UY Scuti Acquisition Corp. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K. Overview We are a blank check company incorporated in the Cayman Islands and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities, which we refer to throughout this annual report as our business combination. We intend to effectuate our initial business combination using cash from the proceeds of the Initial Public Offering and the sale of the private placement units, and the proceeds of potential sales of our securities in connection with our initial business combination, debt or a combination of cash, stock and debt. We expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful. Pursuant to our Amended and Restated Memorandum and Articles of Association, as amended, if we are unable to complete our initial business combination within the Prescribed Time Frame of twelve (12) months from the consummation of our IPO, subject to our ability to extend such time period by up to twelve (12) months, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (which interest shall be net of amounts withdrawn to pay our income taxes), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our Board of Directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Recent Developments Business Combination Agreement On July 18, 2025, we entered into the Merger Agreement with Isdera Group Limited, a Cayman Islands company (“Isdera Group”), a company that shall become the parent company of Xinghui Automotive Technology (Hainan) Co., Ltd, which is in the business of designing automobiles in the People’s Republic of China (“Xinghui Technology”), and Xinghui Technology’s Principal Shareholders for a business combination. The Merger Agreement contemplates that (i) UYSC shall form the Purchaser in the Cayman Islands as an exempted company and a wholly-owned subsidiary and (ii) the Purchaser shall form a company in the Cayman Islands as an exempted company and a wholly-owned subsidiary (the “Merger Sub”) for the purposes of consummating the business combination transactions described in the Merger Agreement. Pursuant to the Merger Agreement, we will merge with and into the Purchaser, resulting in its shareholders becoming shareholders of the Purchaser and concurrently therewith, Merger Sub will merge with and into Isdera Group, with Isdera Group surviving the merger and resulting in the Purchaser acquiring 100% of the issued and outstanding equity securities of Isdera Group (the “Acquisition Merger”). Pursuant to the Merger Agreement, the aggregate consideration to be paid to Isdera Group Shareholders for the Acquisition Merger is such number of newly issued PubCo Ordinary Shares determined by dividing the net value of Isdera Group, which was agreed to be $1,000,000,000, by $10.00 per share. Concurrently with the execution of the Merger Agreement, a principal shareholder of Isdera Group entered into a support agreement with UYSC, pursuant to which such shareholder of Isdera Group agreed not to transfer its shares of Isdera Group and to vote in favor of the Business Combination, subject to the terms of such shareholder support agreement. Sponsor Loan On September 12, 2025, we issued the Sponsor 2025 Note in the principal amount of up to $1,000,000 to Sponsor. The Sponsor 2025 Note bears no interest and initially provided that we shall repay the principal balance on the earlier of: (i) March 31, 2026 or (ii) the date on which we consummate a business combination. The principal balance may be prepaid at any time. Once an amount is drawn down under the Note, it shall not be available for future drawdown requests even if prepaid. The Sponsor 2025 Note was subject to customary events of default, the occurrence of certain of which entitles the Sponsor to declare, by written notice, the unpaid principal balance thereon and all other sums payable with regard to the Sponsor 2025 Note becoming due and payable within five (5) business days. Further, at any time on or prior to the maturity date, the Sponsor may elect to convert the outstanding principal balance of the Sponsor 2025 Note into units of our securities at a conversion price equal to $10.00 per unit. Each unit consists of one ordinary share and one right to receive one-fifth of one ordinary share. The terms of the units are identical to the private placement units sold by us simultaneously with the closing of its initial public offering. Effective as of March 31, 2026, the Company and Sponsor agreed to amend and restate the Sponsor 2025 Note (the “Amended Sponsor Note”) to extend the maturity date thereof to be the earlier of: (i) March 31, 2027 or (ii) the date on which we consummate a business combination. Other than the foregoing terms, the Amended Note has the same terms as the Sponsor 2025 Note. 82 Table of Contents 2026 Extraordinary General Meeting On March 31, 2026, we held the Extraordinary General Meeting. At the Extraordinary General Meeting, holders of our Ordinary Shares approved certain amendments to our Second Amended and Restated Memorandum and Articles of Association (the “Charter Amendment Proposal”) and an amendment to our Investment Management Trust Agreement with Continental Stock Transfer & Trust Company (the “Trust Amendment Proposal”). In accordance with the Charter Amendment Proposal, we received the approval of our shareholders to amend our Amended and Restated Memorandum and Articles of Association to (i) extend the date by which we must complete a business combination up to four times from April 1, 2026 to April 1, 2027, with each extension comprised of a three-month extension period, provided that the Sponsor or its designees cause to be deposited to the Trust Account the amount provided for in the Trust Agreement and (ii) provide that we will not withdraw any amounts out of the interest from the Trust Account to pay dissolution expenses. In accordance with the Trust Amendment Proposal, our shareholders approved the amendment of our Investment Management Trust Agreement to extend the period of time within which we must complete a business combination from two times, each by an additional three-month period to October 1, 2026, to a total of four times, each by an additional three-month period to April 1, 