Filed 2026-03-16 · Period ending 2025-12-31 · 81,927 words · SEC EDGAR
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# CO2 Energy Transition Corp. (NOEM) — 10-K
**Filed:** 2026-03-16
**Period ending:** 2025-12-31
**Accession:** 0001213900-26-027784
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1956648/000121390026027784/)
**Origin leaf:** a376c8bc5d644c5eb45bf0f75d9d860e20be5f9f8747707f418d77751fa9d1a6
**Words:** 81,927
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-K**
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(Mark One)
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedDecember
31, 2025
OR
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number001-42417
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**CO2 Energy Transition
Corp.**(Exact name of registrant as specified in its charter)
| Delaware | | 87-2950691 | |
| (State or other jurisdiction of incorporation or organization) | | (I. R. S. Employer Identification No.) | |
| 1334 Brittmoore Rd,Suite 190, Houston,Texas | | 77043 | |
| (Address of principal executive offices) | | (Zip Code) | |
Registrants telephone number, including
area code:**(346)250-5000**
Securities registered pursuant to Section 12(b)
of the Act:
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | |
| Common Stock | | NOEM | | TheNasdaqStock Market LLC | |
| Warrants | | NOEMW | | TheNasdaqStock Market LLC | |
| Rights | | NOEMR | | TheNasdaqStock Market LLC | |
| Units | | NOEMU | | TheNasdaqStock Market LLC | |
Securities registered pursuant to Section 12(g)
of the Act: None.
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
No
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | |
| Non-accelerated filer | Smaller reporting company | |
| | Emerging growth company | |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants
executive officers during the relevant recovery period pursuant to Section 240.10D-1(b).
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes
No
The aggregate market value of the voting and
non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrants most recently
completed second fiscal quarter was $70,687,140. For purposes of calculating the aggregate market value of shares held by non-affiliates,
we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our executive officers, directors
and 5% or greater stockholders. In the case of 5% or greater stockholders, we have not deemed such stockholders to be affiliates unless
there are facts and circumstances which would indicate that such stockholders exercise any control over our company, or unless they hold
10% or more of our outstanding common stock. These assumptions should not be deemed to constitute an admission that all executive officers,
directors and 5% or greater stockholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed
to be affiliates of our company. Further information concerning shareholdings of our officers, directors and principal stockholders is
included in Part III, Item 12 of this Annual Report on Form 10-K.
The number of shares of Common Stock, $0.0001
par value, outstanding on March 13, 2026 was9,585,750shares.
****
**DOCUMENTS INCORPORATED BY REFERENCE**
None.
**TABLE OF CONTENTS**
****
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PART
I |
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS |
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ITEM 1. BUSINESS |
3 | |
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ITEM 1A. RISK FACTORS |
27 | |
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ITEM 1B. UNRESOLVED STAFF COMMENTS |
65 | |
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ITEM 1C. CYBERSECURITY |
65 | |
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ITEM 2. PROPERTIES |
65 | |
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ITEM 3. LEGAL PROCEEDINGS |
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ITEM 4. MINE SAFETY DISCLOSURES. |
65 | |
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PART II |
66 | |
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ITEM 5. MARKET FOR REGISTRANTS
COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
66 | |
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ITEM 6. [RESERVED] |
66 | |
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ITEM 7. MANAGEMENTS DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
67 | |
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ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK |
71 | |
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ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA |
F-1 | |
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
72 | |
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ITEM 9A. CONTROLS AND PROCEDURES |
72 | |
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ITEM 9B. OTHER INFORMATION |
73 | |
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
73 | |
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PART III |
74 | |
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
74 | |
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ITEM 11. EXECUTIVE COMPENSATION |
87 | |
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
88 | |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
90 | |
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES |
94 | |
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PART IV |
95 | |
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
95 | |
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ITEM 16. FORM 10K SUMMARY. |
96 | |
i
PART I
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CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form
10-K (this Report) contains forward-looking statements. In some cases, you can identify forward-looking statements
by the following words: anticipate, believe, continue, could,
estimate, expect, intend, may, ongoing,
plan, potential, predict, project, should,
or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking
statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or
by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the
statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity,
performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in
this Report. These factors include:
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we are a newly formed company with no operating history and no revenues; | |
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our ability to continue as a going concern; | |
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we may not be able to complete our initial business combination (our Business Combination)
within the prescribed time frame (including any extensions which are available), and our sponsor may not have, or be able to raise,
sufficient funding to make any extension payments to the trust account required to extend the time frame we have to complete our
initial business combination; | |
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stockholders have no rights or interests in funds from the trust account, except under certain limited
circumstances; | |
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our stockholders may be held liable for claims by third parties against us; | |
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if third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share; | |
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subsequent to completion of our initial business combination, we may be required to take write-downs
or write-offs, restructuring and impairment or other charges; | |
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conflicts of interest of our sponsor, officers and directors; | |
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we may have a limited ability to assess the management of a prospective target business; | |
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our public stockholders may not be afforded an opportunity to vote on our proposed Business Combination; | |
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the absence of a redemption threshold may make it possible for us to complete a Business Combination
with which a substantial majority of our stockholders do not agree; | |
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we may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to holders; | |
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we may amend the terms of the public warrants in a manner that may be adverse
to holders of public warrants with the required approval of the holders of the then outstanding public warrants; | |
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our competitors have advantages over us in seeking Business Combinations; | |
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we may be unable to obtain additional financing; | |
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our warrants may have an adverse effect on the market price of our common
stock; | |
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we may issue additional equity and/or debt securities to complete our initial
business combination; | |
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our sponsor controls a substantial interest in us; | |
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if we seek stockholder approval of our initial business combination, our
sponsor, who controls a substantial interest in us, has agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote; | |
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the ability of our public stockholders to redeem their shares for cash may
make our financial condition unattractive to potential Business Combination targets, may not allow us to complete the most desirable
Business Combination or optimize our capital structure, and will increase the probability that our initial business combination would
be unsuccessful; | |
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lack of protections normally afforded to investors of blank check companies; | |
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Nasdaq may delist our securities from trading on its exchange; | |
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we have not registered the shares of common stock issuable upon exercise
of the warrants sold as part of the units in our initial public offering, and such registration may not be in place when an investor
desires to exercise such warrants; | |
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shares being redeemed and warrants becoming worthless; | |
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events which may result in the per-share amount held in our trust account
dropping below $10.00 per public share; | |
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our directors may decide not to enforce the indemnification obligations of
our sponsor; | |
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if, before distributing the proceeds in the trust account to our public stockholders,
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors
in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received
by our stockholders in connection with our liquidation may be reduced; | |
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because we are not limited to a particular industry or any specific target
businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular
target businesss operations; | |
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we may seek acquisition opportunities in companies that may be outside of
our managements areas of expertise; | |
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if we effect our initial business combination with a company with operations
or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our
operations; | |
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changes in laws or regulations, or a failure to comply with any laws and
regulations, tax consequences to Business Combinations may adversely affect our business, investments and results of operations;
and | |
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other risk factors included under Item 1A. Risk Factors
below. | |
You should read the matters
described in Item 1A. Risk Factors and the other cautionary statements made in this Report, as being applicable
to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements
in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking
statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though
our situation may change in the future.
****
2
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ITEM 1. BUSINESS
****
**Summary Matters and Definitions**
In this Annual Report on
Form 10-K (this Report), we may rely on and refer to information regarding the industries in which we operate in
general from market research reports, analyst reports and other publicly available information. Although we believe that this information
is reliable, we cannot guarantee the accuracy and completeness of this information, none of this information has been commissioned by
us, and we have not independently verified any of it.
Unless the context requires
otherwise, references to the Company, we, us, our,
CO2, CO2 Energy and CO2 Energy Transitions Corp. refer specifically to
CO2 Energy Transitions Corp.
In addition, unless the
context otherwise requires and for the purposes of this Report only:
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| Exchange
Act refers to the Securities Exchange Act of 1934, as amended; |
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| SEC
or the Commission refers to the United States Securities and Exchange
Commission; and |
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| Securities
Act refers to the Securities Act of 1933, as amended. |
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**Where You Can Find Other Information**
The Companys Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections
13(a) and 15(d) of the Exchange Act, are filed with the U.S. Securities and Exchange Commission. Such reports and other information filed
by the Company with the SEC are available free of charge atwww.sec.govand on the SEC Filings section of our
website atwww.CO2ET.com,when such reports are available on the SECs website. The Company periodically provides other
information for investors on its corporate website,*www.CO2ET.com*. The information contained on the websites referenced in
this Form 10-K is not incorporated by reference into this filing. Further, the Companys references to website URLs are intended
to be inactive textual references only. Copies of documents filed by us with the SEC are also available from us without charge, upon
oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this
Report.
**Corporate Information**
Our principal executive
offices are located at 1334 Brittmoore Rd, Suite 190, Houston, Texas 77043, and our telephone number is (346) 250-5000.
**Organizational History and Business**
We are a blank check company
incorporated in September 2021 as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization, or similar business combination with one or more businesses or entities, which we refer to as our initial
business combination. We have generated no operating revenues to date and we do not expect that we will generate operating
revenues until we consummate our initial business combination. We have reviewed, and continue to review, a number of opportunities to
enter into an initial business combination with an operating business, but we are not able to determine at this time whether we will
complete an initial business combination with any of the target businesses that we have reviewed or with any other target business.
We intend to effectuate
our initial business combination using cash from the proceeds of our IPO (discussed below) and the sale of the private placement units,
debt or a combination of cash, shares of stock and debt.
Although we may pursue a
Business Combination in any industry, our objective is to identify and consummate a Business Combination with a business in the energy
industry, which includes and is not limited to, the energy transition industry.
3
**Initial Public Offering**
****
On November 22, 2024, the
Company sold 6,900,000 units (units), which includes the full exercise by the underwriters of their over-allotment
option in the amount of 900,000 units. The units were sold for $10.00 per Unit, generating gross proceeds of $69.0 million, and we incurred
offering costs of $3,423,710, consisting of $517,500 of cash underwriting discount, $2,070,000 of deferred underwriting fees, $77,280
fair value of 120,750 shares of common stock issued to Kingswood Capital Partners LLC, the representative of the underwriters of the
IPO (the Representatives Shares), and $758,930 of other offering costs (the IPO or initial
public offering). Each Unit consists of one share of common stock, par value $0.0001 per share, one warrant (each a public
warrant) and one right (each a public right). Each public warrant entitles the holder to receive one
share of our common stock at an exercise price of $11.50 per share, subject to adjustment. Each holder of a public right will automatically
receive one-eighth (1/8) of one share of common stock upon consummation of our initial business combination.
Simultaneously with the
closing of the IPO, the Company consummated the sale of 265,000 units (the private placement units) at a price of
$10.00 per Private Unit in a private placement to the Companys sponsor, CO2 Energy Transition, LLC (the sponsor),
generating gross proceeds of $2,650,000.
The private placement units
are identical to the units, except that the Private Warrants and the common stock issuable upon the exercise of the Private Warrants
will not be transferable, assignable or salable until 30 days after the completion of our initial business combination, subject to certain
limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they
are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial
purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on
the same basis as the Public Warrants.
Following the closing of
the IPO, on November 22, 2024, an amount of $69,000,000 ($10.00 per unit) from the net proceeds of the sale of the units in the IPO and
the sale of the private placement units was placed in a trust account (trust account), located in the United States
and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940
(the Investment Company Act), with a maturity of 185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of (i) the completion of our initial business combination and (ii) the distribution of the funds held
in the trust account, as described below.
A total of $517,500 of underwriting
fees (0.75% of the total offering proceeds) were paid to the underwriters upon the closing of the IPO, together with 120,750 shares of
our common stock, and a total of $2,070,000 of deferred underwriting fees (3% of the total offering proceeds) were placed into the trust
account, to be payable to the underwriters, at such time as we complete our initial business combination, subject to the terms of the
underwriting agreement.
We must complete our initial
business combination by May 22, 2026, 18 months from the closing of our IPO. However, if we anticipate that we may not be able to consummate
our initial business combination by May 22, 2026, we may, by resolution of our board, extend the period of time to consummate an initial
business combination up to six times, each by an additional one month (for a total of up to 24 months to complete a business combination).
In order to extend the time available for the Company to consummate an initial business combination, our sponsor or its affiliates or
designees must deposit into the trust account $229,700 ($0.0333 per share) on or prior to the date of the applicable deadline, for each
one-month extension.
Our units, public shares,
public warrants and public rights are each traded on the Nasdaq Global Market under the symbols NOEMU, NOEM,
NOEMW and NOEMR, respectively. Our units commenced public trading on November 22, 2024, and
our public shares, public warrants and public rights commenced separate public trading on January 16, 2025.
4
**Business Strategy**
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**The Market Opportunity**
We are targeting energy
companies that are undervalued in the private markets. We are focused on energy companies that will benefit from public capital and have
an established track record of profitable growth.
****
**Our Business Strategy**
We plan to focus on four
categories in the energy transition space:
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1. | Energy Industry |
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a. | Production, servicing
and transportation of Oil, Gas and LNG |
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b. | Wind and Solar and Geothermal
technologies and processes |
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2. | Reduction
of CO2 emissions by the electrical generation industry |
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Generation and/or smart usage of peak power | |
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Mitigation of the adverse effects of intermittent renewable power | |
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Small scale hydro | |
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Efficiency technologies | |
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Electric storage | |
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3. | Generation
of lower carbon intensive liquid fuels |
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Biodiesel and renewable diesel | |
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Recycling of solid and liquid wastes | |
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Electrofuels | |
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Hydrogen (Blue/Green) | |
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Ammonia (Blue/Green) | |
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Sustainable aviation fuels | |
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4. | Energy Transition
Service entities |
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a. |
Measurement, testing and controls | |
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Environmental and regulatory compliance | |
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Marketing and trading CO2 tax credits | |
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Project development and operational | |
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e. |
Equipment and manufacturing | |
**Competitive Advantage**
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**Initial Business Combination
Criteria**
Consistent with our strategy,
we have identified the following attributes and guidelines to evaluate potential business combination targets. We may decide, however,
to enter into our initial business combination with one or more businesses that do not meet these criteria and guidelines if we believe
such business presents a compelling investment opportunity. We intend to pursue an initial business combination with companies that have
the following characteristics:
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Excellent fit in energy transition strategy; | |
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$100 million $1 billion in enterprise value; | |
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Sound environmental and regulatory performance criteria; | |
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Significant growth potential; and | |
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Strong management team with energy transition experience. | |
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines as well as on other considerations, factors, and criteria that our management team may deem relevant. In
the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria
and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related
to our initial business combination, which, as discussed in this Report, would be in the form of proxy solicitation materials or tender
offer documents that we would file with the SEC.
****
**Additional Disclosures**
**
*Our Acquisition Process*
To date, we have not selected
any business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly,
with any business combination target.
All of our officers have
fiduciary and contractual duties to our sponsor and to certain companies in which it has invested or to certain other entities. These
entities may compete with us for acquisition opportunities. Subject to their fiduciary duties under applicable law, none of the members
of our management team who are also employed by our sponsor or its affiliates have any obligation to present us with any opportunity
for a potential business combination of which they become aware. Our sponsor and directors and officers are also not prohibited from
sponsoring, investing or otherwise becoming involved with, any other blank check companies, including in connection with their initial
business combinations, prior to us completing our initial business combination. Our management team, in their capacities as directors,
officers or employees of our sponsor or its affiliates or in their other endeavors, may choose to present potential business combinations
to the related entities described above, current or future entities affiliated with or managed by our sponsor, or third parties, before
they present such opportunities to us, subject to his or her fiduciary duties under applicable law and any other applicable fiduciary
duties. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or
officer of the company and it is an opportunity that we are able to complete on a reasonable basis. For more information, see the section
entitled Item 10. Directors, Executive Officers, and Corporate GovernanceConflicts of Interest.
6
Our directors and officers
presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other entities pursuant to
which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any
of our directors or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has
then-currentfiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present
such business combination opportunity to such entity, subject to his or her fiduciary duties under applicable law. Our directors and
officers are also not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest
in allocating management time among various business activities, including identifying potential business combinations and monitoring
the related due diligence. See Item 1A. Risk FactorsCertain of our directors and officers are now, and all
of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by
us, and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
We do not believe, however,
that the fiduciary duties or contractual obligations of our directors or officers will materially adversely affect our ability to identify
and pursue business combination opportunities or complete our initial business combination.
You should not rely on the
historical record of our founders and managements performance as indicative of our future performance. See Item
1A. Risk FactorsPast performance by our management team and their respective affiliates may not be indicative of future
performance of an investment in the company.
**
*Initial Business Combination*
Nasdaq rules require that
our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80%
of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding
the amount of any deferred underwriting discounts held in trust). We refer to this as the 80% of net assets test. If our board of directors
is not able independently to determine the fair market value of the target business or businesses, we may obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. Although we may purchase multiple businesses in related industries in connection with our initial business combination, we
do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination,
although there is no assurance that will be the case.
We anticipate structuring
our initial business combination so that the post-transactioncompany in which our public stockholders own shares will own or acquire
100% of the issued and outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial
business combination such that the post-transactioncompany owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete
such business combination if the post-transactioncompany owns or acquires 50% or more of the issued and outstanding voting securities
of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as
an investment company under the Investment Company Actof1940, as amended (the Investment Company Act).
Even if the post-transactioncompany owns or acquires 50% or more of the voting securities of the target, our stockholders prior
to our initial business combination may collectively own a minority interest in the post-transactioncompany, depending on valuations
ascribed to the target and us in our initial business combination transaction. For example, we could pursue a transaction in which we
issue a substantial number of new shares in exchange for all of the issued and outstanding capital stock, shares or other equity securities
of a target, or issue a substantial number of new shares to third-partiesin connection with financing our initial business combination.
In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number
of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our issued and
outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business
or businesses are owned or acquired by the post-transactioncompany, the portion of such business or businesses that is owned or
acquired is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. Notwithstanding the
foregoing, if we are not then listed on Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% of net assets
test.
We have filed a Registration
Statement on Form8-Awith the SEC to voluntarily register our securities under Section12 of the ExchangeAct. As
a result, we are subject to the rules and regulations promulgated under the ExchangeAct. We have no current intention of filing
a Form15 to suspend our reporting or other obligations under the ExchangeAct prior or subsequent to the consummation of our
initial business combination.
7
*Corporate Information*
We are an emerging
growth company, as defined in Section2(a)of the Securities Act, as modified by the Jumpstart Our Business Startups
Act of 2012 (the JOBS Act). As such, we are eligible to 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 Section404 of the Sarbanes-OxleyAct,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-bindingadvisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section107
of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period
provided in Section7(a)(2)(B)of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1)the lastday of the fiscal year (a)following the fifth anniversary of the completion
of our IPO, (b)in which we have total annual gross revenue of at least $1.235billion, or (c)in which we are deemed
to be a large accelerated filer, which means the market value of our shares of common stock that is held by non-affiliatesequals
or exceeds $700million as of the end of that years second fiscal quarter, and (2)the date on which we have issued
more than $1.00billion in non-convertibledebt securities during the prior three-yearperiod. References herein to emerging
growth company will have the meaning associated with it in the JOBS Act.
Additionally, we are a smaller
reporting company as defined in Item10(f)(1)of RegulationS-K.Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only twoyears of audited financial
statements. We will remain a smaller reporting company until the lastday of the fiscal year in which (1)the market value
of our shares of common stock held by non-affiliatesequals or exceeds $250million as of the end of that years second
fiscal quarter, or (2)our annual revenues equaled or exceeded $100million during such completed fiscal year and the market
value of our shares of common stock held by non-affiliatesequals or exceeds $700million as of the end of that years
second fiscal quarter.
We are a Delaware corporation
incorporated on September30, 2021. Our executive offices are located at 1334 Brittmoore Rd, Suite 190, Houston, Texas 77043 and
our telephone number is (346)482-6238. Our corporate website address is*www.CO2ET.com*. Our website and the information
contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part
of, this Report. You should not rely on any such information in making your decision whether to invest in our securities.
We have not conducted any
operations and have generated no revenues. Until we complete our initial business combination, we will have no operations and will generate
no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background
of our management team, but also the special risks we face as a blank check company. You should carefully consider these and the other
risks set forth in the section entitled Item 1A. Risk Factors included elsewhere in this Report.
8
**Sourcing of Potential Business Combination
Targets**
We believe our management
teams significant operating and transaction experience and relationships with companies, provides us with a substantial number
of potential business combination targets. Over the course of their careers, the members of our management team have developed a broad
network of contacts and corporate relationships around the world. This network has grown through the activities of our management team
sourcing, acquiring, financing and selling businesses, our management teams relationships with sellers, financing sources and
target management teams and the experience of our management team in executing transactions under varying economic and financial market
conditions.
We believe this network
provides our management team with a robust and consistent flow of acquisition opportunities which were proprietary or where a limited
group of investors were invited to participate in the sale process. We believe that the network of contacts and relationships of our
management team provides us with important sources of acquisition opportunities. In addition, we anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and
large business enterprises seeking to divest non-coreassets or divisions.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, directors or officers, or making the acquisition
through a joint venture or other form of shared ownership with our sponsor, directors or officers. In the event we seek to complete an
initial business combination with a target that is affiliated with our sponsor, directors or officers, we, or a committee of independent
and disinterested directors, would obtain an opinion from an independent investment banking firm or another valuation or appraisal firm
that regularly renders fairness opinions on the type of target business we are seeking to acquire that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
As more fully discussed
in Item 10. Directors, Executive Officers, and Corporate GovernanceConflicts of Interest, if any of our directors
or officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she
has pre-existingfiduciary or contractual obligations, he or she may be required to present such business combination opportunity
to such entity prior to presenting such business combination opportunity to us. Our directors and officers currently have fiduciary duties
or contractual obligations that may take priority over their duties to us.
****
**Status as a Public Company**
We believe our structure
will make us an attractive business combination partner to target businesses. As an existing public company, we offer target businesses
an alternative to the traditional initial public offering through a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination. In this situation, the owners of the target business would exchange their equity securities,
shares or shares of stock in the target business for our shares or for a combination of our shares and cash, allowing us to tailor the
consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company,
we believe target businesses will find this method a more certain and cost-effectivemethod to becoming a public company than the
typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show
and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore, once a proposed
business combination is completed, the target business will have effectively become public, whereas an initial public offering is always
subject to the underwriters ability to complete the offering, as well as general market conditions, which could delay or prevent
the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional
means of providing management incentives consistent with stockholders interests. It can offer further benefits by augmenting a
companys profile among potential new customers and vendors and aid in attracting talented employees.
****
9
**Financial Position**
With funds available for
a business combination initially in the amount of $72,113,895 assuming no redemptions and after payment of $2,070,000 of deferred underwriting
discounts, and prior to any post-IPOworking capital expenses, we offer a target business a variety of options such as creating
a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance
sheet by reducing its debt ratio. In the event of significant redemptions, we expect to be able to complete our initial business combination
using our cash, debt or equity securities, or a combination of the foregoing, we believe we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we
have not taken any steps to secure third-partyfinancing and there can be no assurance it will be available to us.
****
**Effecting Our Initial Business Combination**
We intend to effectuate
our initial business combination using cash from the proceeds of our IPO and the sale of the private placement units, our shares, debt
or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our initial business
combination with a company or business that may be financially unstable or in its early stages of development or growth, which would
subject us to the numerous risks inherent in such companies and businesses.
If our initial business
combination is paid for using equity or debt, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or the redemptions of our public shares, we may apply the balance of the cash released
to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transactioncompany,
the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase
of other companies or for working capital.
We have not selected any
business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly,
with any business combination target.
We may seek to raise additional
funds through a private offering of debt or equity securities in connection with the completion of our initial business combination,
and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the
trust account.
In the case of an initial
business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing
the business combination would disclose the terms of the financing and, only if required by law or we decide to do so for business or
other reasons, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately
or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding
with any third party with respect to raising any additional funds through the sale of securities or otherwise.
**
10
**
*Selection of a target business and structuring
of our initial business combination*
As discussed above, Nasdaq
rules require that our initial business combination must be with one or more operating businesses or assets with a fair market value
equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes,
if permitted, and excluding the amount of any deferred underwriting discounts held in trust). We refer to this as the 80% of net assets
test. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally
accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board of directors
is not able independently to determine the fair market value of the target business or businesses, we may obtain an opinion from an independent
investment banking firm, or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of
such criteria. Although we may purchase multiple businesses in related industries in connection with our initial business combination,
we do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination,
although there is no assurance that will be the case. Subject to this requirement, our management will have virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business
combination solely with another blank check company or a similar company with nominal operations.
In any case, we will only
complete an initial business combination if the post-transactioncompany owns or acquires 50% or more of the issued and outstanding
voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required
to register as an investment company under the Investment Company Act. If less than 100% of the equity interests or assets of a target
business or businesses are owned or acquired by the post-transactioncompany, the portion of such business or businesses that is
owned or acquired is what will be valued for purposes of the 80% of net assets test. There is no basis for investors to evaluate the
possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect
our initial business combination with a company or business that may be financially unstable or in its early stages of development or
growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other
information, which will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
****
**Lack of business diversification**
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business.
11
By completing our initial
business combination with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory
risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses,
unlike other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry.
