QETA 10-K & 10-Q changes, risk factors and insider trading

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated 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 “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.

We are a blank check company incorporated in Delaware on May 1, 2023. We were formed 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, which we refer to herein as our “initial business combination.” Our efforts to identify a prospective target business are not limited to any particular industry or geographic region.region, Wealthough intendwe tohave utilizehistorically cashfocused derivedon fromopportunities theinvolving proceedsbusinesses ofwith our IPO and the private placementoperations of Private Units, our securities, debt or a combination of cash, securities and debt, in effecting our initial business combination.Asia.

On October 18, 2024, the Company entered into a non-binding letter of intent (“LOI”) with QUAD,QUAD regarding a potential business combination (the “Proposed Transaction”). The LOI is non-binding and no agreement providing for any Proposed Transaction or any other transaction or the participation by either party therein will be deemed to exist unless and until definitive agreements have been executed.combination. As a result of the execution of the LOI, the deadline by which the Company mustwas required to complete its initial business combination has beenwas extended to January 10, 2025.

On January 10, 2025, the Company held a special meeting of stockholders (the “January Special Meeting”). DuringAt the January Special Special Meeting, stockholders approved the proposalproposals to amend the Company’s amended and restated certificate of incorporation and Trusttrust agreement Agreement to extend the date by which the Company has to consummate a business combination from January 10, 2025 to October 10, 2026 (thirty six (36) months from the consummation of the IPO),2026, on a month-by-month basis, basis,by up to a total of twenty-one (21) times,one-month extensions, by depositing $60,000 into the Company’s trust account for each such one-month extension.

TheUnder Company has until 36 months (or until October 10, 2026) from the closingamended ofterms, the IPO to consummate a Business Combination. In addition, in the event thatif the Company fails to timely make a payment for any given month during the twenty-one (21) month periodextension period, the Company elects has a forty-five (45) day cure period to make an extension, the Company shall have a period of forty five (45) days to pay any applicable past duesuch payment, whichtogether shall be calculated to be equal to the principal of the past due payment, plus anywith accrued but unpaid interest inthereon theat amounta rate of three percent (3%) (the “Cure Period”). If the Company fails to make any applicable past due payment during the Curecure Period, thenperiod, the Company shall immediatelywill cease all operations, operations except for the purpose of winding up,up and will redeem the public shares and liquidate and dissolve with the same effect as if the Company had failed to complete a business combination within thirty-six (36) months from the consummationapplicable oftime the IPO.period.

We have neither engaged in any operations nor generated any operating revenues to date. Our activities fromthrough May 1, 2023 (inception) through December 31, 20242025 wereconsisted of organizational activitiesactivities, identifying and thoseevaluating necessaryprospective totarget preparebusinesses, fornegotiating and documenting a potential initial business combination, and activities in connection with maintaining our IPO,status which is described below, and subsequent to the IPO, identifyingas a targetpublic company for an initial business combination.company. We do not expect to generate any operating revenues until after the completion of our initial business combination.

We expect to continue to generate non-operating income in the form of interest income on cash and investments held in Trust Account after the IPO.trust account. We expect thatto we willcontinue to incur increased expenses as a result of being a public companycompany, (forincluding legal, financial reporting, accounting and auditing compliance), costs, as well as for due diligence and transaction expenses in connection with identifying, searching for,negotiating and completing,pursuing a Businessbusiness Combination.combination.

We intend to use substantially all of the net proceeds of the IPO and the private placement, including the funds held in the Trusttrust Account,account, including any interest earned thereon not previously released into connection with our initial business combination andus to pay our expenses relating thereto, including deferred underwriting discounts and commissions payabletaxes, to the underwriters in the IPO in an amount equal to 3.5% of the total gross proceeds raised in the IPO upon consummation ofconsummate our initial business combination. We may withdraw interest income from the trust account to pay taxes. To the extent that our capital stock or debt is usedused, in whole or in partpart, as consideration to effect complete our initial business combination, the remaining proceeds held in the Trusttrust Accountaccount, as well as any other net proceeds not expended expended, will be used as working capital to finance the operations of the target business.business, Suchmake working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategicother 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 ofpursue our initial business combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.strategy.

