YHN Acquisition I Ltd(YHNA) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements of YHN Acquisition I Limited for the three months ended March 31, 2025, and 2024, along with detailed notes explaining the company's organization, accounting policies, IPO, private placement, related party transactions, shareholder equity, commitments, segment information, and subsequent events Condensed Balance Sheets | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Cash | $537,012 | $669,250 | | Prepayments | $94,322 | $50,485 | | Total current assets | $631,334 | $719,735 | | Cash and marketable securities held in trust | $61,728,779 | $61,089,076 | | TOTAL ASSETS | $62,360,113 | $61,808,811 | | Accrued expenses | $33,000 | $64,997 | | Amount due to sponsor | $96,059 | $60,059 | | Total Current Liabilities | $129,059 | $125,056 | | Deferred underwriting compensation | $1,500,000 | $1,500,000 | | TOTAL LIABILITIES | $1,629,059 | $1,625,056 | | Ordinary shares subject to possible redemption | $61,728,779 | $61,089,076 | | Accumulated deficit | $(997,725) | $(905,321) | | Total Shareholders' Deficit | $(997,725) | $(905,321) | Unaudited Condensed Statements of Operations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Formation and operating costs | $(92,418) | $(25,347) | | Dividend income | $639,703 | $- | | Interest income | $14 | $- | | Other income | $- | $1 | | Total other income | $639,717 | $1 | | NET INCOME (LOSS) | $547,299 | $(25,346) | | Basic and diluted net income per share, ordinary shares subject to possible redemption | $0.09 | $- | | Basic and diluted net loss per share, ordinary shares not subject to possible redemption | $(0.01) | $(0.02) | Unaudited Condensed Statements of Changes in Shareholders' Deficit | Metric | December 31, 2024 | March 31, 2025 | | :---------------------------------------------------- | :---------------- | :------------- | | Balance as of | $(905,321) | $(997,725) | | Subsequent remeasurement of ordinary shares subject to possible redemption | $- | $(639,703) | | Net income for the period | $- | $547,299 | | Balance as of March 31, 2025 | N/A | $(997,725) | Unaudited Condensed Statements of Cash Flows | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) | $547,299 | $(25,346) | | Dividend income earned in cash and investments held in trust account | $(639,703) | $- | | Prepayments | $(43,837) | $- | | Accrued expenses | $(31,997) | $17,820 | | Net cash used in operating activities | $(168,238) | $(7,526) | | Net cash provided by financing activities | $36,000 | $69,600 | | NET CHANGE IN CASH | $(132,238) | $62,074 | | CASH, BEGINNING OF PERIOD | $669,250 | $- | | CASH, END OF PERIOD | $537,012 | $62,074 | Notes to Unaudited Condensed Financial Statements NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND - YHN Acquisition I Limited is a blank check company (SPAC) incorporated on December 18, 2023, for the purpose of acquiring or combining with one or more businesses[25] - The company consummated its Initial Public Offering (IPO) on September 19, 2024, selling 6,000,000 units at $10.00 per unit, generating gross proceeds of $60,000,000[28] - Simultaneously with the IPO, the company sold 250,000 private placement units to its Sponsor for $2,500,000[29] - Transaction costs for the IPO amounted to $2,840,203, including underwriting commissions and other offering costs[30] - The company has until December 18, 2025, to consummate a Business Combination[34] - On January 15, 2025, the Company entered into a legally binding letter of intent with Mingde Technology Limited for a business combination based on an equity valuation of $396 million[38] - Management has determined that if the Company is unsuccessful in consummating an initial business combination within the prescribed period, it raises substantial doubt about its ability to continue as a going concern[41] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The financial statements are prepared in accordance with U.S. GAAP and SEC interim financial reporting rules; the company is an "emerging growth company"[42][44] - The company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[45] - Ordinary shares subject to possible redemption are classified as temporary equity, and changes in redemption value are recognized immediately as a deemed dividend[49] - Rights issued upon IPO and private placements meet the criteria for equity classification under ASC 815[57] - The company is an exempted British Virgin Islands company and is not subject to income taxes in the British Virgin Islands or the United States for the periods presented[61] Fair Value Measurements of Assets Held in Trust Account | Description | March 31, 2025 | December 31, 2024 | Level 1 (Active Markets) | | :-------------------------------- | :------------- | :---------------- | :----------------------- | | U.S. Treasury Securities held in Trust Account | $61,728,779 | $61,089,076 | $61,728,779 (2025), $61,089,076 (2024) | NOTE 3 – INITIAL PUBLIC OFFERING - On September 19, 2024, the Company sold 6,000,000 Public Units at $10.00 per unit, each consisting of one ordinary share and one Public Right[68] - All 6,000,000 public shares include a redemption feature, requiring