Accordingly, the prospects
for our success may be:
|
| solely dependent
upon the performance of a single business, property or asset; or |
|
|
| dependent upon
the development or market acceptance of a single or limited number of products, processes
or services. |
|
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
****
**Limited ability to evaluate the targets
management team**
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target businesss management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more
of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any
of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you
that members of our management team will have significant experience or knowledge relating to the operations of the particular target
business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure
you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
****
**Stockholders may not have the ability to approve
our initial business combination**
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC.However, we will seek stockholder approval if it is required
by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the
table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
|
Type of Transaction |
|
Whether Stockholder
Approval is Required | |
|
Purchase of assets |
|
No | |
|
Purchase of stock of target not involving a merger with the company |
|
No | |
|
Merger of target into a subsidiary of the company |
|
No | |
|
Merger of the company with a target |
|
Yes | |
12
Under Nasdaqs listing
rules, stockholder approval would be required for our initial business combination if, for example:
|
|
|
we issue (other than in a public offering for cash) shares of common stock that will either (a)be
equal to or in excess of 20% of the number of shares of our common stock then issued and outstanding (other than in a public offering); | |
|
|
|
any of our directors, officers or substantial security holders (as defined by the rules of Nasdaq)
has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares
of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable,
exceeds either (a)1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance in the
case of any of our directors and officers or (b)5% of the number of shares of common stock or 5% of the voting power issued
and outstanding before the issuance in the case of any substantial security holders; or | |
|
|
|
the issuance or potential issuance of shares of common stock will result in our undergoing a change
of control. | |
The decision as to whether
we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required
by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors,
including, but not limited to:
|
|
|
the timing of the transaction, including in the event we determine stockholder approval would require
additional time and there is either not enough time to seek stockholder approval or doing so would place the Company at a disadvantage
in the transaction or result in other additional burdens on the Company; | |
|
|
|
the expected cost of holding a stockholder vote; | |
|
|
|
the risk that the stockholders would fail to approve the proposed business combination; | |
|
|
|
other time and budget constraints of the company; and | |
|
|
|
additional legal complexities of a proposed business combination that would be time-consumingand
burdensome to present to stockholders. | |
****
**Permitted purchases and other transactions with respect to our
securities**
In the event we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares,
warrants or rights in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination. There is no limit on the number of securities such persons may purchase. Additionally, at any time at or prior
to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information),
our sponsor, directors, officers, advisors or any of their respective affiliates may enter into transactions with investors and others
to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not
redeem their public shares. However, they have no current commitments, plans or intentions to engage in such transactions and have not
formulated any terms or conditions for any such transactions. None of the funds held in the trust account will be used to purchase public
shares, warrants or rights in such transactions. Such persons will be subject to restrictions in making any such purchases when they
are in possession of any material non-publicinformation or if such purchases are prohibited by RegulationM under the ExchangeAct.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no
longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy
which will require insiders to (1)refrain from purchasing securities during certain blackout periods and when they are in possession
of any material non-publicinformation and (2)clear certain trades prior to execution. We cannot currently determine whether
our insiders will make such purchases pursuant to a Rule10b5-1plan, as it will be dependent upon several factors, including
but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases
pursuant to a Rule10b5-1plan or determine that such a plan is not necessary.
13
In the event that our sponsor,
directors, officers, advisors or any of their respective affiliates purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination,
such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our
initial business combination. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to
the tender offer rules under the ExchangeAct or a going-privatetransaction subject to the going-privaterules under
the ExchangeAct; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such
rules, the purchasers will be required to comply with such rules.
The purpose of such transaction
could be to (1)reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders
for approval in connection with our initial business combination or (2)satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination that
may not otherwise have been possible.
In addition, if such purchases
are made, the public float of our securities and the number of beneficial holders of our securities may be reduced,
possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, directors,
officers, advisors and/or any of their respective affiliates anticipate that they may identify the stockholders with whom our sponsor,
directors, officers, advisors or any of their respective affiliates may pursue privately negotiated transactions by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case of public shares) following our
mailing of tender offer or proxy materials in connection with our initial business combination. To the extent that our sponsor, directors,
officers, advisors or any of their respective affiliates enter into private transactions, they would identify and contact only potential
selling or redeeming stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account
or vote against our initial business combination. Such persons would select the stockholders from whom to acquire shares based on the
number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of
purchase. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive
if it elected to redeem its shares in connection with our initial business combination. Our sponsor, directors, officers, advisors or
any of their respective affiliates will be restricted from purchasing shares if such purchases do not comply with RegulationM under
the ExchangeAct and the other federal securities laws.
Any purchases by our sponsor,
directors, officers and/or any of their respective affiliates who are affiliated purchasers under Rule10b-18under the ExchangeAct
will be restricted unless such purchases are made in compliance with Rule10b-18, which is a safe harbor from liability for manipulation
under Section9(a)(2)and Rule10b-5of the ExchangeAct. Rule10b-18has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, directors, officers and/or any
of their respective affiliates will be restricted from making purchases of shares of common stock if the purchases would violate Section9(a)(2)or
Rule10b-5of the ExchangeAct.
****
14
****
**Ability to extend time to complete an initial business combination**
If we anticipate that we
may not be able to consummate our initial business combination within 18months, we may, by resolution of our board of directors
if requested by our sponsor, extend the period of time to consummate an initial business combination up to six times, each by an additional
one month (for a total of up to 24months to complete an initial business combination), subject to the sponsor depositing additional
funds into the trust account as set out below. Pursuant to the terms of our amended and restated certificate of incorporation and the
trust agreement entered into between us and Continental Stock Transfer & Trust Company, LLC, in order to extend the time available
for us to consummate our initial business combination, our initial stockholders or their affiliates or designees, upon five days advance
notice prior to the applicable deadline, must deposit into the trust account for each one-monthextension, $229,700 ($0.0333 per
share) on or prior to the date of the applicable deadline, up to an aggregate of $1,378,200, or approximately $0.20 per share. Any such
payments would be made in the form of a loan. On April 15, 2025, the Company entered into a convertible promissory note dated March 31,
2025 (the Working Capital Note) with its Sponsor. Pursuant to the Working Capital Note, the Company may request, and in
the sole discretion of the Sponsor, the Sponsor may loan the Company, drawdowns of up to an aggregate $1,500,000 in principal from time
to time, less $11,730 which was advanced prior to the execution of the Working Capital Note, and included as outstanding thereunder,
with such amounts to be used for working capital, which was outstanding as of December 31, 2025. If we complete our initial business
combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. If we do not complete a business
combination, we will not repay such loans. Furthermore, the letter agreement with our initial stockholder, our sponsor, contains a provision
pursuant to which our sponsor has agreed to waive their right to be repaid for such loans in the event that we do not complete a business
combination. Our sponsor and their affiliates or designees are not obligated to fund the trust account to extend the time for us to complete
our initial business combination.
****
**Redemption rights for public stockholders upon completion of our
initial business combination**
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
at a per-shareprice, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of twobusiness
days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable),
divided by the number of then issued and outstanding public shares, subject to the limitations described herein. At the completion of
our initial business combination, we will be required to purchase any shares of common stock properly delivered for redemption and not
withdrawn. The amount in the trust account is initially anticipated to be $10.00 per public share. The per-shareamount we will
distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting discounts we will pay to the
underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem
its shares. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants.
Our initial stockholders, directors and officers have entered into a letter agreement with us, pursuant to which they have agreed to
waive their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of
our initial business combination.
****
**Manner of Conducting Redemptions**
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
either (1)in connection with a stockholder meeting called to approve the business combination or (2)by means of a tender
offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will
be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement.
Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we
do not survive and any transactions where we issue more than approximately 20% of our issued and outstanding shares of common stock or
seek to amend our amended and restated certificate of incorporation would typically require stockholder approval. We intend to conduct
redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by applicable
law or stock exchange listing requirement or we choose to seek stockholder approval for business or other reasons.
15
If a stockholder vote is
not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated
certificate of incorporation:
|
|
|
conduct the redemptions pursuant to Rule13e-4and Regulation14E of the ExchangeAct,
which regulate issuer tender offers; and | |
|
|
|
file tender offer documents with the SEC prior to completing our initial business combination which
contain substantially the same financial and other information about the initial business combination and the redemption rights as
is required under Regulation14A of the ExchangeAct, which regulates the solicitation of proxies. | |
Upon the public announcement
of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate
any plan established in accordance with Rule10b5-1to purchase our shares of common stock in the open market, in order to
comply with Rule14 e-5under the ExchangeAct.
In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20business days, in accordance
with Rule14e-1(a)under the ExchangeAct, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer may be conditioned on public stockholders not tendering more
than a specified number of public shares, which number may be based on the requirement that we may not redeem public shares in an amount
that would cause us to be unable to comply with any cash requirement that may be contained in the agreement relating to our initial business
combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete
such initial business combination.
If, however, stockholder
approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation14A
of the ExchangeAct, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and | |
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file proxy materials with the SEC. | |
We expect that a final proxy
statement would be mailed to public stockholders at least 10days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption
if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply
with the substantive and procedural requirements of Regulation14A in connection with any stockholder vote even if we are not able
to maintain our Nasdaq listing or ExchangeAct registration.
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
16
If we seek stockholder approval,
unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only
if a majority of the shares of our common stock voted are voted in favor of our initial business combination. A quorum for such meeting
will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority
of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Shares held by our initial
stockholders, officers and directors will be included in determining the presence of a quorum and have agreed to vote any founder shares
and any public shares held by them in favor of our initial business combination. These quorums and voting thresholds and agreements,
may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public
shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, our
initial stockholders, directors and officers have entered into a letter agreement with us, pursuant to which they have agreed to waive
their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of a
business combination.
Redemptions of our public
shares may be subject to a limit due to any minimum cash requirement pursuant to an agreement relating to our initial business combination.
For example, the proposed business combination may require: (1)cash consideration to be paid to the target or its owners; (2)cash
to be transferred to the target for working capital or other general corporate purposes; or (3)the retention of cash to satisfy
other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we
would be required to pay for all public shares that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
****
**Limitation on redemption upon completion of
our initial business combination if we seek stockholder approval**
Notwithstanding the foregoing
redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides
that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a group (as defined under Section13 of the ExchangeAct), will be restricted from redeeming
its shares with respect to more than an aggregate of 15% of the shares sold in our IPO, which we refer to as the Excess Shares,
without our prior consent.
We believe this restriction
will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to
exercise their redemption rights against a proposed business combination as a means to force us or our sponsor or its affiliates to purchase
their shares at a significant premium to the then-currentmarket price or on other undesirable terms. Absent this provision, a public
stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights
if such holders shares are not purchased by us or our sponsor or its affiliates at a premium to the then-currentmarket price
or on other undesirable terms. By limiting our stockholders ability to redeem no more than 15% of the shares sold in this offering,
we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial
business combination, particularly in connection with a business combination with a target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders ability to vote
all of their shares (including Excess Shares) for or against our initial business combination.
****
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**Tendering stock certificates in connection
with a tender offer or redemption rights**
We may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name,
to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials
mailed to such holders, or up to twobusiness days prior to the scheduled vote on the proposal to approve the business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust
Companys DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination. The
tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the
requirement that a beneficial holder must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would
have from the time we send out our tender offer materials until the close of the tender offer period, or up to twobusiness days
prior to the scheduled vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes
to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20business
days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10days prior
to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance
of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the
relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost
associated with the above-referencedtendering process and the act of certificating the shares or delivering them through the DWAC
System. The transfer agent will typically charge the tendering broker a fee of approximately $100 and it would be up to the broker whether
or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders
seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights
regardless of the timing of when such delivery must be effectuated.
In order to perfect redemption
rights in connection with their business combinations, some blank check companies would distribute proxy materials for the stockholders
vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the
proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved,
the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result,
the stockholder then had an option window after the completion of the business combination during which he or she
could monitor the price of the companys shares in the market. If the price rose above the redemption price, he or she could sell
his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption
rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become option
rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement
for physical or electronic delivery prior to the meeting ensures that a redeeming holders election to redeem is irrevocable once
the business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or twobusiness days prior
to the scheduled date of the stockholder meeting set forth in our proxy materials, as applicable (unless we elect to allow additional
withdrawal rights). Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption
rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that
the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders
of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business
combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights
would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return
any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed
business combination is not completed, we may continue to try to complete a business combination with a different target until 18months
from the closing of the IPO (May 22, 2026)(or up to 24months from the closing of our IPO (November 22, 2026) if we extend the period
of time to consummate a business combination, as described in more detail in this Report) or as a result of a stockholder vote to amend
our certificate of incorporation (an Extension Period).
18
**Redemption of public shares and liquidation if no initial business
combination**
Our sponsor, directors and
officers have agreed that we will have only 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing
of our IPO (November 22, 2026) if we extend the period of time to consummate a business combination, as described in more detail in this
Report) to complete our initial business combination. If we have not completed our initial business combination within such 18-monthperiod
or during any Extension Period, we will: (1)cease all operations except for the purpose of winding up; (2)as promptly as
reasonably possible but not more than 10business days thereafter, redeem the public shares, at a per-shareprice, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay
dissolution expenses (which may include the costs associated with obtaining directors and officers tail insurance)
and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption
will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidating distributions,
if any); and (3)as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to our warrants or rights, which will expire worthless if we fail to complete our initial business combination within the 18-monthtime
period or during any Extension Period.
Our initial stockholders,
directors and officers have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to their founder shares if we fail to complete our initial business combination within 18 months
from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period
of time to consummate a business combination, as described in more detail in this Report) or during any Extension Period. However, if
our initial stockholders and acquire public shares, 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 allotted 18-monthtime period (or up to
24months from the closing of the IPO if we extend the period of time to consummate a business combination).
Our sponsor, directors and
officers have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (A)to modify 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 18months from
the closing of our IPO (or up to 24months from the closing of our IPO if we extend the period of time to consummate a business
combination, as described in more detail in this Report) or (B)with respect to any other provision relating to stockholders
rights or pre-initialbusiness combination activity, unless we provide our public stockholders with the opportunity to redeem their
shares of our common stock upon approval of any such amendment at a per-shareprice, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then
issued and outstanding public shares.
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
remaining out of the $287,601 of proceeds currently held outside the trust account, although we cannot assure you that there will be
sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing
our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses which may
include the costs associated with obtaining directors and officers tail insurance.
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If we were to expend all
of the net proceeds of our IPO and the sale of the private placement units, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account, the per-shareredemption amount received by stockholders
upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the
claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual
per-shareredemption amount received by stockholders will not be substantially less than $10.00. While we intend to pay such amounts,
if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors claims.
Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses and
other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements
or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not
limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed
a waiver only if management believes that such third partys engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-partyconsultant
whose particular expertise or skills are believed by management to be superior to those of other consultants that would agree to execute
a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that
such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we
have not completed our initial business combination within the required time period, or upon the exercise of a redemption right in connection
with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may
be brought against us within the 10years following redemption. Our sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold
to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds
in the trust account to below (1)$10.00 per public share or (2)such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights
to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities,
including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party,
then our sponsor will not be responsible to the extent of any liability for such third-partyclaims. We have not independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsors only assets are securities
of our company and, therefore, our sponsor may not be able to satisfy those obligations. None of our other officers will indemnify us
for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds
in the trust account are reduced below (1)$10.00 per public share or (2)such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you
that due to claims of creditors the actual value of the per-shareredemption price will not be substantially less than $10.00 per
share.
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We will seek to reduce the
possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors,
service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with
which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust
account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our IPO against certain liabilities,
including liabilities under the Securities Act. As of December 31, 2025, we had access to $287,601 outside of the trust account with
which to pay any such potential claims (not including costs and expenses incurred in connection with our liquidation, up to an aggregate
of $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from our trust account could be liable for claims made by creditors.
Under Delaware General Corporation
Law (DGCL), stockholders may be held liable for claims by third parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 18months of the closing of our IPO
(or up to 24months from the closing of our IPO if we extend the period of time to consummate a business combination, as described
in more detail in this Report) may be considered a liquidating distribution under Delaware law. If the corporation complies with certain
procedures set forth in Section280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it,
including a 60-daynotice period during which any third-partyclaims can be brought against the corporation, a 90-dayperiod
during which the corporation may reject any claims brought, and an additional 150-daywaiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholders
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution.
Furthermore, if the pro
rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do
not complete our initial business combination within 18months of the closing of our IPO (or up to 24months from the closing
of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this Report), is not
considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to
Section174 of the DGCL, the statute of limitations for claims of creditors could then be sixyears after the unlawful redemption
distribution, instead of threeyears, as in the case of a liquidating distribution. If we are unable to complete our initial business
combination within 18months of the closing of our IPO (or up to 24months from the closing of our IPO if we extend the period
of time to consummate a business combination, as described in more detail in this Report), we will: (1)cease all operations except
for the purpose of winding up; (2)as promptly as reasonably possible but not more than tenbusiness 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 (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses which may include the costs associated
with obtaining directors and officers tail insurance), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law; and (3)as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our
intention to redeem our public shares as soon as reasonably possible following our 18thmonth (or up to 24months
from the closing of our IPO if we extend the period of time to consummate a business combination) and, therefore, we do not intend to
comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received
by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
21
Because we will not be complying
with Section280, Section281(b)of the DGCL requires us to adopt a plan, based on facts known to us at such time that
will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
tenyears. However, because we are a blank check company, rather than an operating company, and our operations will be limited to
searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement
associated with our IPO, we will seek to have all vendors, service providers (other than our independent registered public accounting
firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation,
the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability
extending to the trust account is remote.
Further, our sponsor may
be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below: (1)$10.00 per public
share; or (2)the actual amount per public share held in the trust account as of the date of the liquidation of the trust account,
if less than $10.00 per share due to reductions in value of the trust assets, in each case net of permitted withdrawals and will not
be liable as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under
the Securities Act.
If we file a winding-upor
bankruptcy petition or an involuntary winding-upor bankruptcy petition is filed against us that is not dismissed, the proceeds
held in the trust account could be subject to applicable insolvency law, and may be included in our insolvency estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any insolvency claims deplete the trust
account, we cannot assure you we will be able to return $10.00 per share to our public stockholders.
Additionally, if we file
a winding-upor bankruptcy petition or an involuntary winding-upor bankruptcy petition is filed against us that is not dismissed,
any distributions received by stockholders could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance.
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself
and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of
creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earliest to occur of: (1)our completion of an initial business
combination, and then only in connection with those shares of our common stock that such stockholder properly elected to redeem, subject
to the limitations described herein; (2)the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (A)to modify 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 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November
22, 2026) if we extend the period of time to consummate a business combination, as described in more detail in this Report) or (B)with
respect to any other provision relating to stockholders rights or pre-initialbusiness combination activity; and (3)the
redemption of our public shares if we have not completed an initial business combination within 18months from the closing of our
IPO (or up to 24months from the closing of our IPO if we extend the period of time to consummate a business combination, as described
in more detail in this Report), subject to applicable law. In no other circumstances will a stockholder have any right or interest of
any kind to or in the trust account. Neither holders of warrants or of rights will have any right to the proceeds held in the trust account
with respect to the warrants or rights.
****
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**Amended and restated certificate of incorporation**
Our amended and restated
certificate of incorporation contains certain requirements and restrictions that will apply to us until the consummation of our initial
business combination. Our amended and restated certificate of incorporation contains a provision which provides that, if we seek to amend
our amended and restated certificate of incorporation (A)to modify 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 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November 22,
2026) if we extend the period of time to consummate a business combination, as described in more detail in this Report) or (B)with
respect to any other provision relating to stockholders rights or pre-initialbusiness combination activity, we will provide
public stockholders with the opportunity to redeem their public shares in connection with any such amendment. Specifically, our amended
and restated certificate of incorporation provides, among other things, that:
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prior to the consummation of our initial business combination, we shall either: (1)seek stockholder
approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their
shares, regardless of whether they vote for or against, or abstain from voting on, the proposed business combination, into their
pro rata share of the aggregate amount on deposit in the trust account as of twobusiness days prior to the consummation of
our initial business combination, including interest (net of permitted withdrawals); or (2)provide our public stockholders
with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote)
for an amount equal to their pro rata share of the aggregate amount on deposit in the trust account as of twobusiness days
prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), in each case subject
to certain limitations; | |
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we will consummate our initial business combination only if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of our initial business combination at a duly held stockholders
meeting; | |
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if our initial business combination is not consummated within 18months from the closing of
the IPO (or up to 24months from the closing of the IPO if we extend the period of time to consummate a business combination,
as described in more detail in this Report), then our existence will terminate and we will distribute all amounts in the trust account;
and | |
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prior to our initial business combination, we may not issue additional shares of common stock that
would entitle the holders thereof to (1)receive funds from the trust account or (2)vote as a class with our public shares
on any initial business combination. | |
In the event we seek stockholder
approval in connection with our initial business combination, our amended and restated certificate of incorporation provides that we
may consummate our initial business combination only if approved by a majority of the shares of common stock voted by our stockholders
at a duly held stockholder meeting.
Comparison of redemption
or purchase prices in connection with our initial business combination and if we fail to complete our initial business combination.
The following table compares
the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business
combination and if we have not completed our initial business combination within 18 months from the closing of the IPO (May 22, 2026)(or
up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period of time to consummate a business combination,
as described in more detail in this Report) or during any Extension Period.
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Redemptions in Connection
with our Initial Business
Combination |
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Other Permitted Purchases
of Public Shares by our
Affiliates |
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Redemptions if we fail
to Complete an Initial
Business Combination | |
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Calculation of redemption price |
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Redemptions at the time of our initial business combination may be made pursuant to a tender offer
or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender
offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal
to the aggregate amount then on deposit in the trust account calculated as of twobusiness days prior to the consummation of
the initial business combination (which is initially anticipated to be $10.00 per share), including interest (which interest shall
be net of taxes payable), divided by the number of then- issued and outstanding public shares, subject to the limitation that no
redemptions will take place if following such redemptions, we will comply with any limitations (including, but not limited to, cash
requirements) agreed to in connection with the negotiation of terms of a proposed business combination. |
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers,
advisors or any of their respective affiliates may purchase public shares or warrants in privately negotiated transactions or in
the open market either prior to or following the completion of our initial business combination. Such purchases will be restricted
except to the extent such purchases are able to be made in compliance with Rule10b-18, which is a safe harbor from liability
for manipulation under Section9(a)(2) and Rule10b-5of the ExchangeAct. None of the funds in the trust account
will be used to purchase shares in such transactions. |
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If we have not completed our initial business combination within 18months from the closing
of the IPO (or up to 24months if the period of time in which we may complete an initial business combination is extended in
accordance with the procedures set forth in this Report) or during any Extension Period, we will redeem all public shares at a per-shareprice,
payable in cash, equal to the aggregate amount then on deposit in the trust account (which is initially anticipated to be $10.00
per share), including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes
payable), divided by the number of then issued and outstanding public shares. | |
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Impact to remaining stockholders |
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The redemptions in connection with our initial business combination will reduce the book value per
share for our remaining stockholders, who will bear the burden of the deferred underwriting discounts and interest withdrawn in order
to pay taxes (to the extent not paid from amounts accrued as interest on the funds held in the trust account). |
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If the permitted purchases described above are made, there will be no impact to our remaining stockholders
because the purchase price would not be paid by us. |
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The redemption of our public shares if we fail to complete our initial business combination will
reduce the book value per share for the shares held by our initial stockholders who will be our only remaining stockholders after
such redemptions. | |
****
**Competition**
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors
possess greater technical, human and other resources or more industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of our IPO and the sale of the private placement units, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation
gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval
of our initial business combination and we are obligated to pay cash for shares of our common stock, it will potentially reduce the resources
available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination. If we have not completed our initial business combination within the required time period, our public
stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account
and our warrants and rights will expire worthless.
24
**Conflicts of Interest**
All of our officers have
fiduciary and contractual duties to our sponsor and to certain companies in which it has invested or to certain other entities. These
entities may compete with us for acquisition opportunities. While the risk is partially mitigated due to our sponsor and the Company
seeking targets of quite different enterprise sizes, if these entities decide to pursue any such opportunity, we may be precluded from
pursuing such opportunities. Subject to his or her fiduciary duties under applicable law, none of the members of our management team
who are also employed by our sponsor or its affiliates have any obligation to present us with any opportunity for a potential business
combination of which they become aware. Our sponsor and directors and officers are also not prohibited from sponsoring, investing or
otherwise becoming involved with, any other blank check companies, including in connection with their initial business combinations,
prior to us completing our initial business combination. Our management team, in their capacities as directors, officers or employees
of our sponsor or its affiliates or in their other endeavors, may choose to present potential business combinations to the related entities
described above, current or future entities affiliated with or managed by our sponsor, or third parties, before they present such opportunities
to us, subject to his or her fiduciary duties under applicable law and any other applicable fiduciary duties. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is
an opportunity that we are able to complete on a reasonable basis. For more information, see the section entitled Item 10.
Directors, Executive Officers, and Corporate GovernanceConflicts of Interest.
Our directors and officers
presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other entities pursuant to
which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any
of our directors or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has
then-currentfiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present
such business combination opportunity to such entity, subject to his or her fiduciary duties under applicable law. See Item
1A. Risk FactorsCertain of our directors and officers are now, and all of them may in the future, become affiliated
with entities engaged in business activities similar to those intended to be conducted by us, and accordingly, may have conflicts of
interest in determining to which entity a particular business opportunity should be presented.
We do not believe, however,
that the fiduciary duties or contractual obligations of our directors or officers will materially adversely affect our ability to identify
and pursue business combination opportunities or complete our initial business combination.
****
**Indemnity**
Our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (1)$10.00 per public share or (2)such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-partyclaims.
We have not independently verified whether our sponsor has sufficient funds to satisfy their indemnity obligations and believe that our
sponsors only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We
have not asked our sponsor to reserve for such obligations.
25
****
**Employees**
We currently have three
officers, Mr. Brady Rodgers, Mr. Harold R. DeMoss III, and Mr. Mike Lessard, and do not intend to have any full-timeemployees prior
to the completion of our initial business combination. Members of our management team are not obligated to devote any specific number
ofhours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed
our initial business combination. The amount of time that any such person will devote in any time period will vary based on whether a
target business has been selected for our initial business combination and the current stage of the business combination process.
**Effecting Our Initial Business Combination**
We are not presently engaged
in, and we will not engage in, any operations until the consummation of our initial business combination. We intend to effectuate our
initial business combination using cash from the proceeds of our IPO and the sale of the placement units, the proceeds of the sale of
our shares in connection with our initial business combination (pursuant to backstop agreements we may enter into in the future), shares
issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business
combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment
of the consideration in connection with our initial business combination or used for redemptions of our common stock, we may apply the
balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional
funds through a private offering of debt or equity securities in connection with the completion of our initial business combination,
and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the
trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of the IPO and the sale
of the placement warrants, and may as a result be required to seek additional financing to complete such proposed initial business combination.
Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion
of our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets,
our proxy materials or tender offer documents disclosing the initial business combination would disclose the terms of the financing and,
only if required by applicable law or stock exchange requirements, we would seek stockholder approval of such financing. There are no
prohibitions on our ability to raise funds privately, or through loans in connection with our initial business combination. At this time,
we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the
sale of securities or otherwise.
26
ITEM 1A. RISK FACTORS
*The business, financial
condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including
but not limited to those described below, any one or more of which could, directly or indirectly, cause the Companys actual financial
condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results.
Any of these factors, in whole or in part, could materially and adversely affect the Companys business, financial condition, operating
results and stock price.*
**Summary Risk Factors**
****
Our company is subject to
numerous risks described below and elsewhere in this Report. You should carefully consider these risks before making an investment. Some
of these risks relating to our business objectives, our organization and structure include:
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We have no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective. | |
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Our public stockholders may not be afforded an opportunity to vote on our proposed business combination,
which means we may complete our initial business combination even though a majority of our public stockholders do not support such
a combination. | |
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If we seek stockholder approval of our initial business combination, our initial stockholders, directors
and officers have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. | |
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Your only opportunity to affect the investment decision regarding a potential business combination
will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of such
business combination. | |
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The ability of our public stockholders to redeem their shares for cash may make our financial condition
unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with
a target. | |
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The requirement that we complete our initial business combination within the prescribed time frame
may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which
to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which
could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders. | |
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Our search for a business combination, and any target business with which we ultimately consummate
a business combination, may be materially adversely affected by the status of debt and equity markets. | |
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Our search for an initial business combination, and any target business with which we may ultimately
consummate an initial business combination, may be materially adversely affected by current global geopolitical conditions resulting
from the ongoing Russia-Ukraineconflict and the conflict in the Middle East. | |
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We may not be able to complete our initial business combination within the prescribed time frame
and/or extend the required date to complete our initial business combination, in which case we would cease all operations except
for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may receive
only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless. | |
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Inflation Reduction Actof2022 may result in the imposition of an excise tax on the Company; | |
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers,
advisors or any of their respective affiliates may elect to purchase shares or warrants from public stockholders, which may influence
a vote on a proposed business combination and reduce the public float of our securities. | |
27
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Because of our limited resources and the significant competition for business combination opportunities,
it may be more difficult for us to complete our initial business combination. If we have not completed our initial business combination
within the required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances,
on our redemption of their shares, and our warrants will expire worthless. | |
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We may have limited ability to assess the management of a prospective target business and, as a result,
this may affect our initial business combination with a target business whose management may not have the skills, qualifications
or abilities to manage a public company. | |
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We may be able to complete only one business combination with the proceeds of our IPO and the sale
of the private placement units, which will cause us to be solely dependent on a single business which may have a limited number of
products or services. This lack of diversification may negatively impact our operations and profitability. | |
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We are dependent upon our directors and officers and their departure could adversely affect our ability
to operate. | |
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Our key personnel may negotiate employment or consulting agreements with a target business in connection
with a particular business combination. These agreements may provide for them to receive compensation following our initial business
combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination
is the most advantageous. | |
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Our directors and officers will allocate their time to other businesses thereby causing conflicts
of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative
impact on our ability to complete our initial business combination. | |
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Our directors, officers, security holders and their respective affiliates may have competitive pecuniary
interests that conflict with our interests. | |
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The ability of our public stockholders to exercise redemption rights with respect to a large number
of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have
to wait for liquidation in order to redeem your shares. | |
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You will not have any rights or interests in funds from the trust account, except under certain limited
circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares and/or warrants, potentially
at a loss. | |
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Nasdaq may delist our securities from trading on its exchange, which could limit investors
ability to make transactions in our securities and subject us to additional trading restrictions. | |
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You will not be entitled to protections normally afforded to investors of many other blank check
companies. | |
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If we seek stockholder approval of our initial business combination and we do not conduct redemptions
pursuant to the tender offer rules, and if you or a group of stockholders are deemed to hold in excess of 15%
of the shares of our common stock sold in the IPO, you will lose your ability to redeem all such shares in excess of 15% of the shares
of our common stock sold in the IPO. | |
28
**Risk Factors**
****
*An investment in our
securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information
contained in this Report, before making a decision to invest in our securities. If any of the following events occur, our business, financial
condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline,
and you could lose all or part of your investment.*
****
**Risks Relating to Our Business and Strategy**
****
**We have no operating history and no revenues,
and you have no basis on which to evaluate our ability to achieve our business objective.**
We are incorporated under
the laws of the Delaware with no operating results, and we will not commence operations until obtaining funding through our IPO. Because
we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our
initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective
target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete
our initial business combination, we will never generate any operating revenues.
**Our public stockholders may not be afforded
an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though
a majority of our public stockholders do not support such a combination.**
We may not hold a stockholder
vote to approve our initial business combination unless the business combination would require stockholder approval under applicable
law or stock exchange rules or if we decide to hold a stockholder vote for business or other reasons. For instance, Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting, but would still require us to obtain stockholder approval if we
were seeking to issue more than approximately 20.0% of our issued and outstanding shares to a target business as consideration in any
business combination. Therefore, if we were structuring a business combination that required us to issue more than approximately 20.0%
of our issued and outstanding shares, we would seek stockholder approval of such business combination. However, except as required by
applicable law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors such as the timing of the transaction and whether the terms ofthe transaction would otherwise require us
to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the issued
and outstanding shares of common stock do not approve of the business combination we consummate. Please see the section entitled Item
1. BusinessOrganizational History and BusinessStockholders may not have the ability to approve our initial business
combination for additional information.
****
**If we seek stockholder approval of our
initial business combination, our initial stockholders, directors and officers have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.**
Unlike some other blank
check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority of the votes cast
by the public stockholders in connection with an initial business combination, our initial stockholders, directors and officers have
agreed (and their respective permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us, to
vote their founder shares, shares included in the private placement units and any public shares held by them in favor of our initial
business combination. As a result, in addition to the founder shares and shares included in the private placement units, we would need
only a maximum of 2,107,126 votes, if approval of the transaction required majority voting approval, no votes, assuming the transaction
only required the affirmative vote of a majority of the shares voted at a meeting at which there was a quorum, of the 6,900,000 public
shares sold in the IPO to be voted in favor of an initial business combination in order to have such initial business combination approved.
Our directors and officers have also entered into the letter agreement, imposing similar obligations on them with respect to public shares
acquired by them, if any. Our majority stockholder currently beneficially owns approximately 28.7% of the issued and outstanding shares
of our common stock. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary
stockholder approval will be received than would be the case if such persons agreed to vote their founder shares in accordance with the
majority of the votes cast by our public stockholders.
****
29
****
**Your only opportunity to affect the investment
decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash,
unless we seek stockholder approval of such business combination.**
At the time of your investment
in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally,
since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder approval. Accordingly, if we do not seek
stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited
to exercising your redemption rights within the period of time (which will be at least 20business days) set forth in our tender
offer documents mailed to our public stockholders in which we describe our initial business combination.
****
**The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make
it difficult for us to enter into a business combination with a target.**
We may seek to enter into
a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such
closing condition and, as a result, would not be able to proceed with the business combination. The amount of the deferred underwriting
discounts payable to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination
and such amount of deferred underwriting discounts is not available for us to use as consideration in an initial business combination.
If we are able to consummate an initial business combination, the per-sharevalue of shares held by non-redeemingstockholders
will reflect our obligation to pay and the payment of the deferred underwriting discounts. Consequently, if accepting all properly submitted
redemption requests would cause us to be unable to satisfy a closing condition as described above, unless the condition was waived, we
would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
****
**The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.**
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights and, therefore,
we will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet
such requirements, or arrange for third-partyfinancing. In addition, if a larger number of shares is submitted for redemption than
we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange
for third-party financing. Raising additional third-partyfinancing may involve dilutive equity issuances or the incurrence of indebtedness
at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available
to us or optimize our capital structure.
****
30
****
**The requirement that we complete our initial
business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business
combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular
as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that
would produce value for our stockholders.**
Any potential target business
with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
within 18months from the closing of our IPO (or up to 24months from the closing of our IPO if we extend the period of time
to consummate a business combination, as described in more detail in this Report). Consequently, such target business may obtain leverage
over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we
get closer to the end of the 18-monthperiod (or up to 24months from the closing of our IPO if we extend the period of time
to consummate a business combination, as described in more detail in this Report). In addition, we may have limited time to conduct due
diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
****
**Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the status
of debt and equity markets and other events.**
The status of debt and equity
markets, and other events such as terrorist attacks, natural disasters or a significant outbreak of other infectious disease could adversely
affect, economies and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any
potential target business with which we consummate a business combination could be, or may already have been, materially and adversely
affected. If such disruptions continue for an extensive period of time, our ability to consummate a business combination, or the operations
of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
**Our search for an initial business combination,
and any target business with which we may ultimately consummate an initial business combination, may be materially adversely affected
by current global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the conflict in the Middle East.**
The United States and global
markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraineconflict
and the recent escalation of the conflict in the Middle East. In response to the ongoing Russia-Ukraineconflict, the North Atlantic
Treaty Organization (NATO) deployed additional military forces to eastern Europe, and the United States, the United
Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and
related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial
Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide
military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations. The invasion of
Ukraine by Russia and the escalation of the conflict in the Middle East and the resulting measures that have been taken, and could be
taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other
countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length
and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility
in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacksagainst U.S.
companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability
and lack of liquidity in capital markets.
31
Any of the abovementioned
factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian
invasion of Ukraine, the escalation of the conflict in the Middle East and subsequent sanctions or related actions, could adversely affect
our search for an initial business combination and any target business with which we may ultimately consummate an initial business combination.
The extent and duration
of the ongoing conflicts, resulting sanctions and any related market disruptions are impossible to predict, but could be substantial,
particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military
operations on a global scale. Any such disruptions may also have the effect of heightening many of the other risks described in this
section. If these disruptions or other matters of global concern continue for an extensive period of time, our ability to consummate
an initial business combination, or the operations of a target business with which we may ultimately consummate an initial business combination,
may be materially adversely affected.
****
**We may not be able to complete our initial
business combination within the prescribed time frame and/or extend the required date to complete our initial business combination, in
which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in
which case our public stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants
and rights will expire worthless.**
We must complete our initial
business combination by May 22, 2026, 18 months from the closing of our IPO. However, if we anticipate that we may not be able to consummate
our initial business combination by May 22, 2026, we may, by resolution of our board, extend the period of time to consummate an initial
business combination up to six times, each by an additional one month (for a total of up to 24 months to complete a business combination).
In order to extend the time available for the Company to consummate an initial business combination, our sponsor or its affiliates or
designees must deposit into the trust account $229,700 ($0.0333 per share) on or prior to the date of the applicable deadline, for each
one-month extension. Our sponsor or its affiliates or designates may not have sufficient funds and/or may not be able to raise sufficient
funds to deposit amounts in our trust account to allow for extensions of the date we are required to complete our initial business combination.
We may not be able to find
a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other
risks described herein, including as a result of terrorist attacks, natural disasters or a significant outbreak of infectious diseases.
If we have not completed
our initial business combination within such time period or during any Extension Period, we will: (1)cease all operations except
for the purpose of winding up; (2)as promptly as reasonably possible but not more than 10business days thereafter, redeem
the public shares, at a per-shareprice, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (less up to $100,000 of interest to pay dissolution expenses (which may include the costs associated with obtaining directors
and officers tail insurance) and which interest shall be net of taxes payable), divided by the number of then issued
and outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including
the right to receive further liquidating distributions, if any); and (3)as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public
stockholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their shares, and our warrants and
rights will expire worthless. See If third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-shareredemption amount received by stockholders may be less than $10.00 per share and other
risk factors herein.
****
32
****
**If we seek stockholder approval of our
initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase
shares, warrants or rights from public stockholders, which may influence a vote on a proposed business combination and reduce the public
float of our securities.**
If we seek stockholder approval
of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer
rules, our sponsor, directors, officers or their affiliates may purchase shares in privately negotiated transactions or in the open market
either prior to or following the consummation of our initial business combination, although they are under no obligation to do so. Please
see Item 1. BusinessOrganizational History and BusinessPermitted purchases and other transactions with respect
to our securities for a description of how such persons will determine which stockholders to seek to acquire shares from.
Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of our shares is
no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors,
officers or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to
exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
The purpose of such purchases
would be to (1) increase the likelihood of closing the business combination or (2) satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it
appears that such requirement would otherwise not be met. This may result in the consummation of an initial business combination that
may not otherwise have been possible. To the extent that any public shares are purchased such purchases will be in compliance with all
of the requirements set forth in Tender Offers and Schedules Compliance and Disclosure Interpretations Question 166.01 promulgated by
the SEC, including that such public shares will not be voted. See Item 1. BusinessOrganizational History and
BusinessPermitted purchases and other transactions with respect to our securities for a description of how our sponsor,
directors, officers, advisors or any of their respective affiliates will select which stockholders to enter into private transactions
with.
In addition, if such purchases
are made, the public float of our securities and the number of beneficial holders of our securities may be reduced,
possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
****
**Because of our limited resources and the
significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on our redemption of their shares, and our warrants and rights will expire worthless.**
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors
possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be
relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we
could potentially acquire with the net proceeds of our IPO and the sale of the private placement units, our ability to compete with respect
to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event
we seek stockholder approval of our initial business combination and we are obligated to pay cash for shares of our common stock, it
will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place us at
a competitive disadvantage in successfully negotiating our initial business combination. If we have not completed our initial business
combination within the required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our trust account and our warrants and rights will expire worthless. See If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-shareredemption amount
received by stockholders may be less than $10.00 per share and other risk factors herein.
33
**If the funds not being held in the trust
account are insufficient to allow us to operate for at least the 18months following the closing of our IPO (or up to 24months
from the closing of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this
Report), we may be unable to complete our initial business combination.**
The funds available to us
outside of the trust account may not be sufficient to allow us to operate for at least the 18months following the closing of our
IPO (or up to 24months from the closing of our IPO if we extend the period of time to consummate a business combination, as described
in more detail in this Report), assuming that our initial business combination is not completed during that time. We expect to incur
significant costs in pursuit of our acquisition plans. Managements plans to address this need for capital through potential loans
from certain of our affiliates are discussed in the section of this Report titled Managements Discussion and Analysis
of Financial Condition and Results of Operations. However, our affiliates are not obligated to make loans to us in the future,
and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the
future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We believe that the funds
available to us outside of the trust account will be sufficient to allow us to operate for at least the 18months following the
closing of our IPO; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion
of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a no-shop provision (a provision in letters of intent designed to keep
target businesses from shopping around for transactions with other companies or investors on terms more favorable
to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention
to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business. If we have not completed our initial business combination within the
required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our trust account and our warrants and rights will expire worthless. See If third parties bring
claims against us, the proceeds held in the trust account could be reduced and the per-shareredemption amount received by stockholders
may be less than $10.00 per share and other risk factors herein.
****
**If the net proceeds of our IPO and the
sale of the private placement units not being held in the trust account are insufficient, it could limit the amount available to fund
our search for a target business or businesses and complete our initial business combination and we may depend on loans from our sponsor
or management team to fund our search, to pay our taxes and to complete our initial business combination.**
Of the net proceeds of our
IPO and the sale of the private placement units, as of December 31, 2025, only approximately $287,601 was available to us outside the
trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds
from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our
management team nor any of their respective affiliates is under any obligation to loan funds to, or otherwise invest in, us in such circumstances.
Any such loans may be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial
business combination. If we have not completed our initial business combination within the required time period because we do not have
sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public stockholders
may receive only $10.00 per share, or less in certain circumstances, and our warrants and rights will expire worthless. See If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per- share redemption amount received
by stockholders may be less than $10.00 per share and other risk factors herein.
34
**Subsequent to our completion of our initial
business combination, we may be required to takewrite-downsor write- offs, restructuring and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which
could cause you to lose some or all of your investment.**
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues
that may be present with a particular target business that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these
factors, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that
could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and
previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be
non-cashitems and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute
to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other
covenants to which we may be subject as a result of assuming pre-existingdebt held by a target business or by virtue of our obtaining
post-combinationdebt financing. Accordingly, any stockholder or warrant holder who chooses to remain a stockholder or warrant holder,
respectively, following our initial business combination could suffer a reduction in the value of their securities. Such stockholders
and warrant holders are unlikely to have a remedy for such reduction in value.
****
**If we were deemed to be an investment company
for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial business combination and instead
be required to liquidate the Company. To avoid that result, we may determine, in our discretion, to liquidate the securities held in
the trust account.**
There is currently uncertainty
concerning the applicability of the Investment Company Act to a special purpose acquisition company (SPAC) and we
may be subject to a claim that we have been operating as an unregistered investment company. If we are deemed to be an investment company
for purposes of the Investment Company Act, we might be forced to abandon our efforts to complete an initial business combination and
instead be required to liquidate. If we are required to liquidate, our investors would not be able to realize the benefits of owning
stock in a successor operating business, including the potential appreciation in the value of our stock and warrants following such a
transaction, and our rights and warrants would expire worthless.
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. The funds in the trust account will be held initially
only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds investing solely in U.S. government
treasury obligations and meeting certain conditions under Rule 2a-7under the Investment Company Act although, notwithstanding the
nature of our investments we may still be deemed to be deemed to be an unregistered investment company. To mitigate the risk of us being
deemed to have been operating as an unregistered investment company (including under the subjective test of Section3(a)(1)(A) of
the Investment Company Act of 1940, as amended), which risk may increase the longer we hold the investments in the trust account, we
may at any time (based on our management teams ongoing assessment of all factors related to our potential status under the Investment
Company Act) instruct Continental Stock Transfer & Trust Company, the trustee with respect to the trust account, to liquidate the
U.S. government treasury obligations or money market funds held in the trust account and thereafter to hold all funds in the trust account
in cash until the earlier of consummation of our initial business combination or liquidation. As a result, following such liquidation,
we will likely maintain the remaining amount in its trust account in an interest bearing demand deposit account at a bank. The interest
we will earn on such funds may be less than what we would have earned if they were kept in the investments.
35
Furthermore, on January24,
2024, the SEC adopted the final rules (the SPAC Final Rules), relating to, among the others, the extent to which
SPACs could become subject to regulation under the Investment Company Act. The SPAC Final Rules provide that whether a SPAC is an investment
company subject to the Investment Company Act is based on particular facts and circumstances. A specific duration period of a SPAC is
not the sole determinant, but one of the long-standingfactors to consider in determination of a SPACs status under the Investment
Company Act. A SPAC could be deemed as an investment company at any stage of its operation. The determination of a SPACs status
as an investment company includes analysis of a SPACs activities, depending upon the facts and circumstances, including but not
limited to, the nature of SPAC assets and income, the activities of a SPACs officers, directors and employees, the duration of
a SPAC, the manner a SPAC holding itself out to investors, and the merging with an investment company. The SPAC Final Rules were published
in the Federal Register on February26, 2024 and became effective on July1, 2024.
If our facts and circumstances
change over time such that we may be deemed to be an unregulated Investment Company, we will inform our stockholders of this change.
****
**If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.**
As described in the risk
factor above entitled*If we were deemed to be an investment company for purposes of the Investment Company Act of 1940,
as amended (the Investment Company Act), we may be forced to abandon our efforts to complete an initial business combination
and instead be required to liquidate the Company. To avoid that result, we may determine, in our discretion, to liquidate the securities
held in the trust account*, the SECs adopting release with respect to the SPAC Rules provided guidance describing
the extent to which SPACs could become subject to regulation under the Investment Company Act and the regulations thereunder. Whether
a SPAC is an investment company will be a question of facts and circumstances. If our facts and circumstances change over time, we will
update our disclosure to reflect how those changes impact the risk that we may be considered to be operating as an unregistered investment
company. We can give no assurance that a claim will not be made that we have been operating as an unregistered investment company.
If we are deemed to be an
investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and | |
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restrictions on the issuance of securities; each of which may make it difficult for us to complete
our initial business combination. | |
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In addition, we may have imposed upon us burdensome requirements, including: | |
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registration as an investment company with the SEC; | |
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adoption of a specific form of corporate structure; and | |
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations
that we are currently not subject to. | |
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account will
be initially invested by the trustee only in U.S.government treasury bills with a maturity of 185days or less or in money
market funds investing solely in U.S.Treasuries and meeting certain conditions under Rule2a-7under the Investment Company
Act. However, notwithstanding the nature of our investments, it is still possible that we could be deemed an investment company. 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, 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. If we
were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we have not completed
our initial business combination within the required time period, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our trust account and our warrants and rights will expire worthless.
****
36
****
**Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.**
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other
legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws
or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate
and complete our initial business combination, and results of operations.
****
**Because we are not limited to a particular
industry or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the
merits or risks of any particular target businesss operations.**
Although we expect to focus
our search for a target business by concentrating our efforts on the transitional energy sector, we may seek to complete a business combination
with an operating company of any size (subject to our satisfaction of the 80% of net assets test) and in any industry, sector or geographic
area. However, we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our initial business
combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or approached
any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any
particular target businesss operations, results of operations, cash flows, liquidity, financial condition or prospects. To the
extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which
we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings,
we may be affected by the risks inherent in the business and operations of a financially unstable or development stage entity. Although
our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we
will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these
risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to our investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholder or warrant
holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a
reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in
value.
****
**Past performance by our management team
and their respective affiliates may not be indicative of future performance of an investment in the Company.**
Information regarding performance
by our management team and their respective affiliates, is presented for informational purposes only. Past performance by our management
team and their respective affiliates is not a guarantee either (1)that we will be able to identify a suitable candidate for our
initial business combination or (2)of success with respect to any business combination we may consummate. You should not rely on
the historical record of our management team or their affiliates or any related investments performance as indicative of our future
performance of an investment in the Company or the returns the Company will, or is likely to, generate going forward.
****
37
****
**We may seek acquisition opportunities outside
our target industries, which may be outside of our managements areas of expertise.**
Although we intend to target
a business combination in the transitional energy sector, we may consider a business combination outside of our target focus, which may
be outside of our managements areas of expertise. If a business combination candidate is presented to us and we determine that
such candidate offers an attractive acquisition opportunity for our company, we may pursue it. In the event we elect to pursue an acquisition
outside of the areas of our managements expertise, our managements expertise may not be directly applicable to its evaluation
or operation, and the information contained in this Report regarding the areas of our managements expertise would not be relevant
to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or
assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholder or warrant holder who chooses to
remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a reduction in the value
of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
****
**Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.**
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial business combination will not have all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net
worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable law or stock exchange
listing requirements, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain
stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If
we have not completed our initial business combination within the required time period, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants and rights will expire worthless.
****
**We may seek acquisition opportunities with
an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.**
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks
include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our directors and officers will endeavor to evaluate
the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave
us with no ability to control or reduce the chances that those risks will adversely impact a target business.
****
38
****
**We are not required to obtain an opinion
regarding fairness. Consequently, you may have no assurance from an independent source that the price we are paying for the business
is fair to our company from a financial point of view.**
Unless we complete our initial
business combination with an affiliated entity, we are not required to obtain an opinion that the price we are paying is fair to our
company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
****
**Resources could be wasted in researching
acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with
another business. If we have not completed our initial business combination within the required time period, our public stockholders
may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account,
and our warrants and rights will expire worthless.**
We anticipate that the investigation
of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not
to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not
be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business
combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs
incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we have
not completed our initial business combination within the required time period, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants and rights will expire worthless.
****
**Our ability to successfully effect our
initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of our or a targets key personnel could negatively impact the operations
and profitability of our post-combination business.**
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. Our key personnel may or may not remain with
the target. Although some of our key personnel may remain with the target business in senior management, board or advisory positions
following our initial business combination, it is likely that some or all of the management of the target business will remain in place.
While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our
assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company
regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the directors
and officers of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business
combination targets key personnel could negatively impact the operations and profitability of our post-combinationbusiness.
The role of an acquisition candidates key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidates management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our
post-combinationbusiness.
****
39
****
**We may have limited ability to assess the
management of a prospective target business and, as a result, may affect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.**
When evaluating the desirability
of effecting our initial business combination with a prospective target business, our ability to assess the target businesss management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the targets management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the targets
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combinationbusiness may be negatively impacted. Accordingly, any stockholder or warrant holder who chooses to remain
a stockholder or warrant holder, respectively, following our initial business combination could suffer a reduction in the value of their
securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
The directors and officers
of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination targets
key personnel could negatively impact the operations and profitability of our post-combinationbusiness. The role of an acquisition
candidates key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidates management team will remain associated with the acquisition candidate
following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to
remain in place.
****
**We may be able to complete only one business
combination with the proceeds of our IPO and the sale of the private placement units, which will cause us to be solely dependent on a
single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations
and profitability.**
The net proceeds from our
IPO and the sale of the private placement units provided us with $69,000,000 of trust account funds that we may use to complete our initial
business combination (which includes $2,070,000 of deferred underwriting discounts being held in the trust account.
We may effectuate our initial
business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis.
By completing our initial business combination with only a single entity our lack of diversification may subject us to numerous economic,
competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of
risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or | |
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dependent upon the development or market acceptance of a single or limited number of products, processes
or services. | |
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
****
40
****
**We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.**
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks,
including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are
multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of
the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact
our profitability and results of operations.
****
**We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination with
a company that is not as profitable as we suspected, if at all.**
In pursuing our acquisition
strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected,
if at all.
****
**We may not be able to complete a business
combination with a U.S. target company if such business combination is subject to U.S. foreign investment regulations and review by a
U.S. government entity such as the Committee on Foreign Investment in the United States (CFIUS), or ultimately prohibited.**
****
The Committee on Foreign
Investment in the U.S. (CFIUS) is an interagency committee authorized to review certain transactions involving acquisitions
and investments in the U.S. by foreign persons in order to determine the effect of such transactions on the national security of the
U.S. CFIUS has jurisdiction to review transactions that could result in control of a U.S. business directly or indirectly by a foreign
person, certain non-controllinginvestments that afford the foreign investor non-passiverights in a TID U.S. business
(defined as a U.S. business that (1) produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies;
(2) owns or operates certain critical infrastructure; or (3) collects or maintains directly or indirectly sensitive personal data of
U.S. citizens), and certain acquisitions, leases, and concessions involving real estate even with no underlying U.S. business. Certain
categories of acquisitions of and investments in a U.S. business also may be subject to a mandatory notification requirement.
