EMCGF 10-Q
Embrace Change Acquisition Corp. (EMCGF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from _______ to _______
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 19, 2025, there were ordinary shares (including 2,097,743 shares that have been redeemed but remained unpaid), $ par value issued and outstanding.
Table of Contents
| i |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EMBRACE CHANGE ACQUISITION CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Cash and investments held in trust account | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Due to third party | ||||||||
| Convertible promissory note – related party | ||||||||
| Promissory note – third party | ||||||||
| Total Current Liabilities | ||||||||
| Deferred underwriter fee payable | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Ordinary shares subject to possible redemption, shares issued and outstanding at redemption value of $ and $ per share as of June 30, 2025 and December 31, 2024, respectively | ||||||||
| Stockholders’ Deficit | ||||||||
| Ordinary Shares, par value $; shares authorized; (excluding shares subject to redemption, respectively) issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| 1 |
EMBRACE CHANGE ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Formation and operating costs | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (loss): | ||||||||||||||||
| Investment income earned on cash and investments held in Trust Account | ||||||||||||||||
| Loss on modification of deferred underwriting commission | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Total other income | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
| Basic and diluted net income (loss) per ordinary share | $ | ) | $ | $ | ) | $ | ||||||||||
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| 2 |
EMBRACE CHANGE ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
(Unaudited)
| Ordinary shares | Additional Paid in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Re-measurement of ordinary shares subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Re-measurement of ordinary shares subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Additional amount deposit into Trust Account subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance – June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
(Unaudited)
| Ordinary shares | Additional Paid in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Amount deposited into trust account subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Re-measurement of ordinary shares subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance – March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Re-measurement of ordinary shares subject to redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance – June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
| 3 |
EMBRACE CHANGE ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flow from operating activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Investment income earned on cash and investments held in Trust Account | ( | ) | ( | ) | ||||
| Loss on modification of deferred underwriting commission | ||||||||
| Interest expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Investment of cash in Trust Account | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flow from financing activities: | ||||||||
| Proceeds from convertible promissory note - related party | ||||||||
| Proceeds from related party for working capital purpose | ||||||||
| Proceeds from third party for working capital purpose | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Re-measurement of ordinary shares subject to redemption(1) | $ | $ | ||||||
| Extension funds attributable to ordinary shares subject to redemption | $ | $ | ||||||
| Deferred underwriting fee payable | $ | $ | ||||||
| (1) |
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
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EMBRACE CHANGE ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN
Embrace Change Acquisition Corp. (the “Company”) is a blank check company incorporated in the Cayman Islands on March 3, 2021. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities (“Business Combination”). The Company may pursue a business combination target in any business or industry.
As of June 30, 2025, the Company had not yet commenced any operations. All activity through June 30, 2025 relates to the Company’s formation, the Initial Public Offering (as defined below) and after the Initial Public Offering, searching for and identifying a Business Combination target, and prepare for a Business Combination. The Company will not generate any operating revenues until after the completion of its Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO (as defined below). The Company has selected December 31 as its fiscal year end. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The
Company’s sponsor is Wuren Fubao Inc., a Cayman Islands exempted company (the “Sponsor”). The registration statement
for the Company’s Initial Public Offering was declared effective on August 9, 2022. On August 12, 2022, the Company consummated
its Initial Public Offering of units (the “Units”, and, with respect to the ordinary shares included in the Units
being offered, the “Public Shares”), including the issuance of Units as a result of the partial exercise by EF Hutton,
division of Benchmark Investments, LLC (the “Representative”) of its over-allotment option (the “Over-Allotment Option”),
at $ per Unit, generating gross proceeds of $
Simultaneously
with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with the Sponsor of
Following
the closing of the Initial Public Offering on August 12, 2022, an amount of $
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a business combination solely if a vote is held to approve a business combination, an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company.
The shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $ per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. These ordinary shares were recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
| 5 |
If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended Articles of Association (as defined below), offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The Sponsor has agreed (a) to vote its founder shares, the ordinary shares included in the Private Units (the “Private Shares”) and any Public Shares purchased during or after the IPO in favor of a Business Combination, (b) not to propose an amendment to the Company’s Amended Articles of Association with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Ordinary shares) and Private Units (including underlying securities) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Amended Articles of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the Ordinary shares and Private Units (including underlying securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the IPO if the Company fails to complete its Business Combination.
On
August 9, 2023, the Company held an extraordinary general meeting of shareholders (the “First Extraordinary General Meeting”),
at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the Company the right
to extend the date by which the Company
In connection with the shareholders’ vote at the annual general meeting (“Annual General Meeting”) of shareholders held by the Company on October 20, 2023, ordinary shares were tendered for redemption, leaving ordinary shares subject to possible redemption still outstanding after the October 2023 redemption.
