Vernal Capital Acquisition Corp. 10-Q

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations References to the “Company,” “our,” “us” or “we” refer to Vernal Capital Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes related thereto. 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. Overview Vernal Capital Acquisition Corp. (the “Company”) is a blank check company incorporated on July 28, 2025 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities (the “Business Combination”). As of April 30, 2026, the Company had not yet commenced operations. All activity since inception through April 30, 2026, relates to the Company’s formation, its initial public offering (the “IPO”), and the identification and evaluation of prospective target businesses for a Business Combination. The Company will not generate any operating revenues until the completion of a Business Combination. The Company generates non-operating income in the form of interest earned on the funds held in the Trust Account. The Company has selected January 31 as its fiscal year end. Initial Public Offering and Private Placement The Company’s registration statement for its initial public offering (the “IPO”) was declared effective on May 5, 2026. On May 7, 2026, the Company consummated the IPO of 10,000,000 units (the “Unit”) at a price of $10.00 per Unit, generating gross proceeds of $100,000,000. Simultaneously with the closing of the IPO, the Company completed the sale of 251,250 private placement units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit, generating gross proceeds of $2,512,500. A total of $100,500,000, comprised of proceeds from the IPO and a portion of the private placement, was deposited into a U.S.-based Trust Account maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except for any redemption associated with the Company’s seeking shareholder approval for an extension of time to complete a Business Combination, payment of taxes or as otherwise described in its registration statement for its IPO, the proceeds held in the trust account will not be released until the earlier of the completion of the Business Combination and the redemption of 100% of the outstanding public shares if the Company has not completed a Business Combination in the required time period. The remaining proceeds are held outside the Trust Account and are available to fund working capital needs. Liquidity and Capital Resources As of April 30, 2026, the Company had cash of $16,299 and working capital deficit of $366,201. The Company’s liquidity needs prior to the consummation of the IPO had been satisfied through a payment from its Sponsors, Xesse Ventures Limited and Vernal One Limited of $25,000 for 2,875,000 ordinary shares (the “Founder Shares”), and the loan under an unsecured promissory note from Vernal One Limited of $300,000. 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. 16 Going Concern Consideration The Company has incurred and expects to continue to incur significant costs in pursuit of the consummation of an initial Business Combination. In addition, the Company currently has until August 7, 2027 (unless the Company extends such period by amending its Amended and Restated Memorandum and Articles of Association) to consummate the initial Business Combination. If the Company does not complete a Business Combination within the prescribed timeline, the Company will trigger an automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Memorandum and Articles of Association. 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,” the Company has determined that it has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful within the Combination Period. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. Therefore, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. Results of Operations For the three months ended April 30, 2026, we had a net loss of $25,515, all of which consisted of formation and operating costs. The Company did not have any operations or financial activity prior to July 28, 2025 (its inception date), and thus no prior period comparative information is presented. Contractual Obligations Administrative Services Agreement On August 13, 2025, the Company entered into an administrative services agreement with Vernal One Limited (the “Administrative Services Agreement”), commencing on the effective date of the registration statement of the IPO through the earlier of the consummation of the initial Business Combination or the Company’s liquidation, to pay Vernal One Limited $10,000 per month for office space and administrative and support services. On April 17, 2026, the Company and Vernal One Limited entered into an amendment to the Administrative Services Agreement, pursuant to which the monthly fee was adjusted to $6,666.67. For the three months ended April 30, 2026, the Company incurred no expenses under this agreement. Underwriting Agreement We granted the underwriters a 45-day option following the effective date of the registration statement for the IPO to purchase up to 1,500,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. As of the date of this Quarterly Report on Form 10-Q, the over-allotment option has not yet expired. To the extent the over-allotment option is not exercised in full or in part, up to 375,000 Founder Shares will be forfeited by the Sponsors. The underwriter is entitled to (i) an underwriting discount of $0.05175 per unit, or $517,500 (which remains unchanged if the over-allotment option is exercised in full or in part) in the aggregate, which was paid in cash at the closing of the IPO, (ii) 1% of the gross proceeds of the IPO, or 100,000 shares, which were issued in the form of representative shares at the closing of the IPO (such representative shares shall be registered so as to circumvent reliance on the Rule 144 exemption and shall only therein be subject to FINRA’s 180-day lock-up period rule), and (iii) 1% of the gross proceeds of the IPO, or 100,000 shares, which will be issued to the representative of the underwriters upon completion of an initial Business Combination as deferred underwriting commission. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. Significant estimates include the fair value measurements of the assets held in trust and the carrying value of ordinary shares subject to possible redemption. The Company’s management evaluates these estimates on an ongoing basis. Actual results could differ from those estimates. As of April 30, 2026, the Company has not identified any critical accounting policies and estimates. 17 Recent Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”), which enhances the transparency and usefulness of income tax disclosures. ASU 2023-09 will be effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company adopted this guidance on February 1, 2026 and there was no significant impact. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results As of April 30, 2026, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. JOBS Act On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. 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 a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of 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, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) 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, (iii) 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 (iv) 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 our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier. Item 3 - Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.