Shreya Acquisition Group 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations We are a blank check company incorporated in the Cayman Islands as an exempted company with limited liability (meaning our public shareholders have no liability, as shareholders of the company, for the liabilities of the company over and above the amount paid for their shares) to serve as a vehicle to effect a merger, amalgamation, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location. We intend to utilize cash derived from the proceeds of our initial public offering (“IPO”), our securities, debt or a combination of cash, securities and debt, in effecting a business combination. The issuance of additional ordinary shares or preference shares: ● may significantly reduce the equity interest of our shareholders; ● may subordinate the rights of holders of ordinary shares if we issue preference shares with rights senior to those afforded to our ordinary shares; ● will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; ● may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and ● may adversely affect prevailing market prices for our securities. Similarly, if we issue debt securities, it could result in: ● default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations; ● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant; ● our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; ● our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding; ● our inability to pay dividends on our ordinary shares; ● using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; ● limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; ● increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and ● limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. 20 Results of Operations and Known Trends or Future Events We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the IPO. Following the IPO, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after the IPO. After the IPO, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of the IPO. For the three and nine months ended March 31, 2026, we had a net income of $16,397 (resulting from the reversal of an accrual upon being released from an obligation) and a net loss of $97,808, respectively, all of which consisted of general and administrative costs. Liquidity and Capital Resources On May 8, 2026, we consummated the IPO of 11,000,000 units including 1,000,000 additional public units as the underwriters’ over-allotment option was partially exercised (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $110,000,000. Simultaneously with the consummation of the Initial Public Offering and the sale of the Units, we consummated the private placement (“Private Placement”) of 191,750 units (the “Private Placement Units, and, with respect to the Class A ordinary shares included in the Private Placement Units being sold, the “Private Placement Shares”) to the sponsor, at a price of $10.00 per unit, generating gross proceeds of $1,917,500. Transaction costs amounted to $1,731,694, consisting of $600,000 of cash underwriting fees, $600,000 of deferred underwriting fees which will be paid on the consummation of an initial business combination, $171,600 representing the fair value of the representative shares issued to the underwriter and $360,094 of other offering costs, including legal and filing fees. We intend to use substantially all of the net proceeds of the IPO, including the funds held in the trust account, to acquire a target business or businesses and to pay our expenses relating thereto. To the extent that our share capital is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account, as well as any other net proceeds not expended, will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees that we had incurred prior to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such expenses. 21 Over the next 12 months, we will be using the funds held outside of the trust account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination. Out of the funds available outside the trust account, we anticipate that we will incur approximately: ● $250,000 of expenses for legal, accounting, due diligence, travelling and others related to any business combination; ● $150,000 of expenses for legal and accounting related to regulatory reporting obligations; ● $85,000 of NYSE continued listing fees; ● $60,000 to sponsor for administrative fee; and ● $150,000 for other miscellaneous expenses. If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the trust account is less than we expect as a result of the current interest rate environment, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. Going Concern Consideration In connection with the company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, “Presentation of Financial Statements — Going Concern,” management has determined that mandatory liquidation, should the company not complete a business combination and an extension of the deadline to do so not be approved by the shareholders of the company, and potential subsequent dissolution and the liquidity issue raise substantial doubt about the company’s ability to continue as a going concern if it does not complete a business combination. As of March 31, 2026, the Company had no cash and a working capital deficit of $232,990. However, on May 8, 2026, subsequent to the balance sheet date and prior to issuance of the financial statements, the company consummated its IPO, including the partial exercise of the underwriters’ over-allotment option, and the related Private Placement. Following the IPO, the company had $819,520 of cash held outside the trust account and a working capital surplus of $797,965. The company has incurred and expects to continue to incur significant costs as a publicly traded company, to evaluate business opportunities, and to close on a business combination. Such costs will be incurred prior to generating any operating revenues. These factors also raise substantial doubt about the company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management plans to complete a business combination before the mandatory liquidation date and anticipates that the company will have sufficient liquidity to fund its operations until then or one year from the date of issuance of these financial statements, whichever is earlier. However, there can be no assurance that the company will be able to consummate a business combination within the completion window or that liquidity will be sufficient to fund operations. The financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the company be unable to continue as a going concern. Related Party Transactions On July 22, 2025, an aggregate of 2,957,143 initial shares were issued to our initial shareholder, for an aggregate purchase price of $25,000, or approximately $0.008 per share. On February 25, 2026, in connection with the increase in the size of the IPO, we declared a stock dividend equal to 1,971,428 shares increasing the number of initial shares to 4,928,571 shares. The 4,928,571 initial shares held by our initial shareholder include an aggregate of up to 642,857 shares subject to forfeiture by our sponsor to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that our initial shareholder will collectively own 30.0% of our issued and outstanding shares after the IPO (without giving effect to the sale of the private units and assuming our initial shareholders do not purchase units in the IPO). As of March 31, 2026, there were 4,928,571 founder shares issued and outstanding, of which up to 214,286 founder shares are subject to forfeiture if the underwriters’ remaining over-allotment option is not exercised. 22 On August 27, 2025, we issued an unsecured promissory note to our sponsor with an aggregate principal amount of up to $300,000, which is non-interest-bearing. The promissory note was amended on each of January 9, 2026 and April 23, 2026 to extend the maturity. The principal of this note may be drawn down from time to time upon a written request from us to our sponsor. The principal under the note is payable on the earlier of (1) June 30, 2026 and (2) the completion of the IPO. As of March 31, 2026, there were no amounts outstanding under the promissory note. The sponsor paid certain formation, operating or deferred offering costs on behalf of the company. These amounts are due on demand and non-interest bearing. During the period from June 25, 2025 (inception) through March 31, 2026, the sponsor paid $168,245 on behalf of the company, of which $25,000 was paid in exchange for the issuance of the founder shares, resulting in a due to related party of $143,245, which was repaid upon the closing of the IPO. As of March 31, 2026, the amount due to the related party was $143,245. Our sponsor has agreed, commencing from the date that our securities are first listed on the NYSE through the earlier of the consummation of our initial business combination and our liquidation, to make available to us certain general and administrative services, including office space, administrative and support services, as we may require from time to time. We have agreed to pay our sponsor $5,000 per month for these services. No administrative service expense had been paid for the period from June 25, 2025 (inception) through March 31, 2026. If needed to finance transaction costs in connection with searching for a target business or consummating an intended initial business combination, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the working capital loans may be converted upon consummation of our business combination into private units at a price of $10.00 per unit. We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with Accounting Standards Codification (“ASC”) 718 - Compensation - Stock Compensation. As of March 31, 2026, no working capital loans were outstanding. Controls and Procedures We are not currently required to certify the effectiveness of our internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending June 30, 2027. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company will we be required to comply with the independent registered public accounting firm attestation requirement on internal control over financial reporting. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements, including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement. As of the date of this Quarterly Report, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as: ● staffing for financial, accounting and external reporting areas, including segregation of duties; ● reconciliation of accounts; ● proper recording of expenses and liabilities in the period to which they relate; ● evidence of internal review and approval of accounting transactions; ● documentation of processes, assumptions and conclusions underlying significant estimates; and ● documentation of accounting policies and procedures. 23 Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting. Once our management’s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when, or if, required by Section 404. The independent auditors may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. As of March 31, 2026, we have not identified any critical accounting policies or estimates. Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results As of March 31, 2026, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. JOBS Act We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (1) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (4) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements. 24 Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required for smaller reporting companies.