On
August 12, 2024, the Company held an extraordinary general meeting of shareholders (the “Second Extraordinary General
Meeting”), at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the
Company the right to extend the Combination Period twelve (12) times for an additional one (1) month each time, from August 12, 2024
to August 12, 2025, pursuant to the Trust Agreement, by deleting the second amended and restated memorandum and articles of
association in its entirety and substitute it with the third amended and restated memorandum and articles of association of the
Company; (b) as an ordinary resolution, an amendment to the Trust Agreement, to extend the Combination Period from August 12, 2024
to August 12, 2025, by depositing into the Trust Agreement $
| 6 |
On
September 10, 2024, the Company deposited $
On August 11, 2025, the Company held an extraordinary general meeting of shareholders (the “Third Extraordinary General Meeting”), at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the Company the right to extend the Combination Period from August 12, 2025 to August 12, 2026, pursuant to the Trust Agreement, by deleting the third amended and restated memorandum and articles of association in its entirety and substitute it with the fourth amended and restated memorandum and articles of association of the Company; (b) as an ordinary resolution, an amendment to the Trust Agreement, to extend the Combination Period from August 12, 2025 to August 12, 2026. In connection with the shareholders’ vote at the Third Extraordinary General Meeting of shareholders held by the Company on August 11, 2025, ordinary shares were tendered for redemption, leaving ordinary shares still outstanding after the August 2025 redemption.
On
August 11, 2025, the Company deposited $
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than five business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable, if any), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the IPO price per Unit ($).
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.25 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the company’s independent registered accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
| 7 |
On January 9, 2025, EMC Merger Sub 1 (“Purchaser”), a wholly owned subsidiary of the Company and a Cayman Island exempted company, was formed to be the surviving company after the reincorporation merger in connection with a contemplated business combination. It has no principal operations or revenue producing activities.
On January 9, 2025, EMC Merger Sub 2 (“Merger Sub”), a wholly owned subsidiary of the Purchaser and a Cayman Island exempted company, was formed to be the Merger Sub in connection with a contemplated business combination. It has no principal operations or revenue producing activities.
Business Combination Agreement
On January 26, 2025, the Company entered into a merger agreement (as it may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and between the Company, Purchaser, Merger Sub, and Tianji Tire Global (Cayman) Limited, a Cayman Islands exempted company (“Tianji”), pursuant to which (a) the Company will be merged with and into Purchaser (the “Reincorporation Merger”), with Purchaser surviving the Reincorporation Merger, and (b) Merger Sub will be merged with and into Tianji (the “Acquisition Merger”), with Tianji surviving the Acquisition Merger as a direct wholly owned subsidiary of Purchaser (collectively, the “Business Combination”). Following the Business Combination, Purchaser will be a publicly traded company.
Consideration
At the effective time of the Acquisition Merger, each Tianji Class A ordinary share will be converted into the right to receive one Reincorporation Merger Surviving Corporation Class A ordinary share and each Tianji Class B ordinary share will be converted into the right to receive one Reincorporation Merger Surviving Corporation Class B ordinary share, as outlined in the Merger Agreement.
Purchaser
will issue an aggregate of of its ordinary shares (“Purchaser Ordinary Shares”) with a deemed price per share
of US$, for a total value equal to the merger consideration, $
Issuance of Share Consideration
In connection with the Acquisition Merger, fractional shares of the Purchaser Ordinary Shares that would otherwise be issued to the Tianji Shareholders will be rounded down to the nearest whole share.
Liquidity and Capital Resources
As
of June 30, 2025, the Company had $
The
Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
Going Concern Consideration
The
Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s
assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company
is unsuccessful in consummating an Initial Business Combination by August 12, 2026 (as of the date of these unaudited interim consolidated
financial statements are issued, $
| 8 |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are presented in U.S. Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The interim consolidated financial statements as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024, respectively, are unaudited. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of the results for the interim periods. The accompanying balance sheet as of December 31, 2024, is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for fiscal the year ended December 31, 2024. The interim results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected through December 31, 2025 or for any future periods.
