UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| (Mark One) | |||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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MELAR ACQUISITION CORP. I
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026
TABLE OF CONTENTS
i
Unless otherwise stated in this Report, or the context otherwise requires, references to:
| ● | “2025 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC (as defined below) on March 9, 2026; | |
| ● | “2026 First Quarter Form 10-Q” are to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, as filed with the SEC on May 14, 2026; | |
| ● | “Administrative Services Agreement” are to the Administrative Services Agreement, dated June 17, 2024, which we entered into with MCG (as defined below); | |
| ● | “Agile Collateral Agent” are to Agile Capital Funding, LLC, a New York limited liability company, in its capacity as collateral agent; | |
| ● | “Agile Intercreditor Agreement” are to the intercreditor agreement entered into by the Melar Lender with Agile Collateral Agent, Agile Lender (as defined below), YA Lender (as defined below), and which was acknowledged by Everli (as defined below), for itself and on behalf of its subsidiaries, Salvatore Palella, and Palella Holdings, LLC, a Delaware limited liability company; | |
| ● | “Agile Lender” are to Agile Lending, LLC, a Virginia limited liability company; | |
| ● | “Agile Parties” are to Agile Collateral Agent and Agile Lender, collectively; |
| ● | “Amended and Restated Articles” are to our Amended and Restated Memorandum and Articles of Association, as currently in effect; |
| ● | “ASC” are to the FASB (as defined below) Accounting Standards Codification; |
| ● | “ASU” are to the FASB Accounting Standards Update; |
| ● | “Board of Directors” or “Board” are to our board of directors; |
| ● | “Business Combination” are to a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities; |
| ● | “CCM” are to Cohen & Company Capital Markets, a division of Cohen & Company Securities, LLC, a representative of the Underwriters (as defined below); |
| ● | “Certifying Officers” are to our Chief Executive Officer and Chief Financial Officer, together; |
| ● | “Class A Ordinary Shares” are to our Class A ordinary shares, par value $0.0001 per share; |
| ● | “Class B Ordinary Shares” are to our Class B ordinary shares, par value $0.0001 per share; |
| ● | “Closing” are to the consummation of the Everli Business Combination; |
| ● | “Combination Period” are to (i) the 30-month period, from the closing of the Initial Public Offering (as defined below) to December 20, 2026 (or such earlier date as determined by the Board), that we have to consummate an initial Business Combination, or (ii) such other period in which we must consummate an initial Business Combination pursuant to an amendment to the Amended and Restated Articles and consistent with applicable laws, regulations and stock exchange rules; |
ii
| ● | “Company,” “our,” “we,” or “us” are to Melar Acquisition Corp. I, a Cayman Islands exempted company; |
| ● | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our Trust Account and warrant agent of our Warrants (as defined below); |
| ● | “Deferred Fee” are to the additional fee of $6,600,000 in the aggregate to which the Underwriters are entitled that is payable only upon our completion of the initial Business Combination; |
| ● | “Escrowed Seller” are to Salvatore Palella; |
| ● | “Everli” are to Everli Global Inc., a Nevada corporation, together with its successors; |
| ● | “Everli Business Combination” are to the transactions contemplated by the Everli Merger Agreement and the related ancillary documents, collectively; |
| ● | “Everli Merger Agreement” are to the Agreement and Plan of Merger, dated July 30, 2025 and as amended on October 2, 2025 and December 8, 2025, we entered into with (i) Everli, (ii) Merger Sub (as defined below), (iii) the Sponsor (as defined below) and (iv) the Escrowed Seller, as amended by the First Everli Merger Agreement Amendment (as defined below) and the Second Everli Merger Agreement Amendment (as defined below); |
| ● | “Everli Notes” are to the First Everli Note (as defined below) and the Second Everli Note (as defined below), together; |
| ● | “Everli Registration Statement” are to the Registration Statement on Form S-4, which includes a proxy statement/prospectus, in connection with the Everli Business Combination, which was originally submitted confidentially with the SEC on January 23, 2026; |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| ● | “FASB” are to the Financial Accounting Standards Board; |
| ● | “First Everli Merger Agreement Amendment” are to the First Amendment to Agreement and Plan of Merger, dated October 2, 2025, we entered into with (i) Everli, (ii) Merger Sub, (iii) the Sponsor and (iv) the Escrowed Seller; |
| ● | “First Everli Note” are to the secured promissory note and pledge agreement in the principal amount of up to $3,611,111 issued to us by Everli and the Pledging Stockholder (as defined below) on May 30, 2025, as amended and restated on August 18, 2025, and further amended on September 12, 2025, September 29, 2025 and March 30, 2026; |
| ● | “Founder Shares” are to the (i) Class B Ordinary Shares initially purchased by our Sponsor prior to the Initial Public Offering and (ii) Class A Ordinary Shares that will be issued upon the automatic conversion of the Class B Ordinary Shares (x) at the time of our Business Combination as described in the IPO Registration Statement (as defined below) or (y) earlier at the option of the holders thereof, as described in the IPO Registration Statement; for the avoidance of doubt, such Class A Ordinary Shares will not be “Public Shares” (as defined below); |
| ● | “GAAP” are to the accounting principles generally accepted in the United States of America; |
iii
| ● | “Initial Public Offering” or “IPO” are to the initial public offering that we consummated on June 20, 2024; |
| ● | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
| ● | “IPO Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $300,000 issued to our Sponsor on March 11, 2024; |
| ● | “IPO Registration Statement” are to the Registration Statement on Form S-1 initially filed with the SEC on May 31, 2024, as amended, and declared effective on June 17, 2024 (File No. 333-279899); |
| ● | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
| ● | “Letter Agreement” are to the Letter Agreement, dated June 17, 2024, which we entered into with our Sponsor and our directors and officers; |
| ● | “Management” or our “Management Team” are to our executive officers; | |
| ● | “MCG” are to Melar Capital Group LLC, an affiliate of the Sponsor; | |
| ● | “Melar Lender” are to MCG and the Company, together; |
| ● | “Merger Sub” are to MAC I Merger Sub Inc., a Nevada corporation and our wholly-owned subsidiary; |
| ● | “Nasdaq” are to The Nasdaq Stock Market LLC; |
| ● | “Nasdaq 36-Month Requirement” are to the requirement pursuant to the Nasdaq Rules (as defined below) that a SPAC (as defined below) must complete one or more Business Combinations within 36 months following the effectiveness of its initial public offering registration statement; |
| ● | “Nasdaq Rules” are to the continued listing rules of Nasdaq, as they exist as of the date of this Report; |
| ● | “Option Units” are to the 1,000,000 units that were purchased by the Underwriters pursuant to the partial exercise of the Over-Allotment Option (as defined below); |
| ● | “Ordinary Shares” are to the Class A Ordinary Shares and the Class B Ordinary Shares, together; |
| ● | “Over-Allotment Option” are to the 45-day option that the Underwriters had to purchase up to an additional 2,250,000 Option Units to cover over-allotments, if any, pursuant to the Underwriting Agreement (as defined below), which was partially exercised; |
| ● | “Pledging Stockholder” are to a certain stockholder of Everli that is a party to the First Everli Note; |
| ● | “Private Placement” are to the private placement of Private Placement Warrants (as defined below) that occurred simultaneously with the closing of our Initial Public Offering, pursuant to the Private Placement Warrants Purchase Agreements (as defined below); |
iv
| ● | “Private Placement Warrants” are to the warrants issued to our Sponsor, CCM and Seaport (as defined below) in the Private Placement; |
| ● | “Private Placement Warrants Purchase Agreements” are to the (i) Private Placement Warrants Purchase Agreement, dated June 17, 2024, which we entered into with our Sponsor and (ii) Private Placement Warrants Purchase Agreement, dated June 17, 2024, which we entered into with CCM and Seaport, together; |
| ● | “Public Shareholders” are to the holders of our Public Shares, including our Sponsor and Management Team to the extent our Sponsor and/or the members of our Management Team purchase Public Shares, provided that our Sponsor’s and each member of our Management Team’s status as a “Public Shareholder” will only exist with respect to such Public Shares; |
