YHN Acquisition I Ltd(YHNA) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section provides the unaudited condensed consolidated financial statements for YHN Acquisition I Limited, including balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with comprehensive notes detailing the company's business background, accounting policies, and specific financial instrument treatments Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (Unaudited) (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------------------ | :------------------ | | Cash | $47,849 | $669,250 | | Total Current Assets | $101,009 | $719,735 | | Cash and marketable securities held in trust | $62,372,343 | $61,089,076 | | TOTAL ASSETS | $62,473,352 | $61,808,811 | | Total Current Liabilities | $267,048 | $125,056 | | TOTAL LIABILITIES | $1,767,048 | $1,625,056 | | Ordinary shares subject to possible redemption | $62,372,343 | $61,089,076 | | Total Shareholders' Deficit | $(1,666,039) | $(905,321) | Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Formation and operating costs | $(668,321) | $(16,165) | $(760,739) | $(41,512) | | Total other income | $643,571 | $1 | $1,283,288 | $2 | | NET (LOSS) INCOME | $(24,750) | $(16,164) | $522,549 | $(41,510) | | Basic and diluted net income per share (redeemable stock) | $0.02 | $– | $0.12 | $– | | Basic and diluted net loss per share (non-redeemable stock) | $(0.09) | $(0.01) | $(0.10) | $(0.03) | Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit | Metric | Balance as of Dec 31, 2024 (USD) | Subsequent remeasurement (Q1 2025) (USD) | Net income (Q1 2025) (USD) | Balance as of Mar 31, 2025 (USD) | Subsequent remeasurement (Q2 2025) (USD) | Net loss (Q2 2025) (USD) | Balance as of Jun 30, 2025 (USD) | | :------------------------------------------------ | :------------------------- | :--------------------------------- | :------------------- | :------------------------- | :--------------------------------- | :----------------- | :------------------------- | | Total Shareholders' Deficit | $(905,321) | $(639,703) | $547,299 | $(997,725) | $(643,564) | $(24,750) | $(1,666,039) | - The company's total shareholders' deficit increased from $(905,321) as of December 31, 2024, to $(1,666,039) as of June 30, 2025, primarily due to subsequent remeasurement of ordinary shares subject to possible redemption and net losses[17] Unaudited Condensed Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $522,549 | $(41,510) | | Net cash used in operating activities | $(787,401) | $(23,001) | | Net cash provided by financing activities | $166,000 | $44,562 | | NET CHANGE IN CASH | $(621,401) | $21,561 | | CASH, END OF PERIOD | $47,849 | $21,561 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's organizational structure as a blank check company, its business combination efforts, significant accounting policies, and specific financial instrument treatments, also covering related party transactions, commitments, contingencies, and segment information, highlighting the company's going concern considerations NOTE 1 - ORGANIZATION AND BUSINESS BACKGROUND - YHN Acquisition I Limited is a blank check company incorporated on December 18, 2023, for the purpose of effecting a Business Combination, and has not yet commenced operations, generating non-operating income from IPO proceeds[21][24] - The company consummated its Initial Public Offering (IPO) on September 19, 2024, selling 6,000,000 units at $10.00 each, generating $60,000,000, and simultaneously a private placement of 250,000 units to the Sponsor for $2,500,000[25][26] - On April 3, 2025, the company entered into a Business Combination Agreement with Mingde Technology Limited, valued at $396,000,000, which was later amended on June 3, 2025, to include an earnout mechanism of up to an additional $70,000,000 in Earnout Consideration Shares, adjusting the aggregate consideration to $326,000,000 plus earnout[35][37] - The company faces substantial doubt about its ability to continue as a going concern if it fails to consummate a Business Combination by December 18, 2025, as it would be required to cease operations, redeem public shares, and liquidate[39][40] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting rules, consolidating the company and its 100% owned subsidiaries, YHNA MS I Limited (PubCo) and YHNA MS II Limited (Merger Sub)[41][42][43] - The company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[43][44] - Ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value, with changes recognized immediately as deemed dividends[48][69][115] | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------------- | :-------------- | :---------------- | | Ordinary shares subject to possible redemption | $62,372,343 | $61,089,076 | - Rights issued upon IPO and private placements are classified as equity under ASC 815, as they meet the criteria for equity classification[54] - The company operates as a single segment, with the Chief Financial Officer (CODM) reviewing formation and operating costs and