Principles of consolidation
The unaudited interim consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Use of Estimates
The preparation of unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited interim consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited interim consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
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Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had $
Cash and Investments Held in Trust Account
As
of June 30, 2025 and December 31, 2024, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills. All
of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on
the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments
held in Trust Account are included in investment income earned on cash and investments held in Trust in the accompanying statements of
operations. The estimated fair values of investments held in Trust Account are determined using available market information. As of June
30, 2025 and December 31, 2024, the estimated fair values of cash and investments held in Trust Account was $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
The Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
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In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2025 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:
| Description | Quoted Prices in Active Markets (Level 1) | Significant other Observable Inputs (Level 2) | Significant other Unobservable Inputs (Level 3) | |||||||||
| Assets | ||||||||||||
| Cash and Investments held in Trust Account | $ | $ | $ | |||||||||
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2024 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:
| Description | Quoted Prices in Active Markets (Level 1) | Significant other Observable Inputs (Level 2) | Significant other Unobservable Inputs (Level 3) | |||||||||
| Assets | ||||||||||||
| Cash and investments held in Trust Account | $ | $ | $ | |||||||||
Offering Costs Associated with the Initial Public Offering
Offering
costs consisted of legal, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to
the Initial Public Offering. With the partial exercise of the over-allotment, offering cost amounted to $
As discussed in Note 3, all of the ordinary shares sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with ASC 480, conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. In connection with the shareholders’ vote at the Extraordinary General Meeting on August 9, 2023, ordinary shares were tendered for redemption. On August 14, 2023, the Company accepted a reversal request for shares. As a result, a total of ordinary shares were redeemed, leaving ordinary shares subject to possible redemption after the August 7, 2023 redemption. In connection with the Annual General Meeting held on October 20, 2023, ordinary shares were tendered for redemption, leaving ordinary shares subject to possible redemption still outstanding. In connection with the shareholders’ vote at the Extraordinary General Meeting of shareholders held by the Company on August 12, 2024, ordinary shares were redeemed, leaving ordinary shares subject to possible redemption after the August 12, 2024 redemption.
Accordingly, as of June 30, 2025 and December 31, 2024, ordinary shares subject to possible redemption at the redemption amount were presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s consolidated balance sheets.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
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ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s
major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income
tax expense. There were
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero from inception to June 30, 2025.
Segment Reporting
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s chief operating decision maker has been identified as the Chief Executive Officer (“CODM”), who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating segment.
When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews key metrics, formation and operational costs and interest earned on cash and investments held in Trust Account which are included in the accompanying statements of operations.
The key measures of segment profit or loss reviewed by the Company’s CODM are interest earned on cash and investments held in Trust Account and formation and operational costs. The CODM reviews interest earned on cash and investments held in Trust Account to measure and monitor stockholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the trust agreement. Formation and operational costs are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a business combination within the business combination period. The CODM also reviews formation and operational costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited interim consolidated financial statements.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $
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Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and warrants issued as components of the Private Placement Units (the “Private Warrants”) since the exercise of the warrants are contingent upon the occurrence of future events. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the periods.
The following table reflects the calculation of basic and diluted net income (loss) per ordinary share:
For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | |||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Denominator: weighted average number of ordinary shares | ||||||||||||||||
| Basic and diluted net income (loss) per ordinary share | $ | ) | $ | $ | ) | $ | ||||||||||
Risks and Uncertainties
As a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The unaudited interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3. INITIAL PUBLIC OFFERING
On
August 12, 2022, the Company consummated its Initial Public Offering of Units (including the issuance of Units as a
result of the underwriter’s partial exercise of its over-allotment option), at $ per Unit, generating gross proceeds of $
Each
Unit consists of one ordinary share, one warrant and one right. Each whole warrant entitles the holder thereof to purchase one ordinary
share at a price of $
As
of August 12, 2022, the Company incurred offering costs of approximately $
NOTE 4. PRIVATE PLACEMENT
Simultaneously
with the closing of the IPO, the Company consummated the private placement (“Private Placement”) with the Sponsor of
The proceeds from the sale of the Private Units were added to the net proceeds from the Offering held in the Trust Account. The Private Units are identical to the Units sold in the Initial Public Offering, except there will be no redemption rights or liquidating distributions from the Company’s trust account with respect to the private shares, which will expire worthless if the Company does not consummate a business combination. With respect to the Private Warrants, as described in Note 9, the warrant agent shall not register any transfer of Private Warrants until after the consummation of an initial business. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless.
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NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
During
the period ended December 31, 2021, the Company issued an aggregate of shares of Ordinary shares to the Sponsor for an aggregate
purchase price of $
Subject to certain limited exceptions, the initial shareholders have agreed not to transfer, assign or sell their founder shares until six months after the date of the consummation of the Company’s Business Combination or earlier if, subsequent to Business Combination, the Company consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Due to Related Party
As
of June 30, 2025 and December 31, 2024, the amounts due to related party was $
Convertible Promissory Notes - Related Party
On
September 8, 2023, the Company issued an unsecured promissory note (the “September 2023 Convertible Note”), effective as
of September 8, 2023, in an amount of $
On
each of October 10, 2023, November 8, 2023 and December 14, 2023, the Company issued an unsecured promissory note (each is called “October
2023 Convertible Note”, “November 2023 Convertible Note” and “December 2023 Convertible Note”, respectively,
collectively with September 2023 Convertible Note were called “Convertible Promissory Notes”) amounting to $
From
January 1, 2024 to December 31, 2024, the Company issued five unsecured promissory notes (together with the convertible promissory notes
as described above, were called “Convertible Promissory Notes”) amounting to $
As
of June 30, 2025 and December 31, 2024, the Company has borrowed $
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Working Capital Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $
Office Space Provided by Sponsor
The Company currently maintain executive offices at 5186 Carroll Canyon Rd, San Diego, CA 92121. Such space was provided to the Company free of charge by the Sponsor.
