Here's an updated guide to BEST SPAC I Acquisition Corp., drawing from their annual report for the year ended December 31, 2025.

BEST SPAC I Acquisition Corp. Annual Report - Your Investment Guide

Considering an investment in BEST SPAC I Acquisition Corp.? This guide helps you understand their activities this past year and what it means for your money. We'll translate the key details from their annual report into plain English, making it accessible even without a finance background.

This summary will cover essential aspects, including:

• What the company does and its performance this year
• Key financial figures and cash usage
• Major achievements and hurdles faced
• Financial health: cash, debt, and available funds
• Significant risks that could impact your investment
• Competitive landscape and leadership
• Future plans and next steps for their merger
• Market and regulatory changes affecting the company

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Business Overview (What the Company Does)

BEST SPAC I Acquisition Corp. operates as a Special Purpose Acquisition Company (SPAC), often called a "blank check company." Its sole mission is to raise capital from investors through an Initial Public Offering (IPO) and then use those funds to acquire and merge with an existing private company, effectively taking that private company public. Unlike traditional businesses, BEST SPAC I does not yet have its own operations, products, or services.

The year ended December 31, 2025, marked a crucial period for BEST SPAC I. They successfully launched their IPO and identified a merger partner. Here's how they performed:

• Successful IPO: On June 16, 2025, BEST SPAC I completed its IPO, raising $55 million by selling 5.5 million "units" to the public. Each unit included one Class A ordinary share and one "right." This "right" is not a full share; it promises you one-tenth (1/10) of a Class A ordinary share once the business combination is complete.
• Partner Secured! The year's most significant development occurred on September 25, 2025. BEST SPAC I announced a definitive agreement to merge with HDEducation Group Limited (HDE), an education company. This merger represents a critical step toward BEST SPAC I fulfilling its mission. The deal values HDE at $300 million, to be paid entirely in stock. This means HDE's current owners will receive shares in the new, combined public company.

As a blank check company, BEST SPAC I's performance for the year centered on its ability to raise capital and secure a merger target, both of which it successfully achieved.

A quick note on their shares: The company issues Class A ordinary shares (held by public investors) and Class B ordinary shares (held by the founders/sponsors). It has also authorized preference shares, though none are currently issued. Before a merger, Class B shareholders (the founders) elect all company directors. After the merger, Class A and Class B shares generally vote together on most matters.

Financial Performance (Revenue, Profit, Year-over-Year Changes)

As a non-operating SPAC, BEST SPAC I does not generate traditional revenue from sales. Its financial activities primarily involve managing raised funds and covering the costs of seeking a merger.

For the year ended December 31, 2025:

• Interest Income: The company earned approximately $1.2 million from interest on the funds held in its trust account. This represents its primary source of non-operating income.
• Operating Expenses: General and administrative expenses, including legal, accounting, and due diligence costs related to identifying a merger target, totaled approximately $2.5 million.
• Net Loss: Consequently, the company reported a net loss of approximately $1.3 million for the year. This loss is typical for a SPAC in its pre-merger phase, as it incurs costs without generating operating revenue.

Management Discussion (MD&A Highlights)

Major Wins and Challenges This Year

Major Wins:

• Successful IPO: Raising $55 million from public investors provides a significant capital base for the merger.
• Securing a Merger Agreement: Entering a definitive agreement with HDEducation Group Limited fulfills the primary goal of any SPAC, as they identified a business they believe is a good fit within the year.

Challenges:

• No Over-Allotment Exercise: The underwriters did not exercise their option to sell an additional 825,000 units. This can sometimes suggest less initial demand than anticipated during the IPO.
• Merger Not Finalized: Although an agreement is in place, the merger with HDEducation Group Limited still requires several steps, including regulatory approvals and shareholder votes, before it can be completed.

Financial Health (Debt, Cash, Liquidity)

BEST SPAC I's financial health primarily depends on its trust account and working capital:

• Trust Account: The $55 million raised from the public IPO resides securely in a special "trust account." This money is specifically reserved either to complete the merger with HDEducation or, if the merger fails, to be returned to public shareholders who own Class A ordinary shares.
• Private Placement Funds: The Sponsor (the group that established the SPAC) raised an additional $2.77 million through a private sale of units.
• Cash Outside Trust: As of December 31, 2025, the company held approximately $1.5 million in cash outside the trust account. It intends to use these funds to cover operating expenses and merger-related costs.
• Current Liabilities: The company reported approximately $0.8 million in current liabilities, mainly expenses that have been incurred but not yet paid.
• No Operating Debt: Since it has no active business, BEST SPAC I carries no traditional operating debt. Its funds are held solely for the purpose of the merger.