| ● | “Public Shares” are to the Class A Ordinary Shares sold as part of the Units (as defined below) in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market); |
| ● | “Public Warrants” are to the redeemable warrants sold as part of the Units in our Initial Public Offering (whether they were subscribed for in our Initial Public Offering or purchased in the open market); |
| ● | “Registration Rights Agreement” are to the Registration Rights Agreement, dated June 17, 2024, which we entered into with the Sponsor and the other holders party thereto; |
| ● | “Report” are to this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026; |
| ● | “Seaport” are to Seaport Global Securities LLC, a representative of the Underwriters (as defined below); |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; |
| ● | “Second Everli Merger Agreement Amendment” are to the Second Amendment to Agreement and Plan of Merger, dated December 8, 2025, we entered into with (i) Everli, (ii) Merger Sub, (iii) the Sponsor and (iv) the Escrowed Seller; |
| ● | “Second Everli Note” are to the secured promissory note and pledge agreement in the principal amount of up to $7,500,000 issued to MCG by Everli on October 21, 2025; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended; | |
| ● | “Senior Creditors” are to the Melar Lender and the YA Lender (as defined below), collectively; |
| ● | “SPAC” are to a special purpose acquisition company; |
| ● | “Sponsor” are to Melar Acquisition Sponsor I LLC, a Delaware limited liability company; |
| ● | “Sponsor Loan” are to that the unsecured loan made to us by the Sponsor in connection with the Sponsor Note (as defined below); |
| ● | “Sponsor Note” are to the unsecured promissory note in the principal amount of up to $3,611,111 issued by us to the Sponsor on May 30, 2025, as amended and restated on August 18, 2025, and further amended on September 12, 2025, September 29, 2025 and March 30, 2026; |
| ● | “Trust Account” are to the U.S.-based trust account in which an amount of $160,000,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants in the Private Placement was placed following the closing of the Initial Public Offering; |
| ● | “Trust Agreement” are to the Investment Management Trust Agreement, dated June 17, 2024, which we entered into with Continental, as trustee of the Trust Account; |
| ● | “Underwriters” are to the several underwriters of the Initial Public Offering, collectively; |
| ● | “Underwriting Agreement” are to the Underwriting Agreement, June 17, 2024, which we entered into with CCM and Seaport, as representatives of the Underwriters; |
v
| ● | “Units” are to the units sold in our Initial Public Offering, which consist of one Public Share and one-half of one Public Warrant; |
| ● | “Warrant Agreement” are to the Warrant Agreement, dated June 17, 2024, which we entered into with Continental, as Warrant agent; |
| ● | “Warrants” are to the Private Placement Warrants and the Public Warrants, together; |
| ● | “Working Capital Loans” are to funds that, in order to provide working capital or finance transaction costs in connection with a Business Combination, the Sponsor, or an affiliate of the Sponsor, or certain of our directors and officers may, but are not obligated to, loan us; | |
| ● | “YA Lender” are to YA II PN, Ltd., a Cayman Islands exempt limited company; and | |
| ● | “Yorkville Intercreditor Agreement” are to the intercreditor agreement entered into by Melar Lender with the YA Lender, Everli, for itself and on behalf of its subsidiaries, Salvatore Palella, and Palella Holdings LLC, a Delaware limited liability company. |
vi
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MELAR ACQUISITION CORP. I
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2026 (UNAUDITED) AND DECEMBER 31, 2025
| June 30, | ||||||||
| 2026 | December 31, | |||||||
| (Unaudited) | 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Due from Everli | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Marketable securities and cash held in Trust Account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Working Capital Loan - related party | ||||||||
| Sponsor Loan | ||||||||
| Total current liabilities | ||||||||
| Deferred Fee | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 6) | ||||||||
| Class A Ordinary Shares subject to possible redemption, | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preference shares, $ | ||||||||
| Class A Ordinary Shares, $ | ||||||||
| Class B Ordinary Shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
MELAR ACQUISITION CORP. I
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| General and administrative costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income due from Everli | ||||||||||||||||
| Interest expense on Working Capital Loan | ( | ) | ( | ) | ||||||||||||
| Interest expense on Sponsor Loan | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest on cash held in the operating account | ||||||||||||||||
| Dividends and interest earned on marketable securities and cash held in Trust Account | ||||||||||||||||
| Total other income, net | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Weighted average redeemable Class A Ordinary Shares outstanding – basic and diluted | ||||||||||||||||
| Net income per redeemable Class A Ordinary Share – basic and diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average non-redeemable Class A Ordinary Shares and Class B Ordinary Shares outstanding – basic and diluted | ||||||||||||||||
| Net income per non-redeemable Class A Ordinary Share and Class B Ordinary Share – basic and diluted | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
MELAR ACQUISITION CORP. I
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – December 31, 2025 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Accretion of Class A Ordinary Shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – March 31, 2026 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Conversion of Class B Ordinary Shares to Class A Ordinary Shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A Ordinary Shares to redemption amount | — | — | ( | ) | ||||||||||||||||||||||||
| Reversal of allocated value of transaction costs to Public Warrants and Private Placement Warrants | — | — | ||||||||||||||||||||||||||
| Capital contribution from Everli for Trust extension | — | — | — | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – December 31, 2024 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Accretion of Class A Ordinary Shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – March 31, 2025 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Accretion of Class A Ordinary Shares to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – June 30, 2025 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
MELAR ACQUISITION CORP. I
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities and cash held in Trust Account | ( | ) | ( | ) | ||||
| Interest due from Everli | ( | ) | ( | ) | ||||
| Interest expense on Working Capital loan | ||||||||
| Interest expense on Sponsor Loan | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash withdrawn from Trust Account in connection with redemptions | ||||||||
| Payment of invoices on behalf of Everli | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Redemption of Class A Ordinary Shares | ( | ) | ||||||
| Proceeds from Working Capital Loan | ||||||||
| Proceeds from Sponsor Loan | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash – Beginning of period | ||||||||
| Cash – End of period | $ | $ | ||||||
| Non-Cash investing and financing activities: | ||||||||
| Capital contribution from Everli for Trust extension | $ | $ | ||||||
| Reduction of Deferred Fee payable | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Melar Acquisition Corp. I (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on March 11, 2024. The Company was incorporated for the
purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination
with
As of June 30, 2026, the Company had not commenced any operations. All activity for the period from March 11, 2024 (inception) through June 30, 2026 relates to the Company’s formation and the Initial Public Offering (as defined below), and subsequent to the Initial Public Offering, identifying a target company for and consummating a Business Combination, including the Everli Business Combination (as defined and described below). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of dividends and interest income on marketable securities and cash held in the Trust Account (as defined below) and interest income on the Everli Note (as defined below) (see Note 2).
The Company’s sponsor is Melar Acquisition Sponsor I LLC, a Delaware limited liability Company (the “Sponsor”).
On June 20, 2024, the Company consummated the
initial public offering of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of an aggregate of
The Company’s management (“Management”) has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less the Deferred Fee (as defined below) and taxes payable, if any).
