RDACU Swings to Profit on Trust Account Gains, Eyes $350M HZJL Merger

TL;DR

**RDACU is burning cash outside its trust, but the HZJL merger is a massive bet that could pay off if they close it before the January 2026 deadline.**

AI Summary

Rising Dragon Acquisition Corp. (RDACU) reported a net income of $452,318 for the three months ended September 30, 2025, a significant improvement from a net loss of $11,390 in the same period of 2024. For the nine months ended September 30, 2025, the company posted a net income of $1,305,166, compared to a net loss of $50,250 for the period from March 8, 2024 (inception) through September 30, 2024. This positive shift is primarily driven by $1,827,910 in interest income earned from investments held in its Trust Account for the nine-month period. Cash decreased substantially from $392,679 at December 31, 2024, to $5,620 at September 30, 2025, while the investment held in the Trust Account grew from $58,330,546 to $60,158,456. The company entered into a Merger Agreement on January 27, 2025, to acquire HZJL Cayman Limited for $350 million, payable in newly issued Purchaser Ordinary Shares. Current liabilities increased from $22,500 at December 31, 2024, to $95,185 at September 30, 2025, including a $50,000 promissory note to a related party and $19,870 due to a related party. The company faces a working capital deficit of $89,565 as of September 30, 2025, raising going concern considerations.

Why It Matters

This 10-Q reveals RDACU's transition from a blank check company to one actively pursuing a significant business combination with HZJL Cayman Limited, valued at $350 million. For investors, the substantial interest income from the Trust Account is a positive, but the working capital deficit and reliance on related-party financing highlight liquidity risks. Employees and customers of HZJL will be impacted by the post-merger integration, potentially facing changes in operations or management. In the broader SPAC market, this filing underscores the challenges and opportunities in identifying and executing de-SPAC transactions, especially with the tight January 14, 2026, deadline for RDACU to complete its Business Combination.

Risk Assessment

Risk Level: high — The company has a working capital deficit of $89,565 as of September 30, 2025, and cash on hand of only $5,620, indicating significant liquidity issues outside of its Trust Account. Furthermore, the company has until January 14, 2026, to consummate a Business Combination, creating substantial execution risk for the proposed $350 million acquisition of HZJL Cayman Limited.

Analyst Insight

Investors should closely monitor the progress of the HZJL Cayman Limited merger, specifically any updates on shareholder approvals and regulatory filings. Given the tight deadline of January 14, 2026, and the company's limited operating cash, potential investors should exercise extreme caution and consider the high risk of liquidation if the merger fails.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$60,164,076

total Debt

$1,963,935

net Income

$1,305,166

eps

$0.25

gross Margin

N/A

cash Position

$5,620

revenue Growth

N/A

Key Numbers

• $452,318 — Net income for Q3 2025 (Significant increase from a net loss of $11,390 in Q3 2024)
• $1,305,166 — Net income for nine months ended Sept 30, 2025 (Driven by interest income from Trust Account)
• $1,827,910 — Interest income from Trust Account (Primary source of non-operating income for nine months ended Sept 30, 2025)
• $5,620 — Cash on hand as of Sept 30, 2025 (Decreased from $392,679 at Dec 31, 2024, indicating liquidity challenges)
• $60,158,456 — Investment held in Trust Account as of Sept 30, 2025 (Increased from $58,330,546 at Dec 31, 2024)
• $350,000,000 — Aggregate consideration for HZJL acquisition (To be paid in newly issued Purchaser Ordinary Shares)
• $89,565 — Working capital deficit as of Sept 30, 2025 (Indicates going concern considerations)
• January 14, 2026 — Deadline for Business Combination (Creates urgency and risk for the HZJL merger)
• $50,000 — Promissory note to Sponsor (Unsecured and non-interest bearing, due upon business combination)
• 5,750,000 — Ordinary shares subject to possible redemption (At a redemption value of $10.46 per share as of Sept 30, 2025)