interest/dividend income from the Trust Account to manage resources and assess performance[84][85][86] 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, with the ordinary shares containing a redemption feature[66][67] NOTE 4 – PRIVATE PLACEMENT - Simultaneously with the IPO, 250,000 Private Placement Units were sold to the Sponsor at $10.00 per unit, generating $2,500,000, with these units being identical to Public Units except for certain registration rights and transfer restrictions[70][71][73] NOTE 5 – RELATED PARTY TRANSACTIONS - The Company issued 1,715,000 founder shares to the initial shareholder, with 225,000 shares forfeited in November 2024 due to the underwriter not exercising their over-allotment option[72] - An affiliate of the Sponsor provides administrative services for $10,000 per month, incurring $60,000 in fees for the six months ended June 30, 2025, and an unpaid balance of $60,000 as of June 30, 2025[74] - The Company had a temporary advance from its Sponsor of $226,059 as of June 30, 2025, up from $60,059 as of December 31, 2024, which is unsecured, interest-free, and has no fixed repayment terms[75] NOTE 6 – SHAREHOLDERS' DEFICIT - The Company is authorized to issue 500,000,000 ordinary shares with no par value, with 1,750,000 shares issued and outstanding (excluding 6,000,000 shares subject to possible redemption) as of June 30, 2025, and December 31, 2024[76] - Each right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of a Business Combination, with no additional consideration required[77] NOTE 7 – COMMITMENTS AND CONTINGENCIES - The company may be subject to a new U.S. federal 1% excise tax on stock repurchases (including redemptions) under the Inflation Reduction Act of 2022 for transactions occurring after December 31, 2022, which could reduce cash available for a business combination[78][79] - Holders of Founder Shares, Private Placement Units, and certain other securities are entitled to registration rights, requiring the Company to register such securities for resale, with the Company bearing the associated expenses[80][112] - The underwriters did not exercise their 45-day option to purchase 900,000 Units in November 2024[81][113] - Underwriters are entitled to a deferred cash underwriting discount of $1,500,000 (2.5% of gross IPO proceeds) upon the closing of the Business Combination, subject to a minimum of $500,000[82][114] NOTE 8 – SEGMENT INFORMATION - The Company operates as a single operating segment, with the Chief Financial Officer (CODM) reviewing formation and operating costs and interest/dividend income from the Trust Account to manage resources and assess performance[84][85][86] NOTE 9 – SUBSEQUENT EVENTS - The Company has evaluated all events or transactions that occurred after the balance sheet date up through the date the unaudited condensed consolidated financial statements were issued, in accordance with ASC Topic 855[87] 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, detailing its status as a blank check company, the IPO and private placement, the proposed business combination with Mingde, and the associated financial performance and liquidity challenges, including a going concern warning Overview - YHN Acquisition I Limited is a blank check company formed to effect a business combination, which it consummated its IPO on September 19, 2024, raising $60,000,000, and a simultaneous private placement of $2,500,000[91][92][93] - The company entered into a Business Combination Agreement with Mingde Technology Limited on April 3, 2025, later amended on June 3, 2025, to include an earnout mechanism, with an aggregate consideration of $326,000,000 plus up to $70,000,000 in Earnout Consideration Shares[96][98] Results of Operations - The company's activities since inception have been limited to IPO preparation and evaluating business combination candidates, with no operating revenues generated yet[99] | Period | Net Income (Loss) (USD) | Primary Components | | :----------------------------- | :---------------- | :---------------------------------------------------- | | Six months ended June 30, 2025 | $522,549 | Formation and operating costs, dividend income, interest income | | Six months ended June 30, 2024 | $(41,510) | Formation and operating costs, dividend income, interest income | | Three months ended June 30, 2025 | $(24,750) | Formation and operating costs, dividend income, interest income | | Three months ended June 30, 2024 | $(16,164) | Formation and operating costs, other income | Liquidity and Capital Resources | Metric | As of June 30, 2025 (USD) | | :----- | :------------------ | | Cash | $47,849 | - The company's liquidity is primarily from the $60,000,000 IPO proceeds and $2,500,000 private placement proceeds, with $60,300,000 held in a trust account and $737,704 available for working capital outside the trust account as of September 19, 2024[103][104][106] - The company faces substantial doubt about its ability to continue as a going concern if it fails to complete a business