Cloudbreak Pharma Inc. (CLOUDBREAK-B) announced that HK$47.10 million of its June 2025 IPO proceeds were placed into North Rock Fund SPC on 3 July 2025, a move later deemed inconsistent with the use-of-proceeds plan outlined in its prospectus.
The Fund—designed for principal-protected, short-term capital growth—carries an expected annualised return of 2.53%. During preparation of the 2025 annual results, auditors determined the investment should be classified as “financial assets at fair value through profit or loss” rather than “cash and cash equivalents,” triggering a breach of the stated proceeds policy and disclosure requirements under Chapter 14 of the Hong Kong Listing Rules.
Although management cited the Fund’s low-risk profile, liquidity and superior yield compared with time deposits, the board resolved on 30 March 2026 to fully redeem the investment and return the capital to its original purposes. A redemption request has been submitted, and proceeds will be re-allocated strictly in line with the IPO plan once received.
The HK$47.10 million placement represents a percentage ratio above 5% but below 25% under Listing Rule metrics, classifying it as a discloseable transaction. The company had not announced the deal at inception due to a misinterpretation of classification and compliance requirements.
Cloudbreak stressed that the deviation has had no material adverse impact on operations. Remedial measures now in place include: immediate redemption of the Fund, re-circulation of internal-control policies, enhanced staff and director training on Listing Rules, and strengthened consultation with external legal, audit and compliance advisers.
Cloudbreak, a clinical-stage biotechnology firm focused on ophthalmology, reiterates that legal and regulatory compliance remains a priority and that its overall financial position and project funding for core products are unaffected.
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