Key Players & Entities

• Rising Dragon Acquisition Corp. (company) — registrant
• HZJL Cayman Limited (company) — target for business combination
• Aurora Beacon LLC (company) — Sponsor and private placement investor
• Mr. Bin Xiong (person) — representative of Principal Shareholder of HZJL
• Xpand Boom Technology Inc. (company) — wholly-owned subsidiary of Rising Dragon Acquisition Corp.
• Xpand Boom Solutions Inc. (company) — wholly-owned subsidiary of Xpand Boom Technology Inc.
• NASDAQ (regulator) — exchange where units are listed
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Working Capital Deficit and Going Concern [high — financial]: As of September 30, 2025, Rising Dragon Acquisition Corp. has a working capital deficit of $89,565. This, coupled with a significant decrease in cash from $392,679 at December 31, 2024, to $5,620 at September 30, 2025, raises substantial going concern considerations.
• Dependence on Business Combination [high — operational]: The company's existence and ability to generate operating revenue are entirely dependent on completing a Business Combination. The Merger Agreement with HZJL Cayman Limited, valued at $350 million, has a deadline of January 14, 2026, creating significant urgency and risk if the transaction is not completed.
• Reliance on Trust Account Investments for Income [medium — financial]: The company's net income is primarily driven by interest income from its Trust Account investments, totaling $1,827,910 for the nine months ended September 30, 2025. This reliance on non-operating income highlights the absence of core business operations and revenue generation.
• Shareholder Redemption Risk [medium — financial]: There are 5,750,000 ordinary shares subject to possible redemption at $10.46 per share as of September 30, 2025. A significant number of redemptions could impact the cash available for the business combination and the company's financial stability.
• Related Party Transactions [low — financial]: Current liabilities include a $50,000 promissory note and $19,870 due to a related party as of September 30, 2025. While these are not interest-bearing, their nature and terms require careful scrutiny, especially in the context of a potential business combination.

Industry Context

Rising Dragon Acquisition Corp. operates within the Special Purpose Acquisition Company (SPAC) sector. This sector has seen significant activity but is also subject to evolving regulatory scrutiny and market sentiment. The primary focus for SPACs like RDACU is identifying and executing a successful business combination within a defined timeframe, often facing pressure to find suitable targets amidst competition.

Regulatory Implications

As a SPAC, RDACU is subject to SEC regulations governing financial reporting, disclosures, and the process of business combinations. The upcoming deadline for its business combination (January 14, 2026) creates a critical regulatory and operational timeline. Failure to complete a combination could lead to dissolution, impacting shareholders and stakeholders.

What Investors Should Do

1. Monitor the progress of the HZJL Cayman Limited acquisition.
2. Assess the company's liquidity and working capital position.
3. Evaluate the terms of the proposed business combination.

Key Dates

• 2025-01-27: Merger Agreement with HZJL Cayman Limited — Marks the target for the company's business combination, a critical step for its future operations and value creation.
• 2026-01-14: Deadline for Business Combination — Creates a time-sensitive pressure to complete the HZJL acquisition, with potential dissolution if not met.
• 2025-09-30: Quarterly Report Filing — Provides updated financial and operational status, highlighting key metrics and risks as of the end of Q3 2025.
• 2024-03-08: Company Inception — Establishes the starting point for financial reporting and operational history.

Glossary

Blank Check Company

A shell corporation that is established to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. (RDACU is a blank check company formed to find and acquire a target business.)

Business Combination

The acquisition, merger, share exchange, or similar transaction that a special purpose acquisition company (SPAC) undertakes to combine with an operating business. (The primary objective of RDACU is to complete a business combination with a target company like HZJL Cayman Limited.)

Trust Account

An account established by a SPAC to hold the proceeds from its IPO, typically invested in U.S. government securities or money market funds, until a business combination is completed. (RDACU holds a significant investment in its Trust Account, which generates interest income and is a major asset.)

