OAKU Oak Woods Acquisition Corp - 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the “Annual Report”) to “we,” “us” or the “Company” refer to Oak Woods Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Whale Bay International Company Limited. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company, incorporated on March 11, 2022, as a Cayman Islands exempted company. We were formed for the purpose of entering into a merger, stock exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses (the “Business Combination”). On August 10, 2023, we setup Oak Woods Merger Sub, Inc. (“Merger Sub”) as a Cayman Islands exempted company.

On August 11, 2023, Oak Woods Acquisition Corporation, an exempted company incorporated in the Cayman Islands (“Oak Woods”), entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) with Oak Woods Merger Sub, Inc., a Cayman Islands corporation and a wholly owned subsidiary of Oak Woods (“Merger Sub”), Huajin (China) Holdings Limited, a Cayman Islands corporation (“Huajin”) and Xuehong Li, in his capacity as the representative of the Huajin shareholders (“Shareholders’ Representative” or otherwise hereinafter referred to as “Founder”). Pursuant to the terms of the Merger Agreement, and subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Huajin (the “Merger”), with Huajin surviving the merger in accordance with the Companies Act (As Revised) of the Cayman Islands as a wholly- owned subsidiary of Oak Woods.

As of December 31, 2024, the Company had not commenced any operations, except as related to the prospective Merger. All other activities through December 31, 2024 were related to the Company’s formation, the IPO, and searching for a Business Combination target. We will not generate any operating revenues until after the completion of a Business Combination, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived from the IPO.

Recent Development

On August 11, 2023, we entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) with Oak Woods Merger Sub, Inc., a Cayman Islands corporation and a wholly owned subsidiary of us (“Merger Sub”), Huajin (China) Holdings Limited, a Cayman Islands corporation (“Huajin”) and Xuehong Li, in his capacity as the representative of the Huajin shareholders (“Shareholders’ Representative” or otherwise hereinafter referred to as “Founder”). Pursuant to the terms of the Merger Agreement, and subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Huajin (the “Merger”), with Huajin surviving the merger in accordance with the Companies Act (As Revised) of the Cayman Islands as a wholly- owned subsidiary of us (the transactions contemplated by the Merger Agreement and the related ancillary agreements, the “Business Combination”).

The aggregate consideration payable at the closing of the Business Combination (the “Closing”) to the shareholders of Huajin will be the issuance of such number of shares of Oak Woods Class A Ordinary Shares, par value $0.0001 per share (the “Class A Ordinary Shares”) as shall be determined by subtracting the “Closing Net Debt” of Huajin (as defined in the Merger Agreement) from the agreed valuation of $250,000,000, and dividing such difference by $10.00, which represents the agreed valuation of one Class A Ordinary Share. At Closing, each holder of the ordinary shares of Huajin will receive, in exchange for the Huajin shares owned by such persons, shares of a Class A Ordinary Shares of Oak Woods in an amount equal to the product obtained by multiplying the number of ordinary shares of Huajin held by such shareholder by the Closing Consideration Conversion Ratio (as defined in the Merger Agreement). Of the Class A Ordinary Shares to be issued by Oak Woods at Closing, the Indemnification Escrow Shares (as defined below) shall be delivered into escrow for indemnification claims, as described herein. All of the Class A Ordinary Shares of Oak Woods issued and outstanding at the completion of the merger shall be renamed and redesignated as the ordinary shares of Oak Woods.

The parties also agreed that immediately following the Closing, Oak Woods’s board of directors will consist of five directors, three of which will be designated by Oak Woods and two of which will be designated by Huajin. As of the date of this Form 10-K, Huajin made a deposit of $330,969 to the Company, a portion of which funds will be utilized to provide the deposit required to extend the time available to Oak Woods to complete a business combination. The balance of such funds may be used by Oak Woods to fund expenses.