The Business Combination must be with one or more
target businesses that together have a fair market value equal to at least
5
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Following the closing of the Initial Public Offering,
on June 20, 2024, an amount of $
Except with respect to dividends and interest
earned on the funds held in the Trust Account that may be released to the Company for taxes payable, if any, the proceeds from the Initial
Public Offering and the Private Placement will not be released from the Trust Account until the earliest of (i) the completion of the
initial Business Combination, (ii) the redemption of the Public Shares if the Company is unable to complete the initial Business Combination
by December 20, 2026 (as may be further extended by shareholder approval to amend the Company’s amended and restated memorandum
and articles of association (the “Amended and Restated Articles”) to extend the date by which the Company must consummate
an initial Business Combination) or by such earlier liquidation date as the Company’s board of directors may approve (the “Combination
Period”)), subject to applicable law, or (iii) the redemption of the Public Shares properly submitted in connection with a shareholder
vote to amend the Amended and Restated Articles to modify (x) the substance or timing of the Company’s obligation to allow redemption
in connection with the initial Business Combination or to redeem
The Company will provide the Public Shareholders
with the opportunity to redeem, regardless of whether they abstain, vote for, or against, the Company’s initial Business Combination,
all or a portion of their Public Shares upon the completion of the initial Business Combination either (i) in connection with a general
meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision
as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be
made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation
of the initial Business Combination, including interest earned on the funds held in the Trust Account (less taxes payable, if any), divided
by the number of then outstanding Public Shares, subject to the limitations of applicable law and the Amended and Restated Articles. As
of June 30, 2026, the amount of the Trust Account was approximately $
The Ordinary Shares (as defined in Note 2) subject to redemption were recorded at a redemption value and classified as temporary equity at the completion of the Initial Public Offering, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”).
The Company has only the duration of the Combination
Period to complete the initial Business Combination. However, if the Company is unable to complete its initial Business Combination within
the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible, but not more than ten business days thereafter (and subject to lawfully available funds therefor), 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 taxes payable, if any, and up to $
6
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
The Sponsor and the Company’s officers and directors have
entered into a letter agreement with the Company, dated June 17, 2024 (as amended, the “Letter Agreement”), pursuant to which
they have agreed to (i) waive their redemption rights with respect to their Founder Shares (as defined in Note 5) and Public Shares in
connection with (x) the completion of the initial Business Combination or an earlier redemption in connection with the commencement of
the procedures to consummate the initial Business Combination if the Company determines it is desirable to facilitate the completion of
the initial Business Combination and (y) a shareholder vote to approve an amendment to the Amended and Restated Articles to modify (1)
the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to
redeem
The Sponsor has agreed that it will be liable
to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting
firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into
a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in
the Trust Account to below the lesser of (i) $
Shareholders Meeting
On June 16, 2026, the Company held an extraordinary general meeting of shareholders in lieu of an annual general meeting of shareholders (the “June 2026 Meeting”). At the June 2026 Meeting, the Company’s shareholders approved, among other things, an amendment to the Amended and Restated Articles to extend the end of the Combination Period on a monthly basis up to six (6) times, from June 20, 2026 through December 20, 2026, or such earlier date as determined by the Company’s board of directors (“Extension Amendment Proposal”).
In connection with the votes to approve the Extension
Amendment Proposal, the holders of
7
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Trust Account Contribution
In association with the approval of the Extension
Amendment Proposal, the Sponsor or its designee has agreed to contribute to the Trust Account on a monthly basis the lesser of (x) $
Everli Business Combination
On July 30, 2025, the Company entered into an
Agreement and Plan of Merger, as amended on October 2, 2025 (as it may be further amended, supplemented and/or restated from time to time,
the “Everli Merger Agreement”) with (i) MAC I Merger Sub Inc., a Nevada corporation and a wholly-owned subsidiary of the Company
(“Merger Sub”), (ii) Everli Global Inc., a Nevada corporation (together with its successors, “Everli”), (iii)
the Sponsor, in the capacity as the representative from and after the effective time of the Merger (as defined below) for the shareholders
of the Company (other than the Escrowed Seller (as defined below) and his successors and assigns) in accordance with the terms and conditions
of the Everli Merger Agreement, and (iv) Salvatore Palella (the “Escrowed Seller”). Pursuant to the Everli Merger Agreement,
subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated thereby (the “Closing”),
(a) the Company shall de-register from the Register of Companies in the Cayman Islands by way of continuation out of the Cayman Islands
and into the State of Nevada and domesticate as a Nevada corporation (the “Domestication”) and (b) then Merger Sub will merge
with and into Everli (the “Merger” and together with the Domestication and the other transactions contemplated by the Everli
Merger Agreement, the “Everli Business Combination”), with Everli continuing as the surviving entity and a wholly owned subsidiary
of the Company, with Everli’s equity holders receiving shares of common stock of the Company and with certain stockholders of Everli
receiving super-voting stock of the Company in exchange for their existing super-voting stock of Everli. The pre-money equity value of
Everli in the Everli Business Combination is $
Working Capital Loan
On June 11, 2026, the Company issued a promissory
note (the “WCL Note”) in the aggregate principal amount of up to $
The embedded conversion option was analyzed for its accounting implications. As such, management determined the embedded conversion feature was not required to be bifurcated.
8
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Founder Shares Conversion
On June 11, 2026, the Company issued an aggregate
of
Liquidity, Capital Resources and Going Concern
As of June 30, 2026, the Company had $
The Company has until December 20, 2026 to consummate the initial Business Combination (assuming no further extensions). If the Company does not complete a Business Combination within the Combination Period, the Company will trigger an automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Articles. In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements-Going Concern,” the Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The working capital deficit and the expectation of significant future costs raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying unaudited condensed consolidated financial statements are issued. Additionally, Management has determined that the mandatory liquidation and subsequent dissolution, should the Company be unable to complete a Business Combination by the end of the Combination Period, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 20, 2026. Management plans to address this uncertainty through the closing of its proposed Business Combination. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 9, 2026. The interim results for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MAC I Merger Sub Inc. All intercompany transactions have been eliminated.
9
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Emerging Growth Company Status
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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, 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 Securities Exchange Act of 1934, as amended) 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 accompanying unaudited condensed consolidated financial statements with another public company that is neither an (i) emerging growth company nor (ii) 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.
Use of Estimates
The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses at the date of the accompanying unaudited condensed consolidated financial statements. Actual results could differ from those estimates.
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 accompanying unaudited condensed consolidated 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.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had $
Marketable Securities and Cash Held in Trust Account
At June 30, 2026 and December 31, 2025, substantially all of the assets held in the Trust Account were held in money market funds that were invested in Treasury securities. The Company accounts for its marketable securities as trading securities under FASB ASC Topic 320, “Investments—Debt and Equity Securities,” where securities are presented at fair value on the accompanying condensed consolidated balance sheets. Trading securities are presented on the accompanying condensed consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account are included in dividends and interest earned on marketable securities and cash held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
10
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Everli Notes
On May 30, 2025, the Company entered into a secured
promissory note and pledge agreement (the “First Everli Note”) with Everli and a certain stockholder of Everli (the “Pledging
Stockholder”) for a principal amount of up to $
On August 18, 2025, the First Everli Note was amended and restated
to, among other things, amend the principal amount of the First Everli Note to $
On October 21, 2025, Everli entered into a secured
promissory note and pledge agreement in the principal amount of up to $
As of June 30, 2026 and December 31, 2025, Everli
had borrowed $
The Company complies with the requirements of
FASB ASC Topic 835, “Interest,” (“ASC 835”) and reports accrued interest and the amortization of the original
issue discounts on the accompanying unaudited condensed consolidated statements of operations as “interest due from Everli”
and reports the loan amount and unpaid interest as “due from Everli” on the accompanying condensed consolidated balance sheets.
