Financial Performance - The Company recorded a net loss of $89,624 for the three months ended March 31, 2025, consisting of operating costs of $355,862 and interest expense of $1,125, partially offset by investment income of $267,363 [137]. - For the three months ended March 31, 2024, the Company had a net income of $357,077, primarily from investment income of $735,578, offset by operating costs of $49,800 and a loss on modification of deferred underwriter commission of $378,501 [138]. Cash and Working Capital - As of March 31, 2025, the Company had cash of $17,229 and a working capital deficit of $3,214,910 [139]. Borrowings and Debt - The Company has borrowed $775,000 from a subsidiary of Tianji from July 2024 to December 2024, and an additional $300,000 from Tianji and its subsidiaries from January 2025 to April 2025, all of which are unsecured and non-interest bearing [128]. - The Company borrowed a total of $841,112 from the Chief Financial Officer in the form of convertible promissory notes, which are repayable upon the consummation of the Business Combination [143]. - The CFO also paid $144,060 to third-party vendors for working capital, which is due on demand [144]. - From July 2024 to March 2025, the Company borrowed a total of $975,000 from Tianji and its subsidiaries, with an additional $100,000 received after March 31, 2025, bringing the total due to third parties to $1,075,000 [145]. - The Company issued a promissory note for $300,000 with an annual interest rate of 9.127%, of which $50,000 remained unpaid as of March 31, 2025 [146]. - Interest expenses under the promissory note for the three months ended March 31, 2025, were recorded at $1,125, with total outstanding amounts of $55,789 [147]. Acquisition Plans - The Company entered into a merger agreement on January 26, 2025, with Tianji Tire Global (Cayman) Limited, involving a total merger consideration of $450,000,000 [131][133]. - The Company has incurred significant costs in pursuit of its acquisition plans and cannot assure the success of completing a Business Combination [116]. - The Company has incurred significant costs related to financing and acquisition plans, raising concerns about its ability to continue as a going concern if the Initial Business Combination is not completed by August 12, 2025 [148]. Shareholder Actions - 2,903,151 ordinary shares were tendered for redemption during the extraordinary general meeting on August 12, 2024, leaving 2,224,131 ordinary shares still subject to redemption [119]. Financial Obligations - The underwriter is entitled to a deferred fee of $2,587,499, which will be revised to $750,000 in cash and 200,000 shares upon the closing of the Business Combination [150]. Accounting and Estimates - As of March 31, 2025, there were no critical accounting estimates affecting the financial statements [151]. - Management does not anticipate that any recently issued accounting pronouncements will materially affect the Company's financial statements [152]. Business Combination Timeline - The Company has the right to extend the Termination Date of its Business Combination up to ten additional times by depositing $75,000 per month, with the current Termination Date extended to October 12, 2024 [120]. - 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 [132]. Off-Balance Sheet Arrangements - There are no off-balance sheet arrangements or long-term liabilities as of March 31, 2025 [149].
Embrace Change Acquisition Corp.(EMCGU) - 2025 Q1 - Quarterly Report