On March 23, 2024, the Merger Agreement was amended by Agreement to Extend the Merger Agreement and Plan of Reorganization to extend the termination date of the proposed business combination transaction from March 23, 2024 to June 28, 2024.

On June 28, 2024, the Company issued an unsecured promissory note in the amount of $575,000 to the Company’s Sponsor, Whale Bay International Company Limited, which has timely deposited $575,000 in the Company’s Trust Account, representing $0.10 per unit as additional interest on the proceeds in the Trust Account in order to extend the amount of time it has available to complete a business combination until September 28, 2024.

As approved by the shareholders of the Company at the Extraordinary General Meeting adjourned from September 25, 2024 and held on September 26, 2024 (“September EGM”), the amending the Amended and Restated Articles and Memorandum of Association of the Company gives the Company the right to extend the date by which the Company has to complete a business combination from September 28, 2024 to March 28, 2025, by depositing into the Trust Account $172,500 per for each one-month extension, on or prior to the date of the applicable deadline, for up to six (6) times. As of the date of this report, the Company timely made six (6) deposits aggregating $1,035,000 into the Trust Account to effectuate the extension of its time to complete the Business Combination until March 28, 2025. Of the $1,035,000, $172,500 and $172,500 in trust were applied in the Company’s investment account in January 2025 March 2025 by the transfer agent, respectively. In connection with the September EGM, on September 26, 2024, 1,492,646 Class A ordinary shares were redeemed at a per share price of $11.20. On October 4, 2024, $16,541,342 was paid from the Trust Account to redeeming shareholders in connection with the extension.

As approved by the shareholders of the Company at the Extraordinary General Meeting held on March 20, 2025 (“March EGM”), the Amended and Restated Articles and memorandum of Association gives the Company the right to extend the date by which the Company has to complete a business combination from March 28, 2025 to September 28, 2025, by depositing into the Trust Account $172,500 per for each one-month extension, on or prior to the date of the applicable deadline, for up to six (6) times. As of April 28, 2025, the Company timely made two (2) deposits aggregating $345,000 into the Trust Account, thereby extending the time available to the Company to complete our initial business combination until May 28, 2025. In connection with the March EGM, on March 20, 2025, 679,929 Class A ordinary shares were redeemed at a per share price of $11.56. On March 25, 2025, $7,859,455 was paid from the Trust Account to redeeming shareholders in connection with the extension on March 26, 2025. There is no assurance that the Company will complete its initial Business Combination.

Results of Operations

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities for the period from March 11, 2022 (inception) through December 31, 2024 have been entering into a merger, stock exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generated non-operating income in the form of interest income on cash and cash equivalents, and on investments held in Trust Account. 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 $191,545, which resulted from interest income of $5,852 on the operating account and interest income of $2,940,555 on investments held in the Trust Account, partially offset by formation and operating costs of $2,746,762 and an upward change in fair value of warrant liabilities of $400.

For the year ended December 31, 2023, we had net income of $1,308,097, which resulted from interest income of $25,035 on the operating account, interest income of $2,258,904 on the Trust Account, a downward change in fair value of warrant liabilities of $53,500, partially offset by formation and operating costs of $1,029,342.

Liquidity and Capital Resources

On March 28, 2023, we consummated the initial public offering (“IPO”) of 5,750,000 units (the “Public Units’), including the full exercise of the over-allotment option of 750,000 Units granted to the underwriters. The Public Units were sold at an offering price of $10.00 per unit generating gross proceeds of $57,500,000. Simultaneously with the IPO, we sold to our Sponsor 343,125 units at $10.00 per unit (the “Private Units”) in a private placement generating total gross proceeds of $3,431,250. Each Unit consists of one share of Class A ordinary share, par value $0.0001 per share (the “Shares”), one redeemable warrant entitling its holder to purchase one Share at a price of $11.50 per Share, and one right to receive one-sixth (1/6) of one share upon the consummation of our initial business combination.