As of December 31, 2025, the Company had $1,195 in cash and a working capital deficit of $2,630,904. The Company has incurred and expects to continue to incur significant professional costs to remain as a publicly traded company and to incur significant significant transaction costs in pursuit of the consummation of a Business Combination. There is no assurance that the Company’s plans to raise capital will be successful. 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 these conditions raise substantial doubt about the Company’s ability to continue as a going concern.concern, within one year after the date that the consolidated financial statements are issued. 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 a 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 Combination Period. As a result, management has determined that such additional conditions condition also raise raises substantial doubt about the Company’s ability to continue as a going concern.concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. The consolidated financial statementstatements does do not include any adjustments that might result from the outcomeCompany’s ofinability thisto uncertainty.continue as a going concern.

We have entered into an administrative service agreement pursuant to which we will pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support. However, pursuant to the terms of such agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of the initial Business Combination. For the year ended December 31, 20242025 and for the period from May 1, 2023 through December 31, 2023,2024, the Company has incurred $120,000 for andboth $28,710, respectively,years in related party fees for the services provided by the Sponsor under this agreement.

In the event that the closing of the KM QUAD Business Combination does not occur by February 10, 2025, the Company shall have the right to extend the time to complete the KM QUAD Business Combination up to twenty-one (21) times for one month each time until October 10, 2026. QUAD shall be responsible for the extension fees covering nine extensions over nine months, in the total amount of $540,000.

On or before February 14, 2025, KM QUAD wired the first installment of the prepaid extension fees, in the amount of $250,000, to the Company’s designated bank account in exchange for a promissory note issued by the Company. KM QUAD shall wirewired the second installment of the prepaid extension fees, in the amount of $290,000, to the Company’s designated bank account on or before April 20, 2025 in exchange for a promissory note issued by the Company, provided that the Agreement has not been terminated prior to that date.Company. If the closing of the KM QUAD Business Combination does not occur prior to October 10, 2025 due to a delay in obtaining CSRC approvals, KM QUAD shall be responsible for any extension fees and other related fees incurred by the Company beyond October 10, 2025 not to exceed $100,000 per month. If the closing of the KM QUAD Business Combination or termination of the Agreement occurs prior to October 10, 2025, the Company shall return the remaining balance of the prepaid extension fees, if any, to KM QUAD on a pro rata basis. Alternatively, at the closing of the KM QUAD Business Combination, the Company shall have the right to convert any prepaid extension fees that were paid and not returned into Purchaser Class A Ordinary Shares at $10.00 per share.

The preparation of consolidated 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 consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies and estimates.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

Following the January Special Meeting, the Company deposited $60,000 into the trust account for each monthly extension from January 2025 through AprilAugust 2026, thereby extending the date by which the Company could complete a business combination to MaySeptember 10, 2026.

We have neither engaged in any operations nor generated any operating revenues to date. Our activities for the three months ended MarchJune 30, 31, 2026 consisted primarily of identifying and evaluating target businesses, negotiating and entering into the Business Combination Agreement Agreement with Smart Kreate Group Limited and related parties, maintaining our public company status, funding monthly extension deposits, and managing Trust Account and working capital activities. We do not expect to generate any operating revenues until after the completion of our initial business combination.

For the three months ended MarchJune 31,30, 2026, we had net lossincome of $13,521,$884,904, which consisted of interest earned on cash and investments held in the Trust Account of $169,702,$173,286, gain on forgiveness of promissory note of $1,040,000, interest income of $10,$432, partially offset by formation and operational costs of $109,693,$191,749, related party administrative fees of $30,000, franchise tax expense of $10,000,$10,200, andincome income tax expense of $33,540.$34,339 and interest and penalties on excise tax of $62,526.

For the three months ended MarchJune 31,30, 2025, we had a net loss of $193,671,$607,950, which consisted of formation and operational costs of $377,102,$723,999, related party administrative fees of $30,000, franchise tax expense of $10,000,$10,200, and income tax expense of $56,735,$37,507, partially offset by interest income of $6,169$1,391 and interest earned on cash and investments held in the Trust Account of $273,997.$192,365.

