10-Q: Rising Dragon Acquisition Corp. Terminates Merger, Faces Nasdaq Delisting Risk

Rising Dragon Acquisition Corp. announced the termination of its merger agreement with HZJL Cayman Limited and is currently working to regain compliance with Nasdaq listing standards.

Summary

• Rising Dragon Acquisition Corp. (RDAC) filed its quarterly report for the period ending September 30, 2026.
• The company terminated its previously announced merger agreement with HZJL Cayman Limited on October 30, 2026.
• RDAC received a notice from Nasdaq on August 19, 2026, indicating its Market Value of Listed Securities (MVLS) was below the required $35 million for continued listing.
• The company has until February 16, 2027, to regain compliance with Nasdaq listing standards.
• As of September 30, 2026, RDAC had $144 in cash and a working capital deficit of $1,576,102.
• The company's ability to continue as a going concern is subject to substantial doubt if it fails to complete a business combination within its extended deadline.
• RDAC continues to seek a suitable business combination target.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the termination of a significant merger agreement and ongoing concerns about meeting Nasdaq listing requirements, despite some interest income.

Positives

• The company continues to actively seek a business combination, indicating ongoing efforts to find a suitable target.
• Interest income was generated from investments held in the Trust Account, amounting to $847,306 for the nine months ended September 30, 2026.

Negatives

• The merger agreement with HZJL Cayman Limited was terminated on October 30, 2026, halting a significant planned business combination.
• RDAC received a Nasdaq deficiency notice on August 19, 2026, for failing to meet the minimum Market Value of Listed Securities ($35 million) for continued listing.
• The company has a substantial working capital deficit of $1,576,102 as of September 30, 2026.
• Cash on hand outside the trust account is minimal ($144 as of September 30, 2026).
• The company's ability to continue as a going concern is subject to substantial doubt if a business combination is not completed within the specified timeframe.

Risks

• Failure to regain compliance with Nasdaq listing requirements by February 16, 2027, could lead to delisting.
• The company may not be able to identify a suitable target business or complete a business combination within the extended deadline of November 15, 2026 (potentially up to October 15, 2027).
• If a business combination is not completed, the company will be required to liquidate and dissolve, potentially resulting in less than $10.05 per share for public shareholders.
• Claims from creditors could take priority over public shareholders' claims in the event of liquidation.
• The company is an early-stage company and subject to all associated risks.

Future Outlook

The company intends to continue pursuing a business combination with an appropriate target business. However, there is no assurance that it will be able to identify a target or complete a business combination within the current extended deadline. Failure to do so will result in liquidation.

Management Comments

• Management has determined that if the Company is unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the IPO, the requirement that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the ability to continue as a going concern.
• We intend to monitor our MVLS and may, if appropriate, evaluate available options to resolve the deficiency or seek to comply with another Nasdaq listing criterion, such as the Equity Standard.
• We intend to continue to pursue the consummation of an initial business combination with an appropriate target business; however, there can be no assurance that we will be able to identify a target or complete a business combination within the Combination Period.

Industry Context

StockSavvy.ai notes that Rising Dragon Acquisition Corp. is a Special Purpose Acquisition Company (SPAC). The termination of its merger agreement and subsequent Nasdaq listing concerns are common challenges faced by SPACs, particularly those that have extended their timelines without securing a definitive business combination.

Comparison to Industry Standards

• The company's current financial state, with minimal cash and a significant working capital deficit, is typical for SPACs that have not yet completed a business combination and have extended their deadlines.
• The Nasdaq MVLS deficiency is a critical issue; many SPACs aim to complete their business combination before facing such delisting threats, as it significantly impacts their ability to attract investors and potential targets.
• The extended timeline for completing a business combination, now potentially up to October 15, 2027, is a strategy employed by some SPACs to find suitable targets, but it also increases the risk of liquidation if unsuccessful.

Related Party Transactions

• Promissory notes totaling $878,187 were outstanding as of the report date, issued to the Sponsor (Aurora Beacon LLC) and SZG Limited (designee of HZJL Cayman Limited). These notes are non-interest bearing and payable upon the closing of an initial business combination.
• The company had temporary advances of $757,441 from the Sponsor as of September 30, 2026, which are unsecured and interest-free.
• The Sponsor and its affiliates have agreed to vote their shares in favor of a business combination and not to redeem their founder shares or private placement shares.

Stakeholder Impact

• Public shareholders face the risk of losing their investment if a business combination is not completed by the deadline, leading to liquidation.
• The Nasdaq delisting threat could negatively impact the liquidity and market value of outstanding shares.
• Creditors may have claims that take priority over public shareholders in the event of liquidation.
• The Sponsor and its affiliates have agreed to certain voting and redemption restrictions, aligning their interests with the completion of a business combination.

Next Steps

• Continue to seek and evaluate potential target businesses for a business combination.
• Regain compliance with Nasdaq listing requirements.
• If a business combination is not completed by the deadline, the company will cease operations, redeem public shares, and liquidate.

Key Dates

Recommendation

The termination of a key merger agreement, coupled with the ongoing Nasdaq delisting threat and the company's precarious financial position (significant working capital deficit, minimal cash, and substantial doubt about going concern), strongly suggests a negative outlook. The company's ability to secure a new business combination within the extended deadline is highly uncertain, making the current investment highly speculative and risky.

Keywords

Special Purpose Acquisition Company, SPAC, Business Combination, Merger Agreement Termination, Nasdaq Listing, Going Concern, Trust Account, Working Capital