For the three and six months ended June 30, 2026, the Company recognized $
Offering Costs
The Company complies with the requirements of the FASB ASC Topic 340-10-S99, “Accounting for Offering Costs,” and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC Topic 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applied this guidance to allocate Initial Public Offering proceeds from the Units between Public Shares and Public Warrants, using the relative fair value method by allocating Initial Public Offering proceeds first to assigned value of the Public Warrants and then to the Public Shares. Offering costs allocated to the Public Shares were charged to temporary equity. Offering costs allocated to the Warrants were charged to shareholders’ deficit. After Management’s evaluation, the Warrants were accounted for under equity treatment.
11
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to its short-term nature.
Net Income per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of ordinary shares, (i) redeemable Class A Ordinary Shares and (ii) non-redeemable Class A Ordinary Shares and Class B Ordinary Shares. Income and losses are shared pro rata between the two classes of Ordinary Shares. This presentation assumes a Business Combination as the most likely outcome. Net income per Ordinary Share is calculated by dividing the net income by the weighted average Ordinary Shares outstanding for the respective period.
The calculation of diluted net income per Ordinary Share does not consider
the effect of the Warrants issued in connection with the Initial Public Offering,
12
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income per Ordinary Share for each class of Ordinary Shares:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2026 | |||||||||||||||
| Non-Redeemable | Non-Redeemable | |||||||||||||||
| Redeemable Class A | Class A and Class B | Redeemable Class A | Class A and Class B | |||||||||||||
| Basic and diluted net income per Ordinary Share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted average Ordinary Shares outstanding | ||||||||||||||||
| Basic and diluted net income per Ordinary Share | $ | $ | $ | $ | ||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2025 | June 30, 2025 | |||||||||||||||
| Non-Redeemable | Non-Redeemable | |||||||||||||||
| Redeemable Class A | Class A and Class B | Redeemable Class A | Class A and Class B | |||||||||||||
| Basic and diluted net income per Ordinary Share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted average Ordinary Shares outstanding | ||||||||||||||||
| Basic and diluted net income per Ordinary Share | $ | $ | $ | $ | ||||||||||||
Income Taxes
The Company accounts for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. Management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of June 30, 2026 and December 31, 2025, there were unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
13
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the accompanying unaudited condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the accompanying condensed consolidated balance sheets as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Over-Allotment Option was deemed to be a freestanding financial instrument indexed on the contingently redeemable Public Shares and was accounted for as a liability pursuant to ASC 480.
Warrant Instruments
The Company accounts for Warrants as either equity - classified or liability - classified instruments based on an assessment of the Warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the Warrants meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Ordinary Shares and whether the Warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of Warrant issuance and as of each subsequent quarterly period end date while the Warrants are outstanding.
For issued or modified Warrants that meet all of the criteria for equity classification, the Warrants are required to be recorded as a component of additional paid - in capital at the time of issuance. For issued or modified Warrants that do not meet all the criteria for equity classification, the Warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Accordingly, as of the date of issuance, the Company evaluated and classified the Warrant instruments under equity treatment at its assigned fair value.
14
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Class A Ordinary Shares Subject to Possible Redemption
The Public Shares contain a redemption feature
that allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder
vote or tender offer in connection with the initial Business Combination. In accordance with FASB ASC Topic 480-10-S99, “Distinguishing
Liabilities from Equity,” the Company classifies Class A Ordinary Shares subject to redemption outside of permanent deficit as the
redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately
as they occur and adjusts the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately
upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value.
The change in the carrying value of redeemable Class A Ordinary Shares resulted in charges against additional paid-in capital (to the
extent available) and an accumulated deficit. Accordingly, as of June 30, 2026 and December 31, 2025, Class A Ordinary Shares subject
to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the
accompanying condensed consolidated balance sheets.
| Shares | Amount | |||||||
| Class A Ordinary Shares subject to possible redemption, December 31, 2024 | $ | |||||||
| Plus: | ||||||||
| Accretion of carrying value to redemption value | ||||||||
| Class A Ordinary Shares subject to possible redemption, December 31, 2025 | ||||||||
| Plus: | ||||||||
| Accretion of carrying value to redemption value | ||||||||
| Class A Ordinary Shares subject to possible redemption, March 31, 2026 | ||||||||
| Less: | ||||||||
| Redemptions | ( | ) | ( | ) | ||||
| Accretion of carrying value to redemption value | ( | ) | ||||||
| Plus: | ||||||||
| Class A Ordinary Shares issuance costs | ||||||||
| Class A Ordinary Shares subject to possible redemption, June 30, 2026 | $ | |||||||
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update (“ASU”) Topic 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”) requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
In the Initial Public Offering, the Company sold
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor and the Representatives purchased an aggregate of
The Private Placement Warrants are identical to
the Public Warrants sold in the Initial Public Offering except that, so long as they are held by the Sponsor, the Representatives, or
their permitted transferees, the Private Placement Warrants (i) may not (including the Class A Ordinary Shares issuable upon exercise
of these Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until
15
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On March 11, 2024, the Sponsor made a capital
contribution of $
Pursuant to the Letter Agreement, the Sponsor and the Company’s
directors and officers have agreed not to transfer, assign or sell any of their Founder Shares and any Class A Ordinary Shares issued
upon conversion thereof until the earlier to occur of (i)
IPO Promissory Note — Related Party
The Sponsor agreed to loan the Company an aggregate
of up to $
Administrative Services Agreement
The Company entered into an agreement with MCG
to pay an aggregate of $
16
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Related Party Loans
Working Capital Loan
On June 11, 2026, the Company issued the WCL Note
in the aggregate principal amount of up to $
Sponsor Loan
On May 30, 2025, the Company issued an unsecured
promissory note in the aggregate principal amount of up to $
On August 18, 2025, the Sponsor Note was amended
and restated to, among other things, amend the principal amount of the Sponsor Note up to $
The Company complies with the requirements of
ASC 835 and reports accrued interest and the amortization of the original issue discount on the unaudited condensed consolidated statements
of operations included elsewhere in this Report as “interest expense on the Sponsor Note “and report the loan amount and unpaid
interest as “Sponsor Note” on the accompanying condensed consolidated balance sheets. For the three and six months ended June
30, 2026, the Company recognized $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
The Company’s ability to complete an initial Business Combination may be adversely affected by various factors, many of which are beyond the Company’s control. The Company’s ability to consummate an initial Business Combination could be impacted by, among other things, changes in laws or regulations, downturns in the financial markets or in economic conditions, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. The Company cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact the Company’s ability to complete an initial Business Combination.
17
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Registration Rights Agreement
The holders of the (i) Founder Shares, (ii) Private
Placement Warrants and (iii) warrants that may be issued upon conversion of Working Capital Loans (and in each case holders of their underlying
securities, as applicable) have registration rights to require the Company to register for resale any of the Company’s securities
held by them and any other securities of the Company acquired by them prior to the consummation of the initial Business Combination pursuant
to a registration rights agreement, dated June 17, 2024, which the Company entered into with the Sponsor and the other signatories thereto.