NOTE 6. DUE TO THIRD PARTY
From
July 2024 to June 30, 2025, the Company borrowed an aggregated amount of $
NOTE 7. PROMISSORY NOTE - THIRD PARTY
On
August 5, 2024, the Company issued an unsecured promissory note, in an amount of $ to an unrelated third party, which are used
as the extension fee and/or working capital. The unpaid principal balance of this note bears an annual interest rate of nine point one
two seven percent (%) per annum. The note will be due two months after executed. On August 6, 2024, the Company received the $
For
the three months ended June 30, 2025 and 2024, the Company recorded $
NOTE 8. COMMITMENTS AND CONTINGENCIES
Registration Rights
The initial shareholders and their permitted transferees can demand that the Company register the founder shares, the private units and the underlying private shares and private warrants, and the units issuable upon conversion of working capital loans and the underlying ordinary shares, warrants and rights, pursuant to a Registration Rights Agreement signed on August 9, 2022. The holders of such securities are entitled to demand that the Company register these securities at any time after consummation of a Business Combination. Notwithstanding anything to the contrary, any holder that is affiliated with an underwriter participating in the Company’s IPO may only make a demand on one occasion and only during the five-year period beginning on the effective date of the registration statement. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a business combination; provided that any holder that is affiliated with an underwriter participating in the Company’s IPO may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the registration statement.
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The underwriters purchased the of additional Units to cover over-allotments, less the underwriting discounts and commissions.
The
underwriters were entitled to a cash underwriting discount of one percent (
In addition, the Company paid the representative of the underwriters, at closing of the Initial Public Offering, % of the of the IPO shares in the Company’s ordinary shares or ordinary shares as the underwriters’ over-allotment was partially exercised.
Right of First Refusal
For a period beginning on the closing of the Company’s IPO and ending 6 months from the closing of a business combination, the Company have granted D. Boral a right of first refusal to act as sole investment banker, sole book running manager and/or sole placement agent for any and all future private or public equity, equity-linked, convertible and debt offerings during such period. In accordance with FINRA Rule 5110(g)(6)(A), such right of first refusal shall not have a duration of more than three years from the commencement of sales in the Company’s IPO.
NOTE 9. STOCKHOLDERS’ DEFICIT
Ordinary
Shares — The Company is authorized to issue ordinary shares of with a par value of $ per share. Holders of
the Company’s
As of June 30, 2025 and December 31, 2024, there were ordinary shares issued and outstanding, excluding ordinary shares subject to possible redemption.
Warrants
— Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of
the Warrants (as defined below). The Warrants will become exercisable
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The Company may call the Warrants for redemption, in whole and not in part, at a price of $ per warrant:
| ● | at any time while the Warrants are exercisable, | |
| ● | upon not less than days’ prior written notice of redemption to each Warrant holder, | |
| ● | if, and only if, the reported last sale price of the ordinary share equals or exceeds $ per share, for any trading days within a -trading day period ending on the third trading day prior to the notice of redemption to Warrant holders, and | |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary share underlying such warrants at the time of redemption and for the entire -day trading period referred to above and continuing each day thereafter until the date of redemption. |
The Private Warrants (including the ordinary shares issuable upon exercise of the private warrants) will not be transferable, assignable or salable until 30 days after the completion of our Business Combination and they will not be redeemable by the Company so long as they are held by the initial shareholders or their permitted transferees. The initial shareholders, or their permitted transferees, have the option to exercise the Private Warrants on a cashless basis.
If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary share issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger, or consolidation. However, the Warrants will not be adjusted for issuances of ordinary share at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Warrants. Accordingly, the Warrants may expire worthless.
The
Company accounts for
Rights — Each holder of a right will receive one-eighth (1/8) of one ordinary share upon consummation of a Business Combination, even if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the unit purchase price paid for by investors in the IPO. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary share will receive in the transaction on an as- converted into ordinary share basis and each holder of a right will be required to affirmatively convert its rights in order to receive 1/8 share underlying each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).
Additionally, in no event will the Company be required to net cash settle the rights. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights. Accordingly, the rights may expire worthless.