2027 (each an “Extension Period”), provided that the Sponsor and/or its designees deposit $450,000 into the Trust Account for each Extension Period. The Trust Agreement was also amended to provide that (x) if the extension fee is not timely deposited into the Trust Account, we shall have a period of thirty (30) days to pay any applicable past due payment for the extension fee and if we fail to make any applicable past due payment during the cure period, then we shall promptly liquidate the Trust Account and the property in the Trust Account shall be distributed to the public shareholders and (y) we will not withdraw any amounts out of the interest from the Trust Account to pay dissolution expenses. In connection with the Charter Amendment Proposal and Trust Amendment Proposal, we agreed that (i) if it extends the time period within which to consummate a business combination and contributes the revised extension fee to the Trust Account in connection with such election, it intends to file a Current Report on Form 8-K to disclose such event and (ii) if the shareholders approve the Charter Amendment Proposal and the Trust Amendment Proposal, we would not seek another shareholder vote to approve a further change to the terms and conditions concerning extending the time period within which to consummate a business combination In connection with the shareholder votes at the Extraordinary General Meeting, holders of 2,437,288 Ordinary Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.38 per share. As a result, approximately $25,302,078 was removed from the Trust Account to pay such holders and approximately $34,390,068 remained in the Trust Account. Following these redemptions, we had 5,221,060 Ordinary Shares, including 3,312,712 Public Shares, outstanding. Extension Loan Effective as of March 31, 2026, Sun Peisha, an individual and the designee of the Sponsor, loaned us the aggregate amount of $450,000, which sum was deposited into the Trust Account in order to extend the time that we have to consummate a Business Combination for the first three-month extension period. On April 25, 2026, we issued the Extension Note to the lender to evidence the loan. The Extension Note bears no interest and provides that we shall repay the outstanding principal on the date on which we consummate a business combination. On such maturity date, the entire outstanding principal balance of the Extension Note shall be converted into units of our securities at a conversion price of $10.00 per unit, with each unit consisting of one Ordinary Share and one right to receive one-fifth of one Ordinary Share. Further, on June 30, 2026, we caused an additional amount of $450,000 to be deposited into the Trust Account in order to further extend the time that we have to consummate our initial business combination to October 1, 2026. The second extension payment was loaned to us by Isdera HK Limited, an affiliate of Isdera Group. Results of Operations 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 initial public offering and subsequent to our initial public offering, identifying a target company for an initial business combination. Following the initial public offering, we will not generate any operating revenue until after completion of our initial business combination. We generated non-operating income in the form of interest income on investments held in trust and cash. 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 related to our initial business combination. 83 Table of Contents For the fiscal year ended March 31, 2026, we had a net income of $783,344, which consists of interest earned on cash held in the Trust Account of $2,197,604, offset by operating costs of $1,414,260. For the fiscal year ended March 31, 2025, and for the period from January 18, 2024 (inception) through March 31, 2024, we had a net loss of $156,520 and $6,748, respectively, all of which consisted of formation and operating costs. Liquidity and Capital Resources As of March 31, 2026, we had $8,846 in cash and cash equivalents held outside of the Trust Account, a working capital deficit of $1,052,099 and a shareholders’ deficit of $1,036,501. For the year ended March 31, 2026, we had a net income of $783,344, which consists of interest earned on cash held in the Trust Account of $2,197,604, offset by operating costs of $1,414,260. For the fiscal year ended March 31, 2026, we had a negative cash flow from operating activities of $843,315. As of March 31, 2025, we had $17,221 in cash and cash equivalents, a working capital deficit of $138,268 and shareholders’ deficit of $163,268. For the fiscal year ended March 31, 2025, we had a net loss of $156,520 and negative cash flow of $203,779 in operating activities. We have incurred and expect to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our liquidity needs prior to the consummation of the IPO had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares and the loan under an unsecured promissory note from the Sponsor of $500,000. In connection with the closing of our IPO, the approximately $337,584 drawn down under the unsecured promissory note was repaid in full. On April 1, 2025, we consummated the initial closing of our IPO of 5,000,000 units (the “Units”), at $10.00 per Unit, generating gross proceeds of $50,000,000. In connection with the IPO, the underwriters were granted a 45-day option (the “Over-Allotment Option”) to purchase up to 750,000 additional units to cover over-allotments (the “Option Units”), if any. In two separate closings of the Over-Allotment Option on April 7, 2025 and April 9, 2025, we sold an additional 750,000 Option Units at a price of $10.00 per Option Unit and raised additional gross proceeds of $7,500,000. Simultaneously with the closing of our IPO, including the full exercise of the Over-Allotment Option, we consummated the sale of 240,848 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, generating total gross proceeds of $2,408,840, including the cancellation of $337,500 of indebtedness. Each Private Placement Unit consists of one ordinary share and one right to receive one-fifth (1/5 th ) of one ordinary share. The Private Placement was conducted as a non-public transaction and, as a transaction