10-Q: Breeze Holdings Reports Q2 Loss, Advances Biopharma Merger

Breeze Holdings Acquisition Corp. reported a net loss of $5.58 million for the first half of 2025, while progressing towards its business combination with YD Biopharma and securing $13.2 million in PIPE financing.

Summary

• Breeze Holdings Acquisition Corp. (BRZH) reported a net loss of $2,214,684 for the three months ended June 30, 2025, and a net loss of $5,582,198 for the six months ended June 30, 2025.
• Cash held outside the Trust Account decreased significantly to $6,312 as of June 30, 2025, from $101,674 at December 31, 2024.
• Cash held in the Trust Account decreased to $2,759,408 as of June 30, 2025, from $10,532,045 at December 31, 2024, primarily due to significant share redemptions.
• The company's accumulated deficit increased to $(18,710,088) as of June 30, 2025, from $(12,956,873) at December 31, 2024.
• Warrant liabilities increased to $7,785,500 as of June 30, 2025, from $2,877,250 at December 31, 2024, reflecting a loss of $4,908,250 from changes in fair value for the six months ended June 30, 2025.
• The company has a working capital deficit of $10,824,317 as of June 30, 2025.
• Stockholders approved the business combination with YD Biopharma Limited and related proposals on August 14, 2025.
• A PIPE (Private Investment in Public Equity) financing of $13.2 million, contingent on the merger's completion, has been secured with certain investors, including a recent substitution of Ms. Hsiao Lan Wu for Dr. Ou.
• The company's combination period has been extended multiple times, most recently to September 26, 2025, with the 35th one-month extension executed on August 18, 2025.
• Significant share redemptions occurred: 621,609 shares for $7,353,424 on January 2, 2025, and 47,690 shares for $584,386 on June 27, 2025, and 49,715 shares on August 14, 2025.
• The company was delisted from Nasdaq on May 29, 2024, and its rights and warrants were moved from OTCQX Best Market to OTCQB on June 16, 2025, due to non-compliance with penny stock exemptions.

Sentiment

Score: 3

Explanation: The sentiment is negative due to significant net losses, critically low cash balances outside the trust, explicit 'going concern' doubt, and a history of delistings and high redemptions. While the business combination approval and PIPE financing are positive steps, the underlying financial fragility and operational challenges present substantial risks.

Positives

• Stockholders approved the business combination with YD Biopharma Limited and all necessary proposals on August 14, 2025, a critical step towards closing the merger.
• Secured commitments for a $13.2 million PIPE financing, which is contingent upon the successful completion of the merger and will support the business combination and related transaction costs.
• Successfully obtained multiple extensions for the business combination period, most recently extending the deadline to September 26, 2025, demonstrating continued efforts to complete a deal.

Negatives

• Reported a net loss of $5,582,198 for the six months ended June 30, 2025, an increase from the $4,912,173 net loss in the prior year period.
• Cash held outside the Trust Account significantly decreased to $6,312 as of June 30, 2025, from $101,674 at December 31, 2024, indicating very limited liquidity for operations.
• The company has a substantial accumulated deficit of $(18,710,088) as of June 30, 2025, and a negative working capital of $10,824,317, raising substantial doubt about its ability to continue as a going concern.
• Warrant liabilities increased significantly to $7,785,500 as of June 30, 2025, from $2,877,250 at December 31, 2024, resulting in a $4,908,250 loss from changes in fair value.
• The company was delisted from Nasdaq on May 29, 2024, and its rights and warrants were subsequently moved from OTCQX Best Market to OTCQB on June 16, 2025, due to non-compliance with listing rules.
• Identified material weaknesses in internal control over financial reporting related to income tax provision, warrant liability valuation, and untimely financial package preparation.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to insufficient liquidity to sustain operations for a reasonable period.
• Inability to complete the business combination with YD Biopharma within the extended Combination Period (September 26, 2025) would lead to liquidation and warrants expiring worthless.
• Reliance on the Sponsor or its affiliates for working capital loans, with no assurance that such loans will be provided or repaid if a business combination is not completed.
• Geopolitical tensions (Israel-Hamas, Ukraine-Russia, China/Asia-Pacific) could impact global capital markets, supply chains, and the ability to consummate a business combination.
• The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases, which has applied to past redemptions and could apply to future redemptions, potentially decreasing investment value and hindering future transactions.
• Potential for bank failures or insolvency could threaten the company's ability to access existing cash, cash equivalents, and investments held at financial institutions.

Future Outlook

The company intends to complete its business combination with YD Biopharma Limited within the extended Combination Period, which is currently set to expire on September 26, 2025. Management plans to address the going concern uncertainty through this business combination or by obtaining additional working capital loans from the Sponsor or its affiliates. The company is also assessing the impact of the recently signed One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements.

