ESH Acquisition (ESHA) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Interim Financial Statements For the six months ended June 30, 2025, the company reported a $1.28 million net loss and faces going concern doubts Condensed Balance Sheets The balance sheet shows total assets of $9.03 million and a stockholders' deficit of $1.37 million as of June 30, 2025 Condensed Balance Sheet Summary (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $518,354 | $1,346,843 | | Investments held in Trust Account | $8,412,253 | $8,485,212 | | Total Assets | $9,027,196 | $9,978,330 | | Liabilities & Equity | | | | Total Liabilities | $1,984,075 | $1,655,711 | | Class A common stock subject to possible redemption | $8,412,859 | $8,147,290 | | Total Stockholders' (Deficit) Equity | ($1,369,738) | $175,329 | Condensed Statements of Operations The company incurred a net loss of $1.28 million for the six months ended June 30, 2025, a reversal from a prior-year profit Condensed Statements of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | General and administrative expenses | $1,101,299 | $180,420 | $1,375,242 | $393,987 | | Interest earned on investments held in Trust Account | $86,443 | $1,570,573 | $172,694 | $3,135,890 | | Net (Loss) Income | ($1,051,810) | $1,020,047 | ($1,279,498) | $2,159,148 | | Basic and diluted net (loss) income per share | ($0.27) | $0.07 | ($0.33) | $0.15 | Condensed Statements of Changes in Stockholders' (Deficit) Equity Stockholders' equity shifted to a deficit of $1.37 million due to a net loss and accretion of redeemable common stock - Total stockholders' deficit increased to ($1,369,738) as of June 30, 2025, from equity of $175,329 at the end of 2024, driven by a net loss and share redemption accretion[15] Condensed Statements of Cash Flows Net cash used in operating activities increased, contributing to a significant decrease in the company's cash position Condensed Statements of Cash Flows Summary (for the six months ended June 30) | Cash Flow Activity | 2025 (Unaudited) | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,025,664) | ($965,313) | | Net cash provided by investing activities | $245,653 | $931,000 | | Net cash used in financing activities | ($3,000) | ($78,883) | | Net Change in Cash and Restricted Cash | ($783,011) | ($113,196) | | Cash and Restricted Cash – End of period | $563,832 | $1,766,031 | Notes to Condensed Financial Statements The notes highlight the company's SPAC status, extended combination deadline, significant share redemptions, and going concern doubts - The Company is a SPAC that raised $115 million in its June 2023 IPO to fund an Initial Business Combination[21][23] - The deadline to complete a business combination was extended to December 16, 2025, contingent on monthly Trust Account deposits[33][42] - In December 2024, 10.76 million shares were redeemed, resulting in a payout of approximately $115.7 million from the Trust Account[34][47] - On April 11, 2025, the Company received a Nasdaq non-compliance notice for its market value falling below the $50 million minimum requirement[40] - A working capital deficit of $1,369,132 and liquidity conditions raise substantial doubt about its ability to continue as a going concern[50][54] - The Company is subject to a 1% U.S. federal excise tax on stock repurchases, with a payable of $1,286,220 as of June 30, 2025[43][47] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the $1.28 million net loss to higher costs and lower interest income, acknowledging substantial going concern doubts Results of Operations Comparison (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net (Loss) Income | ($1,279,498) | $2,159,148 | | Operating Costs | $1,375,242 | $393,987 | | Interest Income on Trust Account | $172,694 | $3,135,890 | - The company's activities are limited to organizational tasks and identifying a target for an Initial Business Combination, generating no operating revenue[145] - As of June 30, 2025, the company had $518,354 in cash and $8,412,253 in the Trust Account, with its liquidity raising substantial doubt about its ability to continue as a going concern[156][158][162] - The Sponsor may provide working capital loans up to $1.5 million and has agreed to fund up to $360,000 in extension loans[159][160] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk Disclosure under this item is not required as the company qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[173] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period - Based on an evaluation as of June 30, 2025, the company's principal officers concluded that disclosure controls and procedures were effective[175] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[176] Part II. Other Information Item 1. Legal Proceedings The company is not currently involved in any legal proceedings - None[179] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred[179] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of proceeds from its $115 million IPO and a concurrent $7.47 million private placement - The IPO of 11,500,000 Units on June 16, 2023, generated gross proceeds of $115,000,000[180] - A simultaneous private placement of 7,470,000 warrants generated total proceeds of $7,470,000[181] - An aggregate of $116,725,000 from the IPO and private placement was deposited into the Trust Account[182] Item 3. Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None[184] Item 4. Mine Safety Disclosures This disclosure requirement is not applicable to the company's operations - None[184] Item 5. Other Information No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[184] Item 6. Exhibits This section lists the exhibits filed with the report, including required officer certifications - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[186] Part III. Signatures