by an issuer not involving a public offering, is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act. Upon the closing of the IPO and the private placement, a total of $57,500,000 was placed in a trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company as a trustee and will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and that invest only in direct U.S. government treasury obligations. Except for the withdrawal of interest earned on the amounts in the trust account to fund the Company’s taxes, if any, or upon the redemption by public shareholders of Ordinary Shares in connection with certain amendments to the Company’s amended and restated memorandum and articles of association, none of the funds held in the trust account will be released until the completion of the Company’s initial business combination or the redemption by the Company of 100% of the outstanding Ordinary Shares issued by the Company in the Initial Public Offering if the Company does not consummate an initial business combination within the Prescribed Time Frame. We intend to use substantially all of the net proceeds of the IPO and the private placement, including the funds held in the Trust Account, in connection with our initial business combination and to pay our expenses relating thereto. To the extent that our capital stock 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 which 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. 84 Table of Contents We will use funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. We also have ongoing professional and other costs to maintain our reporting, listing, compliance and administrative requirements of being a publicly traded company. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses. The Company currently believes that it does not need additional capital to satisfy its liquidity needs beyond the net proceeds from the consummation of the IPO and the proceeds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Initial Business Combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, 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 complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Our sponsor, an affiliate of our sponsor or our officers and directors may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our 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. Up to $1,500,000 of such loans may be convertible into private placement units at a price of $10.00 per unit. Such units would be identical to the private placement units issued to our sponsor. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. In addition, if we raise additional funds through equity or convertible debt issuances, our public shareholders may suffer significant dilution, and these securities could have rights that rank senior to our public shares. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to our equity securities and could contain covenants that restrict our operations. The Company has incurred and expects to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a Business Combination. In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that as of March 31, 2026, that the Company has sufficient funds for the working capital needs of the Company until a minimum of one year from the date of issuance of these financial statements. The Company cannot assure that its plans to consummate an initial business combination will be successful. In addition, if the Company is unable to complete a Business Combination within the Combination Period, the Company’s board of directors would proceed to commence voluntary liquidation and thereby a formal dissolution of the Company. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the time period we have to complete our initial business combination. As a result, management has determined that such an additional condition also raises substantial doubt about the Company’s ability to continue as a going concern. The financial statement does not include any adjustments that might result from the outcome of this uncertainty. 85 Table of Contents Going Concern Consideration As of March 31, 2026, we had $8,846 of cash and cash equivalents, a working capital deficit of $1,052,099 and shareholders’ deficit of $1,036,501. For the fiscal year ended March 31, 2026, we had an accumulated deficit of $2,027,528 and a negative cash flow from operating activities of $843,315. Subsequent to the consummation of the IPO, our liquidity requirements have been satisfied through the net proceeds from the IPO and the Private Placement. We have incurred, and expect to continue to incur, significant professional fees and costs to maintain our status as a publicly traded company, as well as significant transaction costs in connection with pursuing the consummation of a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, on September 12, 2025, we issued the Sponsor 2025 Note in the principal amount of up to $1,000,000 to our Sponsor. The Note bears no interest and after giving effect to the amendment to the Sponsor 2025 Note as provided for in the Amended 2025 Note, it is repayable by us to the Sponsor in full on the earlier of (i) March 31, 2027 or (ii) the date on which we consummate a business combination. The principal balance may be prepaid at any time. At any time on or prior to the maturity date, the Sponsor may elect to convert the outstanding principal balance of the Note into units of our securities at a conversion price of $10.00 per unit. Each unit consists of one ordinary share and one right to receive one-fifth of one ordinary share. As of March 31, 2026, the principal amount due and owing under the Sponsor 2025 Note was $313,401. Our Amended and Restated Memorandum and Articles of Association originally provided that we will have until 12 months from the closing of our IPO, or up to 18 months from the closing of the IPO, to consummate an initial business combination. Following the approval of the Charter Amendment Proposal and Trust Amendment Proposal at our Extraordinary General Meeting held on March 31, 2026, if we do not consummate an initial business combination by April 1, 2027, we will be required to redeem the public shares and thereafter liquidate and