The holders of these securities are entitled to make up to
Underwriting Agreement
The Underwriters had a
The Underwriters were paid a cash underwriting
discount of $
NOTE 7. SHAREHOLDERS’ DEFICIT
On June 11, 2026, the Company issued an aggregate
of
Preference Shares
The Company is authorized to issue a total of
18
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Class A Ordinary Shares
The Company is authorized to issue a total of
Class B Ordinary Shares
The Company is authorized to issue a total of
The remaining Founder Share will automatically
convert into Class A Ordinary Shares concurrently with or immediately following the consummation of the initial Business Combination or
earlier at the option of the holder on a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations,
recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A Ordinary Shares,
or any other equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related
to or in connection with the closing of the initial Business Combination, the ratio at which Class B Ordinary Shares convert into Class
A Ordinary Shares will be adjusted (unless the holders of a majority of the outstanding Class B Ordinary Shares agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of Class A Ordinary Shares issuable upon conversion of all Class
B Ordinary Shares (including the Class A Ordinary Shares issued on the Founder Shares Conversion) will equal, in the aggregate,
Holders of the Ordinary Shares are entitled to
19
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
Warrants
At June 30, 2026 and December 31, 2025, there
were
The Company will not be obligated to deliver any Class A Ordinary Shares pursuant to the exercise of a Warrant and will have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the Class A Ordinary Shares issuable upon exercise of the Warrants is then effective and a prospectus relating thereto is current. No Warrant will be exercisable and the Company will not be obligated to issue a Class A Ordinary Share upon exercise of a Warrant unless the Class A Ordinary Share issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Warrant, the holder of such Warrant will not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any Warrant. In the event that a registration statement is not effective for the exercised Warrants, the purchaser of a Unit containing such Warrant will have paid the full purchase price for the Unit solely for the Class A Ordinary Share underlying such Unit.
Under the terms of the Warrant Agreement, dated
June 17, 2024, that the Company entered into with Continental (the “Warrant Agreement”), the Company has agreed that, as
soon as practicable, but in no event later than
If the holders exercise their Public Warrants
on a cashless basis, they would pay the warrant exercise price by surrendering the Public Warrants for that number of Class A Ordinary
Shares equal to the quotient obtained by dividing (x) the product of the number of Class A Ordinary Shares issuable upon exercise of the
Public Warrants, multiplied by the excess of the “fair market value” of the Class A Ordinary Shares over the exercise price
of the Public Warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the
Class A Ordinary Shares for the
20
MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
The Company may redeem the outstanding Public Warrants:
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon a minimum of | |
| ● | if, and only if, the closing price of the Class A Ordinary Shares equals or exceeds $ |
Additionally, if the number of outstanding Class
A Ordinary Shares is increased by a share capitalization payable in Class A Ordinary Shares, or by a sub-division of Ordinary Shares or
other similar event, then, on the effective date of such share capitalization, sub-division or similar event, the number of Class A Ordinary
Shares issuable upon exercise of each Warrant will be increased in proportion to such increase in the outstanding Ordinary Shares. A rights
offering made to all or substantially all holders of Ordinary Shares entitling holders to purchase Class A Ordinary Shares at a price
less than the fair market value will be deemed a share capitalization of a number of Class A Ordinary Shares equal to the product of (i)
the number of Class A Ordinary Shares actually sold in such rights offering (or issuable under any other equity securities sold in such
rights offering that are convertible into or exercisable for Class A Ordinary Shares) and (ii) the quotient of (x) the price per Class
A Ordinary Share paid in such rights offering and (y) the fair market value. For these purposes (i) if the rights offering is for securities
convertible into or exercisable for Class A Ordinary Shares, in determining the price payable for Class A Ordinary Shares, there will
be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion
and (ii) fair market value means the volume weighted average price of Class A Ordinary Shares as reported during the
NOTE 8. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects Management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on an assessment of the assumptions that market participants would use in pricing the asset or liability. |
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MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
The following table presents information about the Company’s assets that are measured at fair value as of June 30, 2026 and December 31, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| Level 1 | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets: | ||||||||
| Marketable securities and cash held in Trust Account | $ | $ | ||||||
NOTE 9. SEGMENT INFORMATION
FASB ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (the “CODM”), or group, in deciding how to allocate resources and assess performance.
The CODM assesses performance for the single segment
and decides how to allocate resources based on net income or loss that also is reported on the accompanying unaudited condensed consolidated
statements of operations as net income or loss. The measure of segment assets is reported on the accompanying condensed consolidated balance
sheets as total assets.
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Marketable securities and cash held in Trust Account | $ | $ | ||||||
| Cash | $ | $ | ||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| General and administrative costs | $ | $ | $ | $ | ||||||||||||
| Dividends and interest earned on marketable securities and cash held in Trust Account | $ | $ | $ | $ | ||||||||||||
The CODM reviews dividends and interest earned on marketable securities and cash held in the Trust Account to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the Investment Management Trust Agreement, dated June 17, 2024, which the Company entered into with Continental, as trustee of the Trust Account.
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MELAR ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
General and administrative costs are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination or similar transaction within the Combination Period. The CODM also reviews general and administrative costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. General and administrative costs, as reported on the accompanying unaudited condensed consolidated statements of operations, are the significant segment expenses provided to the CODM on a regular basis.
All other segment items included in net income or loss are reported on the accompanying unaudited condensed consolidated statements of operations and described within their respective disclosures.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the accompanying condensed consolidated balance sheet date up to the date that the accompanying unaudited condensed consolidated financial statements were issued. Based upon this review, other than as set forth below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the accompanying unaudited condensed consolidated financial statements.
On July 24, 2026, Everli deposited $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (this “Report”) including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this Report under Item 1. “Financial Statements.”
Overview
We are a blank check company incorporated in the Cayman Islands on March 11, 2024 for the purpose of effecting a Business Combination. Our Sponsor is Melar Acquisition Sponsor I LLC.
We are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies. We expect to continue to incur significant costs in the pursuit of our acquisition plans. There can be no assurance that our plans to complete a Business Combination, including the Everli Business Combination, will be successful.
Our IPO Registration Statement became effective on June 17, 2024. On June 20, 2024, we consummated our Initial Public Offering of 16,000,000 Units, including 1,000,000 Option Units issued pursuant to the partial exercise of the Over-Allotment Option. Each Unit consists of one Public Share and one-half of one Public Warrant. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to us of $160,000,000.
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Simultaneously with the closing of the Initial Public Offering and pursuant to the Private Placement Warrants Purchase Agreements, we completed the private sale of an aggregate of 5,000,000 Private Placement Warrants to our Sponsor, CCM and Seaport in the Private Placement at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to our Company of $5,000,000. Of those 5,000,000 Private Placement Warrants, (i) the Sponsor purchased 3,500,000 Private Placement Warrants and (ii) CCM and Seaport purchased an aggregate to 1,500,000 Private Placement Warrants. The Private Placement Warrants are identical to the Public Warrants, except as otherwise disclosed in the IPO Registration Statement.
Following the closing of the Initial Public Offering and Private Placement, an amount of $160,000,000 from the net proceeds of the Initial Public Offering and the Private Placement was initially placed in the Trust Account located in the United States with Continental acting as trustee. Pursuant to the Trust Agreement, the Trust Account may be invested only (i) in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act with a maturity of 185 days or less, (ii) in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, (iii) as uninvested cash or (iv) in interest or non-interest bearing demand deposit accounts at a U.S. chartered commercial bank with consolidated assets of $100 billion or more selected by the Trustee that is reasonably satisfactory to us, until the earlier of: (x) the completion of the Business Combination and (y) the distribution of the Trust Account, as described below.
We have until December 20, 2026 (as extended and discussed below), or until such (x) earlier date as our Board may approve or (y) later date as our shareholders may approve, pursuant to the Amended and Restated Articles, to consummate the Business Combination. If we are unable to complete the Business Combination by the end of the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, but not 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 and not previously released to us to pay taxes, if any, 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our Board, dissolve and liquidate, subject, in each case, to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
We may seek to extend the Combination Period consistent with applicable laws, regulations and stock exchange rules by amending our Amended and Restated Articles. Any such amendment would require the approval of our Public Shareholders, who will be provided the opportunity to redeem all or a portion of their Public Shares in connection with the vote on such approval. Such redemptions will decrease the amount held in our Trust Account and our capitalization, and may affect our ability to maintain our listing on Nasdaq. In addition, the Nasdaq Rules currently require SPACs (such as us) to complete their initial Business Combination in accordance with the Nasdaq 36-Month Requirement. If we do not meet the Nasdaq 36-Month Requirement, our securities will likely be subject to suspension of trading and delisting from Nasdaq. Our Sponsor may also, in its discretion, consider selling its interest in our Company to another sponsor entity, which may result in a change to our Management Team.