classification outside of permanent equity as temporary equity[69][72] - The Company recognizes changes in the redemption value of ordinary shares subject to possible redemption immediately as a deemed dividend[73] NOTE 4 – PRIVATE PLACEMENT - Simultaneously with the IPO, 250,000 Private Placement Units were sold to the Sponsor at $10.00 per unit[74] - Private Placement Units are identical to Public Units, except for certain registration rights and transfer restrictions[75] NOTE 5 – RELATED PARTY TRANSACTIONS - The Company issued 1,725,000 founder shares to initial shareholders, with 225,000 shares subject to forfeiture (which occurred in November 2024)[76] - The Sponsor purchased 250,000 Private Placement Units for $2,500,000[77] - An affiliate of the Sponsor provides administrative services for $10,000 per month; $30,000 in fees were incurred for Q1 2025[78] - Amount due to Sponsor was $96,059 as of March 31, 2025, an increase from $60,059 at December 31, 2024[79] NOTE 6 – SHAREHOLDERS' DEFICIT - The Company is authorized to issue 500,000,000 ordinary shares with no par value[81] - As of March 31, 2025, there were 1,750,000 ordinary shares issued and outstanding, excluding 6,000,000 shares subject to possible redemption[81] - Each right entitles the holder to one-tenth (1/10) of an ordinary share upon consummation of a Business Combination[82] NOTE 7 – COMMITMENTS AND CONTINGENCIES - Redemptions or repurchases after December 31, 2022, may be subject to a new U.S. federal 1% excise tax under the Inflation Reduction Act of 2022, potentially reducing cash available for a business combination[83][84] - Holders of Founder Shares, Private Placement Units, and certain other securities are entitled to registration rights[85] - The underwriters did not exercise their 45-day option to purchase 900,000 Units in November 2024[86] - A deferred underwriting commission of $1,500,000 (2.5% of gross IPO proceeds) is payable upon the closing of the Business Combination[87] NOTE 8 – SEGMENT INFORMATION - The Company has determined it has only one operating segment, with the Chief Financial Officer acting as the chief operating decision maker (CODM)[90] - The CODM reviews formation and operating costs and interest/dividend earned on investments in the Trust Account to allocate resources and assess financial performance[91][92] NOTE 9 – SUBSEQUENT EVENTS - On April 3, 2025, the Company entered into a Business Combination Agreement with Mingde Technology Limited[94] - The transaction involves a reincorporation merger and an acquisition merger, making Mingde a wholly-owned subsidiary of the Purchaser (the Company)[94] - The merger consideration is $396,000,000, based on 39,600,000 Purchaser Ordinary Shares valued at $10.00 each[94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting its status as a blank check company, the proceeds from its IPO and private placement, and the significant shift to net income in Q1 2025. It also addresses liquidity, capital resources, contractual obligations, and critical accounting policies, emphasizing the going concern risk if a business combination is not completed by December 18, 2025 Special Note Regarding Forward-Looking Statements - The report includes forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[97] - Readers are advised to refer to the Risk Factors section of the Company's Form S-1 for important factors that could cause actual results to differ[97] Overview - The Company is a blank check company incorporated on December 18, 2023, formed to effectuate a business combination[98] - The IPO on September 19, 2024, generated $60,000,000 from 6,000,000 units[99] - A private placement concurrent with the IPO generated $2,500,000 from 250,000 units sold to the Sponsor[100] - Net proceeds from the IPO and private placement are primarily intended for consummating a business combination[102] Results of Operations - The company's activities have been limited to IPO preparation and evaluating business combination candidates, with no operating revenues generated yet[103] - For the three months ended March 31, 2025, the company reported a net income of $547,299[104] - For the three months ended March 31, 2024, the company reported a net loss of $25,347[104] Liquidity and Capital Resources - As of March 31, 2025, the company had cash of $537,012[105] - $60,300,000 was held in a trust account for public shareholders as of September 19, 2024[107][132] - The company has until December 18, 2025, to complete its initial business combination[110] - Failure to complete a business combination by December 18, 2025, would lead to winding up, redemption of public shares, and liquidation, raising substantial doubt about the company's ability to continue as a going concern[111][112] Off-balance Sheet Financing Arrangements - As of March 31, 2025, the company has no off-balance sheet financing arrangements, obligations, assets, or liabilities[113] Contractual Obligations - The company has an agreement to pay its Sponsor $10,000 per month for general and administrative services, commencing September 19, 2024[114] - A deferred underwriting commission of $1,500,000 (2.5% of gross IPO proceeds) is payable upon the closing of the