DEF: Broad Capital Seeks Extension, Cuts Fees Amid Delisting

Broad Capital Acquisition Corp. seeks stockholder approval to extend its business combination deadline to July 2027 and reduce monthly extension fees, following its delisting from Nasdaq and termination of a prior merger agreement.

Summary

• A Special Meeting of Stockholders will be held on January 9, 2026, to vote on three proposals: an Extension Amendment Proposal, a Trust Amendment Proposal, and an Adjournment Proposal.
• The Extension Amendment Proposal seeks to extend the deadline for completing a business combination from January 13, 2026, to July 13, 2027, through up to eighteen one-month extensions.
• The proposal also aims to reduce the monthly extension payment from $0.03 per public share to an aggregate amount equal to $0.02 multiplied by the number of public shares not redeemed.
• The Trust Amendment Proposal will amend the Investment Management Trust Agreement to reflect the extended date and reduced payment, and require funds in the Trust Account to be held in an interest-bearing demand deposit account.
• The Adjournment Proposal allows for the meeting to be adjourned if there are insufficient votes for the other proposals.
• The company's definitive merger agreement with Openmarkets Group Pty Ltd (OMG), entered into on January 18, 2023, was terminated by OMG on February 12, 2025.
• Broad Capital Acquisition Corp. is actively seeking a new candidate for an initial business combination.
• Without the proposed extension, the company believes it would be forced to liquidate.
• The company's securities ceased trading on Nasdaq on January 22, 2025, and were officially delisted by the SEC on June 5, 2025, due to non-compliance (lack of public shares).
• Public stockholders have the right to redeem their shares for an anticipated price of approximately $12.29 per public share based on the current Trust Account balance of approximately $1,244,017 as of December 16, 2025.
• The Sponsor and the company's directors and officers collectively own approximately 98.2% of the outstanding common stock, totaling 3,036,010 shares.

Sentiment

Score: 2

Explanation: The company is in a highly distressed state, having been delisted from Nasdaq and failed to secure a business combination after multiple extensions and significant redemptions. While the extension provides a lifeline, the underlying issues (lack of a target, delisting consequences, minimal public float) are severe, indicating a very low probability of a successful outcome for public shareholders.

Positives

• The proposed extension provides an additional 18 months, until July 13, 2027, to identify and complete a business combination, preventing immediate liquidation.
• The monthly extension fee required from the Sponsor will be reduced from $0.03 to $0.02 per non-redeemed public share, lowering the cost of extensions.
• The Sponsor (or its designees) has agreed to provide the Adjusted Monthly Extension Loan as a non-interest bearing, unsecured promissory note, reducing immediate cash outflow for the company.
• The Trust Account funds will be maintained in an interest-bearing demand deposit account, potentially generating some interest income, although minimal interest is expected.

Negatives

• The company's previous definitive merger agreement with Openmarkets Group Pty Ltd (OMG) was terminated on February 12, 2025, indicating challenges in securing a business combination.
• The company's securities ceased trading on Nasdaq on January 22, 2025, and were officially delisted on June 5, 2025, due to non-compliance (lack of public shares).
• Delisting from Nasdaq results in significant adverse consequences, including reduced attractiveness as a merger partner, limited market quotations, reduced liquidity, potential 'penny stock' designation, and decreased ability to raise additional financing.
• The company is now subject to state-level securities regulation, which may make completing a business combination more difficult and costly.
• Previous stockholder redemptions have significantly depleted the Trust Account, with approximately $1.24 million remaining as of December 16, 2025, from an initial $102.6 million.
• Only 101,216 public shares remain outstanding as of the record date, indicating a very small public float.
• The Sponsor and officers/directors have a conflict of interest, as their initial investment of $25,000 for Insider Shares and $4,511,300 for Private Placement Units would be worthless upon liquidation.
• Public shareholders may receive less than $10.15 per share upon liquidation, and their rights will expire worthless.
• There is uncertainty regarding the amount that will remain in the Trust Account after redemptions, potentially requiring additional funds to complete a business combination.
• The company faces a risk of being deemed an investment company if Trust Account funds are held too long, which would force liquidation.
• The Inflation Reduction Act of 2022 may impose a 1% excise tax on stock repurchases, including redemptions, potentially making the company less appealing to targets.