combination by December 18, 2025, which would trigger liquidation and dissolution[108][109] Off-balance Sheet Financing Arrangements - As of June 30, 2025, the company has no obligations, assets, or liabilities considered off-balance sheet arrangements and has not entered into any such arrangements[110] Contractual Obligations - The company has an agreement to pay its Sponsor $10,000 monthly for administrative services, commencing September 19, 2024, until the earlier of business combination completion or liquidation[111] - Holders of Founder Shares, Private Placement Units, and certain other securities are entitled to registration rights, requiring the Company to register such securities for resale, with the Company bearing the associated expenses[112] - Underwriters are entitled to a deferred cash underwriting discount of $1,500,000 (2.5% of gross IPO proceeds) upon the closing of the Business Combination, subject to a minimum of $500,000[114] Critical Accounting Policies - Ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value, with changes recognized immediately as deemed dividends[115] | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------------- | :-------------- | :---------------- | | Ordinary shares subject to possible redemption | $62,372,343 | $61,089,076 | - Net income (loss) per share is calculated in accordance with ASC Topic 260, allocating undistributed income (loss) ratably between redeemable and non-redeemable ordinary shares, with remeasurement of accretion treated as deemed dividends[116] | Metric | Redeemable Ordinary Shares (3M ended Jun 30, 2025) (USD) | Non-Redeemable Ordinary Shares (3M ended Jun 30, 2025) (USD) | Redeemable Ordinary Shares (6M ended Jun 30, 2025) (USD) | Non-Redeemable Ordinary Shares (6M ended Jun 30, 2025) (USD) | | :------------------------------------------------ | :------------------------------------------------- | :--------------------------------------------------- | :------------------------------------------------- | :--------------------------------------------------- | | Basic and diluted net income (loss) per share | $0.02 | $(0.09) | $0.12 | $(0.10) | Item 3. Quantitative and Qualitative Disclosures about Market Risk As of June 30, 2025, the company was not subject to material market or interest rate risk, as the net proceeds from its IPO held in the Trust Account are invested in short-term U.S. government securities or money market funds - As of June 30, 2025, the company was not subject to any material market or interest rate risk[119] - Proceeds from the IPO held in the Trust Account are invested in U.S. government treasury bills, notes, or bonds with a maturity of 180 days or less, or in money market funds investing solely in U.S. treasuries, minimizing interest rate risk due to their short-term nature[119] Item 4. Control and Procedures Management, with the participation of its Certifying Officers, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[120] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[122] 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 a party to any legal proceedings as of the filing date of this Form 10-Q[124] Item 1A. Risk Factors The company refers to the risk factors disclosed in its final prospectus dated September 17, 2024, for its Initial Public Offering, stating that there have been no material changes to these factors as of the date of this Quarterly Report - No material changes to the risk factors disclosed in the final prospectus dated September 17, 2024, have occurred as of the date of this Quarterly Report[125] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the IPO of 6,000,000 Public Units and the simultaneous private placement of 250,000 Private Units to the Sponsor, both on September 19, 2024, generating gross proceeds of $60,000,000 and $2,500,000 respectively, with $60,300,000 placed in a trust account - On September 19, 2024, the company consummated its IPO of 6,000,000 Public Units at $10.00 per unit, generating $60,000,000[126] - Simultaneously, a private placement of 250,000 Private Units was made to the Sponsor at $10.00 per unit, generating $2,500,000, issued under a Section 4(2) exemption from registration[127] - As of September 19, 2024, $60,300,000 was held in a trust account for public shareholders, comprising IPO proceeds and $300,000 from the private placement[129] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[130] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[131] Item 5. Other Information During the quarter ended June 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025[132] 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 certifications and XBRL documents - The report includes various exhibits, such as certifications from principal executive and financial officers (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[133][134] SIGNATURES - The report was signed on July 31, 2025, by Poon Man Ka, Christy, Chief Executive Officer (Principal Executive Officer) of YHN Acquisition I Limited[136][138]