Four Leaf Acquisition Corp Swings to Loss Amid Redemptions, Lower Income

TL;DR

**Four Leaf is bleeding cash and investor confidence, making its merger with Xiaoyu Dida look increasingly precarious.**

AI Summary

Four Leaf Acquisition Corporation (FLAC) reported a net loss of $148,054 for the six months ended June 30, 2025, a significant decline from the net income of $297,258 in the same period of 2024. This shift was primarily driven by a decrease in dividend and interest income, which fell from $1,495,275 in H1 2024 to $637,205 in H1 2025, and increased formation and operating costs, rising from $658,628 in H1 2025 compared to $876,445 in H1 2024. The company's cash balance decreased from $28,407 at December 31, 2024, to $9,804 at June 30, 2025. A key business change was the redemption of 1,708,386 Class A common shares, reducing the shares subject to possible redemption from 2,668,693 to 960,307, and the corresponding cash outflow of $19,856,826 from the trust account. The company also incurred an excise tax liability of $500,512 as of June 30, 2025, up from $301,944 at December 31, 2024. FLAC entered into a Merger Agreement with Xiaoyu Dida Interconnect International Limited on December 17, 2024, but has not yet commenced operations, relying on non-operating income from its trust account. The company extended its business combination period to June 22, 2025, with potential further extensions to June 22, 2026.

Why It Matters

This 10-Q filing reveals Four Leaf Acquisition Corp's struggle to maintain profitability and execute its SPAC mission. The substantial share redemptions, reducing Class A common stock subject to redemption from 2,668,693 to 960,307 shares, indicate a significant lack of investor confidence in the proposed business combination with Xiaoyu Dida. This could make it harder for FLAC to meet the 80% asset threshold for a successful merger, potentially impacting the target company, Xiaoyu Dida, and its employees. Competitively, other SPACs might face similar redemption pressures, making successful de-SPAC transactions increasingly challenging in the current market.

Risk Assessment

Risk Level: high — The company reported a net loss of $148,054 for the six months ended June 30, 2025, a stark contrast to the $297,258 net income in the prior year. Furthermore, 1,708,386 Class A common shares were redeemed, leading to a $19,856,826 outflow from the trust account, significantly reducing the capital available for a business combination and increasing the risk of not meeting the 80% asset threshold.

Analyst Insight

Investors should consider divesting from Four Leaf Acquisition Corp given the substantial redemptions, declining cash, and net losses. The significant reduction in trust account assets from $30,124,557 to $11,354,936 raises serious doubts about the viability of the proposed merger with Xiaoyu Dida and the company's ability to complete a business combination.

Financial Highlights

debt To Equity

N/A

revenue

$637,205

operating Margin

N/A

total Assets

$31,347,191

total Debt

$26,886,347

net Income

($148,054)

eps

($0.04)

gross Margin

N/A

cash Position

$9,804

revenue Growth

-57.4%

Revenue Breakdown

Key Numbers

• $148,054 — Net Loss (for the six months ended June 30, 2025, compared to $297,258 net income in H1 2024)
• $19,856,826 — Class A Common Stock Redemptions (cash outflow from trust account due to redemptions as of June 30, 2025)
• 1,708,386 — Shares Redeemed (number of Class A common shares redeemed as of June 30, 2025)
• $637,205 — Dividend and Interest Income (for the six months ended June 30, 2025, down from $1,495,275 in H1 2024)
• $658,628 — Formation and Operating Costs (for the six months ended June 30, 2025, compared to $876,445 in H1 2024)
• $9,804 — Cash Balance (as of June 30, 2025, down from $28,407 at December 31, 2024)
• $11,093,593 — Class A Common Stock Subject to Redemption (as of June 30, 2025, down from $30,023,845 at December 31, 2024)
• $500,512 — Excise Tax Liability (as of June 30, 2025, up from $301,944 at December 31, 2024)
• $2,000,000 — Convertible Note - Related Party (outstanding as of June 30, 2025)
• $1,116,100 — Promissory Note - Related Party (outstanding as of June 30, 2025)