NOTE 10. SUBSEQUENT EVENTS
Subsequent
to June 30, 2025, the Company received an aggregated amount of $
On August 11, 2025, the Company held the Third Extraordinary General Meeting of shareholders, at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the Company the right to extend the Combination Period from August 12, 2025 to August 12, 2026, pursuant to the Trust Agreement, by deleting the third amended and restated memorandum and articles of association in its entirety and substitute it with the fourth amended and restated memorandum and articles of association of the Company; (b) as an ordinary resolution, an amendment to the Trust Agreement, to extend the Combination Period from August 12, 2025 to August 12, 2026.
In connection with the shareholders’ vote at the Third Extraordinary General Meeting of shareholders held by the Company on August 11, 2025, ordinary shares were tendered for redemption, leaving ordinary shares still outstanding after the August 2025 redemption.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “Embrace Change,” “our,” “us” or “we” refer to Embrace change Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward- looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S. Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated in the Cayman Islands for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our Business Combination using cash from the proceeds of the initial public offering (the “IPO”) and the private placement of the private placement units, the proceeds of the sale of our securities in connection with our Business Combination, our shares, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments
Extension and Redemption
From January 2024 to August 2024, the Company deposited additional seven tranches of $100,000, for an aggregated of $700,000 into the Trust Account, extending the Termination Date to August 12, 2024.
On August 12, 2024, the Company held an extraordinary general meeting of shareholders (the “Second Extraordinary General Meeting”), at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the Company the right to extend the Combination Period twelve (12) times for an additional one (1) month each time, from August 12, 2024 to August 12, 2025, pursuant to the Trust Agreement, by deleting the second amended and restated memorandum and articles of association in its entirety and substitute it with the third amended and restated memorandum and articles of association of the Company; (b) as an ordinary resolution, an amendment to the Trust Agreement, to extend the Combination Period from August 12, 2024 to August 12, 2025, by depositing into the Trust Agreement $75,000 for each one-month extension. In connection with the shareholders’ vote at the Second Extraordinary General Meeting held by the Company on August 12, 2024, 2,903,151 ordinary shares were tendered for redemption, leaving 2,224,131 ordinary shares subject to possible redemption still outstanding after the August 2024 redemption.
On September 10, 2024, the Company deposited $75,000 into the Trust Account, extending the Termination Date to September 12, 2024. On May 8, 2025 and June 3, 2025, the Company deposited two tranches of $75,000, for an aggregated of $150,000, into the Trust Account.
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On August 11, 2025, the Company held an extraordinary general meeting of shareholders (the “Third Extraordinary General Meeting”), at which the Company’s shareholders approved the following proposals: (a) as a special resolution, giving the Company the right to extend the Combination Period from August 12, 2025 to August 12, 2026, pursuant to the Trust Agreement, by deleting the third amended and restated memorandum and articles of association in its entirety and substitute it with the fourth amended and restated memorandum and articles of association of the Company; (b) as an ordinary resolution, an amendment to the Trust Agreement, to extend the Combination Period from August 12, 2025 to August 12, 2026. In connection with the shareholders’ vote at the Third Extraordinary General Meeting of shareholders held by the Company on August 11, 2025, 2,097,743 ordinary shares were tendered for redemption, leaving 2,422,281 ordinary shares still outstanding after the August 2025 redemption.
On August 11, 2025, the Company deposited $400,000 into the Trust Account. Up to the date the unaudited interim consolidated financial statements were issued, the Company is obligated to deposit another $275,000, to the Trust Account. As of the date of these unaudited interim consolidated financial statements are issued, $275,000 of the required extension payments, has not been deposited into the Trust Account.
Nasdaq Notices
On April 23, 2024, the Company received a delisting determination letter from the Listing Qualifications of Nasdaq advising the Company that the Company has not paid its assessed fees required by Listing Rule 5250(f). The Company subsequently paid the outstanding fee.
On May 30, 2024, the Company received a delinquency notification letter from Nasdaq due to the Company’s non-compliance with Nasdaq Listing Rule 5250(c)(1) as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024.
On June 24, 2024, the Company received a notice from Nasdaq indicating that, unless the Company timely requests a hearing before a Nasdaq Hearings Panel (the “Panel”) by 4:00 p.m. Eastern Time on July 1, 2024, the Company’s securities (units, ordinary shares, warrants, and rights) would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on July 3, 2024, due to the Company’s non-compliance with the Minimum Holders Rule and the Reporting Rule. The Company timely requested a hearing before the Panel to appeal the Staff Determination and submitted a request for extension of stay. The suspension referenced in the Staff Determination has been stayed for a period of 15 calendar days until July 16, 2024 and the hearing has been scheduled on August 1, 2024.
On July 12, 2024, the Company submitted a written submission to Nasdaq. On July 25, 2024, the Company received a notice from Nasdaq indicating the grant of the Company’s request to extend the stay of suspension pending a hearing on August 1, 2024, and issuance of a final Panel decision. On August 1, 2024, the Company attended the Nasdaq hearing before the Panel.