Risk Factors (Key Risks)

For a SPAC like BEST SPAC I, the biggest risks center on its core mission to complete a merger:

• Merger Completion Risk: The most significant risk is that the merger with HDEducation Group Limited may not close. If the deal collapses, BEST SPAC I would likely liquidate, returning the trust account money to Class A shareholders. In this scenario, your "rights" would expire worthless, meaning you would lose their entire value.
• Redemption Risk: Public shareholders can redeem their Class A shares for their proportionate share of the trust account funds if they do not approve the merger or simply prefer cash. If many shareholders redeem their shares, the cash remaining in the trust account could become insufficient to complete the merger. Alternatively, the combined company might have very little cash to operate, potentially jeopardizing the deal or its future prospects.
• Dilution Risk:
  • Rights Conversion: Upon merger completion, your "rights" convert into Class A shares (1/10th of a share per right). This conversion will increase the total number of outstanding shares.
  • Fractional Rights: It's crucial to understand that fractional rights are typically worthless. For example, if you hold 15 rights, you would likely receive 1 Class A share (for 10 rights), and the remaining 5 rights would expire without value. Investors must hold rights in multiples of 10 to receive full shares.
  • Future Financing: The company might need to raise additional capital to complete the merger or support the combined business post-merger. With 100 million Class A shares authorized, issuing new shares could significantly dilute existing shareholders' ownership and reduce the value of your investment.
• Post-Merger Performance & Valuation: Even if the merger completes, there's no guarantee that HDEducation Group Limited will perform as expected. HDE's $300 million valuation relies on projections and market conditions that may not materialize. The education sector itself carries inherent business risks (e.g., regulatory changes, competition, technological disruption) that will become risks for the combined entity.
• Liquidation Deadline: BEST SPAC I faces a deadline of June 16, 2027 (24 months from its IPO) to complete a business combination. If they do not complete a merger by this date, the company will be forced to liquidate, returning trust funds to Class A shareholders and rendering rights worthless.
• Liquidity and Trading: While BEST SPAC I's shares and units are listed on Nasdaq, the market for SPAC securities can sometimes be less liquid or more volatile than for established operating companies.
• Conflicts of Interest: The company's officers and directors may have other business interests. These could potentially create conflicts of interest when they make decisions regarding the merger.

Competitive Position

As a SPAC, BEST SPAC I does not hold a "competitive position" in an industry in the traditional sense. Its "competition" primarily consisted of other SPACs vying for attractive private companies to merge with. Now that they have identified HDEducation, their focus shifts entirely to successfully completing that transaction and supporting the combined entity's growth.

Future Outlook (Guidance, Strategy)

BEST SPAC I's future hinges entirely on successfully completing the merger with HDEducation Group Limited. The next key steps in this process include:

1. Regulatory Approvals: Obtaining necessary approvals from relevant government and regulatory bodies.
2. Shareholder Vote: BEST SPAC I's public shareholders must approve the merger agreement. This is also when shareholders can choose to redeem their shares.
3. Closing the Transaction: Once approvals are secured and conditions met, the merger will officially close.

Upon completion, BEST SPAC I will essentially transform into HDEducation (or its parent company after the merger). Its performance will then depend on the operational success and growth of the education business itself. The company's goal is to become a publicly traded education company.

Leadership, Sponsor, and Strategy

No specific leadership changes were mentioned during this period. The company's strategy has remained consistent: to find and merge with a suitable private company. The merger agreement with HDEducation Group Limited directly executes this strategy. The Sponsor plays a critical role in a SPAC, providing initial capital and expertise.

Market Trends and Regulatory Environment

The broader market and regulatory environment for SPACs have seen increased scrutiny. Regulators, including the SEC, have focused on SPAC disclosures, accounting treatments, and investor protections. This increased oversight, combined with fluctuating market sentiment and higher redemption rates in the SPAC market, can impact the likelihood of merger completion and the combined entity's post-merger performance. These trends create a more challenging environment for SPACs to successfully complete their transactions and deliver value to shareholders.