For the year ended December 31, 2024, net cash used in operating activities was $1,342,834, which was due to net income of $191,545, adjusting interest income of $2,940,555 earned on Trust Account and changes in fair value of warrant liabilities of $8,100, and changes in operating assets and liabilities of $1,398,076.

For the year ended December 31, 2023, net cash used in operating activities was $650,771, which was due to net income of $1,308,097, adjusting interest income of $2,258,904 earned on Trust Account and changes in fair value of warrant liabilities of $53,500, and changes in operating assets and liabilities of $353,536.

As of December 31, 2024 and 2023, we had cash of $4,637 and $367,321, respectively, held outside 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 an initial business combination.

As of December 31, 2024, the Company had working capital deficit of $4,388,114. The Company has incurred and expects to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, it would repay such loaned amounts at that time. Up to $1,151,000 of such Working Capital Loans may be converted upon completion of a Business Combination into units at a price of $10.00 per unit. Such units would be identical to the Private Units.

On August 11, 2023, the Company entered into a Merger Agreement and Plan of Reorganization (the “Merger Agreement”) with Oak Woods Merger Sub, Inc., a Cayman Islands corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Huajin (China) Holdings Limited, a Cayman Islands corporation (“Huajin”) and Xuehong Li, in his capacity as the representative of the Huajin shareholders (“Shareholders’ Representative” or otherwise hereinafter referred to as “Founder”). Pursuant to the terms of the Merger Agreement, and subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Huajin (the “Merger”), with Huajin surviving the merger in accordance with the Companies Act (As Revised) of the Cayman Islands as a wholly- owned subsidiary of the Company (the transactions contemplated by the Merger Agreement and the related ancillary agreements, the “Business Combination”). In connection with the Business Combination, Huajin made a deposit of $330,969 to the Company. The Company recorded the deposit in the account of “deposit from the target company” on the consolidated balance sheet.

On June 28, 2024, the Company issued an unsecured promissory note in the amount of $575,000 to the Company’s Sponsor, Whale Bay International Company Limited, which has timely deposited $575,000 in the Company’s Trust Account, representing $0.10 per unit as additional interest on the proceeds in the Trust Account in order to extend the amount of time it has available to complete a business combination until September 28, 2024.

As approved by the shareholders of the Company at the Extraordinary General Meeting adjourned from September 25, 2024 and held on September 26, 2024 (“September EGM”), the amending the Amended and Restated Articles and Memorandum of Association of the Company gives the Company the right to extend the date by which the Company has to complete a business combination from September 28, 2024 to March 28, 2025, by depositing into the Trust Account $172,500 per for each one-month extension, on or prior to the date of the applicable deadline, for up to six (6) times. As of the date of this report, the Company timely made six (6) deposits aggregating $1,035,000 into the Trust Account to effectuate the extension of its time to complete the Business Combination until March 28, 2025. Of the $1,035,000, $172,500 and $172,500 in trust were applied in the Company’s investment account in January 2025 March 2025 by the transfer agent, respectively. In connection with the September EGM, on September 26, 2024, 1,492,646 Class A ordinary shares were redeemed at a per share price of $11.20. On October 4, 2024, $16,541,342 was paid from the Trust Account to redeeming shareholders in connection with the extension.