Risks

• There is no assurance that the proposed extension will enable the company to complete a business combination by the Extended Date of July 13, 2027.
• Significant redemptions by public stockholders could leave the company with insufficient cash to consummate a business combination on commercially acceptable terms, or at all.
• Public stockholders may be unable to recover their investment except through sales on the open market, which may lack sufficient liquidity or favorable prices due to the Nasdaq delisting.
• The company's delisting from Nasdaq significantly hinders its ability to attract a merger partner and complete a business combination.
• As securities are no longer 'covered securities,' the company is subject to state-level securities regulation, increasing the difficulty and cost of completing a business combination.
• Securityholders may be prohibited from trading the company's securities if the company is not registered in the state where they reside.
• The company may be deemed a foreign person under CFIUS regulations, potentially subjecting a business combination to review, delay, or even prohibition.
• New SEC rules regulating SPACs may increase the costs and time needed to negotiate and complete an initial business combination.
• The company may be subject to a 1% excise tax on stock repurchases (redemptions) under the Inflation Reduction Act of 2022, which could make transactions less appealing to targets.
• If deemed an investment company under the Investment Company Act, the company would face burdensome compliance requirements and severe restrictions, likely leading to liquidation.
• Minimal interest is expected on funds held in the Trust Account, reducing the per-share amount public stockholders would receive upon redemption or liquidation.
• Unstable market and economic conditions, including financial institution liquidity risks, could adversely affect the company's business, financial condition, and ability to secure financing.
• The Sponsor and directors/officers have a conflict of interest, as their significant investment would be worthless if a business combination is not completed.
• The company will incur significant transaction and transition costs associated with a business combination, even if it is not completed, reducing available cash.
• There is no assurance that the Sponsor would be able to satisfy its indemnification obligations if claims reduce Trust Account funds below $10.15 per public share.
• Public shareholders may receive less than $10.15 per share upon liquidation, and their rights will expire worthless.
• Stockholders may be held liable for claims by third parties against the corporation to the extent of distributions received in a dissolution if the company does not comply with Delaware General Corporation Law Section 280.

Future Outlook

The company intends to complete a business combination as soon as possible and, in any event, on or before the proposed Extended Date of July 13, 2027, if the extension proposals are approved. The Board believes that without the extension, the company would be forced to liquidate. The company is actively seeking a potential candidate for an initial business combination.

Management Comments

• "We are pleased to utilize the virtual stockholder meeting technology to provide ready access and cost savings for our stockholders and the Company."
• "The BRAC Board has determined that it is in the best interests of the Company to seek an extension of the Termination Date and a reduction of the Monthly Extension Loan, and have the Companys shareholders approve the Extension Amendment Proposal and the Trust Amendment Proposal to allow for additional time to consummate the business combination and to reduce our cost to exercise one or more extensions beginning on January 13, 2026."
• "Without the Extension, the Company believes that the Company may not be able to complete a business combination on or before the Termination Date. If that were to occur, the Company would be precluded from completing a business combination and would be forced to liquidate."
• "Our Board believes that it is in the best interests of the stockholders to continue our existence until the proposed Extended Date in order to allow us more time to complete the Business Combination."
• "The Company believes that given its expenditure of time, effort and money, circumstances warrant providing public stockholders an opportunity to consider a business combination."
• "Our Board believes the Business Combination will provide significant benefits to our stockholders."

Industry Context

This filing reflects the ongoing challenges faced by many Special Purpose Acquisition Companies (SPACs) in the current market environment. Broad Capital Acquisition Corp.'s situation is particularly dire, marked by its delisting from Nasdaq and the termination of a prior merger agreement. The need for multiple extensions and the significant depletion of its Trust Account through redemptions highlight the difficulty in identifying and closing a suitable business combination. The increasing regulatory scrutiny on SPACs, including new SEC rules and potential excise taxes, adds further complexity and cost to their operations, making the path to a successful de-SPAC transaction more arduous.