Key Players & Entities

• Four Leaf Acquisition Corporation (company) — registrant
• Xiaoyu Dida Interconnect International Limited (company) — merger target
• ALWA Sponsor, LLC (company) — company sponsor
• The Nasdaq Stock Market LLC (regulator) — exchange where securities are registered
• $148,054 (dollar_amount) — net loss for six months ended June 30, 2025
• $297,258 (dollar_amount) — net income for six months ended June 30, 2024
• $19,856,826 (dollar_amount) — value of Class A common stock redeemed as of June 30, 2025
• 1,708,386 (dollar_amount) — number of Class A common shares redeemed
• $500,512 (dollar_amount) — excise tax liability as of June 30, 2025
• $11,354,936 (dollar_amount) — marketable securities held in trust account as of June 30, 2025

FAQ

Risk Factors

• Dwindling Trust Account and Cash Reserves [high — financial]: The company's cash balance has fallen from $28,407 at December 31, 2024, to $9,804 at June 30, 2025. Concurrently, the value of marketable securities in the trust account decreased from $30,124,557 to $11,354,936. This reduction is largely due to significant redemptions of Class A common shares, totaling $19,856,826.
• Increased Operating Costs and Net Loss [medium — financial]: Formation and operating costs increased to $658,628 for the six months ended June 30, 2025, compared to $876,445 in the prior year period. This, combined with reduced income, resulted in a net loss of $148,054 for H1 2025, a reversal from a net income of $297,258 in H1 2024.
• Growing Excise Tax Liability [medium — regulatory]: The company's excise tax liability has increased from $301,944 at December 31, 2024, to $500,512 as of June 30, 2025. This represents an additional financial burden that impacts the company's net assets.
• Dependence on Business Combination and Extended Deadlines [medium — operational]: FLAC has not yet commenced operations and relies on non-operating income. The company has extended its business combination deadline to June 22, 2025, with potential further extensions to June 22, 2026, indicating uncertainty in achieving its strategic objectives.
• Related Party Debt Obligations [medium — financial]: The company has outstanding related party debt, including a $2,000,000 convertible note and a $1,116,100 promissory note as of June 30, 2025. The increase in the promissory note from $195,100 at year-end 2024 suggests ongoing financial reliance on related parties.

Industry Context

As a Special Purpose Acquisition Company (SPAC), Four Leaf Acquisition Corporation operates in a unique segment of the financial industry focused on identifying and merging with a target company. The SPAC market has seen significant volatility, with increased regulatory scrutiny and a challenging environment for completing business combinations. Companies like FLAC rely heavily on their ability to secure a suitable target and navigate the complexities of shareholder redemptions and market conditions.

Regulatory Implications

FLAC is subject to SEC regulations governing SPACs, including reporting requirements and rules related to redemptions and business combinations. The increasing excise tax liability also points to evolving tax regulations that can impact SPACs. Failure to complete a business combination within the specified timeframe can lead to dissolution, triggering further regulatory and financial implications.

What Investors Should Do

1. Monitor the progress of the merger with Xiaoyu Dida Interconnect International Limited.
2. Assess the impact of ongoing redemptions on the company's cash runway.
3. Evaluate the sustainability of the company's non-operating income sources.
4. Understand the terms and implications of related party debt.

Key Dates

• 2024-12-17: Merger Agreement with Xiaoyu Dida Interconnect International Limited — Marks a significant step towards a business combination, though operations have not yet commenced.
• 2025-06-22: Initial Business Combination Period Extension Deadline — Indicates a need for more time to complete the business combination, with potential for further extensions.
• 2025-06-30: Quarterly Period End — Reporting period for the condensed financial statements, showing a net loss and significant redemptions.

Glossary

Class A common stock subject to possible redemption

Shares of Class A common stock that holders have the right to redeem for cash at a specified redemption price, typically upon a business combination or liquidation event. (A significant portion of FLAC's Class A shares are subject to redemption, impacting the company's cash position and equity structure. The number of these shares decreased significantly due to redemptions.)

Accumulated deficit

The cumulative net losses of a company since its inception, less any net income. It represents a negative balance in retained earnings. (FLAC has an accumulated deficit of $6,632,890 as of June 30, 2025, reflecting its operational losses to date.)

Trust account

An account established by a special purpose acquisition company (SPAC) to hold the proceeds from its initial public offering (IPO) in trust, typically invested in U.S. Treasury securities or money market funds, until a business combination is completed. (The trust account is a critical component of FLAC's financial structure, holding funds for redemptions and investment. Its balance has significantly decreased due to share redemptions.)