As approved by the shareholders of the Company at the Extraordinary General Meeting held on March 20, 2025 (“March EGM”), the Amended and Restated Articles and memorandum of Association gives the Company the right to extend the date by which the Company has to complete a business combination from March 28, 2025 to September 28, 2025, by depositing into the Trust Account $172,500 per for each one-month extension, on or prior to the date of the applicable deadline, for up to six (6) times. As of April 28, 2025, the Company timely made two (2) deposits aggregating $345,000 into the Trust Account, thereby extending the time available to the Company to complete our initial business combination until May 28, 2025. In connection with the March EGM, on March 20, 2025, 679,929 Class A ordinary shares were redeemed at a per share price of $11.56. On March 25, 2025, $7,859,455 was paid from the Trust Account to redeeming shareholders in connection with the extension on March 26, 2025.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Codification (“ASC”) Subtopic 205-40, Presentation of Financial Statements – Going Concern, the Company may need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In addition, if the Company is unable to complete a Business Combination within the Combination Period, the Company’s board of directors would proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period. As a result, management has determined that such additional conditions also raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding the deferred underwriting commissions, to complete an initial business combination. To the extent that capital stock or debt is used, in whole or in part, as consideration to complete an initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue growth strategies. If an initial business combination agreement requires the Company to use a portion of the cash in the Trust Account to pay the purchase price or requires the Company to have a minimum amount of cash at closing, the Company will need to reserve a portion of the cash in the Trust Account to meet such requirements or arrange for third-party financing.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2024 and 2023. 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

Registration Rights

The holders of the founder shares, Private Placement Units, shares being issued to the underwriters of the Initial Public Offering, and units that may be issued on conversion of Working Capital Loans (and in each case holders of their component securities, as applicable) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Initial Public Offering requiring the Company to register such securities for resale. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Promissory Notes — Related Party

Promissory notes as extension Loans

In order to finance the potential obligation to add funds to the Trust Account    in connection with extending time to complete a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Extension Loans”). Such Extension Loans would be evidenced by promissory notes. In June 2024, the Company issued one non-interest bearing unsecured promissory note, in an amount of $575,000, to the Sponsor in exchange for Sponsor depositing such amount into the Company’s Trust Account in order to extend the amount of time it has available to complete a business combination until September 28, 2024. The promissory note is payable on the earlier of (i) September 28, 2024, or (ii) the date on which Maker consummates its business combination with Huajin. In March 2025, the promissory note of $575,000 issued in June 2024 was extended and is payable on the earlier of (i) September 28, 2025, or (ii) the date on which the Company consummates its business combination with Huajin.

On September 26, 2024, the shareholders approved the amendment to the Articles and Memorandum of Association (“First Amended and Restated Amended and Restated”), pursuant to which the Company has the right to extend the time to complete a business combination six (6) times for an additional one (1) month each time from September 28, 2024 to March 28, 2025 by depositing into the Trust Account $172,500 for each one-month extension. For the period from September 28, 2024 through February 28, 2024, the Company issued six unsecured promissory notes, each in an amount of $172,500, to the Sponsor in exchange for Sponsor depositing such amount into the Company’s Trust Account in order to extend the amount of time it has available to complete a business combination until March 28, 2025.

On March 20, 2025, the shareholders approved another amendment to the   Articles and Memorandum of Association (“Second Amended and Restated Amended and Restated”), pursuant to which the Company has the right to extend the time to complete a business combination six (6) times for an additional one (1) month each time from March 28, 2025 to September 28, 2025 by depositing into the Trust Account $172,500 for each one-month extension. As of April 28, 2025, the Company timely made two (2) deposits aggregating $345,000 into the Trust Account, thereby extending the time available to the Company to complete our initial business combination until May 28, 2025.

In the event that a Business Combination does not close by January 28, 2025, or up to September 28, 2025 no amounts will thereafter be due thereon.

As of December 31, 2024 and 2023, the Company had promissory notes as extension loans of $1,265,000 and $nil, respectively. As of the date of these consolidated financial statements, the Sponsor has not demanded repayment.

Other promissory notes

On July 15, 2022, the sponsor has agreed to loan the Company up to $500,000 to be used for a portion of the expenses of the Proposed Public Offering. This loan is non-interest bearing, unsecured and is due at the earlier of (1) the closing of the Proposed Public Offering or (2) the date on which the Company determines not to conduct an initial public offering of its securities. Effective on March 28, 2023, the Company and the sponsor entered into an extension agreement pursuant to which the sponsor agreed to extend the promissory note to May 31, 2023. In June 2023, the Company repaid promissory notes due to the sponsor.