Ordinary Shares Subject to Possible Redemption

Shares issued by a SPAC that holders can redeem for cash at a specified price (usually the IPO price plus accrued interest) if they do not wish to proceed with the business combination. (A substantial portion of RDACU's shares are subject to redemption, impacting its capital structure and potential cash outflows.)

Working Capital Deficit

Occurs when a company's current liabilities exceed its current assets, indicating a potential short-term liquidity issue. (RDACU has a working capital deficit of $89,565 as of September 30, 2025, raising concerns about its ability to meet short-term obligations.)

Year-Over-Year Comparison

Compared to the prior period (inception through September 30, 2024), Rising Dragon Acquisition Corp. has transitioned from a net loss of $50,250 to a net income of $1,305,166 for the nine months ended September 30, 2025. This dramatic shift is driven by $1,827,910 in interest income from its Trust Account investments, rather than operational improvements. While assets have grown due to the Trust Account investment, cash on hand has plummeted from $392,679 to $5,620, and current liabilities have increased, leading to a working capital deficit not present in the prior period.

Key Financial Figures

• $0.0001 — isting of one Ordinary Share, par value $0.0001 per share, and one Right entitling the

Filing Documents

• ea0263836-10q_rising.htm (10-Q) — 590KB
• ea026383601ex31-1_rising.htm (EX-31.1) — 9KB
• ea026383601ex31-2_rising.htm (EX-31.2) — 10KB
• ea026383601ex32-1_rising.htm (EX-32.1) — 4KB
• ea026383601ex32-2_rising.htm (EX-32.2) — 4KB
• 0001213900-25-106634.txt ( ) — 3544KB
• rdacu-20250930.xsd (EX-101.SCH) — 30KB
• rdacu-20250930_cal.xml (EX-101.CAL) — 13KB
• rdacu-20250930_def.xml (EX-101.DEF) — 151KB
• rdacu-20250930_lab.xml (EX-101.LAB) — 240KB
• rdacu-20250930_pre.xml (EX-101.PRE) — 153KB
• ea0263836-10q_rising_htm.xml (XML) — 456KB

SIGNATURES

SIGNATURES 8 i PART I - FINANCIAL INFORMATION Item 1. Financial Statements Page Unaudited Condensed Consolidated Balance Sheets F- 1 Unaudited Condensed Consolidated F-2 Unaudited Condensed Consolidated F-3 Unaudited Condensed Consolidated F-4 Notes to Unaudited Condensed Consolidated Financial Statements F-5 – F-16 1 RISING DRAGON ACQUISITION CORP. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (Unaudited) ASSETS Current assets: Cash $ 5,620 $ 392,679 Prepaid expense - 63,000 Total Current Assets 5,620 455,679 Investment held in Trust Account 60,158,456 58,330,546 TOTAL ASSETS $ 60,164,076 $ 58,786,225 LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' DEFICIT Current liabilities: Accrued liabilities $ 25,315 $ 22,500 Promissory notes – related party 50,000 - Due to related party 19,870 - Total Current Liabilities 95,185 22,500 Deferred underwriting compensation 1,868,750 1,868,750 TOTAL LIABILITIES 1,963,935 1,891,250 Commitments and contingencies (Note 7) Ordinary shares subject to possible redemption, 5,750,000 and 5,750,000 shares issued and outstanding at redemption value of $ 10.46 and $ 10.14 as of September 30, 2025 and December 31, 2024, respectively 60,158,456 58,330,546 Shareholders' Deficit: Preference shares, $ 0.0001 par value; 500,000 shares authorized; no shares issued and outstanding - - Ordinary shares, $ 0.0001 par value; 55,000,000 shares authorized; 1,749,375 shares issued and outstanding as of September 30, 2025 and December 31, 2024 (excluding 5,750,000 and 5,750,000 shares subject to possible redemption), respectively 175 175 Accumulated deficit ( 1,958,490 ) ( 1,435,746 ) Total Shareholders' Deficit ( 1,958,315 ) ( 1,435,571 ) TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' DEFICIT $ 60,164,076 $ 58,78

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View this 10-Q filing on SEC EDGAR