Our sponsor is not, nor
is it controlled by or have substantial ties to a non-U.S. person. Although we intend to enter into a business combination in which our
investors, both our sponsor and its affiliates as well as our public investors, would own a minority of the post-combinationcompany,
we cannot guarantee that this will be the case. In addition, we cannot predict whether there will be significant ownership by non-U.S.
persons among our stockholders, among other factors that could affect the likelihood of a CFIUS or similar review.
If our business combination
with a U.S. business is subject to CFIUS review, we may determine that we are required to make a mandatory filing or that we will submit
a voluntary notice to CFIUS, or to proceed with the business combination without notifying CFIUS and risk CFIUS intervention, before
or after the closing of our initial business combination. CFIUS may decide to block or delay our business combination, impose conditions
to mitigate national security concerns with respect to such business combination or order us to divest all or a portion of a U.S. business
of the combined company without first obtaining CFIUS clearance. As a result, we may exclude companies in certain industries from consideration
as potential business combination partners, and companies in those industries may not view us as an attractive business combination partner,
reducing the pool of potential targets companies, and reducing the likelihood that we complete a business combination. We may be adversely
affected in terms of competing with other blank check companies or investment partners that do not have similar foreign ownership issues.
41
Moreover, the process of
government review, whether by the CFIUS or otherwise, could be lengthy, and we have 18months (or up to 24months if we extend
the time to complete our initial business combination in accordance with the procedures set forth in our amended and restated certificate
of incorporation. If the review process extends beyond such timeframe or our business combination is ultimately prohibited by CFIUS or
another U.S. government entity, we may be required to liquidate our company. In such circumstances, our warrants and rights will expire
worthless.
****
**Our management may not be able to maintain
control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.**
We may structure our initial
business combination so that the post-transactioncompany in which our public stockholders will own less than 100% of the equity
interests or assets of a target business, but we will complete such business combination only if the post-transactioncompany owns
or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in
the target business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transactioncompany owns 50% or more of the voting
securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the
post business combination company, depending on valuations ascribed to the target and us in our initial business combination transaction.
For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of
the issued and outstanding capital stock, shares or other equity securities of a target, or issue a substantial number of new shares
to third-partiesin connection with financing our initial business combination. In this case, we would acquire a 100% interest in
the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately
prior to such transaction could own less than a majority of our issued and outstanding shares of common stock subsequent to such transaction.
In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger
share of the Companys shares than we initially acquired. Accordingly, this may make it more likely that our management will not
be able to maintain our control of the target business.
****
**We may be unable to obtain additional financing
to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.**
Although we believe that
the net proceeds of our IPO and the sale of the private placement units will be sufficient to allow us to complete our initial business
combination, because we have not yet selected any target business we cannot ascertain the capital requirements for any particular transaction.
If the net proceeds of our IPO and the sale of the private placement units prove to be insufficient, either because of the size of our
initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for
cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the
terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional
financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms,
if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate.
In addition, even if we
do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or
growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our directors, officers or stockholders are required to provide any financing to us in connection
with or after our initial business combination. If we have not completed our initial business combination within the required time period,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our
trust account, and our warrants and rights will expire worthless.
****
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****
**Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.**
The federal proxy rules
require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the UnitedStates
of America, or U.S.GAAP, or international financial reporting standards as issued by the International Accounting Standards Board,
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the
standards of the Public Company Accounting Oversight Board (UnitedStates), or PCAOB.These financial statement requirements
may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements
in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame.
****
**Compliance obligations under theSarbanes-OxleyAct
may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an acquisition.**
Section404 of the
Sarbanes-OxleyAct requires that we evaluate and report on our system of internal controls beginning with this Report. Only in the
event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will
we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-OxleyAct
particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial
business combination may not be in compliance with the provisions of the Sarbanes-OxleyAct regarding adequacy of its internal controls.
The development of the internal control of any such entity to achieve compliance with the Sarbanes-OxleyAct may increase the time
and costs necessary to complete any such acquisition.
****
**If our management team pursues a company
with operations or opportunities outside of the UnitedStates for our initial business combination, we may face additional burdens
in connection with investigating, agreeing to and completing such combination, and if we effect such initial business combination, we
would be subject to a variety of additional risks that may negatively impact our operations.**
If our management team pursues
a company with operations or opportunities outside of the UnitedStates for our initial business combination, we would be subject
to risks associated with cross-borderbusiness combinations, including in connection with investigating, agreeing to and completing
our initial business combination, conducting due diligence in a foreign market, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial
business combination with such a company, we would be subject to any special considerations or risks associated with companies operating
in an international setting (including how relevant governments respond to such factors), including any of the following:
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costs and difficulties inherent in managing cross-borderbusiness operations and complying with
commercial and legal requirements of overseas markets; | |
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rules and regulations regarding currency redemption; | |
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complex corporate withholding taxes on individuals; | |
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laws governing the manner in which future business combinations may be effected; | |
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tariffs and trade barriers; | |
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regulations related to customs and import/export matters; | |
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longer payment cycles; | |
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tax consequences, such as tax law changes, including termination or reduction of tax and other incentives
that the applicable government provides to domestic companies, and variations in tax laws as compared to the UnitedStates; | |
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currency fluctuations and exchange controls, including devaluations and other exchange rate movements; | |
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rates of inflation, price instability and interest rate fluctuations; | |
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liquidity of domestic capital and lending markets; | |
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challenges in collecting accounts receivable; | |
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cultural and language differences; | |
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employment regulations; | |
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energy shortages; | |
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other forms
of social instability; | |
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deterioration of political relations with the UnitedStates; | |
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obligatory military service by personnel; and | |
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government appropriation of assets. | |
We may not be able to adequately
address these additional risks. If we were unable to do so, we may be unable to complete such combination or, if we complete such combination,
our operations might suffer, either of which may adversely impact our results of operations and financial condition.
****
**If our management following our initial
business combination is unfamiliar with U.S.securities laws, they may have to expend time and resources becoming familiar with
such laws, which could lead to various regulatory issues.**
Following our initial business
combination, any or all of our management could resign from their positions as officers of the company, and the management of the target
business at the time of the business combination could remain in place. Management of the target business may not be familiar with U.S.securities
laws. If new management is unfamiliar with U.S.securities laws, they may have to expend time and resources becoming familiar with
such laws. This could be expensive and time-consumingand could lead to various regulatory issues which may adversely affect our
operations.
****
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****
**After our initial business combination,
our results of operations and prospects could be subject, to a significant extent, to the economic, political, social and government
policies, developments and conditions in the country in which we operate.**
The economic, political
and social conditions, as well as government policies, of the country in which our operations are located could affect our business.
Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in
the future. If in the future such countrys economy experiences a downturn or grows at a slower rate than expected, there may be
less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely
affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our
initial business combination, the ability of that target business to become profitable.
****
**We may face risks related to companies
in our target industries.**
If we are successful in
completing a business combination with a target business in the transitional energy sector, we may be subject to, and possibly adversely
affected by, the following risks:
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an inability to compete effectively in a highly competitive environment with many incumbents having
substantially greater resources; | |
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an inability to manage rapid change, increasing expectations and growth; | |
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a reliance on proprietary technology to provide services and to manage our operations, and the failure
of this technology to operate effectively, or our failure to use such technology effectively; | |
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an inability to license or enforce intellectual property rights on which our business may depend; | |
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any significant disruption in our computer systems or those of third parties that we would utilize
in our operations; | |
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms; | |
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potential liability for negligence, copyright, or trademark infringement or other claims based on
the nature and content of materials that we may distribute; | |
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competition for advertising revenue; | |
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disruption or failure of our networks, systems or technology as a result of computer viruses, cyber-
attacks, misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental
releases of information or similar events; | |
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an inability to obtain necessary hardware, software and operational support; and | |
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reliance on third-partyvendors or service providers. | |
Any of the foregoing could
have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses
will not be limited to businesses with transformative technologies for industrial applications. Accordingly, if we acquire a target business
in another industry, these risks will be subject to risks attendant with the specific industry in which we operate or target business
which we acquire, which may or may not be different than those risks listed above.
****
45
****
**As the number of special purpose acquisition
companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate
an initial business combination.**
In recentyears, the
number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for special
purpose acquisition companies have already entered into an initial business combination, and there are still many special purpose acquisition
companies preparing for an initial public offering, as well as many such companies currently in registration. As a result, at times,
fewer attractive targets may be available to consummate an initial business combination.
In addition, because there
are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition
for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved
financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical
tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-businesscombination.
This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination,
and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
****
**Risks Related to Our Organization and Structure**
****
**Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.**
In the event that the proceeds
in the trust account are reduced below the lesser of (1)$10.00 per public share or (2)such lesser amount per public share
held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose
not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.00 per share.
****
**We are dependent upon our directors and
officers, and their departure could adversely affect our ability to operate.**
Our operations are dependent
upon a relatively small group of individuals and in particular, Messrs. Rodgers and DeMoss. We believe that our success depends on the
continued service of our directors and officers, at least until we have completed our initial business combination. In addition, our
directors and officers are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of
interest in allocating their time among various business activities, including identifying potential business combinations and monitoring
the related due diligence. Moreover, certain of our directors and officers have time and attention requirements for investment funds
of which affiliates of our sponsor are the investment managers. We do not have an employment agreement with, or key-maninsurance
on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could
have a detrimental effect on us.
46
**Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for
them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.**
Our key personnel may be
able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment
or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of our initial business combination. The personal and financial interests of
such individuals may influence their motivation in identifying and selecting a target business, subject to his or her fiduciary duties
under applicable law.
However, we believe the
ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor
in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any
of our key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our
key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel
will remain with us will be made at the time of our initial business combination.
****
**Our directors and officers will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.**
Our directors and officers
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their
time between our operations and our search for a business combination and their other businesses. We do not intend to have any full-timeemployees
prior to the completion of our initial business combination. Each of our officers is engaged in several other business endeavors for
which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number ofhours
per week to our affairs. Certain of our independent directors also serve as officers and/or board members for other entities. If our
officers and directors other business affairs require them to devote substantial amounts of time to such affairs in excess
of their current commitment levels, it could limit their ability to devote time to our affairs, which may have a negative impact on our
ability to complete our initial business combination. For a complete discussion of our officers and directors other business
affairs, please see Item 10. Directors, Executive Officers, and Corporate GovernanceDirectors and Officers.
****
**Certain of our directors and officers are
now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be
conducted by us, and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should
be presented.**
Until we consummate our
initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor
and directors and officers are, or may in the future become, affiliated with entities that are engaged in a similar business. For more
information, see the section entitled Item 10. Directors, Executive Officers, and Corporate GovernanceConflicts of Interest.
Our sponsor and directors and officers are also not prohibited from sponsoring, investing or otherwise becoming involved with, any other
blank check companies, including in connection with their initial business combinations, prior to us completing our initial business
combination. Moreover, certain of our directors and officers have time and attention requirements for investment funds of which affiliates
of our sponsor are the investment managers.
47
Our directors and officers
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they
owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to other entities prior to its presentation to us, subject to his or her fiduciary duties under applicable law. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is
an opportunity that we are able to complete on a reasonable basis.
For a complete discussion
of our officers and directors business affiliations and the potential conflicts of interest that you should be aware of,
please see Item 10. Directors, Executive Officers, and Corporate GovernanceDirectors and Officers, Item
10. Directors, Executive Officers, and Corporate GovernanceConflicts of Interest and Item 13. Certain Relations
and Related Transactions and Director Independence.
****
**Our directors, officers, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.**
We have not adopted a policy
that prohibits our directors, officers, security holders or their respective affiliates from having a direct or indirect pecuniary or
financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or officers,
although we do not intend to do so. Nor do we have a policy that prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
As a result, there may be substantial overlap between companies that would be a suitable business combination for us and companies that
would make an attractive target for such other affiliates.
****
**We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, directors or officers
which may raise potential conflicts of interest.**
In light of the involvement
of our sponsor, directors and officers with other entities, we may decide to acquire one or more businesses affiliated with our sponsor,
directors and officers. Certain of our directors and officers also serve as officers and board members for other entities, including
those described under Item 10. Directors, Executive Officers, and Corporate GovernanceConflicts of Interest.
Such entities may compete with us for business combination opportunities. Our sponsor, directors and officers are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and
there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be
specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined
that such affiliated entity met our criteria and guidelines for a business combination as set forth in Item 1. BusinessOrganizational
History and BusinessEffecting Our Initial Business CombinationSelection of a target business and structuring
of our initial business combination and such transaction was approved by a majority of our independent and disinterested directors.
Despite our agreement that we, or a committee of independent and disinterested directors, will obtain an opinion from an independent
investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business
we are seeking to acquire, regarding the fairness to our company from a financial point of view of a business combination with one or
more businesses affiliated with our sponsor, directors or officers, potential conflicts of interest still may exist and, as a result,
the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of
interest.
****
48
****
**Since our initial stockholders will lose
their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our initial business combination.**
On January13, 2022,
our sponsor initially subscribed for an aggregate of 3,593,750 founder shares. In connection with a reduction in the planned size of
the offering, the subscription agreement was amended and restated on October10, 2022, on December28, 2022, and on December1,
2023, the subscription agreement was further amended and restated in connection with a change in the proposed terms of the offering to
provide for a subscription of 2,300,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.011 per share.
The founder shares will be worthless if we do not complete an initial business combination.
In addition, our sponsor
purchased 265,000 private placement units simultaneously with our IPO, each unit consisting of one share of common stock, one warrant
and one right, with each warrant exercisable for one share of common stock, for a purchase price of $2,650,000 in the aggregate and each
right entitling the holder to one-eighthof one share of common stock upon completion of the initial business combination, or $10.00
per unit, that will also be worthless if we do not complete a business combination.
The founder shares are identical
to the shares of common stock included in the units sold in the IPO except that: (1) the founder shares are subject to certain transfer
restrictions contained in a letter agreement that our initial stockholders, directors and officers have entered into, (2)pursuant
to such letter agreement, our initial stockholders, directors and officers have agreed to waive: (i)their redemption rights with
respect to any founder shares and public shares held by them, as applicable, in connection with the completion of our initial business
combination; (ii)their redemption rights with respect to any founder shares and public shares held by them in connection with a
stockholder vote to amend our amended and restated certificate of incorporation (A)to modify 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 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing of our
IPO (November 22, 2026) if we extend the period of time to consummate a business combination, as described in more detail in this Report)
or (B)with respect to any other provision relating to stockholders rights or pre- initial business combination activity;
and (iii)their rights to liquidating distributions from the trust account with respect to any founder shares they hold if we fail
to complete our initial business combination within 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the
closing of our IPO (November 22, 2026) if we extend the period of time to consummate a business combination, as described in more detail
in this Report) or during any Extension Period (although they will be entitled to liquidating distributions from the trust account with
respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame); and
(3)the founder sharesare entitled to registration rights. If we submit our initial business combination to our public stockholders
for a vote, our initial stockholders have agreed (and their respective permitted transferees will agree), pursuant to the terms of a
letter agreement entered into with us, to vote their founder shares and any public shares held by them purchased during or after our
IPO in favor of our initial business combination. While we do not expect our board of directors to approve any amendment to or waiver
of the letter agreement, investment agreements or registration rights agreement prior to our initial business combination, it may be
possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one
or more amendments to or waivers of such agreements in connection with the consummation of our initial business combination. Any such
amendments or waivers would not require approval from our stockholders, may result in the completion of our initial business combination
that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities.
The personal and financial
interests of our sponsor, directors and officers may influence their motivation in identifying and selecting a target business combination,
completing an initial business combination and influencing the operation of the business following the initial business combination.
This risk may become more acute as the 18-monthdeadline following the closing of our IPO nears, which is the deadline for the completion
of our initial business combination.
****
**The nominal purchase price paid by our
sponsor for the founder shares may result in significant dilution to the implied value of your public shares upon the consummation of
our initial business combination.**
We sold units at an offering
price of $10.00 per unit and the amount in our trust account is initially $10.00 per public share, implying an initial value of $10.00
per public share. However, our sponsor paid a nominal aggregate purchase price of $25,000 for the founder shares, or approximately $0.011
per share. As a result, the value of our public shares may be significantly diluted upon the consummation of our initial business combination,
when the founder shares are converted into public shares.
****
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**The value of the founder shares following
completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the
trading price of our public shares at such time is substantially less than $10.00 per share.**
Our sponsor has invested
in us an aggregate of $2,675,000, comprised of the $25,000 purchase price for the founder shares and the $2,650,000 purchase price for
the private placement units. Assuming a trading price of $10.00 per share upon consummation of our initial business combination, the
2,300,000 founder shares and 265,000 private placement units would have an aggregate implied value of $22,650,000. Even if the trading
price of our common stock was as low as approximately $1.18 per share, and the private placement units were worthless, the value of the
founder shares would be equal to the sponsors initial investment in us. As a result, our sponsor is likely to be able to recoup
its investment in us and make a substantial profit on that investment, even if our public shares have lost significant value. Accordingly,
our management team, which owns interests in our sponsor, may have an economic incentive that differs from that of the public stockholders
to pursue and consummate an initial business combination rather than to liquidate and to return all of the cash in the trust to the public
stockholders, even if that business combination were with a riskier or less-establishedtarget business. For the foregoing reasons,
you should consider our management teams financial incentive to complete an initial business combination when evaluating whether
to redeem your shares prior to or in connection with the initial business combination.
****
**We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial
majority of our stockholders do not agree.**
Our amended and restated
certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public
shares in an amount that would cause us not to comply with any net tangible asset or cash requirement that may be contained in the agreement
relating to our initial business combination, unless such condition is waived. As a result, we may be able to complete our initial business
combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares
or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our
sponsor, directors, officers, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would
be required to pay for all public shares that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
****
**In order to effectuate an initial business
combination, blank check companies have, in the past, amended various provisions of their charters and modified governing instruments,
including their warrant agreements and rights agreements. We cannot assure you that we will not seek to amend our amended and restated
certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination
that some of our stockholders may not support.**
In order to effectuate an
initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified
governing instruments, including their warrant agreements and rights agreements. For example, blank check companies have amended the
definition of business combination, increased redemption thresholds, extended the time to consummate an initial business combination
and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments, including
the warrant agreement, or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered in our IPO,
we would register, or seek an exemption from registration for, the affected securities.
****
50
****
**Certain provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account) may be amended with the approval of holders of not less than a majority of our common stock,
which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our
amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination
that some of our stockholders may not support.**
Our amended and restated
certificate of incorporation provides that any of its provisions (related to pre-businesscombination activity (including the requirement
to fund the trust account and not release such amounts except in specified circumstances and to provide redemption rights to public stockholders
as described herein) may be amended if approved by holders of at least a majority of our common stock, and corresponding provisions of
the trust agreement governing the release of funds from our trust account may be amended if approved by holders of a majority of our
common stock. In all other instances, our amended and restated certificate of incorporation provides that it may be amended by holders
of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable stock exchange rules. We may not issue
additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business
combination. Our initial stockholders, who collectively beneficially own 28.7% of our common stock, may participate in any vote to amend
our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they
choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which will govern
our pre-businesscombination behavior more easily than some other blank check companies, and this may increase our ability to complete
our initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended
and restated certificate of incorporation.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us that they will not propose any amendment to our amended and restated certificate
of incorporation (A)to modify 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 18 months from the closing
of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period of time to consummate
a business combination, as described in more detail in this Report) or (B)with respect to any other provision relating to stockholders
rights or pre-initialbusiness combination activity, unless we provide our public stockholders with the opportunity to redeem their
shares of our common stock upon approval of any such amendment at a per-shareprice, payable in cash, equal to the aggregate amount
then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements are contained in a letter
agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-partybeneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholders derivative
action, subject to applicable law.
****
**CO2 Energy Transition, LLC, our sponsor,
beneficially owns a significant percentage of our outstanding common stock and as such exercises significant voting control over us,
which limits stockholders abilities to influence corporate matters and could delay or prevent a change in corporate control.**
CO2 Energy Transition, LLC,
our sponsor, beneficially owns approximately 28.7% of our common stock. As a result, it has significant influence on the stockholder
vote. Consequently, it has the ability to influence matters affecting our stockholders and therefore exercises significant control in
determining the outcome of a number of corporate transactions or other matters. Additionally, it will be difficult if not impossible
for investors to remove our current directors, which will mean they will remain in control of who serves as officers of the Company as
well as whether any changes are made in the Board of Directors. As a potential investor in the Company, you should keep in mind that
even if you own shares of our common stock and wish to vote them at annual or special stockholder meetings, your shares will have little
effect on the outcome of corporate decisions. Because CO2 Energy Transition, LLC will significantly influence the vote on all stockholder
matters, investors may find it difficult to replace our management if they disagree with the way our business is being operated. The
interests of CO2 Energy Transition, LLC may not coincide with our interests or the interests of other stockholders.
51
CO2 Energy Transition, LLC
acquired its shares of common stock for substantially less than the price of the shares of common stock acquired in our IPO, and/or the
current trading price of our common stock, and may have interests, with respect to their common stock, that are different from other
investors and the concentration of voting power held by CO2 Energy Transition, LLC may have an adverse effect on the price of our common
stock.
In addition, as a result
of their substantial ownership in our company, CO2 Energy Transition, LLC may exert a substantial influence on other actions requiring
a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of
incorporation and approval of major corporate transactions. If CO2 Energy Transition, LLC purchases any shares of our common stock in
the aftermarket or in privately negotiated transactions, this would increase its influence over these actions. Accordingly, CO2 Energy
Transition, LLC will exert significant influence over actions requiring a stockholder vote at least until the completion of our initial
business combination.
**We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding
public warrants.**
Our warrants were issued
in registered form under a warrant agreement between Continental Stock Transfer& Trust Company, as warrant agent, and us. The
warrant agreement provides that (a)the terms of the warrants may be amended without the consent of any holder for the purpose of
(i)curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description
of the terms of the warrants and the warrant agreement set forth in the prospectus associated with our IPO, or defective provision or
(ii)adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to
the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered
holders of the warrants under the warrant agreement and (b)all other modifications or amendments require the vote or written consent
of at least 50% of the then outstanding public warrants, provided that any amendment that solely affects the terms of the private placement
units or any provision of the warrant agreement solely with respect to the private placement units also requires at least a majority
of the then outstanding private placement units. Accordingly, we may amend the terms of the public warrants in a manner adverse to a
holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the
terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such
amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease
the number of shares of common stock purchasable upon exercise of a warrant.
****
**A provision of our warrant agreement may
make it more difficult for us to consummate an initial business combination.**
Unlike some blank check
companies, if
|
(i) | we issue additional
shares of common stock or equity-linked securities for capital raising purposes in connection
with the closing of our initial business combination at an issue price or effective issue
price of less than $9.20 per share of common stock (with such issue price or effective issue
price to be determined in good faith by our board of directors and, in the case of any such
issuance to our sponsor or its affiliates, without taking into account any founder shares
held by our sponsor or their respective affiliates, as applicable, prior to such issuance)
(the Newly Issued Price), |
|
|
|
(ii) |
the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of our initial business combination on the date of the completion of our initial
business combination (net of redemptions), and | |
|
|
(iii) |
the volume weighted average trading price of shares of our common stock during the 20 trading day
period starting on the trading day prior to the day on which we consummate our initial business combination (such price, the Market
Value) is below $9.20 per share, | |
then the exercise price of the warrants will
be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger
price described below will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price. This may make it more difficult for us to consummate an initial business combination with a target business.
52
Once the warrants become
exercisable, we may redeem the outstanding warrants (except the private placement units):
|
|
|
in whole and not in part; | |
|
|
|
at a price of $0.01 per warrant; | |
|
|
|
upon not less than 30 days prior written notice of redemption to each warrant holder; | |
|
|
|
and if, and only if, there is a current registration statement in effect with respect to the shares
of common stock underlying such warrants; and | |
|
|
|
if, and only if, the last reported sale price of shares of our common stock for any 20 trading days
within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the
warrant holders (the Reference Value) equals or exceeds $18.00 per share (as adjusted for adjustments to the
number of shares issuable upon exercise or the exercise price of a warrant). | |
If the foregoing conditions
are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the shares of common stock may fall below the $18.00 trigger price as well as the $11.50 warrant exercise
price after the redemption notice is issued.
****
**Our warrant agreement designates the courts
of the State of NewYork or the UnitedStates District Court for the Southern District of NewYork as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of
warrant holders to obtain a favorable judicial forum for disputes with our company.**
Our warrant agreement provides
that, subject to applicable law, (i)any action, proceeding or claim against us arising out of or relating in any way to the warrant
agreement, including under the Securities Act, will be brought and enforced in the courts of the State of NewYork or the UnitedStates
District Court for the Southern District of NewYork, and (ii)that we irrevocably submit to such jurisdiction, which jurisdiction
shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and
that such courts represent an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the ExchangeAct
or any other claim for which the federal district courts of the UnitedStates of America are the sole and exclusive forum. Any person
or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of NewYork or the UnitedStates District Court
for the Southern District of NewYork (a foreign action) in the name of any holder of our warrants, such holder
shall be deemed to have consented to: (x)the personal jurisdiction of the state and federal courts located in the State of NewYork
in connection with any action brought in any such court to enforce the forum provisions (an enforcement action),
and (y)having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holders
counsel in the foreign action as agent for such warrant holder.
This choice-of-forumprovision
may limit a warrant holders ability to bring a claim in a judicial forum that it finds favorable for disputes with our company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
****
53
****
**Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to
pay in the future for shares of our common stock and could entrench management.**
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to
be in their best interests. These provisions include three-yeardirector terms and the ability of the board of directors to designate
the terms of and issue new series of preferred stock, which may make more difficult the removal of management and may discourage transactions
that otherwise could involve payment of a premium over prevailing market prices for our securities. Section203 of the DGCL affects
the ability of an interested stockholder to engage in certain business combinations, for a period of threeyears
following the time that the stockholder becomes an interested stockholder. We will elect in our certificate of incorporation
not to be subject to Section203 of the DGCL.Nevertheless, our certificate of incorporation contains provisions that have
the same effect as Section203 of the DGCL, except that it provides that affiliates of our sponsor and their transferees will not
be deemed to be interested stockholders, regardless of the percentage of our voting stock owned by them, and will
therefore not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire control of
our company.
**Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.**
Our amended and restated
certificate of incorporation requires, to the fullest extent permitted by law, that (i)any derivative action or proceeding brought
on our behalf, (ii)any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to
us or our stockholders, (iii)any action asserting a claim against us, our directors, officers or employees arising pursuant to
any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv)any action asserting a claim
against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery
in the State of Delaware, except any action (A)as to which the Court of Chancery of the State of Delaware determines that there
is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the
personal jurisdiction of the Court of Chancery within tendays following such determination), (B)which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery, (C)for which the Court of Chancery does not have subject matter
jurisdiction, or (D)arising under the Securities Act, as to which the Court of Chancery and the federal district court for the
District of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit
will be deemed to have consented to service of process on such stockholders counsel. Although we believe this provision benefits
us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine
that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits
against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities
laws and the rules and regulations thereunder.
Our amended and restated
certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable
law. Section27 of the ExchangeAct creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability
created by the ExchangeAct or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to
suits brought to enforce any duty or liability created by the ExchangeAct or any other claim for which the federal courts have
exclusive jurisdiction. Section22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits
brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, our amended
and restated certificate of incorporation provides that the Court of Chancery and the federal district court for the District of Delaware
shall have concurrent jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether
a court would enforce such provision, and our stockholders will not be deemed to have waived our compliance with the federal securities
laws and the rules and regulations thereunder.
Although we believe this
provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies,
the provision may have the effect of discouraging lawsuits against our directors and officers.
****
54
****
**We may not hold an annual stockholder meeting
until after the consummation of our initial business combination. Our public stockholders will not have the right to elect or remove
directors prior to the consummation of our initial business combination.**
We may not hold an annual
meeting of stockholders until after we consummate our initial business combination (unless required by Nasdaq) and thus may not be in
compliance with Section211(b)of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing
directors in accordance with a companys bylaws unless such election is made by written consent in lieu of such a meeting. Therefore,
if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt
to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section211(c)of
the DGCL.
****
**We are an emerging growth company and a
smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.**
We are an emerging
growth company within the meaning of the Securities Act, as modified by the JOBS Act, and we 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 Section404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to fiveyears, although circumstances could cause us to lose that status earlier, including if
the market value of our shares of common stock held by non-affiliatesequals or exceeds $700million as of the end of any second
quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot
predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our
securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they
otherwise would be, there may be a less active trading market for our securities, and the trading prices of our securities may be more
volatile.
Further, Section102(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 ExchangeAct) 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-emerginggrowth companies but any such election to opt out is irrevocable. We have 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, we, 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 our financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Additionally, we are a smaller
reporting company as defined in Item10(f)(1)of RegulationS-K.Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only twoyears of audited financial
statements. We will remain a smaller reporting company until the lastday of the fiscal year in which (1)the market value
of our shares of common stock held by non-affiliatesequals or exceeds $250million as of the end of that years second
fiscal quarter, and (2)our annual revenues equaled or exceeded $100million during such completed fiscal year and the market
value of our shares of common stock held by non-affiliatesequals or exceeds $700million as of the end of that years
second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial
statements with other public companies difficult or impossible.
****
55
****
**Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.**
In recentmonths, the
market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and
our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged
for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue
into the future.
The increased cost and decreased
availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial
business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a
public company, the post-businesscombination entity might need to incur greater expense, accept less favorable terms or both. However,
any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-businesscombinations
ability to attract and retain qualified officers and directors.
In addition, even after
we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims
arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors
and officers, the post- business combination entity may need to purchase additional insurance with respect to any such claims (run-offinsurance).
The need for run-offinsurance would be an added expense for the post-businesscombination entity, and could interfere with
or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
****
**Risks Related to Ownership of Our Securities**
****
**Inflation Reduction Actof2022 may result in the
imposition of an excise tax on the Company**
On August16, 2022,
then President Biden signed into law the Inflation Reduction Act of 2022 (the IR Act), which, among other things,
imposes a 1% excise tax on any publicly traded domestic corporation that repurchases its stock after December31, 2022 (the Excise
Tax). The Excise Tax is imposed on the fair market value of the repurchased stock, with certain exceptions. Because we are
a Delaware corporation and our securities are traded on Nasdaq, we are a covered corporation within the meaning
of the IR Act. While not free from doubt, absent any further guidance from the U.S. Department of the Treasury (the Treasury),
who has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise
Tax, the Excise Tax may apply to any redemptions of our common stock, including redemptions in connection with an initial business combination,
extension vote or otherwise, unless an exemption is available. The Excise Tax would be payable by us and not by the redeeming holders.
Generally, issuances of securities by us in connection with our initial business combination transaction (including any PIPE transaction
at the time of our initial business combination), as well as any other issuances of securities not in connection with our initial business
combination, would be expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year,
but the number of securities redeemed may exceed the number of securities issued.
Whether and to what extent
we would be subject to the Excise Tax in connection with a business combination, extension vote or otherwise would depend on a number
of factors, including (i)the fair market value of the redemptions and repurchases in connection with the business combination,
extension vote or otherwise, (ii)the structure of a business combination, (iii)the nature and amount of any PIPE
or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination
but issued within the same taxable year of a business combination) and (iv)the content of regulations and other guidance from the
Treasury. Consequently, the Excise Tax may make a transaction with us less appealing to potential business combination targets. Finally,
based on recently issued interim guidance from the Internal Revenue Service and Treasury, subject to certain exceptions, the Excise Tax
should not apply in the event of our complete liquidation.
We will not use trust funds
to pay any excise tax that may be incurred.
56
**The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.**
If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have
a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful increases. If our initial
business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account.
If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares
may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on
your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your
shares in the open market.
****
**If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.**
We will comply with the
tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite
our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder
may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares. In the event that a stockholder fails to comply with these
procedures, its shares may not be redeemed. See Item 1. BusinessOrganizational History and BusinessManner of
Conducting Redemptions.
****
**You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced
to sell your public shares and/or public warrants, potentially at a loss.**
Our public stockholders
will be entitled to receive funds from the trust account only upon the earliest to occur of: (1)our completion of an initial business
combination, and then only in connection with those shares of our common stock that such stockholder properly elected to redeem, subject
certain limitations; (2)the redemption of any public shares properly submitted in connection with a stockholder vote to amend our
amended and restated certificate of incorporation (A)to modify 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 18months from the closing of our IPO (or up to 24months from the closing of our IPO if we extend the period of time
to consummate a business combination, as described in more detail in this Report)or (B)with respect to any other provision relating
to stockholders rights or pre-initialbusiness combination activity; and (3)the redemption of our public shares if
we have not completed an initial business combination within 18months from the closing of our IPO (or up to 24months from
the closing of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this Report),
subject to applicable law. In addition, if we are unable to complete an initial business combination within 18 months from the closing
of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period of time to consummate
a business combination, as described in more detail in this Report) for any reason, compliance with Delaware law may require that we
submit a plan of dissolution to our then-existingstockholders for approval prior to the distribution of the proceeds held in our
trust account. In that case, public stockholders may be forced to wait beyond 18 months from the closing of the IPO (May 22, 2026)(or
up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period of time to consummate a business combination,
as described in more detail in this Report) before they receive funds from our trust account. In no other circumstances will a stockholder
have any right or interest of any kind to or in the trust account. Holders of public warrants will not have any right to the proceeds
held in the trust account with respect to the public warrants. Accordingly, to liquidate your investment, you may be forced to sell your
public shares and/or public warrants, potentially at a loss.
57
**Nasdaq may delist our securities from trading
on its exchange, which could limit investors ability to make transactions in our securities and subject us to additional trading
restrictions.**
Our units, shares, warrants
and rights are currently traded on Nasdaq. Although we currently meet the continued listing standards set forth in the Nasdaq listing
standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial
business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain
certain financial, distribution and share price levels. In order to continue listing our securities on Nasdaq prior to our initial business
combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a $50 million market
value of listed securities, 1.1 million publicly available shares, a $15 million market value of publicly held shares and a minimum number
of holders of our securities (generally 400 public holders). Additionally, in connection with our initial business combination, we will
be required to demonstrate compliance with Nasdaqs initial listing requirements, which are more rigorous than Nasdaqs continued
listing requirements, in order to continue to maintain the listing of our securities on Nasdaq, for instance, our stock price would generally
be required to be at least $4.00 per share, the market value of listed securities would be required to be at least $75 million, we would
need to have 1.1 million publicly available shares and $20 million of market value of unrestricted publicly held shares, and we would
be required to have a minimum of 400 round lot holders (with at least 50% of such round lot holders holding securities with a market
value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing requirements at
that time.
If Nasdaq delists any of
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
such securities could be quoted on an over-the- counter market. If this were to occur, we could face significant material adverse consequences,
including:
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a determination that our common stock is a penny stock which will require brokers
trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary
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a limited amount of news and analyst coverage; and | |
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The National Securities
Markets Improvement Actof1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as covered securities. Because our units, common stock, warrants and rights are
listed on Nasdaq, our units, shares of our common stock, warrants and rights qualify as covered securities under such statute. Although
the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of
covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale
of securities issued by special purpose acquisition companies, certain state securities regulators view blank check companies unfavorably
and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under such statute and we would
be subject to regulation in each state in which we offer our securities.
**The normal regulatory protections for blank check companies
will not apply to your investment in this company.**
Under the U.S. securities
laws, our company has characteristics of a blank check company because our business plan is to engage
in a merger or acquisition with an unidentified company or companies, or other entity or person, and Rule 419 as promulgated
under the Securities Act governs such offerings and provides an exclusion for which we qualify because Exchange Act Rule 3a51-1(a)(2)
excludes from the definition of penny stock a security that is registered, or approved for registration upon notice
of issuance, on a national securities exchange, or is listed, or approved for listing upon notice of issuance on, an automated quotation
system sponsored by a registered national securities association, that has established initial listing standards that meet or exceed
the criteria set forth in the Exchange Rule. Therefore, because our securities are listed on the Nasdaq Global Market, the Company can
therefore rely on the Exchange Rule to avoid being treated as a penny stock. Thus, the investor protections of Rule 419 will not apply:
restriction on the transferability of the securities, completion of an initial business combination within 18months, and restriction
on the use of interest earned on the funds held in trust.
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**If we seek stockholder approval of our
initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a group
of stockholders are deemed to hold in excess of 15% of the shares of our common stock, you will lose your ability to redeem all such
shares in excess of 15% of the shares of our common stock.**
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined
under Section13 of the ExchangeAct), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the shares sold in our IPO, without our prior consent. However, we would not be restricting our stockholders ability
to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess
Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss
on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our initial business combination. As a result, you will continue to hold that number
of shares exceeding 15%, and in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
****
**If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per- share redemption amount received by stockholders may be less than
$10.00 per share.**
Our placing of funds in
the trust account may not protect those funds from third-partyclaims against us. Although we will seek to have all vendors, service
providers (other than our independent registered public accounting firm), prospective target businesses and other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements
they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach
of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in
order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management
believes that such third partys engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third-partyconsultant whose particular
expertise or skills are believed by management to be superior to those of other consultants that would agree to execute a waiver or in
cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we have not completed
our initial business combination within the required time period, or upon the exercise of a redemption right in connection with our initial
business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against
us within the 10years following redemption. Accordingly, the per-share redemption amount received by public stockholders could
be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors.
Our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (1)$10.00 per public share or (2)such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-partyclaims.
We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our
sponsors only assets are securities of our company. Our sponsor may not have sufficient funds available to satisfy those obligations.
We have not asked our sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations.
As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination
and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per public share in connection with any redemption of your public shares. None
of our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
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**The securities in which we invest the funds
held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that
theper-shareredemption amount received by public stockholders may be less than $10.00 per share.**
The proceeds held in the
trust account will be invested only in U.S.government treasury bills with a maturity of 185days or less or in money market
funds investing solely in U.S.Treasuries. While short-termU.S.government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recentyears. Central banks in Europe and Japan pursued interest
rates below zero in recentyears, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it
may in the future adopt similar policies in the UnitedStates. In the event that we are unable to complete our initial business
combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled
to receive their pro-ratashare of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable
(less, in the case we are unable to complete our initial business combination, up to an aggregate of $100,000 of interest for dissolution
expenses which may include the costs associated with obtaining directors and officers tail insurance)). Negative
interest rates could reduce the value of the assets held in trust such that the per-shareredemption amount received by public stockholders
may be less than $10.00 per share.
****
**If, after we distribute the proceeds in
the trust account to our public stockholders, we file awinding-upor bankruptcy petition or an involuntarywinding-upor
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our
board of directors and us to claims of punitive damages.**
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a winding-upor bankruptcy petition or an involuntary winding-upor
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable
debtor/creditor and/or insolvency laws as a voidable performance. As a result, a liquidator could seek to recover some or all amounts
received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or having acted in bad faith by paying public stockholders from the trust account prior to addressing the claims of creditors, thereby
exposing itself and us to claims of punitive damages.
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**If, before distributing the proceeds in
the trust account to our public stockholders, we file awinding-upor bankruptcy petition or an involuntarywinding-upor
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the
claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation
may be reduced.**
If, before distributing
the proceeds in the trust account to our public stockholders, we file a winding-upor bankruptcy petition or an involuntary winding-upor
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
insolvency law, and may be included in our liquidation estate and subject to the claims of third parties with priority over the claims
of our stockholders. To the extent any liquidation claims deplete the trust account, the per-shareamount that would otherwise be
received by our stockholders in connection with our liquidation would be reduced.
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**If we have not completed our initial business
combination within the allotted time period, our public stockholders may be forced to wait beyond such allotted time period before redemption
from our trust account.**
If we have not completed
our initial business combination within 18 months from the closing of the IPO (May 22, 2026)(or up to 24 months from the closing of our
IPO (November 22, 2026) if we extend the period of time to consummate a business combination, as described in more detail in this Report)
or during any Extension Period, we will distribute the aggregate amount then on deposit in the trust account, including interest (less
up to $100,000 of interest to pay dissolution expenses (which may include the costs associated with obtaining directors and officers
tail insurance) and which interest shall be net of taxes payable), pro rata to our public stockholders by way of
redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. Any redemption
of public stockholders from the trust account shall be effected automatically by function of our amended and restated certificate of
incorporation prior to any voluntary winding up. If we are required to windup, liquidate the trust account and distribute such amount
therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must
comply with the applicable provisions of Delaware law. In that case, investors may be forced to wait beyond the allotted time period
before the redemption proceeds of our trust account become available to them and they receive the return of their pro rata portion of
the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation
unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated certificate
of incorporation and then only in cases where investors have properly sought to redeem their shares of our common stock. Only upon our
redemption or any liquidation will public stockholders be entitled to distributions if we have not completed our initial business combination
within the required time period and do not amend certain provisions of our amended and restated certificate of incorporation prior thereto.
****
**Our stockholders may be held liable for
claims by third parties against us to the extent of distributions received by them upon redemption of their shares.**
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 18months of the closing of our IPO (or up to 24months from the
closing of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this Report)
may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section280
of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-daynotice period during
which any third-partyclaims can be brought against the corporation, a 90-dayperiod during which the corporation may reject
any claims brought, and an additional 120-daywaiting period before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholders pro rata share
of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary
of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 24thmonth
from the closing of our IPO in the event we do not complete our initial business combination and, therefore, we do not intend to comply
with the foregoing procedures.
Because we do not intend
to comply with Section280, Section281(b)of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10years following our dissolution. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our
vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies
with Section281(b)of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the
lesser of such stockholders pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent
of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such
date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 18months of the closing of our IPO (or up to 24months
from the closing of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this
Report) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then
pursuant to Section174 of the DGCL, the statute of limitations for claims of creditors could then be sixyears after the unlawful
redemption distribution, instead of threeyears, as in the case of a liquidating distribution.
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**We have registered the issuance of the
shares of our common stock issuable upon exercise of the public warrants under the Securities Act, however, such registration may not
be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except
on a cashless basis and potentially causing such warrants to expire worthless.**
We have registered the issuance
of the shares of common stock issuable upon exercise of the private warrants under the Securities Act, however, such registration may
not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to expire worthless. Additionally, under the terms of the warrant agreement,
we have agreed that, as soon as practicable after the closing of our initial business combination, we will use our best efforts to file
with the SEC a registration statement covering the issuance of such shares, and we will use our best efforts to cause the same to become
effective within 60business days after the closing of our initial business combination and to maintain the effectiveness of such
registration statement and a current prospectus relating to those shares of our common stock until the warrants expire or are redeemed.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in
the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference
therein are not current, complete or correct or the SEC issues a stop order. If any such registration statement has not been declared
effective by the 60thbusiness day following the closing of the business combination, holders of the warrants shall have
the right, during the period beginning on the 61stbusiness day after the closing of the business combination and ending
upon such registration statement being declared effective by the SEC, and during any other period when we fail to have maintained an
effective registration statement covering the shares of common stock issuable upon exercise of the warrants, to exercise such warrants
on a cashless basis. We shall provide the Warrant Agent with an opinion of counsel stating that (i)the exercise
of the warrants on a cashless basis is not required to be registered under the Securities Act and (ii)the shares of common stock
issued upon such exercise will be freely tradable under U.S.federal securities laws by anyone who is not an affiliate (as such
term is defined in Rule144 under the Act) of the Company and, accordingly, will not be required to bear a restrictive legend.
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**The grant of registration rights to our
initial stockholders and their respective permitted transferees may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of shares of our common stock.**
Additionally, pursuant to
a registration rights agreement, the Company shall use its best efforts to file a registration statement within 30days of our initial
business combination, for our initial stockholders and their respective permitted transferees. In addition, our initial stockholders
and their respective permitted transferees can demand that we register the resale of their founder shares. In addition, our sponsor and
its permitted transferees can demand that we register the resale of the shares of common stock included in the private placement units
and the shares of our common stock issuable upon exercise of the warrants included in the private placement units, and holders of units
that may be issued upon conversion of working capital loans may demand that we register the resale of the securities included in such
units or the shares of our common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect
on the market price of shares of our common stock. In addition, the existence of the registration rights may make our initial business
combination more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake
they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of shares of our
common stock that is expected when the shares of common stock owned by our initial stockholders or their permitted transferees, our private
placement units or units issued in connection with working capital loans are registered for resale.
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**We may issue additional shares of our common
stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
Any such issuances would dilute the interest of our stockholders and likely present other risks.**
Our amended and restated
certificate of incorporation authorizes the issuance of up to 40,000,000shares of our common stock, par value $0.0001 per share.
There are currently 22,353,625 authorized but unissued shares of our common stock available for issuance, which amount takes into account
shares reserved for issuance upon exercise of outstanding warrants and rights. There are no shares of preferred stock issued and outstanding.
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We may issue a substantial
number of additional shares of our common stock in order to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also enter into forward purchase agreements or other commitments to
purchase our securities prior to completion of our initial business combination. We may also issue shares of our common stock to redeem
the public warrants. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial
business combination, we may not issue additional shares of common stock that would entitle the holders thereof to (1)receive funds
from the trust account or (2)vote as a class with our public shares on any initial business combination. The issuance of additional
shares of common stock or shares of preferred stock:
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may subordinate the rights of holders of shares of common stock if shares of preferred stock are
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could cause a change of control if a substantial number of our shares of common stock is issued,
which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation
or removal of our present directors and officers; | |
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may have the effect of delaying or preventing a change of control of us by diluting the share ownership
or voting rights of a person seeking to obtain control of us; | |
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may adversely affect prevailing market prices for our units, shares of common stock, warrants and/or
rights; and | |
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**We may issue our shares to investors in
connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.**
In connection with our initial
business combination, we may issue shares to investors in private placement transactions (so-calledPIPE transactions) at a price
of $10.00 per share or which approximates the per-shareamounts in our trust account at such time, which is generally approximately
$10.00. The purpose of such issuances will be to enable us to provide sufficient liquidity to the post-businesscombination entity.
The price of the shares we issue may therefore be less, and potentially significantly less, than the market price for our shares at such
time. As a result, you will experience further dilution.
The potential PIPE transactions
may result in costs particular to the de-SPACprocess that would not be anticipated in a traditional initial public offering. The
potential PIPE transactions are intended to ensure a return on investment to the investor in return for funds facilitating the sponsors
completion of the initial business combination or providing sufficient liquidity.
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**The exercise price for the public warrants
is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely to expire worthless.**
The exercise price of the
public warrants is higher than is typical in many similar blank check companies in the past. Historically, the exercise price of a warrant
was generally a fraction of the purchase price of the units in the initial public offering. The exercise price for our public warrants
is $11.50 per share, subject to adjustment as provided herein. As a result, the warrants are more likely to expire worthless.
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**We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.**
We have the ability to redeem
the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant if,
among other things, the Reference Value equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable
upon exercise or the exercise price of a warrant and if, and only if, there is a current registration statement in effect with respect
to the shares of common stock underlying such warrants. If the foregoing conditions are satisfied and we issue a notice of redemption,
each warrant holder can exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the shares of
common stock may fall below the $18.00 trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued.
If we call the warrants
for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so
on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that
number of shares of common stock equal to the quotient obtained by dividing (x)the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value
(defined below) by (y)the fair market value. The fair market value shall mean the average reported last sale
price of the shares of common stock for the fivetrading days ending on the thirdtrading day prior to the date on which the
notice of redemption is sent to the holders of warrants.
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**Our managements ability to require
holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon
their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.**
If we call our public warrants
for redemption after the redemption criteria have been satisfied, our management will have the option to require any holder that wishes
to exercise his or her warrant (including any private warrants included in the private placement units) to do so on a cashless
basis. If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of
common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash.
This will have the effect of reducing the potential upside of the holders investment in our company.
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**If we do not file and maintain a current
and effective prospectus relating to the common stock issuable upon exercise of the warrants, holders will only be able to exercise such
warrants on a cashless basis.**
If we do not file and maintain
a current and effective prospectus relating to the common stock issuable upon exercise of the warrants at the time that holders wish
to exercise such warrants, they will only be able to exercise them on a cashless basis provided that an exemption
from registration is available. As a result, the number of shares of common stock that holders will receive upon exercise of the warrants
will be fewer than it would have been had such holder exercised his warrant for cash. Further, if an exemption from registration is not
available, holders would not be able to exercise on a cashless basis and would only be able to exercise their warrants for cash if a
current and effective prospectus relating to the common stock issuable upon exercise of the warrants is available. Under the terms of
the warrant agreement, we have agreed to use our best efforts to meet these conditions and to file and maintain a current and effective
prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot
assure you that we will be able to do so. If we are unable to do so, the potential upside of the holders
investment in our company may be reduced or the warrants may expire worthless.
**An investor will only be able to exercise
a warrant if the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt under the
securities laws of the state of residence of the holder of the warrants.**
No warrants will be exercisable
and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise have been
registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. If
the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions
in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and
they may expire worthless if they cannot be sold.
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**Our warrants and founder shares may have
an adverse effect on the market price of shares of our common stock and make it more difficult to effectuate our initial business combination.**
In a private placement in
connection with our IPO, our sponsor purchased 265,000 private placement units, each containing one share of our common stock, one warrant
exercisable to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment, and one-eighthof a
right. Our initial stockholder, our sponsor, currently holds 2,565,000shares of our common stock. In addition, if our sponsor,
an affiliate of our sponsor or certain of our directors and officers make any working capital loans, up to $1,500,000 of such loans may
be converted into units, at the price of $10.00 per unit at the option of the lender. Such units would be identical to the private placement
units. To the extent we issue shares of our common stock to effectuate a business combination, the potential for the issuance of a substantial
number of additional shares of our common stock upon exercise of these warrants or conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our common stock
and reduce the value of the shares of our common stock issued to complete the business combination. Therefore, our warrants and founder
shares may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
****
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****
ITEM 1B. UNRESOLVED STAFF
COMMENTS
****
None.
ITEM 1C. CYBERSECURITY
**
*Risk Management and Strategy*
Although, as a blank check
company, we do not have any operations, we are nonetheless subject to the risk of cybersecurity incidents. Among other things, the investments
in our Trust Account and bank deposits may be vulnerable to such incidents, and we may depend on the digital technologies of third parties.
We and third parties may be subject to cybersecurity attacks or security breaches. To the extent that we rely on the technologies of
third parties, we depend upon the personnel and the processes of suchthird partiesto protect against cybersecurity incidents,
and we have no personnel or processes of our own for this purpose.In the event of a cybersecurity incident impacting us, our Management
will report to the Board of Directors and provide updates on the Managements incident response plan for addressing and mitigating
any risks associated with such an incident.As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to
investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them,
could have material adverse consequences on our business and lead to financial loss. We have not encountered any cybersecurity incidents
since our Initial Public Offering. In addition to our own cybersecurity risks, any proposed Business Combination target may have been
subject to, or may in the future be subject to, cybersecurity incidents.
To date, we havenotexperienced
any cybersecurity attacks. However, any such attack could adversely affect our business. Further, a penetration of our systems or a third-partys
systems or other misappropriation or misuse of personal information could subject us to business, regulatory, litigation and reputation
risk, which could have a negative effect on our business, financial condition and results of operations.
****
ITEM 2. PROPERTIES
****
We currently maintain our
executive offices at 1334 Brittmoore Rd, Suite 190, Houston, Texas 77043. In addition, we may have officers that do not work from our
designated facilities due to telecommuting. We consider our current office space adequate for our current operations.
****
ITEM 3. LEGAL PROCEEDINGS
Although we may, from time
to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a
party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us or
contemplated to be brought against us.
****
ITEM 4. MINE SAFETY DISCLOSURES.
****
This item is not applicable
to the Company.
65
PART II
****
ITEM 5. MARKET FOR REGISTRANTS
COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
****
**Market Information**
Our units, public shares,
public warrants and public rights are each traded on the Nasdaq Global Market under the symbols NOEMU, NOEM,
NOEMW and NOEMR, respectively. Our units commenced public trading on November 22, 2024, and
our public shares, public warrants and public rights commenced separate public trading on January 16, 2025.