The decrease increase in net lossincome for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to to a significantgain decreaseon inforgiveness formationof andpromissory operational costs and lower income tax expense, partially offset by lowerloan, interest earned on cash and investments held in the Trust Account.Account, partially offset by lower formation and operational costs.

On January 10, 2025, in connection with the special meeting of stockholders, holders of 5,199,297 shares exercised their right to redeem such shares for a pro rata portion of the funds held in the trust account. As a result, approximately $55.2 million was removed from the trust account to pay such redeeming stockholders, and approximately $18.0 million remained in the trust account following such redemptions. Following the January 10, 2025 special meeting, the Company was permitted to extend the date by which it must consummate a business combination from January 10, 2025 to October 10, 2026 on a month-by-month basis, by up to twenty-one one-month extensions, by depositing $60,000 into the trust account for each such one-month extension. The Company deposited $60,000 for each monthly extension through MarchJune 2026. Subsequent to MarchJune 31,30, 2026, the Company deposited an additional $60,000$120,000 for the AprilJuly and August 2026 extension.

As of MarchJune 31,30, 2026, the Company had cash of $909,$4,575, cash and investments held in the Trust Account of $19,541,732,$19,854,590, and a working capital capital deficit of $2,952,897.$2,380,850. As of December 31, 2025, the Company had cash of $1,195 and a working capital deficit of $2,630,904. The Company Company has incurred and expects to continue to incur significant professional costs to remain as a publicly traded company and to incur significant significant transaction costs in pursuit of the consummation of a Business Combination. There is no assurance that the Company’s plans to raise capital will be successful. 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 about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt doubt about the Company’s ability to continue as a going concern, within one year after the date that the consolidated financial statements statements are issued. 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 Combination Period. As a result, management has determined that such additional condition also raises 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. The consolidated financial statements do not include any adjustments that might result from the Company’s inability to continue as a going concern.

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of MarchJune 31,30, 2026. We do not participate participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, entities, or purchased any non-financial assets.

We have entered into an administrative services agreement pursuant to which we will pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support. However, pursuant to the terms of such agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue without interest and be due and payable no later than the date of the consummation of the initial Business Combination. For the three and six months ended MarchJune 31,30, 2026, the Company incurred $30,000 and $60,000 in administrative fees. As of MarchJune 31,30, 2026 and December 31, 2025, the Company had accrued administrative fees due to the Sponsor of $30,000$60,000 and $0, respectively.

InThe KM QUAD Merger Agreement provided that, in the event that the closing of the KM QUAD Business Combination does not occur by February 10, 2025, the Company shall have the right to extend the time to complete the KM QUAD Business Combination up to twenty-one (21) times for one month each time until October 10, 2026. QUAD shallwould be responsible for the extension fees covering nine extensions over nine months, in total amount of $540,000.

On or before February 14, 2025, KM QUAD wired the first installment of the prepaid extension fees, in the amount of $250,000, to the Company’s designated bank account in exchange for a promissory note issued by the Company. KM QUAD wired the second installment of the prepaid extension fees, in the amount of $290,000, to the Company’s designated bank account on or before April 20, 2025 in exchange for a promissory note issued by the Company. If the closing of the KM QUAD Business Combination does not occur prior to October 10, 2025 due to a delay in obtaining CSRC approvals, KM QUAD shallwould be responsible for any extension fees and other related fees incurred by the Company beyond October 10, 2025 not to exceed $100,000 per month. If the closing of the KM QUAD Business Combination or termination of the Agreement occurs prior to October 10, 2025, the Company shallwould return the remaining balance of the prepaid extension fees, if any, to KM QUAD on a pro rata basis. Alternatively, at the closing of the KM QUAD Business Combination, the Company shallwould have the right to convert any prepaid extension fees that were paid and not returned into Purchaser Class A Ordinary Shares at $10.00 per share.

On April 30, 2026, KM QUAD released and discharged the Company from all obligations under the KM QUAD Notes, including the outstanding principal balance of $1,040,000.$500,000 and extension fee of $540,000.