In May 2024, the Company issued one non-interest bearing unsecured promissory note, in an amount of $657,700, to the Sponsor in exchange for loans to support the Company’s operations. The promissory notes are payable on the earlier of (i) September 28, 2024, or (ii) the date on which the Company consummates its business combination with Huajin. With the extension of the time to complete a business combination by September 28, 2025, the Company amended the payment term of the promissory notes, which are payable on the earlier of (i) September 28, 2025, or (ii) the date on which the Company consummates its business combination with Huajin.

In July 2024, the Company issued one non-interest bearing unsecured promissory note to the Sponsor in exchange for loans to support the Company’s operations. The Company could draw down a maximum amount of $1,000,000. As of December 31, 2024, the Company drew down $322,450 from the promissory note. The promissory notes are payable on the earlier of (i) March 28, 2025, or (ii) the date on which the Company consummates its business combination with Huajin. With the extension of the time to complete a business combination by September 28, 2025, the Company amended the payment term of the promissory notes, which are payable on the earlier of (i) September 28, 2025, or (ii) the date on which the Company consummates its business combination with Huajin.

As of December 31, 2024 and 2023, the Company had promissory notes as operation loans of $980,150 and $nil, respectively, due to related parties.

Administrative Services Agreement

The Company is obligated, commencing on March 23, 2023, to pay the sponsor a monthly fee of $10,000 for general and administrative services. However, pursuant to the terms of such agreement, the Company may delay payment of such monthly fee upon a determination by the audit committee that the Company lacks sufficient funds held outside the trust to pay actual or anticipated expenses in connection with the initial Business Combination. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of our initial Business Combination.

For the years ended December 31, 2024 and 2023, the Company accrued administrative service expenses of $120,000 and $90,000, respectively, in the account of formation and operating costs. As of December 31, 2024 and 2023, the Company had service fee payable of $210,000 and $90,000, respectively, due to the sponsor.

Underwriting Ag reement

The Company granted the underwriter a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less the underwriting discounts and commissions, which the underwriter partially exercised in full, and the additional Units were issued on March 23, 2023.

The underwriter was paid a cash underwriting discount of $0.20 per Unit, or $1,150,000 in the aggregate. In addition, the underwriter is entitled to a deferred fee of $0.35 per Unit, or $2,012,500 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement.

Financial Advisory Agreement

The Company engaged Asian Legend International Investment Holding Limited (“AsianLegend”) as the Company’s advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the Business Combination simultaneously upon the closing of IPO. Under the Merger Agreement and the agreement entered into between AsianLegend and the Company, with the consent of Huajin, The Company will pay AsianLegend a cash fee of $100,000 per month, from the month AsianLegend started consulting services to the date of Closing of the Business Combination for such services, plus Class A Ordinary Shares issued to AsianLegend upon the consummation of a Business Combination. The number of Class A Ordinary Shares to be issued to Asian Legend is calculated at 5% of the number of Class A Ordinary Shares to be issued to the Huajin shareholders upon the consummation of a Business Combination. AsianLegend started to provide consulting services in October 2023. As of December 31, 2024 and 2023, the Company had accrued consulting service expenses of $1,500,000 and $300,000, respectively.

Critical Accounting Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. We did not identify critical accounting estimates for the year ended December 31, 2024.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic ASC 280) Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, require disclosure of other segment items by reportable segment and a description of the composition of other segment items, require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under ASC 280. The Company adopted ASU 2023-07 for the annual period ended December 31, 2024. The adoption of this standard did not have a material impact to our results of operations, cash flows or financial condition.

On December 14, 2023, the FASB issued a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09, Improvements to Income Tax Disclosures, applies to all entities subject to income taxes. For public business entities (PBEs), the new requirements will be effective for annual periods beginning after December 15, 2024. For entities other than public business entities (non-PBEs), the requirements will be effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.