Shareholder Meeting
On June 16, 2026, we held an extraordinary general meeting of shareholders in lieu of an annual general meeting of shareholders (the “June 2026 Meeting”). At the June 2026 Meeting, our shareholders approved, among other things, an amendment to our Amended and Restated Articles to extend the end of the Combination Period on a monthly basis up to six (6) times, from June 20, 2026 through December 20, 2026, or such earlier date as determined by the Board (the “Extension Amendment Proposal”).
In connection with the votes to approve the Extension Amendment Proposal, the holders of 12,076,077 Public Shares properly exercised their right to redeem such shares for cash at a redemption price of approximately $10.89 per share, for an aggregate redemption amount of approximately $131.5 million (the “Meeting Redemptions”). Following the Meeting Redemptions, there were 3,923,923 Public Shares issued and outstanding.
Trust Account Contribution
In association with the approval of the Extension Amendment Proposal, the Sponsor or its designee has agreed to contribute to the Trust Account on a monthly basis the lesser of (x) $80,000 or (y) $0.02 for each Public Share that is not redeemed. Based on the 3,923,923 Public Shares that remain outstanding after the Meeting Redemptions, the monthly contribution amount is $78,478.46. In association with the Extension Amendment Proposal, as of the date of this filing, the Company’s designee, Everli, has deposited $78,478 to extend the Combination Period to August 20, 2026.
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Everli Business Combination
On July 30, 2025, we entered into the Everli Merger Agreement with (i) the Merger Sub, (ii) Everli, (iii) the Sponsor, as the SPAC Representative, and (iv) the Escrowed Seller. On October 2, 2025, the parties to the Everli Merger Agreement entered into the First Everli Merger Agreement Amendment, pursuant to which, the deadline for Everli to procure at least $10,000,000 in Bridge Financing (as defined in the Everli Merger Agreement), the failure of which entitles Everli to terminate the Everli Merger Agreement, was extended from September 30, 2025 to October 21, 2025. On December 8, 2025, the parties to the Everli Merger Agreement entered into the Second Everli Merger Agreement Amendment, pursuant to which the parties thereto extended the GAAP Audit Delivery Date from November 30, 2025 to January 16, 2026. We have waived the right to receive the GAAP Audited Everli Financials by the GAAP Audit Delivery Date, provided that such deliverables are received by January 31, 2026. Such deliverables were received by January 31, 2026.
Pursuant to the Everli Merger Agreement, subject to the terms and conditions set forth therein, (i) prior to the Closing, we will continue out of the Cayman Islands and into the State of Nevada and domesticate as a Nevada corporation, and (ii) at the Closing, Merger Sub will merge with and into Everli, with Everli continuing as the surviving entity and wholly-owned subsidiary of our Company, and with each Everli shareholder receiving shares of our Common Stock (as defined in the Everli Merger Agreement) at the Closing, as further described below.
The Everli Merger Agreement provides that the total consideration received by the Everli security holders from us at the Closing will be a number of shares of our Common Stock with an aggregate value equal to the sum of (i) One Hundred and Eighty Million Dollars ($180,000,000) plus (ii) the gross proceeds of the Bridge Financing, if any, that has converted into Everli common stock, plus (iii) the Everli Equity Investment (as defined in the Everli Merger Agreement), if any, with each share of our Common Stock valued at $10.00.
On January 23, 2026, a draft of the Everli Registration Statement was submitted to the SEC, which was further amended. The Everli Registration Statement includes a proxy statement to our shareholders and a prospectus for the registration of our securities to be issued in connection with the Everli Business Combination.
For a full description of the Everli Merger Agreement and the proposed Everli Business Combination, please see Item 1. “Business” of our 2025 Annual Report.
Working Capital Loan
On June 11, 2026, we issued the WCL Note in the aggregate principal amount of up to $1,500,000 to the Sponsor. The Working Capital Loan is interest bearing at 17.5% per annum and is repayable in full upon the earlier of (i) the date on which the Company consummates its initial Business Combination and (ii) the date of liquidation of the Company. If, prior to the Business Combination, the principal balance of the Working Capital Loan has not been paid in full, then, at the Sponsor’s option and subject to certain conditions, up to $1,500,000 of the unpaid principal amount of the Working Capital Loan may be converted into Conversion Warrants to purchase Class A Ordinary Shares at a conversion price of $1.00 per Conversion Warrant. The Conversion Warrants shall be identical to the Warrants issued in the Private Placement that took place simultaneously with the Initial Public Offering. The Conversion Warrants and their underlying securities are entitled to the registration rights set forth in the Working Capital Loan.
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Founder Shares Conversion
On June 11, 2026, we issued an aggregate of 5,621,621 Class A Ordinary Shares to the Sponsor upon the Founder Shares Conversion of an equal number of Class B Ordinary Shares held by the Sponsor. The Class A Ordinary Shares issued in connection with the Founder Shares Conversion are subject to the same restrictions applicable to the Class B Ordinary Shares prior to the Founder Shares Conversion, including, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial Business Combination.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from March 11, 2024 (inception) through June 30, 2026 were organizational activities, those necessary to prepare for the Initial Public Offering, as described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of dividends and interest income on marketable securities and cash held in the Trust Account, located in the United States, with Continental acting as trustee. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2026, we had net income of $720,170, which consists of dividends and interest earned on marketable securities and cash held in the Trust Account of $1,365,225, interest due from Everli of $157,970 and interest on cash held in the operating account of $4, partially offset by general and administrative costs of $628,701, interest expense on the Working Capital Loan of $7,758, and interest expense on the Sponsor Loan of $166,570.
For the three months ended June 30, 2025, we had net income of $1,556,238, which consists of dividends and interest earned on marketable securities and cash held in the Trust Account of $1,786,926, interest due from Everli of $2,540 and interest on cash held in the operating account of $169, partially offset by general and administrative costs of $233,288 and interest due to the Sponsor of $109.
For the six months ended June 30, 2026, we had net income of $1,498,431, which consists of dividends and interest earned on marketable securities and cash held in the Trust Account of $2,879,103, interest due from Everli of $314,204 and interest on cash held in the operating account of $5, partially offset by general and administrative costs of $1,367,922, interest expense on the Working Capital Loan of $7,758, and interest expense on the Sponsor Loan of $319,201.
For the six months ended June 30, 2025, we had net income of $3,136,231, which consists of dividends and interest earned on marketable securities and cash held in the Trust Account of $3,523,660, interest due from Everli of $2,540 and interest on cash held in the operating account of $376, partially offset by general and administrative costs of $390,236 and interest due to the Sponsor of $109.
Liquidity, Capital Resources and Going Concern
Following the Initial Public Offering, including the partial exercise of the Over-Allotment Option, and the Private Placement, a total of $160,000,000 was placed in the Trust Account.
For the six months ended June 30, 2026, cash used in operating activities was $325,007. Net income of $1,498,431 was adjusted for dividends and interest earned on marketable securities and cash held in the Trust Account of $2,879,103, interest due from Everli of $314,204, interest expense on Working Capital loan of $7,758 and interest due on Sponsor Loan of $319,201. Changes in operating assets and liabilities provided $1,042,910 of cash for operating activities.