Business Combination[117] - Holders of Founder Shares, Private Placement Units, and certain other securities are entitled to registration rights[115] Critical Accounting Policies - Ordinary shares subject to possible redemption are classified as temporary equity, and changes in redemption value are recognized immediately as a deemed dividend[118] Ordinary Shares Subject to Possible Redemption Calculation | Metric | Amount | | :---------------------------------------------------- | :------------- | | Gross proceeds | $60,000,000 | | Less: Proceeds allocated to Public Rights | $(3,767,573) | | Less: Offering costs of Public Shares | $(2,661,858) | | Plus: Accretion of carrying value to redemption value - 2024 | $6,729,431 | | Plus: Subsequent remeasurement of ordinary shares subject to possible redemption - 2024 | $789,076 | | Ordinary shares subject to possible redemption as of December 31, 2024 | $61,089,076 | | Plus: Subsequent remeasurement of ordinary shares subject to possible redemption - 2025 | $639,703 | | Ordinary shares subject to possible redemption as of March 31, 2025 | $61,728,779 | - Net income (loss) per share is calculated by allocating undistributed income (loss) ratably between redeemable and non-redeemable ordinary shares, with remeasurement of accretion treated as a deemed dividend[120] Net Income (Loss) Per Share Allocation | Metric | Redeemable Ordinary Share (2025) | Non-Redeemable Ordinary Share (2025) | Redeemable Ordinary Share (2024) | Non-Redeemable Ordinary Share (2024) | | :---------------------------------------------------- | :------------------------------- | :----------------------------------- | :------------------------------- | :----------------------------------- | | Interest income earned in Trust Account | $639,717 | $- | $- | $- | | Total expenses | $(71,549) | $(20,869) | $- | $(25,346) | | Total allocation | $568,168 | $(20,869) | $- | $(25,346) | | Weighted-average shares outstanding | 6,000,000 | 1,750,000 | $- | 10,000 | | Basic and diluted net income (loss) per share | $0.09 | $(0.01) | $- | $(0.02) | Item 3. Quantitative and Qualitative Disclosures about Market Risk As of March 31, 2025, the company was not subject to material market or interest rate risk. Its funds held in the Trust Account are invested in short-term U.S. government securities or money market funds, which minimizes exposure to interest rate fluctuations - As of March 31, 2025, the company was not subject to any material market or interest rate risk[122] - Funds in the Trust Account are invested in short-term U.S. government treasury bills or money market funds, limiting exposure to interest rate risk[122] Item 4. Control and Procedures This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness at a reasonable assurance level as of March 31, 2025. It also confirms no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[123] - Disclosure controls and procedures provide reasonable, not absolute, assurance and may not prevent all errors or instances of fraud due to inherent limitations and resource constraints[124] Changes in Internal Control over Financial Reporting - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[125] PART II – OTHER INFORMATION Item 1. Legal Proceedings As of the filing date of this Form 10-Q, the Company is not a party to any legal proceedings - The Company is not involved in any legal proceedings as of the filing date[127] Item 1A. Risk Factors This section refers to the risk factors previously disclosed in the company's final prospectus for its Initial Public Offering filed on September 17, 2024, and states that there have been no material changes to these risk factors as of the date of this Quarterly Report - Risk factors are detailed in the final prospectus for the Initial Public Offering filed on September 17, 2024[128] - No material changes to the previously disclosed risk factors have occurred as of the date of this report[128] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the IPO on September 19, 2024, which generated $60,000,000 from 6,000,000 Public Units, and a concurrent private placement of 250,000 Private Units to the Sponsor for $2,500,000, issued under a Section 4(2) exemption. A total of $60,300,000 from these proceeds was placed in a trust account - The IPO on September 19, 2024, involved the sale of 6,000,000 Public Units for $60,000,000[129] - A private placement of 250,000 Private Units to the Sponsor generated $2,500,000, issued under a Section 4(2) exemption[130] - $60,300,000 was held in a trust account for public shareholders as of September 19, 2024[132] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - No defaults upon senior securities[134] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[135] Item 5. Other Information No other information is reported under this item - None[136] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including various certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[138] - Inline XBRL Instance Document and Taxonomy Extension Documents are filed as Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, and 104[138] SIGNATURES - The report was signed by Satoshi Tominaga, Chief Executive Officer, on May 12, 2025[142]