

SEC Filing: Oak Woods Acquisition Corp [ OAKU ] - 10-K - May. 02, 2025