dissolve. Accordingly, there is a possibility that an initial business combination may not be completed within the prescribed period of time. In connection with our assessment of going concern considerations in accordance with Accounting Standards Update (“ ASU ”) 2014-15, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management has determined that if we are unsuccessful in consummating an initial business combination within the prescribed period of time from the closing of the IPO, the requirement that we cease all operations, redeem the public shares, and thereafter liquidate and dissolve raises substantial doubt about our ability to continue as a going concern within one year after the date the unaudited financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for certain general and administrative services, including office space, utilities and administrative services, provided to the Company. We began incurring these fees on April 1, 2025 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination or the Company’s liquidation. We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay: (1) the Sponsor a monthly fee of $10,000 for certain general and administrative services, including office space, utilities and administrative services, provided to us; (2) our legal counsel a monthly fee of $5,000 for professional services as legal consulting. We began incurring these fees on April 1, 2025, and will continue to incur these fees monthly until the earlier of the completion of a Business Combination or our liquidation. Underwriting Agreement The underwriters of our IPO, Maxim Group, LLC (“Maxim”), were entitled to a cash underwriting discount of 1.75% of the gross proceeds of the IPO, or $875,000 (or $1,006,250 including the full exercise of the Over-Allotment Option). Additionally, we issued the underwriter 4% of the gross proceeds of the IPO as underwriting discounts and commissions in the form of Representative Shares at a price of $10.00 per ordinary share, which equaled 200,000 shares (or 230,000 shares if the underwriter’s overallotment option is exercised in full) upon the consummation of the IPO. In connection with the closing of the IPO, we issued 200,000 Representative Shares to the underwriter. In connection with the issuance and sales of the Option Units, we issued an additional 30,000 Representative Shares to Maxim, the representative of the underwriters. 86 Table of Contents Critical Accounting Policies Basis of Presentation The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying audited financial statements as of March 31, 2026 has been prepared in accordance with U.S. GAAP and the rules of the SEC. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Ordinary Shares Subject to Possible Redemption All of the 5,750,000 ordinary shares sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection with UYSC’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to UYSC’s amended and restated certificate of incorporation. UYSC accounted for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (ASC 480). Ordinary shares subject to mandatory redemption (if any) were classified as a liability instrument and will be measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features Redemption Rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within UYSC’s control) were classified as temporary equity. At all other times, ordinary shares were classified as stockholders’ equity. In accordance with ASC 480-10-S99, UYSC classified the ordinary shares subject to redemption outside of permanent equity as the redemption provisions are not solely within its control. Given that the 5,750,000 ordinary shares sold as part of the units in the IPO were issued with other freestanding instruments (i.e., rights), the initial carrying value of ordinary shares classified as temporary equity has been allocated to the proceeds determined in accordance with ASC 470-20. If it is probable that the equity instrument will become redeemable, UYSC has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. UYSC has elected to recognize the changes in redemption value as a deemed dividend and charges against retained earnings or, in the absence of retained earnings, by charges against additional paid-in capital, over an expected 12-month period, which is the initial period that UYSC has to complete a Business Combination. 87 Table of Contents Use of Estimates In preparing these financial statements in conformity with U.S. GAAP, the Company’s management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Deferred Offering Costs The Company complies with the requirements of ASC 340-10-S99-1. Deferred offering costs consist of legal, accounting, and other costs (including underwriting discounts and commissions) incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to shareholders’ equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. As of March 31, 2025, the Company had deferred offering costs of $222,095. Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. Fair Value of Financial Instruments ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC Topic 820 establishes a fair value hierarchy for inputs, which represents the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of UYSC. Unobservable inputs reflect UYSC’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: ● Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that UYSC has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. ● Level 2 - Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. ● Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The fair value of UYSC’s assets and liabilities, which qualify as financial instruments under ASC Topic 820 approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The carrying amounts reported in the balance sheet for cash and cash equivalents, marketable securities held in trust account, accounts payable and accrued expenses and due to related parties each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period between the origination of such instruments and their expected realization and their current market rate of interest. Recent Accounting Standards Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement. 88 Table of Contents