**Holders**
As of March 13, 2026, there
were two holders of record of our public units, five holders of record of our common stock, one holder of record of our public warrants,
and one holder of record of our public rights.
The number of holders of
record does not include a substantially greater number of street name holders or beneficial holders whose public units,
common stock and public warrants and public rights are held of record by banks, brokers and other financial institutions.
**Dividends**
We have not paid any cash
dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general
financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our
initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors
is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur
any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive
covenants we may agree to in connection therewith.
**Securities Authorized for Issuance Under Equity
Compensation Plans**
None.
**Recent Sales of Unregistered Securities**
****
There have been no sales
of unregistered securities during the quarter ended December 31, 2025, and from the period from January 1, 2026 to the filing date of
this Report which have not previously been disclosed in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
****
**Purchases of Equity Securities by the Issuer
and Affiliated Purchasers**
****
None.
ITEM 6. [RESERVED]
66
ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion
of the Companys historical performance and financial condition should be read together with the financial statements and related
notes in Item 8. Financial Statements and Supplemental Data of this Report. This discussion contains forward-looking statements
based on the views and beliefs of our management, as well as assumptions and estimates made by our management, see Cautionary
Statement Regarding Forward-Looking Information. These statements by their nature are subject to risks and uncertainties, and
are influenced by various factors. As a consequence, actual results may differ materially from those in the forward-looking statements.
See Item 1A. Risk Factors of this report for the discussion of risk factors.
**Summary of The Information Contained in
Managements Discussion and Analysis of Financial Condition and Results of Operations**
Our Managements Discussion
and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying financial statements
and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as
follows:
|
|
|
Company Overview. Discussion of our business and overall analysis of financial and other highlights
affecting us, to provide context for the remainder of MD&A. | |
|
|
|
| |
|
|
|
Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows
and discussion of our financial condition. | |
|
|
|
| |
|
|
|
Results of Operations. An analysis of our financial results for the years ended December 31,
2025 and 2024. | |
|
|
|
| |
|
|
|
Critical Accounting Estimates. A Summary of critical accounting estimates. | |
**Company Overview**
We are a blank check company
incorporated in the state of Delaware on September 30, 2021, formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate
our initial Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the private placement
units, our shares, debt or a combination of cash, shares and debt.
**Liquidity, Capital Resources and Going Concern**
As of December 31, 2025,
the Company had $287,601 in cash and a working capital deficit of $422,177.
Until the consummation of
the Initial Public Offering, our only source of liquidity was an initial purchase of shares of common stock, par value $0.0001 per share,
by the sponsor and loans from the sponsor.
On November 22, 2024, we
consummated the Initial Public Offering of 6,900,000 units, which included the full exercise by the underwriters of their over-allotment
option in the amount of 900,000 units, at $10.00 per unit, generating gross proceeds of $69,000,000. Simultaneously with the closing
of the Initial Public Offering, we consummated the sale of 265,000 private placement units at a price of $10.00 per private placement
unit in a private placement to the sponsor, generating gross proceeds of $2,650,000.
Following the Initial Public
Offering, a total of $69,000,000 was placed in the trust account. We incurred $3,423,710 of expenses associated with the Initial Public
Offering, consisting of $517,500 of cash underwriting discount, $2,070,000 of deferred underwriting fees, $77,280 fair value of the Representative
Shares, and $758,930 of other offering costs.
For the year ended December
31, 2025, cash used in operating activities was $745,359. Net income of $1,652,360 was impacted by interest earned on marketable securities
held in the trust account of $2,882,889, and changes in operating assets and liabilities provided $485,170 of cash.
For the year ended December31,
2024, cash used in operating activities was $305,589. Net income of $2,632 was impacted by interest earned on marketable securities held
in the trust account of $310,897 and payment of operation costs through the promissory note of $11,050. Changes in operating assets and
liabilities provided $7,407.
67
For the year ended December
31, 2025, cash provided by investing activities was $79,891, representing cash interest withdrawn from the Trust Account to pay taxes.
For the year ended December31,
2024, cash used in investing activities was $69,000,000, representing the investment of cash in our trust account.
For the year ended December
31, 2025, no cash was used in financing activities.
For the year ended December31,
2024, cash provided by financing activities was $70,256,546, mainly due to proceeds from the IPO and the sale of the private placement
units.
As of December 31, 2025,
we had investments of $72,113,895 held in the trust account. Through December 31, 2025, we have withdrawn $79,891 of interest earned
from the trust account to pay taxes.
We intend to use substantially
all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less income taxes
payable), to complete our initial business combination. To the extent that our share capital or debt is used, in whole or in part, as
consideration to complete our initial 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.
As of December 31, 2025,
we had cash of $287,601. We intend to 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.
In order to finance transaction
costs in connection with an initial business combination, we and the sponsor, on April 15, 2025, entered into a convertible promissory
note dated March 31, 2025 (the Working Capital Note). Pursuant to the Working Capital Note, we may request, and in the
sole discretion of the sponsor, the sponsor may loan the Company, loan drawdowns of up to an aggregate of $1,500,000 in principal (Working
Capital Loan) from time to time, less $11,730 which was advanced prior to the execution of the Working Capital Note, and included
as outstanding thereunder, with such amounts to be used for working capital.
Amounts owed under the Working
Capital Note do not accrue interest and are payable on the earlier of: (i) the effective date of the consummation of the Companys
initial merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses
or entities (the Business Combination); or (ii) the date that the winding up of the Company is effective (such date, as
applicable, the Maturity Date), unless accelerated upon the occurrence of an Event of Default (as defined in the Working
Capital Note).
Amounts outstanding under
the Working Capital Note, are convertible, at the option of the sponsor, into units of the Company (Working Capital Note Units),
at a conversion price of $10.00 per Working Capital Note Unit, with each unit consisting of one share of Company common stock, one warrant,
and one right, with each warrant entitling the holder thereof to purchase one share of common stock at $11.50 per share, subject to adjustment
as provided in the Companys Registration Statement on Form S-1 filed in connection with its IPO, and each eight rights entitling
the holder to receive one share of common stock upon completion of the Business Combination. The Working Capital Note Units will be identical
to the private placement units issued to the Sponsor at the time of the Companys IPO.
68
In addition, if we are unable
to complete a Business Combination by May 22, 2026, unless extended for further 6 months, then the Company will cease all operations
except for the purpose of liquidating. We cannot be assured that our plans to consummate an initial Business Combination will be successful.
In connection with the Companys
assessment of going concern considerations in accordance with Accounting Standards Codification (ASC) 205-40 Going
Concern, we have determined that the potential liquidity shortfall and the mandatory liquidation raise substantial doubt about
the Companys ability to continue as a going concern.
**Off-Balance Sheet Financing Arrangements**
We have no obligations,
assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2025. We do not participate in transactions
that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased
any non-financial assets.
**Contractual Obligations**
We do not have any long-term
debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor $10,000
per month for office space, utilities, secretarial support and other administrative and consulting services.
The Company granted the
underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 900,000 additional units to cover over-allotments,
if any, at the Initial Public Offering price less the underwriting discounts and commissions. On November 22, 2024, simultaneously with
the closing of the Initial Public Offering, the underwriters elected to fully exercise the over-allotment option to purchase an additional
900,000 units at a price of $10.00 per Unit.
The underwriters were entitled
to a cash underwriting discount of 0.75% of the gross proceeds of the Initial Public Offering, or $517,500, which was paid upon the closing
of the Initial Public Offering, together with 120,750 shares of our common stock. Additionally, the underwriters were entitled to a deferred
underwriting discount of 3.00% of the gross proceeds of the Initial Public Offering, or $2,070,000, payable upon the closing of an initial
Business Combination from the amounts held in the trust account.
**Results of Operations**
****
We have neither engaged
in any operations nor generated any revenues to date. Our only activities from September30, 2021 (inception) through December 31,
2025, were organizational activities, those necessary to prepare for the Initial Public Offering, 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 interest income on marketable securities held in the Trust Account. 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 year ended December
31, 2025, we had net income of $1,652,360, which consists of interest income on investments held in the trust account of $2,882,889,
offset by operating costs of $646,306, provision for income taxes of $579,272, and interest expense of $4,951.
For the year ended December31,
2024, we had net income of $2,632, which consists of interest income on investments held in the trust account of $310,897, offset by
operating costs of $246,139, provision for income taxes of $61,039 and interest expense of $1,087.
69
**JOBS Act**
****
The Jumpstart Our Business
Startups Act of 2012 (the JOBS Act) contains provisions that, among other things, relax certain reporting requirements
for qualifying public companies. We qualify as an emerging growth company and under the JOBS Act are allowed to
comply with new or revised accounting pronouncements based on the effective date for private (not publicly-traded) companies. We are
electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial
statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective
dates.
Additionally, subject to
certain conditions set forth in the JOBS Act, if, as an emerging growth company, we plan to rely on rules which
allow us to, among other things, delay the required (i) provision of an auditors attestation report on our system of internal
controls over financial reporting pursuant to Section 404, (ii) provision of all of the compensation disclosure that may be required
of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) compliance with any
requirement that may be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit rotation or a supplement
to the auditors report providing additional information about the audit and the financial statements (auditor discussion and analysis),
and (iv) disclosure of certain executive compensation related items such as the correlation between executive compensation and performance
and comparisons of the CEOs compensation to median employee compensation. These exemptions will apply for a period of five years
following the completion of our IPO or until we are longer an emerging growth company, whichever is earlier.
**Critical Accounting Estimates**
****
The preparation of financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and income and expenses during the periods reported. 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 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 materially differ from
those estimates. As of December 31, 2025, we did not have any critical accounting estimates to be disclosed.
**Recent Accounting Standards**
We do not believe that any
recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
For more information on
recently issued accounting standards, see Note 2 Summary of Significant Accounting Policies, to the Notes to Financial
Statements included herein.
**Commitments and Contractual Obligations**
****
**Registration Rights**
The holders of founder shares,
private placement warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of common
stock issuable upon the exercise of the private placement warrants and Working Capital Note Units), are entitled to certain registration
rights pursuant to a registration rights agreement (discussed in greater detail above in NOTE 6. COMMITMENTS AND CONTINGENCIES, under
Registration Rights to the notes to financial statements. These holders will be entitled to certain demand and piggy-back
registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.
****
70
****
**Underwriting Agreement**
The underwriters were entitled
to a cash underwriting discount of 0.75% of the gross proceeds of the Initial Public Offering, or $517,500, which was paid upon the closing
of the Initial Public Offering. Additionally, the underwriters are entitled to a deferred underwriting discount of 3.00% of the gross
proceeds of the Initial Public Offering, or $2,070,000, payable upon the closing of an initial Business Combination from the amounts
held in the trust account, as well as 120,750 representative shares with the fair value of $77,280 issued to the underwriters in connection
with closing of the Initial Public Offering.
The deferred fee will become
payable to the underwriter from the amounts held in the trust account solely in the event that the Company completes an initial Business
Combination, subject to the terms of the underwriting agreement.
**Common Stock Subject to Possible Redemption**
We account for our common
stock subject to possible redemption in accordance with the guidance in ASC Topic 480 Distinguishing Liabilities from Equity.
Shares of common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.
Shares of conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control
of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary
equity. At all other times, shares of common stock are classified as stockholders equity. Our common stock features certain redemption
rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of
December 31, 2025, 6,900,000 shares of common stock subject to possible redemption are presented as temporary equity, outside of the
stockholders equity section of our balance sheet.
**Net Income Per Common Share**
We comply with accounting
and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. The Company has two classes of shares, which are
referred to as redeemable common stock and non-redeemable common stock. Income and losses are shared pro rata between the two classes
of shares. Net income per common share is calculated by dividing the net income by the weighted average shares of common stock outstanding
for the respective period.
We have not considered the
effect of the warrants sold in the initial public offering and the concurrent private placement to purchase an aggregate of 7,165,000
warrants in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method.
As a result, diluted earnings per common share are the same as basic earnings per common share for the period.
****
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e)
of Regulation S-K ( 229.305(e)), the Company is not required to provide the information required by this Item as it is a smaller
reporting company, as defined by Rule 229.10(f)(1).
71
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
**CO2
ENERGY TRANSITION CORP.**
****
**TABLE
OF CONTENTS TO FINANCIAL STATEMENTS**
|
|
Page | |
|
Index
to Financial Statements |
| |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID #100) |
F-2 | |
|
Balance Sheets |
F-3 | |
|
Statements of Operations |
F-4 | |
|
Statements of Stockholders Deficit |
F-5 | |
|
Statements of Cash Flows |
F-6 | |
|
Notes to Financial Statements |
F-7 | |
F-1
**Report
of Independent Registered Public Accounting Firm**
****
To the Stockholders and the Board of Directors of
CO2 Energy Transition Corp.
**Opinion on the Financial Statements**
We have audited the accompanying balance sheets
of CO2 Energy Transition Corp. as of December 31, 2025 and 2024, and the related statements of operations, stockholders deficit,
and cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the financial
statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of CO2 Energy
Transition Corp. as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31,
2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.
**Explanatory Paragraph - Going Concern**
****
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the
Company is a Special Purpose Acquisition Corporation that was formed for the purpose of completing a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities on or before May22,
2026. The Company lacks the capital resources that are needed to fund its operations for a reasonable period of time, which is generally
considered to be one year from the issuance of the financial statements. These matters raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do
not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
**Basis for Opinion**
**
These financial statements are the responsibility
of the entitys management. Our responsibility is to express an opinion on these financial statements based on our audits. We are
a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required
to be independent with respect to CO2 Energy Transition Corp. in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. CO2 Energy Transition Corp. is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of
the entitys internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as CO2 Energy Transition Corp's
auditor since 2023.
New York, NY
March 13, 2026
PCAOB ID Number 100
F-2
**CO2
ENERGY TRANSITION CORP.**
**BALANCE
SHEETS**
****
|
| |
December31, 2025 | | |
December31, 2024 | | |
|
ASSETS | |
| | |
| | |
|
Current assets | |
| | |
| | |
|
Cash | |
$ | 287,601 | | |
$ | 953,069 | | |
|
Prepaid expenses | |
| 95,333 | | |
| 220,947 | | |
|
Total Current Assets | |
| 382,934 | | |
| 1,174,016 | | |
|
| |
| | | |
| | | |
|
Investments held in Trust Account | |
| 72,113,895 | | |
| 69,310,897 | | |
|
TOTAL ASSETS | |
$ | 72,496,829 | | |
$ | 70,484,913 | | |
|
| |
| | | |
| | | |
|
LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS DEFICIT | |
| | | |
| | | |
|
Current liabilities | |
| | | |
| | | |
|
Accounts payable and accrued expenses | |
$ | 142,278 | | |
$ | 297,787 | | |
|
Accrued offering costs | |
| 75,000 | | |
| 75,000 | | |
|
Income tax payable | |
| 576,103 | | |
| 61,039 | | |
|
Working Capital Noterelated party | |
| 11,730 | | |
| 11,730 | | |
|
Total Current Liabilities | |
| 805,111 | | |
| 445,556 | | |
|
Deferred underwriting fee | |
| 2,070,000 | | |
| 2,070,000 | | |
|
TOTAL LIABILITIES | |
| 2,875,111 | | |
| 2,515,556 | | |
|
| |
| | | |
| | | |
|
Common Stock Subject to Possible Redemption (Note 7) | |
| | | |
| | | |
|
Common stock subject to possible redemption, 6,900,000 shares issued and outstanding at redemption value of $10.35 and $10.03 per share as of December 31, 2025 and 2024, respectively | |
| 71,410,223 | | |
| 69,233,258 | | |
|
| |
| | | |
| | | |
|
STOCKHOLDERS DEFICIT | |
| | | |
| | | |
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at December 31, 2025 and 2024 | |
| | | |
| | | |
|
Common stock, $0.0001 par value; 40,000,000 shares authorized; 2,685,750 shares issued and outstanding at December 31, 2025 and 2024, respectively (excluding 6,900,000 shares subject to possible redemption) | |
| 269 | | |
| 269 | | |
|
Additional paid-in capital | |
| | | |
| | | |
|
Accumulated deficit | |
| (1,788,774 | ) | |
| (1,264,170 | ) | |
|
Total Stockholders Deficit | |
| (1,788,505 | ) | |
| (1,263,901 | ) | |
|
TOTAL LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS DEFICIT | |
$ | 72,496,829 | | |
$ | 70,484,913 | | |
**
*The
accompanying notes are an integral part of the financial statements.*
F-3
**CO2
ENERGY TRANSITION CORP.**
**STATEMENTS
OF OPERATIONS**
****
|
| |
For the Years Ended
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
General and administrative costs | |
$ | 646,306 | | |
$ | 246,139 | | |
|
Loss from operations | |
| (646,306 | ) | |
| (246,139 | ) | |
|
| |
| | | |
| | | |
|
Other (expense) income: | |
| | | |
| | | |
|
Interest expense | |
| (4,951 | ) | |
| (1,087 | ) | |
|
Interest earned on investments held in Trust Account | |
| 2,882,889 | | |
| 310,897 | | |
|
Total other income, net | |
| 2,877,938 | | |
| 309,810 | | |
|
| |
| | | |
| | | |
|
Income before provision for income taxes | |
| 2,231,632 | | |
| 63,671 | | |
|
Provision for income taxes | |
| (579,272 | ) | |
| (61,039 | ) | |
|
Net income | |
$ | 1,652,360 | | |
$ | 2,632 | | |
|
| |
| | | |
| | | |
|
Basic weighted average shares outstanding, common stock subject to possible redemption | |
| 6,900,000 | | |
| 735,246 | | |
|
Basic and diluted net income per share, common stock subject to possible redemption | |
$ | 0.17 | | |
$ | 0.00 | | |
|
Basic weighted average shares outstanding, non-redeemable common stock | |
| 2,685,750 | | |
| 2,073,072 | | |
|
Basic and diluted net income per share, non-redeemable common stock | |
$ | 0.17 | | |
$ | 0.00 | | |
****
*The
accompanying notes are an integral part of the financial statements.*
F-4
**CO2
ENERGY TRANSITION CORP.**
**STATEMENTS
OF CHANGES IN STOCKHOLDERS DEFICIT**
**FOR
THE YEARS ENDED DECEMBER 31, 2025 AND DECEMBER 31, 2024**
****
|
| |
Common Stock | | |
Additional Paid-in | | |
Accumulated | | |
Total Stockholders | | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | | |
|
BalanceJanuary1, 2024 | |
| 2,300,000 | | |
$ | 230 | | |
$ | 24,770 | | |
$ | (361,845 | ) | |
$ | (336,845 | ) | |
|
Accretion of common stock subject to redemption to redemption amount | |
| | | |
| | | |
| (3,511,194 | ) | |
| (904,957 | ) | |
| (4,416,151 | ) | |
|
Sale of 265,000 shares of common stock | |
| 265,000 | | |
| 27 | | |
| 2,649,973 | | |
| | | |
| 2,650,000 | | |
|
Fair Value of Public Warrants at issuance | |
| | | |
| | | |
| 207,000 | | |
| | | |
| 207,000 | | |
|
Fair value of representative shares deferred until IPO | |
| 120,750 | | |
| 12 | | |
| 77,268 | | |
| | | |
| 77,280 | | |
|
Fair value of rights included in Public units | |
| | | |
| | | |
| 621,000 | | |
| | | |
| 621,000 | | |
|
Allocated value of transaction costs to common stock | |
| | | |
| | | |
| (68,817 | ) | |
| | | |
| (68,817 | ) | |
|
Net income | |
| | | |
| | | |
| | | |
| 2,632 | | |
| 2,632 | | |
|
BalanceDecember31, 2024 | |
| 2,685,750 | | |
| 269 | | |
| | | |
| (1,264,170 | ) | |
| (1,263,901 | ) | |
|
Accretion of common stock subject to redemption to redemption amount | |
| | | |
| | | |
| | | |
| (2,176,965 | ) | |
| (2,176,965 | ) | |
|
Net income | |
| | | |
| | | |
| | | |
| 1,652,360 | | |
| 1,652,360 | | |
|
BalanceDecember31, 2025 | |
| 2,685,750 | | |
$ | 269 | | |
$ | | | |
$ | (1,788,774 | ) | |
$ | (1,788,505 | ) | |
****
*The
accompanying notes are an integral part of the financial statements.*
F-5
**CO2
ENERGY TRANSITION CORP.**
**STATEMENTS
OF CASH FLOWS**
****
|
| |
For the Years Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Cash Flows from Operating Activities: | |
| | |
| | |
|
Net income | |
$ | 1,652,360 | | |
$ | 2,632 | | |
|
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | | |
|
Operating expenses paid on behalf of the Company | |
| | | |
| 11,050 | | |
|
Interest earned on Investments held in Trust Account | |
| (2,882,889 | ) | |
| (310,897 | ) | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Prepaid expenses | |
| 125,614 | | |
| (220,947 | ) | |
|
Accounts payable and accrued expenses | |
| (155,508 | ) | |
| 151,534 | | |
|
Income tax payable | |
| 515,064 | | |
| 61,039 | | |
|
Net cash used in operating activities | |
| (745,359 | ) | |
| (305,589 | ) | |
|
| |
| | | |
| | | |
|
Cash Flows from Investing Activities: | |
| | | |
| | | |
|
Investment of cash in Trust Account | |
| | | |
| (69,000,000 | ) | |
|
Cash withdrawn from Trust Account for income and franchise taxes | |
| 79,891 | | |
| | | |
|
Net cash provided by (used in) investing activities | |
| 79,891 | | |
| (69,000,000 | ) | |
|
| |
| | | |
| | | |
|
Cash Flows from Financing Activities: | |
| | | |
| | | |
|
Proceeds from sale of Units, net of underwriting discounts paid | |
| | | |
| 68,482,500 | | |
|
Proceeds from sale of Private Units | |
| | | |
| 2,650,000 | | |
|
Proceeds from promissory note - related party | |
| | | |
| 129,800 | | |
|
Repayment of promissory note - related party | |
| | | |
| (562,000 | ) | |
|
Payment of offering costs | |
| | | |
| (443,754 | ) | |
|
Net cash provided by financing activities | |
| | | |
| 70,256,546 | | |
|
| |
| | | |
| | | |
|
Net Change in Cash | |
| (665,468 | ) | |
| 950,957 | | |
|
Cash Beginning of period | |
| 953,069 | | |
| 2,112 | | |
|
Cash End of year | |
$ | 287,601 | | |
$ | 953,069 | | |
|
| |
| | | |
| | | |
|
Non-cash investing and financing activities and cash paid for income taxes: | |
| | | |
| | | |
|
Deferred offering costs included in accrued offering costs | |
$ | | | |
$ | 3,635 | | |
|
Amounts reclassified to promissory note | |
$ | 11,730 | | |
$ | | | |
|
Cash paid for income taxes | |
$ | 64,208 | | |
$ | | | |
*The
accompanying notes are an integral part of the financial statements.*
F-6
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
**NOTE
1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN**
CO2
Energy Transition Corp. (the Company) was incorporated in Delaware on September30, 2021. The Company was formed for
the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (the Business Combination). The Company is not limited to a particular industry or sector for
purposes of consummating a Business Combination. While the Company may pursue an initial Business Combination target in any industry
or geographic location, the Company intends to focus its search for a target business in the transitional energy sector. The Company
is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and
emerging growth companies.
As
of December 31, 2025, the Company had not commenced any operations. All activity for the period from September30, 2021 (inception)
through December 31, 2025, relates to the Companys formation, the initial public offering (the Initial Public Offering),
which is described below and identifying a target company for a Business Combination. 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 interest income from the proceeds derived from the Initial Public Offering.
The
registration statement for the Companys Initial Public Offering was declared effective on November 12, 2024. On November 22, 2024,
the Company consummated the Initial Public Offering of 6,900,000 units, with each unit consisting of one share of our common stock, one
redeemable warrant, and one right (the Units and, with respect to the shares of common stock included in the Units offered,
the Public Shares), which includes the full exercise by the underwriters of their over-allotment option in the amount of
900,000 Units, at $10.00 per Unit, generating gross proceeds of $69,000,000 which is described in Note 3. Each warrant entitles the holder
thereof to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment as provided herein and each eight
rights entitle the holder thereof to receive one share of common stock at the closing of a Business Combination.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 265,000 units (the Private Units)
at a price of $10.00 per Private Unit in a private placement to the Companys sponsor, CO2 Energy Transition, LLC (the Sponsor),
generating gross proceeds of $2,650,000, which is described in Note 4. Each Private Unit consists of one share of our common stock, one
redeemable warrant, and one right with respect to the shares of common stock. Each warrant entitles the holder thereof to purchase one
share of our common stock at a price of $11.50 per share, subject to adjustment and each eight rights entitle the holder thereof to receive
one share of common stock at the closing of a Business Combination.
Transaction
costs amounted to $3,423,710 consisting of $517,500 of cash underwriting discount, $2,070,000 of deferred underwriting fees, $77,280
fair value of Representative Shares (as defined in Note 8), and $758,930 of other offering costs.
On
November 22, 2024, in connection with the closing of the Initial Public Offering, the underwriters were entitled to a cash underwriting
discount of 0.75% of the gross proceeds of the Initial Public Offering, or $517,500, which was paid upon the closing of the Initial Public
Offering. Additionally, the underwriters were entitled to a deferred underwriting discount of 3.00% of the gross proceeds of the Initial
Public Offering, or $2,070,000, payable upon the closing of an initial Business Combination from the amounts held in the Trust Account,
as well as 120,750 representative shares with the fair value of $77,280 issued to the underwriters in connection with the closing of
the Initial Public Offering.
****
There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more
initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the
net assets held in the Trust Account (as defined below) (excluding any deferred underwriting discounts). The Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of
the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as
an investment company under the Investment Company Actof1940, as amended (the Investment Company
Act).
F-7
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
Following
the closing of the Initial Public Offering, on November 22, 2024, an amount of $69,000,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (Trust Account),
located in the UnitedStates and invested only in U.S.government securities, within the meaning set forth in Section2(a)(16)of
the Investment Company Act, with a maturity of 185days or less or in any open-ended investment company that holds itself out as
a money market fund selected by the Company meeting certain conditions of Rule2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of (i)the completion of a Business Combination, and (ii)the distribution of the funds held
in the Trust Account, as described below.