On September 5, 2024, the Company received a delinquency notification letter from Nasdaq due to the Company’s non-compliance with Nasdaq Listing Rule 5250(c)(1) as a result of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024. On September 16, 2024, the Company filed its Form 10-Q for the fiscal quarter ended June 30, 2024.
On October 30, 2024, the Company received a letter from Nasdaq which confirmed that the Company regained compliance on September 16, 2024 with the filing requirement in Listing Rule 5250(c), as required by the Nasdaq hearing panel’s decision dated August 14, 2024. The Company is subject to a mandatory panel monitor for a period of one year from September 16, 2024. Under the terms of the panel monitor, in the event the Company is again out of compliance with the periodic filing rule during the monitoring period, the Company will have an opportunity to request a new hearing before the panel in order to maintain its listing, rather than being granted additional time to regain compliance or being afforded an applicable cure or compliance period.
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On August 14, 2025, the Company received a written notice from Nasdaq that the Company’s securities will be delisted from The Nasdaq Stock Market by reason of the failure of the Company to complete its initial business combination by August 9, 2025 (36 months from the effectiveness of its IPO registration statement) as required by IM-5101-2. Accordingly, trading in the Company’s Ordinary Shares, Warrants, Rights and Units will be suspended at the opening of business on August 21, 2025 and a Form 25-NSE will be filed by Nasdaq with SEC, which will remove the Company’s securities from listing and registration on the Nasdaq Stock Market.
Satisfaction and Discharge Agreement
On March 4, 2024, the Company and D. Boral Capital (“D. Boral”), formerly known as EF Hutton, division of Benchmark Investments, LLC, the underwriter of Company’s IPO, entered into a Satisfaction and Discharge of Indebtedness Pursuant to Underwriting Agreement dated August 9, 2022 (the “Satisfaction and Discharge Agreement”), pursuant to which, D. Boral agreed to revise the deferred underwriting fee of three point five percent (3.50%) of the gross proceeds of the initial public offering, or $2,587,499, to (1) $750,000 in cash on the date of the closing of the initial business combination (the “Closing”) and (2) 200,000 of registered and unrestricted shares of the Company, shall be issued and delivered to D. Boral at the Closing.
Financing from Debt
From July 2024 to December 2024, the Company received $775,000 from a subsidiary of Tianji (as defined below). These amounts are unsecured, non-interest bearing and due on demand. From January 2025 to June 2025, the Company borrowed $400,000 from Tianji and its subsidiaries, these amounts are unsecured, non-interest bearing and due on demand.
On August 5, 2024, the Company borrowed $300,000 from another unrelated third party, by issuing a promissory note. The unpaid principal balance of this note bears an annual interest rate of nine point one two seven percent (9.127%) per annum. The note will be due two months after executed. On August 6, 2024, the Company received the $300,000 in full under such note. On September 10, 2024, and September 27, 2024, the Company repaid $100,000 and $150,000, respectively, to the payee, leaving $50,000 in principal unpaid as of June 30, 2025. On October 5, 2024, the remaining principal of $50,000 was due and will be payable on demand. Up to the date the unaudited interim consolidated financial statements were issued, the principal of $50,000 remained unpaid and past due.
For the three months ended June 30, 2025 and 2024, the Company recorded $1,138 and $0 in interest expenses under the promissory note - third party. For the six months ended June 30, 2025 and 2024, the Company recorded $2,263 and $0 in interest expenses under the promissory note - third party. As of June 30, 2025 and December 31, 2024, the total outstanding under the promissory note- third party was $56,927 and $54,664, respectively.
Business Combination Agreement
On January 26, 2025, the Company entered into a merger agreement (as it may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and between the Company, EMC Merger Sub 1, a Cayman Islands exempted company and wholly owned subsidiary of the Company (“Purchaser”), EMC Merger Sub 2, a Cayman Islands exempted company and wholly owned subsidiary of Purchaser (“Merger Sub”), and Tianji Tire Global (Cayman) Limited, a Cayman Islands exempted company (“Tianji”), pursuant to which (a) the Company will be merged with and into Purchaser (the “Reincorporation Merger”), with Purchaser surviving the Reincorporation Merger, and (b) Merger Sub will be merged with and into Tianji (the “Acquisition Merger”), with Tianji surviving the Acquisition Merger as a direct wholly owned subsidiary of Purchaser (collectively, the “Business Combination”). Following the Business Combination, Purchaser will be a publicly traded company.
Consideration
At the effective time of the Acquisition Merger, each Tianji Class A ordinary share will be converted into the right to receive one Reincorporation Merger Surviving Corporation Class A ordinary share and each Tianji Class B ordinary share will be converted into the right to receive one Reincorporation Merger Surviving Corporation Class B ordinary share, as outlined in the Merger Agreement.