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For the six months ended June 30, 2025, cash used in operating activities was $322,449. Net income of $3,136,231 was affected by dividends and interest earned on marketable securities and cash held in the Trust Account of $3,523,660, interest due from Everli of $2,540 and interest due to the Sponsor of $109. Changes in operating assets and liabilities provided $67,411 of cash for operating activities.
As of June 30, 2026 and December 31, 2025, we had marketable securities held in the Trust Account of $42,874,392 and $171,405,977, respectively. We may withdraw interest from the Trust Account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable, if any, and exclude the Deferred Fee), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we may, at any time (based on our Management Team’s ongoing assessment of all factors related to our potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest-bearing demand deposit account at a bank.
As of June 30, 2026 and December 31, 2025, we had cash held outside of the Trust Account of $2,068 and $32,075, respectively. We use the 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.
Our liquidity needs through June 30, 2026 have been satisfied through (i) a contribution of $25,000 from the Sponsor in exchange for the issuance of our Founder Shares, (ii) loans pursuant to the IPO Promissory Note, Working Capital Loan and Sponsor Note, and (iii) the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside the Trust Account.
Promissory Notes
IPO Promissory Note
Prior to the closing of our Initial Public Offering, on March 11, 2024, our Sponsor agreed to loan us an aggregate of up to $300,000 under the IPO Promissory Note to cover expenses related to the Initial Public Offering. Such loans and advances were non-interest bearing and payable on the earlier of December 31, 2024 or the completion of our Initial Public Offering. The loan of $249,389 was fully repaid upon the consummation of our Initial Public Offering on June 20, 2024. No additional borrowing is available under the IPO Promissory Note.
Everli Notes
On May 30, 2025, we entered into the First Everli Note with Everli and the Pledging Stockholder for a principal amount of up to $300,000. The First Everli Note bore interest at an annual compounded rate of 17.5% and was secured by a continuing security interest in all of Everli’s and its subsidiaries’ property and assets, and a pledge of equity interests by the Pledging Stockholder as collateral. The principal and accrued interest of the First Everli Note was due and payable on the earliest of: (i) July 29, 2025, if the Term Sheet (as defined in the First Everli Note) was terminated by our Company in our sole discretion; (ii) five (5) business days after any other termination of the Term Sheet in accordance with the terms thereof; (iii) five (5) business days after the termination of a definitive agreement for a Business Combination transaction involving us and Everli; and (iv) five (5) business days after Everli’s receipt of at least an aggregate of $5,000,000 in proceeds under a $10 million senior secured convertible loan as contemplated under the Term Sheet.
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On August 18, 2025, the First Everli Note was amended and restated to, among other things, amend the principal amount of the First Everli Note up to $1,000,000, including an OID of ten percent (10%). On September 12, 2025, the First Everli Note was amended by the first amendment to increase the principal amount to up to $1,250,000. On September 29, 2025, the First Everli Note was amended by the second amendment to increase the principal amount to up to $3,250,000. On March 30, 2026, the First Everli Note was amended by the third amendment to increase the principal amount to up to $3,611,111.
On October 21, 2025, Everli entered into the Second Everli Note with MCG, an affiliate of the Sponsor, for the aggregate principal amount of $7,500,000, which includes a $750,000 original issue discount. The Second Everli Note bears interest at 17.5% per annum and is secured by the assets of Everli and its subsidiaries. The principal under the Everli Notes satisfied the $10,000,000 Bridge Financing (as defined in the Everli Merger Agreement) requirement as provided in the Everli Merger Agreement. The principal and accrued interest of the Second Everli Note shall be due and payable on the twelfth-month anniversary of the issuance date of the note. MCG has a right to convert any outstanding balance under the Second Everli Note into fully paid and nonassessable shares of our Class A Common Stock at a rate set forth in the Second Everli Note at any time or times on or after the Everli Business Combination. We were a signatory to the Second Everli Note to acknowledge, among other things, the conversion right and the parity of the security interest granted under the First Everli Note and the security interest granted under the Second Everli Note. The Second Everli Note creates no direct financial obligation or an off-balance sheet arrangement for us.
As of June 30, 2026 and December 31, 2025, Everli had borrowed $3,250,000 (via cash borrowings and the payment of multiple invoices by us for Everli), under the First Everli Note, as amended, and had an outstanding balance (including interest) of $4,120,066 and $3,805,862, reflected on the condensed consolidated balance sheets included elsewhere in this Report.
We comply with the requirements of FASB ASC Topic 835, “Interest” (“ASC 835”) and report accrued interest and the amortization of the original issue discounts on the unaudited condensed consolidated statements of operations included elsewhere in this Report as “interest due from Everli” and report the loan amount and unpaid interest as “due from Everli” on the condensed consolidated balance sheets included elsewhere in this Report. For the three and six months ended June 30, 2026, the Company recognized $157,970 and $314,204, respectively, in amortized OID and accrued interest on the unaudited condensed consolidated statements of operations. For the three and six months ended June 30, 2025, the Company recognized $2,540 in accrued interest on the unaudited condensed consolidated statements of operations.
Sponsor Note
On May 30, 2025, we issued the Sponsor Note in the aggregate principal amount of up to $300,000 to the Sponsor, for the Sponsor Loan. The Sponsor Loan is interest bearing at a rate of 17.5% per annum, unsecured and due on the earliest of: (i) July 29, 2025, if the Term Sheet is terminated by us in our sole discretion; (ii) five (5) business days after any other termination of the Term Sheet in accordance with the terms thereof; (iii) five (5) business days after the termination of a definitive agreement for a Business Combination transaction involving us and Everli; and (iv) five (5) business days after Everli’s receipt of at least an aggregate of $5,000,000 in proceeds under a $10 million senior secured convertible loan as contemplated under the Term Sheet.
On August 18, 2025, the Sponsor Note was amended and restated to, among other things, amend the principal amount of the Sponsor Note up to $1,000,000, including an original issue discount of ten percent (10%). On September 12, 2025, the Sponsor Note was further amended to increase the principal amount to up to $1,250,000. On September 29, 2025, the Sponsor Note was further amended to increase the principal amount to up to $3,250,000. On March 30, 2026, the Sponsor Note was further amended to increase the principal amount to up to $3,611,111. As of June 30, 2026 and December 31, 2025, we had borrowed $3,250,000 and $3,178,079, respectively, under the Sponsor Loan and reported $4,109,133 and $3,718,011, respectively (including interest), on the condensed consolidated balance sheets included elsewhere in this Report.
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We comply with the requirements of ASC 835 and report accrued interest and the amortization of the original issue discount on the unaudited condensed consolidated statements of operations included elsewhere in this Report as “interest expense on the Sponsor Note” and report the loan amount and unpaid interest as “Sponsor Note” on the condensed consolidated balance sheets included elsewhere in this Report. For the three and six months ended June 30, 2026, we recognized $166,570 and $319,201, respectively, in amortized OID and accrued interest expense on the unaudited condensed consolidated statements of operations. For the three and six months ended June 30, 2025, we had incurred $109 in interest, reported as interest expense on the Sponsor Loan.
Intercreditor Agreements
On May 8, 2026, Melar Lender entered into the Yorkville Intercreditor Agreement with the YA Lender, Everli, for itself and on behalf of its subsidiaries, Salvatore Palella, and Palella Holdings, LLC, a Delaware limited liability company. The Yorkville Intercreditor Agreement provides that the Melar Lender and the YA Lender share pari passu rights in payment and a first-priority security interest over substantially all of Everli’s assets, with principal payments distributed pro rata based on outstanding amounts (subject to specified exclusions), coordinated notice and lien provisions, and mutual consent to each other’s financing arrangements.