The
Company will provide the holders of the outstanding Public Shares (the Public Stockholders) with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i)in connection with a stockholder
meeting called to approve the Business Combination or (ii)by means of a tender offer. The decision as to whether the Company will
seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public
Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion
of a Business Combination with respect to the Companys warrants.
The
Company will only proceed with a Business Combination if the Company seeks stockholder approval, and a majority of the shares voted are
voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements
and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and
Restated Certificate of Incorporation (the Certificate of Incorporation), conduct the redemptions pursuant to the tender
offer rules of the U.S.Securities and Exchange Commission (SEC) and file tender offer documents with the SEC prior
to completing a Business Combination.
If,
however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company
decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy
solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection
with a Business Combination, the holders of the Companys shares prior to the Initial Public Offering (the Initial Stockholders)
have agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering
in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting,
and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the
tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a group (as defined under Section13 of
the Securities ExchangeActof1934, as amended (the ExchangeAct)), will be restricted from redeeming
its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.
F-8
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The
Initial Stockholders have agreed (a)to waive their redemption rights with respect to the Founder Shares and Public Shares held
by them in connection with the completion of a Business Combination, (b)to waive their liquidation rights with respect to the
Founder Shares if the Company fails to complete a Business Combination within 18months (or up to 24months in certain
circumstances, discussed below) from the closing of the Initial Public Offering, and (c)not to propose an amendment to the
Certificate of Incorporation (i)to modify the substance or timing of the Companys obligation to allow redemptions in
connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business
Combination within the Combination Period (as defined below) or (ii)with respect to any other provision relating to
stockholders rights or pre-business combination activity, unless the Company provides the Public Stockholders with the
opportunity to redeem their Public Shares in conjunction with any such amendment. However, if the Sponsor acquires Public Shares in
or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the
Company fails to complete a Business Combination within the Combination Period. If the Board of Directors anticipates that the
Company may not be able to consummate an initial business combination by May 22, 2026, the Board of Directors, by resolution, may
extend the period of time to consummate an initial Business Combination up to six times, each by an additional one month (for a
total of up to 24 months to complete a Business Combination). In order to extend the time available for the Company to consummate an
initial Business Combination, our sponsor or its affiliates or designees must deposit into the trust account $229,700 ($0.0333 per
share) on or prior to the date of the applicable deadline, for each one-month extension.
The
Company will have until 18months (or up to 24months if the Company extends the period of time to consummate a Business Combination)
from the closing of the Initial Public Offering to complete a Business Combination (the Combination Period). If the Company
has not completed a 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 tenbusinessdays 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 pay taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders
rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii)as promptly as reasonably
possible following such redemption, subject to the approval of the Companys remaining stockholders and the Companys board
of directors, dissolve and liquidate, subject in each case to the Companys obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to the Companys warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination
Period.
The
Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares and shares of common stock part
of, and issuable in connection with, the Private Placement Units, if the Company fails to complete a Business Combination within the
Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the Initial Public Offering, such Public Shares
will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the
Combination Period.
As
of January 16, 2025, the holders of the Units issued in the Companys Initial Public Offering have the right to elect to separately
trade the Public Shares, the Public Warrants and Public Rights included in the Units. No fractional Public Rights will be issued upon
separation of the Units and only whole Public Rights will trade. The Public Shares, Public Warrants and Public Rights that are separated
will trade on the Nasdaq Global Market (Nasdaq) under the symbols NOEM, NOEMW and NOEMR,
respectively. Those Units not separated will continue to trade on the Nasdaq under the symbol NOEMU.
**Risks
and Uncertainties**
The
United States and global markets have experienced, and may continue to experience, significant volatility and disruption as a result
of geopolitical instability, including the ongoing Russia-Ukraine conflict, an escalation of the ongoing Israel-Hamas conflict and
broader instability in the Middle East, as well as other existing or emerging geopolitical tensions. In response to the
Russia-Ukraine conflict, the North Atlantic Treaty Organization (NATO) has deployed additional military forces to
eastern Europe, and the United States, the United Kingdom, the European Union and other countries have imposed extensive sanctions
and other restrictive measures against Russia, Belarus and related individuals and entities, including restrictions on certain
financial institutions and access to global payment systems. Certain countries, including the United States, have also provided, and
may continue to provide, military aid or other assistance to Ukraine and to Israel, which may further increase geopolitical tensions
among a number of nations.
F-9
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
These
conflicts and related developments have heightened global security concerns and have contributed to, and may continue to contribute to,
significant volatility in commodity prices (including energy), inflationary pressures, disruptions to global trade routes and supply
chains, instability and reduced liquidity in credit and capital markets, heightened interest rates, increased cyberattacks (including
state-sponsored or retaliatory cyber activity) and a decrease in willingness of investors to embrace risk. In addition, current and future
sanctions, export controls, foreign investment restrictions and other regulatory actions could increase compliance costs, limit business
operations or financing alternatives, or adversely affect the ability of companies to engage in cross-border transactions.
Although
the duration, scope and ultimate impact of these conflicts and related geopolitical developments are highly uncertain and difficult to
predict, any escalation, continuation or expansion of these or other geopolitical events could adversely affect global economic conditions
and financial markets. Any of these factors, or other negative impacts on the global economy, capital markets or geopolitical conditions,
could materially and adversely affect the Companys ability to identify, negotiate and consummate an initial Business Combination,
including by limiting the availability of financing, reducing the number of attractive target businesses, increasing transaction costs,
delaying transaction timelines or adversely affecting the operations, valuation or prospects of any target business with which the Company
may ultimately consummate, or seek to consummate, an initial Business Combination.
**Liquidity,
Capital Resources and Going Concern**
****
As
of December 31, 2025, the Company had $287,601 in cash and a workingcapital deficit of $422,177. The Companys liquidity
needs through December 31, 2025, have been satisfied through proceeds from the consummation of the Initial Public Offering on November
22, 2024, as well as the issuance of the $1,500,000 promissory note to the Sponsor on April 15, 2025, which was dated
March 31, 2025, and borrowings thereunder. The Company withdrew $79,891 for payment of income and franchise taxes in 2025.
In
addition, if the Company is unable to complete a Business Combination by May 22, 2026, unless extended further for up to 6 months, then
the Company will cease all operations except for the purpose of liquidating. The Company cannot be assured that its plans to consummate
an initial Business Combination will be successful.
In
connection with the Companys assessment of going concern considerations in accordance with Accounting Standards Codification (ASC)
205-40 Going Concern, Management has determined that the potential liquidity shortfall and the mandatory liquidation raise
substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
required to liquidate after May 22, 2026.
**NOTE
2. SIGNIFICANT ACCOUNTING POLICIES**
****
**Basis
of Presentation**
The
accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America
(GAAP) and pursuant to the rules and regulations of the SEC.
**Emerging
Growth Company**
The
Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (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, 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 stockholder approval of any golden parachute payments not previously approved.
F-10
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
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 Companys financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which 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 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 financial statements and the
reported amounts of expenses during the reporting period.
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 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.
As of December 31, 2025 and 2024, the Company had $287,601 and $953,069 in cash, respectively, and no cash equivalents.
**Investments
in Trust Account**
As
of December 31, 2025 and 2024, the assets held in the Trust Account were held in money market funds which are invested primarily in U.S.
government securities. The Company accounts for its investments as trading securities under ASC 320 InvestmentsDebt and
Equity Securities, where securities are presented at fair value on the balance sheets. Gains and losses resulting from the change
in fair value of investments held in the Trust Account are included in interest earned on investments held in the Trust Account in the
statements of operations.
**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 $250,000. Any loss incurred or a lack of access
to such funds could have a significant adverse impact on the Companys financial condition, results of operations, and cash flows.****
F-11
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**Offering
Costs**
The
Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin Topic5A, Expenses of Offering.
Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. Financial Accounting
Standards Board (FASB) ASC470-20, 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 applies this guidance to allocate
Initial Public Offering proceeds from the Unitsbetween common stock, warrants, and rights, using the residual method by allocating
Initial Public Offering proceeds first to the assigned value of the warrants and rights and then to the common stock. Offering costs
allocated to Public Shares were charged to temporary equity, and offering costs allocated to Public Rights, Public Warrants and Private
Units were charged to stockholders deficit, as Public and Private Rights and Warrants, after managements evaluation, were
accounted for under equity treatment.
****
**Fair
Value of Financial Instruments**
The
fair value of the Companys assets and liabilities, which qualify as financial instruments under FASB ASC820, Fair
Value Measurements and Disclosures, approximates the carrying amounts represented in the balance sheets, primarily due to its
short-term nature.
**Income
Taxes**
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes. Deferred tax
assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
The
Company accounts for income taxes under ASC 740, Income Taxes (ASC 740). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets
and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not
be realized. As of December 31, 2025 and 2024, the Company had a full valuation allowance against the deferred tax assets.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in a companys financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition.
The Companys effective tax rate was 26.0% and 95.9% for the years ended December 31, 2025, and 2024, respectively. The effective
tax rate differs from the statutory tax rate of 21% due to the valuation allowance on the deferred tax assets.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of December 31, 2025 and 2024. The Company is currently not aware of
any issues under review that could result in significant payments, accruals or material deviation from its position.
F-12
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
The
Company has identified the United States as its only major tax jurisdiction. The Company may be subject to potential examination
by federal and state taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing
and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Companys
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
**Net
Income per Common Stock Share**
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. The Company has
two classes of shares outstanding, which are referred to as redeemable common stock and non-redeemable common stock. Income and losses
are shared pro rata between the two classes of shares. Net income per common share is calculated by dividing the net income by the weighted
average shares of common stock outstanding for the respective period.
The
calculation of diluted net income does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering
(including the consummation of the Over-allotment) and the private placement warrants to purchase an aggregate of 7,165,000 shares of
common stock in the calculation of diluted income per share, because their exercise is contingent upon future events. As a result, diluted
net income per share is the same as basic net income per share for the three and nine months ended December 31, 2025 and 2024. Accretion
associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
The
following table reflects the calculation of basic and diluted net income per common stock share:
|
| |
FortheYearsEnded December 31, | | |
|
| |
2025 | | |
2024 | | |
|
| |
Redeemable | | |
Non-redeemable | | |
Redeemable | | |
Non-redeemable | | |
|
Basic and diluted net income per common stock share | |
| | |
| | |
| | |
| | |
|
Numerator: | |
| | |
| | |
| | |
| | |
|
Allocation of net income | |
$ | 1,189,400 | | |
$ | 462,961 | | |
$ | 689 | | |
$ | 1,943 | | |
|
Denominator: | |
| | | |
| | | |
| | | |
| | | |
|
Basic and diluted weighted average common stock outstanding | |
| 6,900,000 | | |
| 2,685,750 | | |
| 735,246 | | |
| 2,073,072 | | |
|
Basic and diluted net income per common stock share | |
$ | 0.17 | | |
$ | 0.17 | | |
$ | 0.00 | | |
$ | 0.00 | | |
****
**Derivative
Financial Instruments**
The
Company accounts for derivative financial instruments in accordance with ASC 815, Derivatives and Hedging. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance
and remeasured at each reporting date, with changes in the fair value reported in the statements of operations. The classification of
derivative financial instruments is evaluated at the end of each reporting period. There were no derivative financial instruments as
of December 31, 2025 and 2024.
**Warrant
and Right Instruments**
The
Company accounted for the Public Warrants and Private Warrants and Public Rights and Private Rights issued in connection with the Initial
Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815 Derivatives and Hedging.
Accordingly, the Company evaluated and classified the warrant and right instruments under equity treatment.
F-13
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**Common
Stock Subject to Possible Redemption**
The
Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Companys
liquidation, or if there is a stockholder vote or tender offer in connection with the Companys initial Business Combination. In
accordance with ASC 480-10-S99, the Company classifies Public Shares subject to redemption outside of permanent equity as the redemption
provisions are not solely within the control of the Company. The Public Shares sold as part of the Units in the Initial Public Offering
were issued with other freestanding instruments (i.e., Public Warrants and Public Rights) and as such, the initial carrying value of
Public Shares classified as temporary equity are the allocated proceeds determined in accordance with ASC 470-20. The Company recognizes
changes in redemption value immediately as it occurs and will adjust 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 shares will result in charges against
additional paid-in capital (to the extent available) and accumulated deficit. Accordingly, at December 31, 2025 and 2024, common stock
subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders deficit section
of the Companys balance sheets, respectively. At December 31, 2025 and 2024, the common stock subject to possible redemption reflected
in the balance sheets is reconciled in the following table:
|
Gross proceeds | |
$ | 69,000,000 | | |
|
Less: | |
| | | |
|
Proceeds allocated to Public Warrants | |
| (207,000 | ) | |
|
Proceeds allocated to Public Rights | |
| (621,000 | ) | |
|
Common stock issuance costs | |
| (3,354,893 | ) | |
|
Plus: | |
| | | |
|
Remeasurement of carrying value to redemption value | |
| 4,416,151 | | |
|
Common stock subject to possible redemption, December 31, 2024 | |
$ | 69,233,258 | | |
|
Plus: | |
| | | |
|
Remeasurement of carrying value to redemption value | |
| 2,176,965 | | |
|
Common stock subject to possible redemption, December 31, 2025 | |
$ | 71,410,223 | | |
**Recent
Accounting Standards**
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Companys financial statements.
**NOTE
3. INITIAL PUBLIC OFFERING**
In
the Initial Public Offering which closed on November 22, 2024, the Company sold 6,900,000 Units, at a purchase price of $10.00 per Unit,
which includes the full exercise by the underwriters of their over-allotment option in the amount of 900,000 Units. Each Unit consists
of one share of common stock, one right (Public Right) and one redeemable warrant (Public Warrant). Each
Public Right entitles the holder thereof to receive one-eighth (1/8) of one share of common stock upon the consummation of a Business
Combination (see Note 7). Each Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50
per share (see Note 7).
**NOTE
4. PRIVATE PLACEMENT**
****
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 265,000 Private Units at a price of $10.00
per Private Unit, for an aggregate purchase price of $2,650,000 in a private placement. Each Private Unit consists of one Private
Share, one right (Private Right) and one redeemable warrant (Private Warrant). Each Private Right
entitles the holder thereof to receive one-eighth (1/8) of one share of common stock upon the consummation of a Business Combination
(see Note 7). Each whole Private Warrant is exercisable for one share of common stock at a price of $11.50 per share, subject to
adjustment (see Note 7). The proceeds from the sale of the Private Units were added to the net proceeds from the Initial Public
Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the
proceeds from the sale of the Private Units held in the Trust Account will be used to fund the redemption of the Public Shares
(subject to the requirements of applicable law) and the Private Units and all underlying securities will expire
worthless.
F-14
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**NOTE
5. RELATED PARTIES**
****
**Founder
Shares**
****
On
January13, 2022, the Sponsor entered into a subscription agreement and paid $25,000 to cover certain offering costs of the Company
in consideration for 3,593,750 shares of common stock (the Founder Shares). In connection with a reduction in the planned
size of the Initial Public Offering, the Sponsor amended and restated the subscription agreement on October10, 2022 to provide
for a subscription of 2,300,000 shares of common stock. On December28, 2022, in connection with a change in the terms of the offering,
the Sponsor further amended and restated the subscription agreement to provide for a subscription of 3,066,667 shares of common stock.
On December1, 2023, the Sponsor further amended and restated the subscription agreement to provide for a subscription of 2,300,000
shares of common stock. All shares have been retrospectively presented so that the total Founder Shares issued total 2,300,000 shares
of common stock. The Founder Shares included an aggregate of up to 300,000 shares subject to forfeiture to the extent that the underwriters
over-allotment was not exercised in full, so that the number of Founder Shares would equal, on an as-converted basis, approximately 25%
of the Companys issued and outstanding common stock after the Initial Public Offering (assuming the Sponsor did not purchase any
Public Shares in the Initial Public Offering). At the closing of the Initial Public Offering on November 22, 2024, the underwriters exercised
their over-allotment option in full. As such, the 300,000 Founder Shares are no longer subject to forfeiture.
The
Initial Stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the
earlier to occur of (A)one year after the completion of a Business Combination and (B)subsequent to a Business Combination,
(x)if the last reported sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
capitalizations, reorganizations, recapitalizations and the like) for any 20tradingdays within any 30-tradingday period
commencing at least 150days after a Business Combination, or (y)the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their
shares of common stock for cash, securities or other property.
**Promissory
NoteRelated Party**
On
January8, 2022, the Sponsor issued an unsecured promissory note to the Company (the Promissory Note), pursuant to
which the Company could borrow up to an aggregate principal amount of $400,000. On February15, 2023, the Company amended the Promissory
Notes principal amount from $400,000 to $450,000. On April20, 2024, the Company further amended the Promissory Notes
principal amount from $450,000 to $800,000. The Promissory Note was non-interest bearing and payable on the earlier of (i)December31,
2025, or (ii)the consummation of the Initial Public Offering. As of December 31, 2025 and 2024, there was $0 and $11,730 outstanding
under the Promissory Note, respectively. On November 22, 2024, upon the closing of the Initial Public Offering, the Company repaid the
note and borrowings with the exception of $11,730, which was rolled into the Working Capital Note issued by the Company on April 15,
2025, as described below.
**Working
Capital Loans**
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Companys officers and directors may, but are not obligated to, loan the Company funds as may be required
(Working Capital Loans). If the Company completes a Business Combination, the Company would repay the Working Capital
Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only
out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be
used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon
consummation of a Business Combination, without interest, or, at the lenders discretion, up to $1,500,000 of such Working
Capital Loans may be convertible into units at a price of $10.00 per unit. The units would be identical to the Private Placement
Units. As of December 31, 2024, no such Working Capital Loans were outstanding.
F-15
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
On
April 15, 2025, the Company entered into a convertible promissory note dated March 31, 2025 (the Working Capital Note)
with its Sponsor. Pursuant to the Working Capital Note, the Company may request, and in the sole discretion of the Sponsor, the Sponsor
may loan the Company, drawdowns of up to an aggregate of $1,500,000 in principal from time to time, less $11,730 which was advanced prior
to the execution of the Working Capital Note, and included as outstanding thereunder, with such amounts to be used for working capital.
Amounts
owed under the Working Capital Note do not accrue interest and are payable on the earlier of: (i) the effective date of the consummation
of the Companys Business Combination; or (ii) the date that the winding up of the Company is effective (such date, as applicable,
the Maturity Date), unless accelerated upon the occurrence of an Event of Default (as defined in the Working Capital Note).
Amounts
outstanding under the Working Capital Note, are convertible, at the option of the Sponsor, into units of the Company (Working
Capital Note Units), at a conversion price of $10.00 per Working Capital Note Unit. The Working Capital Note Units will be identical
to the Private Units issued to the Sponsor at the time of the Companys Initial Public Offering.
As
of December 31, 2025 and 2024, $11,730 and $0, respectively, was outstanding under the Working Capital Note.
****
**Administrative
Services Agreement**
****
The
Company entered into an agreement, commencing on November 12, 2024 through the earlier of consummation of the initial Business Combination
and the Companys liquidation, to pay the Sponsor $10,000 per month for office space, utilities, secretarial support and other
administrative and consulting services. For the year ended December 31, 2025, the Company had incurred and paid $120,000 of administrative
services fees. For the year ended December 31, 2024, the Company had incurred and paid $3,667 of administrative services fees. The administrative
services fees are included in General and administrative costs in the Companys statements of operations.
**NOTE
6. COMMITMENTS AND CONTINGENCIES **
**Registration
Rights**
The
holders of the Founder Shares, Private Placement Unitsand any units that may be issued upon conversion of the Working Capital Note
(and any common stock issuable upon the exercise of the Private Placement Units and Working Capital Note Units) have rights to require
the Company to register any of the securities held by them for resale under the Securities Act pursuant to a registration and stockholder
rights agreement signed on the effective date of the Initial Public Offering. These holders are entitled to make up to three demands,
excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition,
these holders have piggyback registration rights to include their securities in other registration statements filed by
the Company. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from
delays in registering the Companys securities. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
F-16
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
**Underwriting
Agreement**
The
Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 900,000 additional Units
to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On November 22,
2024, simultaneously with the closing of the Initial Public Offering, the underwriters elected to fully exercise the over-allotment option
to purchase an additional 900,000 Units at a price of $10.00 per Unit.
The
underwriters were entitled to a cash underwriting discount of 0.75% of the gross proceeds of the Initial Public Offering, or $517,500,
which was paid upon the closing of the Initial Public Offering. Additionally, the underwriters are entitled to a deferred underwriting
discount of 3.00% of the gross proceeds of the Initial Public Offering, or $2,070,000, payable upon the closing of an initial Business
Combination from the amounts held in the Trust Account, as well as 120,750 representative shares with the fair value of $77,280 issued
to the underwriters in connection with the closing of the Initial Public Offering.
**NOTE
7. STOCKHOLDERS DEFICIT**
****
**Preferred
Stock** The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with
such designation, rights and preferences as may be determined from time to time by the Companys board of directors. As of December
31, 2025 and 2024, there were no shares of preferred stock issued and outstanding.
****
**Common
Stock**The Company is authorized to issue 40,000,000 shares of common stock with a par value of $0.0001 per
share. Holders of common stock are entitled to one vote for each share. As of December 31, 2025 and 2024, 2,685,750 shares of common
stock are issued and outstanding respectively, excluding 6,900,000 shares of common stock subject to possible redemption.
****
**Rights
** Each holder of a right will receive one-eighth (1/8) of one share of common stock upon consummation of a Business Combination,
even if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will
be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive
its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit
purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business
Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to
receive the same per share consideration the holders of the common stock will receive in the transaction on an as-converted into common
stock basis and each holder of a right will be required to affirmatively convert its rights in order to receive 1/8 of one share underlying
each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except
to the extent held by affiliates of the Company).
As
of December 31, 2025 and 2024, there were 6,900,000 rights related to the Initial Public Offering and 265,000 rights related to Private
Units, outstanding.
If
the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the
Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution
from the Companys assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless.
Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business
Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire
worthless.
****
**Warrants
**The Public Warrants were to become exercisable on the later of (a)30days after the completion of a Business
Combination and (b)12months from the closing of the Initial Public Offering, and as such, became exercisable on November
22, 2025. The Public Warrants will expire fiveyears from the completion of a Business Combination or earlier upon redemption or
liquidation.
F-17
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
No
warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the common stock
issuable upon exercise of the warrants and a current prospectus relating to such common stock. Notwithstanding the foregoing, if a registration
statement covering the common stock issuable upon exercise of the Public Warrants is not effective within 60 business days following
the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and
during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis pursuant to the exemption provided by Section3(a)(9) of the Securities Act, provided that such exemption is available.
Once
the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:
|
| in
whole and not in part; |
|
|
| at
a price of $0.01 per Public Warrant; |
|
|
| upon
not less than 30days prior written notice of redemption to each warrant holder; |
|
|
| if,
and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading day period commencing after the warrants
become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and |
|
|
| if,
and only if, there is a current registration statement in effect with respect to the common stock underlying such warrants. |
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a cashless basis, as described in the warrant agreement. The exercise price and number of shares
of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share
dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the
Public Warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will
the Company be required to net cash settle the Public Rights or Public Warrants. If the Company is unable to complete a Business Combination
within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive
any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Companys assets held
outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Rights and Public Warrants may expire worthless.
In
addition, if (x)the Company issues additional common stock or equity-linked securities for capital raising purposes in connection
with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of common stock (with
such issue price or effective issue price to be determined in good faith by the Companys board of directors, and in the case of
any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates,
as applicable, prior to such issuance) (the Newly Issued Price), (y)the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the
date of the completion of a Business Combination (net of redemptions), and (z)the volume weighted average trading price of the
Companys common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates
a Business Combination (such price, the Market Value) is below $9.20 per share, the exercise price of the Public Warrants
will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value or the Newly Issued Price, and the $18.00
per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market
Value or the Newly Issued Price.
F-18
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
The
Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Warrants and the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until
30days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants
will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will
be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
As
of December 31, 2025 and 2024, there were 6,900,000 Public Warrants and 265,000 Private Warrants outstanding.
**NOTE
8. REPRESENTATIVE SHARES**
****
Simultaneously
with the closing of the Initial Public Offering on November 22, 2024, the Company issued Kingswood Capital Partners LLC, the representative
of the underwriters (Kingswood), 120,750 shares of common stock (the Representative Shares). The Company
estimated the value of the Representative Shares to be $77,280. Kingswood has agreed not to transfer, assign or sell any such shares
until the completion of the initial Business Combination. In addition, Kingswood has agreed (i) to waive its redemption rights with respect
to such shares in connection with the completion of an initial Business Combination and (ii) to waive its rights to liquidating distributions
from the Trust Account with respect to such shares if the Company fails to complete an initial Business Combination within the Combination
Period.
The
Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately
following the effective date of the Initial Public Offering pursuant to Rule 5110(e)(1) of FINRAs NASD Conduct Rules. Pursuant
to FINRA Rule 5110(e)(1), these securities may not be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the effective date of the Initial Public Offering, nor may they be sold, transferred, assigned, pledged
or hypothecated for a period of 180 days immediately following the effective date of the Initial Public Offering except to any underwriter
and selected dealer participating in the Initial Public Offering and their bona fide officers or partners, registered persons or affiliates
or as otherwise permitted under Rule 5110(e)(2), and only if any such transferee agrees to the foregoing lock-up restrictions.
**NOTE
9. INCOME TAXES**
The
Companys net deferred tax assets are as follows:
|
| |
December31, | | |
December31, | | |
|
| |
2025 | | |
2024 | | |
|
Deferred tax assets | |
| | | |
| | | |
|
Net operating loss carryforward | |
$ | - | | |
$ | - | | |
|
Startup Costs | |
| 248,509 | | |
| 137,879 | | |
|
Total deferred tax assets | |
| 248,509 | | |
| 137,879 | | |
|
Valuation allowance | |
| (248,509 | ) | |
| (137,879 | ) | |
|
Deferred tax assets, net of allowance | |
$ | - | | |
$ | - | | |
The
income tax provision for the years ended December 31, 2025 and 2024 consists of the following:
|
| |
December31, | | |
December31, | | |
|
| |
2025 | | |
2024 | | |
|
Federal | |
| | | |
| | | |
|
Current | |
$ | 579,272 | | |
$ | 61,039 | | |
|
| |
| | | |
| | | |
|
Deferred | |
| (110,630 | ) | |
| (47,668 | ) | |
|
State | |
| | | |
| | | |
|
Current | |
$ | | | |
$ | | | |
|
Deferred | |
| | | |
| | | |
|
Change in valuation allowance | |
| 110,630 | | |
| 47,668 | | |
|
Income tax provision | |
$ | 579,272 | | |
$ | 61,039 | | |
As
of December31, 2025 and 2024, the Company had a total of $0 and $0, respectively, of U.S. federal net operating loss carryovers
available to offset future taxable income. The federal net operating loss can be carried forward indefinitely.