Purchaser will issue an aggregate of 45,000,000 of its ordinary shares (“Purchaser Ordinary Shares”) with a deemed price per share of US$10.00, for a total value equal to the merger consideration, $450,000,000 (the “Merger Consideration Shares”), to the shareholders of Tianji (the “Tianji Shareholders”) at the Business Combination closing (the “Closing”). Upon Closing, the Tianji Shareholders will no longer hold any rights in the Tianji ordinary shares they held prior to the Closing, and they will hold the right to receive their portion of the Merger Consideration Shares pursuant to the Merger Agreement.
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Issuance of Share Consideration
In connection with the Acquisition Merger, fractional shares of the Purchaser Ordinary Shares that would otherwise be issued to the Tianji Shareholders will be rounded down to the nearest whole share.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our IPO, the IPO, and after our IPO, searching for and identifying a business combination target, and prepare for a business combination. Following our IPO, we will not generate any operating revenues until after completion of our Business Combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after our IPO. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our consolidated financial statements. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
For the three months ended June 30, 2025, we had a net loss of $98,634, which consists of operating costs of $374,642 and interest expense of $1,138, partially offset by investment income earned on cash and investments held in trust account of $277,146. For the three months ended June 30, 2024, we had a net income of $677,230 which consists of investment income earned on cash and investments held in trust account of $755,157 partially offset by operating costs of $77,927.
For the six months ended June 30, 2025, we had a net loss of $188,258, which consists of operating costs of $730,504 and interest expense of $2,263, partially offset by investment income earned on cash and investments held in trust account of $544,509. For the six months ended June 30, 2024, we had a net income of $984,507 which consists of investment income earned on cash and investments held in trust account of $1,490,735 partially offset by operating costs of $127,727 and loss on modification of deferred underwriter commission of $378,501.
Liquidity and Capital Resources
As of June 30, 2025, we had cash of $469 on our balance sheet and a working capital deficit of $3,740,690.
We intend to use the funds held outside of the Trust Account, proceeds from Convertible Promissory Notes (as described below) and loans received from the unrelated third parties (as described below) for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination. The interest income earned on the investments held in the Trust Account are unavailable to fund operating expenses.
In order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of notes may be converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of June 30, 2025 and December 31, 2024, the Company borrowed $241,112 under Working Capital Loans, which was included in convertible promissory note - related party.
On September 8, 2023, the Company borrowed $10,000 from the Sponsor. The loan bears no interest and is repayable in full upon the consummation of the Company’s Business Combination. It is convertible at the Sponsor’s election upon the consummation of the Company’s Business Combination. Upon such election, this loan will convert, at a price of $10.00 per unit, into units identical to the private placement units issued in connection with the Company’s initial public offering.
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From October 2023 to December 2024, the Company borrowed $841,112 in total from our Chief Financial Officer, in form of convertible promissory notes, for working capital and extension deposits purposes (as described in Note 5 of the Notes to the Financial Statements). These loans bear no interest and are repayable in full upon the consummation of the Company’s Business Combination. They are convertible at the CFO’s election upon the consummation of the Company’s Business Combination. Upon such election, these loans will convert, at a price of $10.00 per unit, into units identical to the private placement units issued in connection with the Company’s initial public offering. Up to the date the financial statements were available to be issued, the total amounts borrowed from the CFO under convertible promissory notes were $841,112.
From October 2023 to December 2024, the Company’s CFO also paid $144,060, on behalf of us, to the third-party vendors for working capital purposes. These amounts are unsecured, non-interest bearing and due on demand. Up to the date the unaudited interim consolidated financial statements were available to be issued, the total amounts paid by the CFO were $144,060.
From July 2024 to December 2024, the Company borrowed $775,000 from Tianji and its subsidiaries. From January 2025 to June 2025, the Company borrowed $400,000 from Tianji and its subsidiaries. These amounts are unsecured, non-interest bearing and due on demand. The Company recorded them as due to third party on the consolidated balance sheet. As of June 30, 2025 and December 31, 2024, the total due to third party was $1,175,000 and $775,000, respectively. Subsequent to June 30, 2025, the Company received an additional $500,000 from Tianji and its subsidiaries for working capital purposes, resulting an aggregated of $1,675,000 due to third party up to the date the unaudited consolidated financial statements were issued.
On August 5, 2024, the Company borrowed $300,000 from another unrelated third party, by issuing a promissory note. The unpaid principal balance of this note bears an annual interest rate of nine point one two seven percent (9.127%) per annum. The note will be due two months after executed. On August 6, 2024, the Company received the $300,000 in full under such note. On September 10, 2024, and September 27, 2024, the Company repaid $100,000 and $150,000, respectively, to the payee, leaving $50,000 in principal unpaid as of June 30, 2025. On October 5, 2024, the remaining principal of $50,000 was due and will be payable on demand. Up to the date the unaudited interim consolidated financial statements were issued, the principal of $50,000 remained unpaid and past due.
