IPO and Financial Proceeds - The Company completed its initial public offering (IPO) on August 12, 2022, raising gross proceeds of $73,928,550 from the sale of 7,392,855 units at a price of $10.00 per unit[22]. - A total of $75,776,764 from the IPO and private placement was placed in a trust account for the benefit of public shareholders, with $72,039,264 from the IPO and $3,737,500 from the private placement[26]. - Following the IPO, $75,776,764 was placed in a trust account, equating to $10.25 per unit, for future business combinations[133]. - As of December 31, 2024, the Company had cash of $66,985 and a working capital deficit of $2,857,923[160]. - The anticipated per-share redemption price for public shareholders upon consummation of the initial business combination is expected to be $10.25[78]. - The per-share redemption amount for shareholders upon dissolution is approximately $10.25, which may be reduced due to creditor claims[96]. - The trust account holds $75,776,764 from the IPO and private placement, which may only be invested in U.S. government treasury obligations or money market funds[121]. Business Combination and Agreements - The Company entered into a Merger Agreement on January 26, 2025, for a business combination with Tianji Tire Global, which will be executed in two steps[38]. - The Sponsor Support Agreement was executed to approve the Merger Agreement and the proposed business combination[39]. - The Company Support Agreement was signed by certain Tianji shareholders to approve the Merger Agreement and the proposed business combination[41]. - The initial business combination must involve target businesses with a fair market value of at least 80% of the trust account balance at the time of the agreement[58]. - The company intends to structure its initial business combination to acquire 100% of the equity interest or assets of the target business[68]. - Initial shareholders have agreed to waive their redemption rights for founder shares if the business combination is not consummated within the specified period[95]. - The Company entered into a merger agreement on January 26, 2025, with Tianji Tire Global, involving a total merger consideration of $450,000,000[155]. Management and Operations - The management team emphasizes the importance of a mature and adaptable management team as a competitive edge in complex environments[55]. - The management team has extensive experience in multinational financial management, which will aid in identifying financial risks of potential investment targets[49]. - The company plans to pursue prospective targets in technology, internet, and consumer sectors, focusing on companies with established brands and stable cash flow[53]. - The company will conduct extensive due diligence on prospective target businesses, including meetings with management and financial reviews[65]. - The independent directors bring diverse international experience, enhancing the company's ability to identify and evaluate target businesses[51]. - The company currently has two executive officers who are not obligated to devote specific hours to company matters[104]. - The company may recruit additional managers post-business combination, but there is no guarantee of finding suitable candidates[73]. Compliance and Regulatory Matters - The Company received a delisting determination letter from Nasdaq in April 2024 but subsequently paid the outstanding fee[31]. - The Company requested a hearing before Nasdaq to appeal a suspension and delisting due to non-compliance with listing rules, with a hearing scheduled for August 1, 2024[33]. - The Company received a notice from Nasdaq on October 12, 2023, regarding non-compliance with the minimum holder requirement, with a deadline to submit a compliance plan by November 27, 2023[141]. - The Company was notified on December 22, 2023, of non-compliance for failing to timely file its Quarterly Report for the period ended September 30, 2023, with a 60-day window to submit a compliance plan[142]. Financial Performance and Projections - The Company recorded a net income of $1,442,593 for the year ended December 31, 2024, consisting of investment income of $2,377,420, offset by operating costs of $551,662 and other expenses[158]. - The Company expects to incur significant costs in pursuit of its financing and acquisition plans, raising concerns about its ability to continue as a going concern if a business combination is not completed by August 12, 2025[169]. - The Company has not generated any operating revenues to date and will not do so until after the completion of its business combination[157]. - The Company has not paid any cash dividends to date and does not intend to do so prior to completing its initial business combination[116]. - The Company intends to retain all earnings for business operations and does not anticipate declaring any dividends in the foreseeable future[116]. Internal Controls and Governance - As of December 31, 2024, the company's disclosure controls and procedures were deemed ineffective by the Certifying Officers[179]. - Management assessed the internal control over financial reporting and identified a material weakness due to inadequate segregation of duties and insufficient written policies[182]. - The company plans to enhance internal controls by increasing board size and consulting third-party professionals for complex accounting applications[183]. - The audit committee consists of independent directors, ensuring compliance with Nasdaq listing standards[200]. - Jiangping (Gary) Xiao is recognized as an "audit committee financial expert" under SEC rules[201]. - The compensation committee is responsible for overseeing executive compensation and may retain external advisers while considering their independence[204]. - The nominating committee oversees the selection of board nominees and consists solely of independent directors[205]. - Management intends to implement remediation steps to improve internal controls and address identified weaknesses[183]. Legal and Risk Factors - The company may face intense competition from other entities with similar business objectives, which may limit its ability to acquire larger target businesses[102]. - The company has not encountered any cybersecurity incidents since its IPO and does not consider itself to face significant cybersecurity risk[108]. - The company may be subject to legal proceedings, but is not currently involved in any material litigation[110]. - Officers and directors may have conflicts of interest due to multiple business affiliations and fiduciary obligations[213]. - The company has agreed not to consummate an initial business combination with entities affiliated with initial shareholders unless independent fairness opinions are obtained[216].
Embrace Change Acquisition (EMCG) - 2024 Q4 - Annual Report