Management Comments

• Management has determined that the company currently lacks the liquidity needed to sustain operations for a reasonable period of time, raising substantial doubt about its ability to continue as a going concern.
• Management plans to address this uncertainty through a business combination and intends to consummate the business combination within the time period ending September 26, 2025.
• The company believes it will need to raise additional funds to meet expenditures for operating its business and may need additional financing to complete its business combination or due to significant public share redemptions.

Industry Context

Breeze Holdings Acquisition Corp.'s situation reflects common challenges faced by Special Purpose Acquisition Companies (SPACs) in the current market environment. The significant redemptions, declining trust account balance, and reliance on sponsor loans are indicative of the high redemption rates and investor skepticism prevalent in the SPAC market. The delisting from Nasdaq and subsequent move to OTC markets for its securities further highlights the difficulties many SPACs face in meeting listing requirements and maintaining investor confidence as their initial business combination deadlines approach. The ongoing need for extensions and the substantial 'due to Sponsor' balance are typical of SPACs struggling to close a deal, often leading to increased financial strain and reduced public float.

Comparison to Industry Standards

• The high redemption rates experienced by Breeze Holdings (e.g., 621,609 shares redeemed in January 2025, 47,690 in June 2025, and 49,715 in August 2025) are consistent with the broader SPAC market trend of increased redemptions, particularly as deal timelines extend and trust values increase, allowing investors to redeem at or above IPO price.
• The company's delisting from Nasdaq and subsequent trading on OTC markets is a significant deviation from the typical SPAC lifecycle, which aims for a Nasdaq or NYSE listing post-combination. This move reflects a failure to meet exchange listing criteria, a challenge many SPACs face if they cannot complete a qualifying business combination within the specified timeframe.
• The increasing reliance on Sponsor loans (totaling over $10 million) to fund extensions and working capital is a common characteristic of SPACs nearing their dissolution deadline without a completed deal, as public funds in the trust are protected for redemptions.
• The identified material weaknesses in internal controls, particularly regarding complex financial instruments like warrant liabilities and income tax accounting, are not uncommon for smaller public companies or SPACs with limited internal accounting resources, but they represent a significant control deficiency compared to larger, more established public entities.

Corporate Governance

Related Party Transactions

• The Sponsor (Breeze Sponsor, LLC) purchased 100 shares of common stock (Founder Shares) for $25,000 in June 2020, and 4,325,000 Private Placement Warrants for $1.00 each.
• The Sponsor and its affiliates are reimbursed for out-of-pocket expenses incurred on the company's behalf, with no cap or ceiling on reimbursement.
• The company pays an affiliate of the Sponsor $5,000 per month for office space, utilities, and administrative support services.
• The Sponsor has provided significant working capital loans and funds for SPAC extensions, totaling $10,390,465 owed as of June 30, 2025. These loans are non-interest bearing and payable upon the consummation of an initial Business Combination.
• The Sponsor has agreed to assume $1.2 million of the $2.0 million fee owed to Woolery & Co. for strategic legal advisory services upon completion of a business combination.

Stakeholder Impact

• Shareholders: Face significant dilution risk from warrants and potential future capital raises. Public shareholders have experienced substantial redemptions, reducing their pro rata share of the trust account and potentially limiting future upside if the business combination is successful.
• Sponsor: Bears significant financial risk by providing substantial non-interest bearing loans to fund extensions and working capital, which may not be repaid if a business combination is not completed.
• Employees: As a blank check company, direct employee impact is minimal, but the uncertainty of a business combination affects future employment prospects post-merger.
• Creditors/Vendors: The company endeavors to have vendors waive rights to the Trust Account, but the 'going concern' doubt indicates potential risk for unsecured creditors if the business combination fails.

Next Steps

• Complete the business combination with YD Biopharma Limited by the extended deadline of September 26, 2025.
• Assess the impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements.
• Implement remediation plans to address identified material weaknesses in internal control over financial reporting, including enhancing processes for income tax accounting and warrant liability valuation.

Key Dates

Recommendation

The company faces severe liquidity issues, evidenced by critically low cash outside the trust account and a substantial accumulated deficit, leading to an explicit 'going concern' warning. Despite the recent stockholder approval for the business combination and PIPE financing, the history of high redemptions, the delisting from Nasdaq, and the ongoing reliance on Sponsor loans indicate a highly precarious financial position. The significant increase in warrant liabilities also adds to the financial burden. The risks of failure to complete the business combination by the September 26, 2025 deadline, coupled with the potential for further redemptions and the 1% excise tax, make this a high-risk investment with substantial downside potential. A seasoned investor would likely view the current situation as indicative of a distressed asset with a high probability of further value erosion or liquidation.

Keywords

SPAC, Breeze Holdings, YD Biopharma, Merger, PIPE Financing, Quarterly Report, Biopharma, Acquisition, SEC Filing, Going Concern, Warrants, Redemptions, Delisting