On May 27, 2026, Melar Lender entered into the Agile Intercreditor Agreement with the Agile Parties and YA Lender, which was acknowledged by Everli, for itself and on behalf of its subsidiaries, Salvatore Palella, and Palella Holdings. The Agile Intercreditor Agreement governs the respective rights, priorities and obligations of the Agile Parties, the Melar Lender and the YA Lender with respect to all indebtedness, liabilities and obligations of Everli, its subsidiaries, Palella Holdings, Palella, and certain other guarantors and pledgors under the applicable loan documents, owed to the Agile Parties, the Melar Lender and the YA Lender under certain promissory notes issued by Everli to each of the Agile Parties, the Melar Lender and the YA Lender, and the related guarantees and security interests.
Pursuant to the Agile Intercreditor Agreement, the Agile Parties have agreed that they are subordinate lenders to each of the Senior Creditors, and that all indebtedness owed by Palella Holdings and Palella to the Agile Parties is and shall be junior and subordinate in right of payment and security to the indebtedness evidenced by the promissory notes issued to the Melar Lender and the promissory notes issued to the YA Lender.
Working Capital Loans
On June 11, 2026, we issued the WCL Note in the aggregate principal amount of up to $1,500,000 to the Sponsor. The Working Capital Loan is interest bearing at 17.5% per annum and is repayable in full upon the earlier of (i) the date on which the Company consummates its initial Business Combination and (ii) the date of liquidation of the Company. If, prior to the Business Combination, the principal balance of the Working Capital Loan has not been paid in full, then, at the Sponsor’s option and subject to certain conditions, up to $1,500,000 of the unpaid principal amount of the Working Capital Loan may be converted into Conversion Warrants to purchase Class A Ordinary Shares at a conversion price of $1.00 per Conversion Warrant. The Conversion Warrants shall be identical to the Warrants issued in the Private Placement that took place simultaneously with the Initial Public Offering. The Conversion Warrants and their underlying securities are entitled to the registration rights set forth in the Working Capital Loan.
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Going Concern
We have until December 20, 2026, to consummate an initial Business Combination (assuming no further extensions). If we do not complete a Business Combination within the Combination Period, we will trigger an automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Articles. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements-Going Concern,” we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. The working capital deficit and the expectation of significant future costs raises substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. Additionally, Management has determined that the mandatory liquidation and subsequent dissolution, should we be unable to complete a Business Combination by the end of the Combination Period, raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after December 20, 2026. Management plans to address this uncertainty through the closing of its proposed Business Combination. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as follows:
Administrative Services Agreement
Commencing on June 18, 2024, and until the completion of our Business Combination or liquidation, we reimburse MCG, an affiliate of the Sponsor, $10,000 per month for office space, utilities, and secretarial and administrative support pursuant to the Administrative Services Agreement. For the three and six months ended June 30, 2026, the Company incurred $30,000 and $60,000 in fees for these services, respectively. For the three and six months ended June 30, 2025, the Company incurred $30,000 and $60,000 in fees for such services, respectively, in the condensed consolidated balance sheets in accounts payable and accrued liabilities.
Underwriting Agreement
We granted the Underwriters a 45-day option from the date of the Initial Public Offering to purchase up to an additional 2,250,000 Option Units to cover over-allotments, if any. On June 20, 2024, simultaneously with the Initial Public Offering, the Underwriters partially exercised their Over-Allotment Option and purchased 1,000,000 Option Units, with 45 days to purchase the remaining 1,250,000 Option Units. On August 4, 2024, the remaining Over-Allotment Option expired worthless.
The Underwriters were paid a cash underwriting discount of $0.20 per Unit (excluding any Units sold pursuant to the Over-Allotment Option), or $3,000,000 in the aggregate, which was paid upon the closing of the Initial Public Offering. Additionally, the Underwriters are entitled to the Deferred Fee of $0.40 per Unit other than Option Units, and $0.60 per Option Unit, or $6,600,000 in the aggregate. The Deferred Fee is payable to the Underwriters from the amounts held in the Trust Account solely on amounts remaining in the Trust Account following all properly submitted shareholder redemptions in connection with the consummation of the initial Business Combination, subject to the terms of the Underwriting Agreement. In connection with redemptions by holders of Public Shares in association with the June 2026 Meeting, $131,489,166 was removed from the Trust Account and the related Deferred Fee was reduced by $4,885,024. At June 30, 2026 and December 31, 2025, the Company reported $1,714,976 and $6,600,000 on the condensed consolidated balance sheets as the Deferred Fee.
Registration Rights Agreement
The holders of (i) the Founder Shares, (ii) the Private Placement Warrants and (iii) any private placement-equivalent warrants issued in connection with the Working Capital Loans, if any (and in each case holders of their underlying securities, as applicable) are entitled to registration rights pursuant to the Registration Rights Agreement, requiring us to register such securities for resale (in the case of the Founder Shares, only after conversion to our Class A Ordinary Shares). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. CCM and Seaport may only make a demand on one occasion and only during the five-year period beginning on the effective date of the IPO Registration Statement. In addition, CCM and Seaport may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the IPO Registration Statement. We will bear the expenses incurred in connection with the filing of any such registration statements.
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Letter Agreement
Our Sponsor, directors and officers have entered into the Letter Agreement with us, pursuant to which, they have waived their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if we fail to complete our initial Business Combination within the Combination Period. However, if they acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if we fail to complete our initial Business Combination within the Combination Period.
Additionally, pursuant to the Letter Agreement, our Sponsor, directors and officers will not propose any amendment to our Amended and Restated Articles to modify (i) the substance or timing of our obligation to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Combination Period or (ii) any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity, unless we provide our Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment 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 and not previously released to us to pay our taxes, divided by the number of then outstanding Public Shares.
Critical Accounting Estimates and Standards
The preparation of the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Report in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the disclosure of contingent assets and liabilities, in our unaudited condensed consolidated financial statements. These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual experience differs from the assumptions used, our unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Report could be materially affected. As of June 30, 2026, we did not have any critical accounting estimates to be disclosed.
Recent Accounting Standards
In November 2024, the FASB issued ASU Topic 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2024-03.
Management does not believe that any other recently issued, but not yet effective, accounting standards, which, if currently adopted, would have a material effect on the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Report.
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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.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our Management, including our Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our Management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of June 30, 2026.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There have been no changes to our internal control over financial reporting during the quarterly period ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our Management, there is no material litigation currently pending or contemplated against us, any of our subsidiaries, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations, see the section titled “Risk Factors” contained in our IPO Registration Statement, 2025 Annual Report, and 2026 First Quarter Form 10-Q. As of the date of this Report, there have been no material changes with respect to those risk factors. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
For the risks related to Everli and the Everli Business Combination, please see the registration statement on Form S-4 for the Everli Business Combination, once filed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Use of Proceeds
There have been no offerings of registered securities and therefore no planned use of proceeds from such offerings during the quarterly period covered by this Report. For a description of the use of proceeds generated in our Initial Public Offering and the Private Placement, see Part I, Item 2 of this Report. There has been no material change in the planned use of proceeds from our Initial Public Offering and Private Placement as described in the IPO Registration Statement. The specific investments in our Trust Account may change from time to time.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Trading Arrangements
During the quarterly period ended June 30, 2026,
none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
Additional Information
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Report.
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Certain schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Melar will provide a copy of such omitted materials to the SEC or its staff upon request. |
| † | Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) of Regulation S-K. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MELAR ACQUISITION CORP. I | ||
| Date: August 13, 2026 | By: | /s/ Gautam Ivatury |
| Name: | Gautam Ivatury | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 13, 2026 | By: | /s/ Edward Lifshitz |
| Name: | Edward Lifshitz | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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