Excise tax liability

A tax imposed on specific goods, services, or activities. In this context, it likely refers to a tax on share repurchases or other corporate actions. (FLAC has an increasing excise tax liability, which adds to its expenses and reduces its net assets.)

Year-Over-Year Comparison

Compared to the six months ended June 30, 2024, Four Leaf Acquisition Corp. has experienced a significant financial downturn. Net income has reversed to a net loss of $148,054 from a profit of $297,258. This is primarily due to a sharp decline in dividend and interest income, which fell from $1,495,275 to $637,205, and an increase in formation and operating costs. The company also saw a substantial decrease in its cash position and a significant outflow from its trust account due to Class A common stock redemptions, which reduced the number of redeemable shares from 2,668,693 to 960,307.

Key Financial Figures

• $0.0001 — et LLC Class A common stock, par value $0.0001 per share FORL The Nasdaq Stock Market
• $11.50 — r one share of Class A common stock for $11.50 per share FORLW The Nasdaq Stock Market

Filing Documents

• ea0252564-10q_fourleaf.htm (10-Q) — 916KB
• ea025256401ex10-1_fourleaf.htm (EX-10.1) — 27KB
• ea025256401ex10-2_fourleaf.htm (EX-10.2) — 28KB
• ea025256401ex10-3_fourleaf.htm (EX-10.3) — 32KB
• ea025256401ex31-1_fourleaf.htm (EX-31.1) — 11KB
• ea025256401ex31-2_fourleaf.htm (EX-31.2) — 11KB
• ea025256401ex32-1_fourleaf.htm (EX-32.1) — 4KB
• ea025256401ex32-2_fourleaf.htm (EX-32.2) — 4KB
• 0001213900-25-080962.txt ( ) — 5121KB
• forlw-20250630.xsd (EX-101.SCH) — 42KB
• forlw-20250630_cal.xml (EX-101.CAL) — 20KB
• forlw-20250630_def.xml (EX-101.DEF) — 246KB
• forlw-20250630_lab.xml (EX-101.LAB) — 359KB
• forlw-20250630_pre.xml (EX-101.PRE) — 242KB
• ea0252564-10q_fourleaf_htm.xml (XML) — 595KB

SIGNATURES

SIGNATURES 41 i PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Financial Statements FOUR LEAF ACQUISITION CORPORATION CONDENSED BALANCE SHEETS June 30, 2025 December 31, 2024 (Unaudited) ASSETS Current assets Cash $ 9,804 $ 28,407 Restricted cash - held in trust account 19,856,826 - Prepaid expenses 125,625 35,000 Total current assets 19,992,255 63,407 Other assets Marketable securities held in trust account 11,354,936 30,124,557 Total assets $ 31,347,191 $ 30,187,964 LIABILITIES, COMMON STOCK Current liabilities Accrued offering costs $ 24,999 $ 24,999 Accounts payable and accrued expenses 548,486 508,906 Due to related party 242,180 182,180 Class A common stock pending redemption ( 1,708,386 shares and no shares as of June 30, 2025 and December 31, 2024, respectively) 19,856,826 - Convertible note - related party 2,000,000 2,000,000 Promissory note - related party 1,116,100 195,100 Deferred credit - operating expenses funded by Xiaoyu Dida 341,250 191,250 Excise tax liability 500,512 301,944 Income taxes payable 358,644 221,943 Total current liabilities 24,988,997 3,626,322 Deferred underwriting fee payable 1,897,350 1,897,350 Total liabilities 26,886,347 5,523,672 Commitments and Contingencies (Note 6) Class A common stock subject to possible redemption, $ 0.0001 par value; 26,000,000 shares authorized; 960,307 shares issued and outstanding and 2,668,693 shares issued and outstanding (at $ 11.55 and $ 11.25 redemption value as of June 30, 2025 and December 31, 2024, respectively) 11,093,593 30,023,845 Stockholders' deficit Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized; none issued and outstanding - - Class A common stock, $ 0.0001 par value; 26,000,000 shares authorized; 54,210 shares issued and outstanding (excluding 960,307 and 2,668,693 shares subject to possible

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View this 10-Q filing on SEC EDGAR