For the three months ended June 30, 2025 and 2024, the Company recorded $1,138 and $0 in interest expenses under the promissory note - third party. For the six months ended June 30, 2025 and 2024, the Company recorded $2,263 and $0 in interest expenses under the promissory note - third party. As of June 30, 2025 and December 31, 2024, the total outstanding under the promissory note - third party was $56,927 and $54,664, respectively.
Going Concern Consideration
The Company expects to incur significant costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unsuccessful in consummating an Initial Business Combination by August 12, 2025 (as of the date of these unaudited interim consolidated financial statements are issued, $275,000 of the required extension payments has not been deposited into the Trust Account), the requirement that the Company cease all operations, redeem the Public Shares and thereafter liquidate and dissolve raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited interim consolidated financial statements are issued. The unaudited interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The accompanying unaudited interim consolidated financial statement has been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. The underwriter is entitled to a deferred fee of three point five percent (3.50%) of the gross proceeds of the Offering upon closing of the Business Combination, or $2,587,499. On March 4, 2024, we and D. Boral, entered into a satisfaction and discharge of indebtedness pursuant to underwriting agreement dated August 9, 2022 (the “Satisfaction and Discharge Agreement”), pursuant to which, the underwriter agreed to revise the deferred underwriting fee of $2,587,499, to (1) $750,000 in cash on the date of the closing of the initial business combination (the “Closing”) and (2) 200,000 of registered and unrestricted shares of us, shall be issued and delivered to the underwriter at the Closing. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. As of June 30, 2025, there were no critical accounting estimates.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As of the date of this report, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this report as we have conducted no operations to date.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company we are not required to make disclosures under this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the fiscal quarter ended June 30, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended June 30, 2025, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report include the risk factors described in the registration statements on Form S-1 (File Nos. 333-258221 and 333-265184) for our IPO filed with the SEC. As of the date of this Quarterly Report, there have been no material changes to the previously disclosed risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We issued an aggregate of 1,437,500 ordinary shares to certain of our initial shareholders on April 20, 2022. We subsequently declared a share dividend of 0.50 shares for each outstanding share, resulting in 2,156,250 founder shares being outstanding. On July 1, 2022, the sponsor surrendered an aggregate of 287,500 founder shares for no consideration, which surrender was effective retroactively, resulting in 1,868,750 shares being outstanding. As a result of the partial exercise of the representative’s over-allotment option, an aggregate of 20,536 founder shares were forfeited to us, which surrender was effective retroactively and resulting in an aggregate of 1,848,214 founder shares issued and outstanding. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”).
On August 12, 2022, we consummated our IPO of units (the “Units”), including the issuance of 892,855 Units as a result of the partial exercise of the representative’s over-allotment option. The Units issued in the IPO were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $73,928,550. D. Boral acted as the sole book-running manager for the IPO. US Tiger Securities, Inc. acted as the co-manager for the IPO. The securities in the IPO were registered under the Securities Act on two registration statements on Form S-1 (File Nos. 333-258221 and 333-265184) (as amended, the “Registration Statement”). The Securities and Exchange Commission declared the registration statements effective on May 16, 2022 and August 9, 2022, respectively.
Simultaneous with the consummation of the IPO, we consummated the private placement (“Private Placement”) with the sponsor of 373,750 units (the “Private Units”), generating total proceeds of $3,737,500. The Private Units are identical to the Units sold in the IPO except that the holder has agreed not to transfer, assign, or sell any of the Private Units or underlying securities (except in limited circumstances, as described in the Registration Statement) until the completion of the Company’s initial business combination. In addition, the warrants included in the Private Units are not redeemable if held by them or a permitted transferee. The sponsor was granted certain demand and piggy-back registration rights in connection with the purchase of the Private Units. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On August 12, 2022, a total of $75,776,764 of the net proceeds from the IPO and the Private Placement were deposited in a trust account established for the benefit of the public shareholders. This includes $72,039,264 of the net proceeds from the IPO (which amount includes $2,587,499 of the underwriters’ deferred discount) and $3,737,500 from the Private Placement.
Transaction costs of the Initial Public Offering with the exercise of the over-allotment amounted to $3,898,030 consisting of $739,286 of up-front underwriting fees and a deferred discount of $2,587,499 and $571,245 of other costs.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits.
| * | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 19, 2025 | EMBRACE CHANGE ACQUISITION CORP. | |
| By: | /s/ Zheng Yuan | |
| Name: | Zheng Yuan | |
| Title: | Chief Financial Officer (Principal Financial and Accounting Officer) | |
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