Comparison to Industry Standards

• Broad Capital Acquisition Corp. is seeking an extension to July 13, 2027, which would be approximately 66 months from its January 2022 IPO. This timeline is significantly longer than the typical 18-24 month period initially targeted by most SPACs for completing a business combination.
• The company's delisting from Nasdaq on January 22, 2025, due to non-compliance (lack of public shares) is a critical deviation from industry standards. Most SPACs rely on a major exchange listing to provide liquidity and a clear path to public market access for their target companies, making Broad Capital a far less attractive merger partner.
• The high redemption rates in previous extension votes (e.g., $43.35 million in January 2023, $19.3 million in January 2025) have severely depleted the Trust Account, leaving only approximately $1.24 million. This contrasts sharply with successful SPACs that retain a substantial portion of their trust for the business combination, demonstrating significant investor skepticism.
• The remaining public float of only 101,216 shares and the Sponsor/officer/director ownership of 98.2% of outstanding common stock is highly unusual for a publicly traded entity and indicates a near-complete loss of public investor interest and liquidity, unlike typical SPACs that maintain a more balanced shareholder base until a merger.

Corporate Governance

Legal Proceedings

• The SEC officially filed to delist the company on June 5, 2025.
• The filing discusses potential liabilities of stockholders for claims by third parties against the corporation in the event of dissolution, particularly if the company does not comply with Section 280 of the Delaware General Corporation Law (DGCL).
• The Sponsor has agreed to indemnify the company against certain third-party claims that reduce the Trust Account below $10.15 per public share, but there is no assurance the Sponsor can satisfy these obligations.

Related Party Transactions

• The Sponsor (Broad Capital LLC) and its affiliates or permitted designees will deposit the Adjusted Monthly Extension Loan into the Trust Account in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination.
• The Sponsor, directors, and officers own 2,539,767 Insider Shares (purchased for $25,000) and 451,130 Private Placement Units (purchased for $4,511,300), which would become worthless if a business combination is not consummated.
• Certain executive officers have beneficial interests in the Sponsor.
• Johann Tse (CEO) and Rita Jiang (CFO) are managing members of the Sponsor and have shared power to vote and dispose of the Sponsor's shares, creating a potential conflict of interest.

Stakeholder Impact

• **Shareholders (Public)**: Face significant risk of capital loss due to the company's delisting, termination of a prior merger, and depleted Trust Account. Liquidity for their shares is severely impaired. Those who redeem will receive cash, but those who do not face high uncertainty and potential further dilution. Their rights will expire worthless upon liquidation.
• **Shareholders (Sponsor/Insiders)**: Have a strong financial incentive to approve the extension to protect their initial investment (Insider Shares and Private Placement Units) which would be worthless upon liquidation. Their ownership represents 98.2% of outstanding common stock, giving them significant voting power.
• **Creditors**: The company has obligations under Delaware law to provide for claims of creditors in case of dissolution. The Sponsor has agreed to indemnify the company against certain third-party claims, but the ability to satisfy these obligations is not assured.
• **Potential Target Businesses**: The company's delisting from Nasdaq and its history of failed mergers make it a less attractive merger partner, potentially limiting the pool of suitable candidates.

Next Steps

• Hold a Special Meeting of Stockholders on January 9, 2026, to vote on the Extension Amendment Proposal, Trust Amendment Proposal, and Adjournment Proposal.
• If the proposals are approved, the company will file an amendment to its charter with the Secretary of State of Delaware and execute an amendment to the Trust Agreement.
• Continue efforts to identify and consummate a business combination by the new Extended Date of July 13, 2027.
• Seek stockholder approval for any future business combination when it is identified.
• If the proposals are not approved or a business combination is not completed by the deadline, the company will dissolve and liquidate.

Key Dates

Recommendation

The company is in a highly precarious position, having been delisted from Nasdaq and failing to secure a business combination after multiple extensions and significant redemptions. The Trust Account is severely depleted, and the termination of a prior merger agreement highlights ongoing difficulties. While the extension provides a temporary reprieve, the fundamental issues of illiquidity, lack of a viable target, and the substantial conflict of interest for insiders (who own 98.2% of shares and whose investment would be worthless upon liquidation) make a successful outcome for public shareholders highly improbable. The risks of further capital loss and continued illiquidity are substantial, warranting a 'sell' recommendation for any remaining public shareholders.

Keywords

SPAC, Broad Capital Acquisition Corp, BRAC, SEC filing, proxy statement, business combination, extension, liquidation, Nasdaq delisting, redemption rights, trust account, corporate governance, risk factors, financial reporting, special purpose acquisition company, merger agreement termination