F-19
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
In
assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment. After consideration of all of the information available, management believes that significant uncertainty
exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the
years ended December31, 2025 and 2024, the change in the valuation allowance was $110,630 and $47,668 respectively.
A
reconciliation of the federal income tax rate to the Companys effective tax rate is as follows:
|
| |
December31, | | |
December31, | | |
|
| |
2025 | | |
2024 | | |
|
Statutory federal income tax rate | |
| 21.0 | % | |
| 21.0 | % | |
|
State taxes, net of federal tax benefit | |
| 0.0 | % | |
| 0.0 | % | |
|
Change in fair value of warrants | |
| 0.0 | % | |
| 0.0 | % | |
|
Change in valuation allowance | |
| 5.0 | % | |
| 74.9 | % | |
|
Income tax provision | |
| 26.0 | % | |
| 95.9 | % | |
The
Companys effective tax rates for the periods presented differ from the expected (statutory) rates due to changes in fair value
in warrants, transaction costs associated with warrants and the recording of full valuation allowances on deferred tax assets.
The
Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination
by the various taxing authorities.
**NOTE
10.FAIR VALUE MEASUREMENTS**
ASC820,
Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. Fair value measurements are classified on a three-tier hierarchy as
follows:
|
| Level1
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
|
| Level2
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and |
|
|
| Level3
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers
are unobservable. |
|
****
F-20
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
The
following table presents information about the Companys assets that are measured at fair value on a recurring basis at December
31, 2025 and 2024, indicating the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
****
|
Description | |
Level | |
December31, 2025 | | |
December31, 2024 | | |
|
Assets: | |
| |
| | |
| | |
|
Investments held in Trust Account | |
1 | |
$ | 72,113,895 | | |
$ | 69,310,897 | | |
****
As
of December 31, 2025 and 2024, the assets held in the Trust Account were held in money market funds which are invested primarily in U.S.
government securities.
The
fair value of the Representative Shares was determined using the Monte Carlo Simulation Model. The Representative Shares have been allocated
between temporary equity and stockholders deficit and will not require remeasurement after issuance. The following table presents
the quantitative information regarding market assumptions used in the valuation of the Representative Shares:
|
| |
November22, 2024 | | |
|
Implied common stock price | |
$ | 9.88 | | |
|
Lockup Term (years) | |
| 0.5 | | |
|
Probability of De-SPAC and Market Adjustment | |
| 7.5 | % | |
|
Discount for Lack of Marketability | |
$ | (0.10 | ) | |
The
fair value of Public Rights was determined using the Monte Carlo Simulation Model. The Public Rights have been classified within stockholders
deficit and will not require remeasurement after issuance. The following table presents the quantitative information regarding market
assumptions used in the valuation of the Public Rights:
|
| |
November22, 2024 | | |
|
Traded price of Unit | |
$ | 9.98 | | |
|
Expected Term to De-SPAC (Years) | |
| 1.5 | | |
|
Probability of De-SPAC and Market Adjustment | |
| 7.5 | % | |
|
Risk-free rate | |
$ | 4.45 | % | |
|
Implied common stock price | |
$ | 9.88 | | |
|
Fair value per share right | |
$ | 0.09 | | |
The
fair value of the Public Warrants was determined using the Monte Carlo Simulation Model. The Public Warrants have been classified within
stockholders deficit and will not require remeasurement after issuance. The following table presents the quantitative information
regarding market assumptions used in the valuation of the Public Warrants:
|
| |
November22,
2024 | | |
|
Expected Term to De-SPAC (Years) | |
| 1.5 | | |
|
Warrant Term | |
| 6.5 | | |
|
Implied common stock price | |
$ | 9.88 | | |
|
Exercise price | |
| 11.50 | | |
|
Risk-free rate | |
| 4.35 | % | |
|
Probability of De-SPAC and Market Adjustment | |
| 2.5 | % | |
|
Fair value per share warrant | |
$ | 0.03 | | |
F-21
**CO2
ENERGY TRANSITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2025**
****
**NOTE
11.SEGMENT INFORMATION**
****
ASC
Topic 280,Segment Reporting, establishes standards for companies to report in their financial statement 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 Companys chief operating
decision maker (CODM), or group, in deciding how to allocate resources and assess performance.
The
Companys CODM has been identified as its Chief Financial Officer, who reviews the operating results for the Company as a whole
to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company
only has one reportable operating segment.
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 statements of operations as net income or loss. The measure of segment assets is reported on the balance sheets as total assets.
When evaluating the Companys performance and making key decisions regarding resource allocation, the CODM reviews several key
metrics, which include the following:
|
| |
For the Years Ended
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
General and administrative expenses | |
$ | 646,306 | | |
$ | 246,139 | | |
|
Interest earned on the Trust Account | |
$ | 2,882,889 | | |
$ | 310,897 | | |
|
| |
December31, 2025 | | |
December31, 2024 | | |
|
Cash | |
$ | 287,601 | | |
$ | 953,069 | | |
|
Investments held in Trust Account | |
$ | 72,113,895 | | |
$ | 69,310,897 | | |
The
CODM reviews interest earned on the Trust Account to measure and monitor stockholders value and determine the most effective strategy
of investment with the Trust Account funds while maintaining compliance with the trust agreement. General and administrative expenses
are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination
within the Business 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 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 statements of operations and described within their respective disclosures.
****
**NOTE
12.SUBSEQUENT EVENTS**
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.
F-22
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
****
None.
ITEM
9A. CONTROLS AND PROCEDURES
****
**Evaluation
of Disclosure Controls and Procedures**
****
Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (our
principal executive officer and principal accounting/financial officer), Mr. Brady Rodgers and Mr. Harold R. DeMoss III, respectively,
we conducted 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, as of the end of the period covered by this Annual Report. Our disclosure controls
and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules
and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosures. Based on this evaluation, our Chief Executive Officer and
our Chief Financial Officer concluded that as of December 31, 2025, the design and operation of our disclosure controls and procedures
were effective.
**Limitations
on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting**
In
designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must
reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of
possible controls and procedures relative to their costs.
**Managements
Report on Internal Controls Over Financial Reporting**
As
required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial
reporting includes those policies and procedures that:
|
(1) | pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of our company, |
|
|
(2) | provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP,
and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
|
|
(3) | provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could
have a material effect on the financial statements. |
|
72
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our
financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may
deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 31, 2025. In making
these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control Integrated Framework (2013). Based on our assessments and those criteria, management determined
that we maintained effective internal control over financial reporting as of December 31, 2025.
This
Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to our status
as an emerging growth company under the JOBS Act.
**Changes
in Internal Control over Financial Reporting**
There
has not been any change in our internal control over financial reporting that occurred during the three months ended December 31, 2025,
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
****
ITEM
9B. OTHER INFORMATION
****
*Rule
10b5-1 Trading Plans.*During the quarter ended December 31, 2025,noneof the Companys directors or officers
(as defined in Rule 16a-1(f))adoptedorterminatedany contract, instruction or written plan for the purchase or
sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule
10b5-1 trading arrangement.
ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
****
Not
applicable.
73
****
PART
III
****
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
****
**Directors
and Officers**
Our
directors and officers are as follows:
|
Name |
|
Age |
|
Title |
|
Director
Since | |
|
Brady
Rodgers |
|
47 |
|
President
and Chief Executive Officer; Director |
|
November
2024 | |
|
Harold
R.DeMossIII |
|
69 |
|
Chief
Financial Officer |
|
| |
|
Mike
Lessard |
|
37 |
|
Vice
President of Business Development |
|
| |
|
William
H.Flores |
|
72 |
|
Independent
Director |
|
November
2024 | |
|
Marcella
Burke |
|
43 |
|
Independent
Director |
|
November
2024 | |
|
Charles
E.Fox |
|
65 |
|
Chairman
of the Board |
|
November
2024 | |
|
James
Wang |
|
42 |
|
Independent
Director |
|
November
2024 | |
**Business
Experience**
The
following is a brief description of the business experience and background of our current directors and executive officers. There are
no family relationships among any of the directors or executive officers.
****
**Brady
Rodgers**President& CEO
Brady
Rodgers has served as our President& Chief Executive Officer and a member of our Board of Directors since November 2024. Mr.Rodgers
has served as President of Antelope Energy Partners, LLC since May 2023. Mr. Rodgers was the President and CEO of Native State CCS, a
CCS development company targeting on-sitegeological storage for ethanol plants from 2020 through December 2023. Additionally, he
has served as CEO of Focus Oil from 2016 to date with his primary focus on strategic, mergers &acquisitions and technical advisory
for middle market oil& gas acquisitions. He was a Vice President of GulfSlope Energy from2013-2016in corporate
development& engineering. He was formerly Group HeadEnergy Acquisitions& Divestitures for J.P.Morgan
from2010-2013. He was with Venoco E& P in Denver in engineering &as an operations manager from2008-2010.
His international experience includes a stint with Endeavour International Corporation in London, UK& Houston in development&
engineering lead North Sea2005-2008and Devon Energy Sr. Production& Reservoir Engineer from2002-2005. Mr.Rodgers
has a Masters in Global Energy Management from the University of Colorado and a BS in Petroleum Engineering from the University of Kansas.
He has served on the Board of Directors, Unconventional Resources Technical Advisory Committee (URTAC),2009-2010by direct
appointment of President Barack Obama. URTAC is a US Department of Energy administered board that makes annual recommendations on federal
research of E& P foundational sciences in conjunction with federal, state and environmental, and industry representatives.
He has been a former or current member of SPE, IPAA, ADAM, YPE, DAC and Houston Producers Forum. He is a former Board of Trustees of
the Houston Hobby Center for the Performing Arts and an active volunteer with Junior achievement, Habit for Humanity and PTSD veteran
support group.
We
believe Mr.Rodgers is qualified to serve on our Board of Directors due to his extensive energy management experience.
****
74
**Harold
R.DeMossIII, CPA**CFO
Harold
R. Chip DeMossIII serves as our Chief Financial Officer.Mr.DeMoss is also currently co-founderand
Chief Financial Officer of Tanglewood Energy Partners, LLC, a privately-heldenergy investment management company, a position he
has held since 2019. Since 1993, he has also served as chairman of DeMoss Interests, Ltd, a family office holding group composed of oil
and gas, farming, and real estate interests. He was formerly the General Manager of George& Cynthia Mitchell Historic Galveston
Properties. He started his career with the audit group of Coopers& Lybrand where he focused on energy and real estate clients
in the Houston office. He holds FINRA investment banking and other securities registrations, in addition to Certified Public Accountant
registrations in Texas and Florida. He is a member of the American Institute of Certified Public Accountants and holds the AICPAs
Chartered Global Management Accountant (CGMA) designation. He obtained his BBA degree from Texas A&M University and his MS degree
from Massachusetts Institute of Technology (MIT).
**Mike
Lessard**Vice President of Business Development
Mr.
Lessard serves as our Vice President of Business Development. Mr. Lessard has served as a principal with Native States CCS, a CCS development
company targeting on-site geological storage for ethanol plants since February 2022. Prior to joining Native States, he served as a Development
Manager for Advance Energy Partners, LLC, a position he held from October 2018 through January 2022. Mr. Lessard obtained his BS degree
in Petroleum Engineering from Colorado School of the Mines.
****
**William
H.Flores, CPA**Independent Director (Energy/Government)
William
H. Bill Flores has 30 years of energy industry experience, including over 20 years of C-level and board governance
leadership with public and private energy companies. Following his energy industry career, he served in the United States House of Representatives
from 2011 to 2021 as Congressman for the 17th Congressional District of Texas from 2011 to 2021. He currently serves as Chair of Serolf
Technologies LLC (wholly-owned by Mr. Flores); Chair of the Board of the Electric Reliability Council of Texas (ERCOT); Chair of the
Board and Audit Committee Chair of Nauticus Robotics Inc. (NASDAQ); Director and Audit Committee Chair of New Era Helium (NASDAQ); member
of the Strategic Advisory Committee of Veriten LLC; and member of the boards of several non-profit organizations. Bill is a Texas licensed
CPA with a BBA in Accounting from Texas A&M University (College Station) and an MBA from Houston Christian University.
We
believe Mr.Flores is qualified to serve on our board due to his extensive government and energy experience.
**Marcella
Burke**Independent Director (Legal and Regulatory)
Marcella
Burke serves as a Director of the Company. Ms. Burke is an expert in environmental law and regulation. She has been the owner and managing
partner at The Burke Law Group since February 2023. Previously, she was a partner at Eversheds Sutherland US LLP from July2022
through January 2024. Prior to that, from September2019 through July2022, she was a partner at King& Spalding LLP,
where she led the Houston offices Environmental Health and Safety practice. Ms. Burke previously served as Deputy General Counsel
at the Environmental Protection Agency, where she managed the litigation docket and regulatory portfolio of the Office of Chemical Safety
and Pollution Prevention. She also previously served at the Department of Interior as Deputy Solicitor for Energy and Natural Resources,
and Senior Counselor to the Assistant Secretary for Land and Minerals Management, where she managed the litigation docket and regulatory
portfolio of all energy and natural resource permitting and project development on federal oil and gas, renewables, and carbon capture
program.
75
She
has been named by the Petroleum Economist as a global Top 100 Women of the Energy Transition, received the National Law Journal Energy/Environmental
Law Trailblazer Award, named Lawdragon 500 Leading Environmental& Energy Lawyers, and ranked among the Legal 500 UnitedStates
top environmental practices. She is on the Executive Committee of the Environment& Natural Resources Division of the State
Bar of Texas, the Institute for Energy Law Advisory Counsel, and is the Chair of the Environment& Natural Resources Program
Committee of the Foundation for Natural Resources and Energy Law. She was appointed by Governor Greg Abbott to serve as a Director on
the School Land Board, which approves land sales, trades and exchanges, and the purchase of land for the State of Texas General Land
Office. Ms. Burke received a Bachelor of Arts degree from Texas A&M University and her J.D. from the University of Houston Law Center.
We
believe Ms. Burke is qualified to serve on our board due to her extensive legal experience with energy, natural resources and related
industries.
****
**Charles
E.Fox**Chairman (Industry)
Charles
E. Chuck Fox serves as our Chairman. He is chief executive officer and co-founderof Windy Cove
EnergyII, an oil and gas producer, and Pure Earth Plasma Holdings, which are investors in the sponsor entity, CO2 Energy
Transition, LLC. Prior to Pure Earth and Windy Cove EnergyII, he co-foundedand led Windy Cove Energy as its chief
executive officer from 20142016. Previously, he was vice president of operations and engineering for Kinder
Morgan CO2 Company (2000 2013). Mr. Fox is a co-authorof the SPE monograph, Practical Aspects of CO2 Flooding and
was an SPE distinguished lecturer on carbon capture utilization and storage. He has taught numerous classes about CO2 flooding and
carbon storage. He holds an M.S. degree in petroleum engineering from Stanford University and a B.S. degree in mechanical
engineering from Rice University. He is a registered professional engineer in Texas and New Mexico.
We
believe Mr.Fox is qualified to serve on our board due to his extensive experience in the energy industry.
****
**James
Wang**Independent Director
James
Wang serves as a Director. Mr.Wang has been a veteran investor and financier in the energy and decarbonization sectors for over
two decades. He is currently a Partner and Chief Financial Officer of VP Ventures and OneLNG, an integrated micro-LNGdeveloper
in Texas, a position he has held since September 2023. From July 2018 to June 2023, he was a Managing Director at ARA Partners, one of
the largest energy transition capital providers in the United States where he played an important role in sourcing, execution, portfolio
management and investment realization for the firm including its investments in Centric Infrastructure Group, Priority Power, Path Environmental
Technology, Anesco and Fluitron. Prior to joining ARA, from August 2008 through July 2018, he worked at First Reserve, a global private
equity investment firm. He began his career in the Global Natural Resources Group, Investment Banking Division, at Lehman Brothers, a
position he held from July 2006 through June 2008.
Mr.Wang
has both a B.B.A. and an M.P.A. from the University of Texas.
We
believe that Mr.Wang is qualified to serve on our board due to his extensive capital raising and mergers and acquisitions experience.
****
76
****
**Advisory
Council Members**
****
**Fred
Zeidman**Advisory Council Member
Fred
Zeidman is Chairman of WoodRock& Co., an investment banking service business, and served as Chairman and CEO of Good Works
Acquisition Corp., until its sale to Cipher Mining, and Chairman of Good Works Acquisition Corp. II, both publicly-held SPACs, as well
as Chairman of Gordian Group LLC, a U.S.investment bank specializing in board level advice in complex, distressed or story
financial matters. Mr.Zeidman is Co-Chairand Director of Council for a Secure America (CSA), an organization dedicated to
promoting UnitedStates energy independence and its impact on UnitedStates foreign policy. Mr.Zeidman, Chairman Emeritus
of the UnitedStates Holocaust Memorial Council was appointed by President George W.Bush in March2002 and served in
that position from2002-2010. A prominent Houston based business and civic leader; Mr.Zeidman also is Chairman Emeritus of
the University of Texas Health Science System Houston. He is formerly National Chairman of the Development Corp of Israel Campaign (Israel
Bonds) and served on the Board of the National World WarII Museum. Over the course of his distinguished 50-yearcareer, Mr.Zeidman
has been involved in numerous high-profileworkouts, restructurings and reorganizations. He was the former CEO, President and Chairman
of Seitel, Inc., a Houston-basedonshore seismic data provider where he was instrumental in the successful turnaround of the Company.
He served as lead Director of Straight Path Communications, Inc. until its sale to Verizon in 2018, Director of REMA a division of NRG
Corp. and he further serves on the board of Prosperity Bank and was formerly Restructuring Officer of TransMeridian Exploration Inc.
and Chief Bankruptcy Trustee of AremisSoft Corp. He held the post of Chairman of the Board and CEO of Unibar Corporation, the largest
domestic independent drilling fluids company, until its sale to Anchor Drilling Fluids in 1992. Mr.Zeidman holds a Bachelors
degree from Washington University in St. Louis and a Masters degree in Business Administration from NewYork University.
****
**Leisha
John**Advisory Council Member
Leisha
John is an ESG Advisor to the Board. Ms. John is a CPA with 38years of experience at EY (Ernst& Young LLP). She served
as the first Americas Director of Environmental Sustainability from 2008 through her retirement in 2021. In her role, she advised the
EY Americas Executive Board on Environmental, Social and Governance (ESG) matters. Prior to her ESG appointment, Ms. John was the CEO
of EYs Global Delivery Services (shared services) center in Bangalore, India where she led the global operations from 2004-2008.
Her expertise in operations, workforce development, transformation and multi-stakeholderengagement contributed to billions of dollars
of growth at EY.Prior to her CEO role, she served as the Director of Strategy and Innovation for EYs US Tax practice following
manyyears serving EYs audit and tax clients in various industries. Currently, she is the Chairman of Earthwatch Institute,
a global organization that engages citizens in science to promote conservation. Ms. John is a CPA, a LEED AP, a Competent Board ESG Certificate
holder, and serves on the Sustainable Business Advisory Council for the University of Miami.
****
**Number,
Terms of Office and Appointment of Directors and Officers**
Our
board of directors consists of five members. In accordance with Nasdaq corporate governance requirements, we are not required to hold
an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of our directors
will expire at our first annual meeting of stockholders, subject to re-nomination and reappointment to the board by our stockholders.
Subject to any other special rights applicable to the stockholders, any vacancies on our board of directors may be filled by the affirmative
vote of a majority of the directors present and voting at the meeting of our board of directors or by a majority of the holders of our
shares of common stock (or, prior to our initial business combination, holders of our founder shares).
Our
officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific
terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our amended and restated
certificate of incorporation as it deems appropriate. Our amended and restated certificate of incorporation provides that our
officers may consist of a Chairman, a Chief Executive Officer, a President, a Chief Operating Officer, a Chief Financial Officer,
Vice Presidents, a Secretary, Assistant Secretaries, a Treasurer and such other offices as may be determined by the board of
directors.
77
****
**Director
Independence**
Nasdaq
listing standards require that a majority of our board of directors be independent. An independent director is defined
generally as a person that, in the opinion of the companys board of directors, has no material relationship with the listed company
(either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). We have four independent
directors as defined in the Nasdaq listing standards and applicable SEC rules. Our board of directors has determined that
each of Messrs. Flores, Fox and Wang and Ms. Burke is an independent director under applicable SEC and Nasdaq listing standards. Accordingly,
a majority of the members of our Board of Directors are independent as defined in the Nasdaq rules governing members of boards of directors
and as defined under Rule 10A-3 of the Exchange Act.
In
assessing director independence, the Board considers, among other matters, the nature and extent of any business relationships, including
transactions conducted, between the Company and each director and between the Company and any organization for which one of our directors
is a director or executive officer or with which one of our directors is otherwise affiliated.
Furthermore,
the Board has determined that each of the members of our Audit Committee, Compensation Committee, and Corporate Governance and Nominating
Committee, is independent within the meaning of Nasdaq director independence standards applicable to members of such committees, as currently
in effect.
Our
independent directors have regularly scheduled meetings at which only independent directors are present.
**Arrangements
between Officers and Directors**
To
our knowledge, there is no arrangement or understanding between our sole officer and any other person, including our sole director, pursuant
to which the officer was selected to serve as an officer.
**Other
Directorships**
No
director of the Company is also a director of issuers with a class of securities registered under Section 12 of the Exchange Act (or
which otherwise are required to file periodic reports under the Exchange Act), except as otherwise stated herein.
**Involvement
in Certain Legal Proceedings**
Our
officers and directors were not involved in any of the following during the past ten years: (1) any bankruptcy petition filed by or
against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within
two years prior to that time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or banking activities; (4) being found by a court of
competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or
state securities or commodities law, (5) being the subject of, or a party to, any Federal or State judicial or administrative order,
judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal
or State securities or commodities law or regulation; (ii) any law or regulation respecting financial institutions or insurance
companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation
prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the subject of, or a party to, any
sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section
3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any
equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with
a member.
78
****
**Board
Leadership Structure**
Our
Board of Directors has the responsibility for selecting our appropriate leadership structure. In making leadership structure determinations,
the Board of Directors considers many factors, including the specific needs of our business and what is in the best interests of our
shareholders. Our current leadership structure is comprised of a separate Chairman of the Board of Directors, and Chief Executive Officer
(CEO).Mr. Rodgers currently serves as CEO and Mr. Fox currently serves as Chairman of the Board of Directors
(Board) of the Company. The Board of Directors does not have a policy as to whether the Chairman should be an independent
director, an affiliated director, or a member of management. Our Board of Directors believes that the Companys current leadership
structure is appropriate because it effectively allocates authority, responsibility, and oversight between management (the Companys
President and CEO, Mr. Rodgers)and the members of our Board of Directors. It does this by giving primary responsibility for the
operational leadership and strategic direction of the Company to its CEO, while enabling our Chairman to facilitate our Board of Directors
oversight of management, promote communication between management and our Board of Directors, and support our Board of Directors
consideration of key governance matters.
The
Board of Directors believes that its programs for overseeing risk, as described below, would be effective under a variety of leadership
frameworks and therefore do not materially affect its choice of structure.
The
Board evaluates its structure periodically, as well as when warranted by specific circumstances, in order to assess which structure is
in the best interests of the Company and its stockholders based on the evolving needs of the Company. This approach provides the Board
appropriate flexibility to determine the leadership structure best suited to support the dynamic demands of our business.
**Risk
Oversight**
Effective
risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision,
the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors
approach to risk oversight includes understanding the critical risks in our business and strategy, evaluating our risk management processes,
allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and
compliance with legal responsibilities.
The
Board exercises direct oversight of strategic risks to us. Our Audit Committee reviews and assesses our processes to manage business
and financial risk and financial reporting risk. It also reviews our policies for risk assessment and assesses steps management has taken
to control significant risks. Our Compensation Committee oversees risks relating to compensation programs and policies. In each case
management periodically reports to our Board or the relevant committee, which provides the relevant oversight on risk assessment and
mitigation. The Corporate Governance and Nominating Committee recommends the slate of director nominees for election to the Companys
Board, identifies and recommends candidates to fill vacancies occurring between annual stockholder meetings, reviews, evaluates and recommends
changes to the Companys corporate governance guidelines, and establishes the process for conducting the review of the Chief Executive
Officers performance.
While
the Board and its committees oversee the Companys strategy, management is charged with its day-to-day execution. To monitor performance
against the Companys strategy, the Board receives regular updates and actively engages in dialogue with management.
79
**Meetings
of the Board of Directors and Annual Meeting**
During
the fiscal year that ended on December 31, 2025, the Board held one meeting and took various other actions via the unanimous written
consent of the Board of Directors and the various committees described above. All directors attended all of the Board of Directors
meetings and committee meetings relating to the committees on which each director served during fiscal year 2025.
**Executive
Sessions of the Board of Directors**
The
independent members of our Board of Directors meet in executive session (with no management directors or management present)from
time to time. The executive sessions include whatever topics the independent directors deem appropriate.
**Committees
of the Board of Directors**
Our
board of directors has three standing committees: an audit committee, a compensation committee and a corporate governance and nominating
committee. The rules of Nasdaq and Rule10A-3of the ExchangeAct require that the audit committee of a listed company
be comprised solely of independent directors, and the rules of Nasdaq require that the compensation committee and the corporate governance
and nominating committee of a listed company be comprised solely of independent directors. Each committee operates under a charter that
has been approved by our board of directors and has the composition and responsibilities described below. The charter of each committee
is available on our website.
**
*Audit
Committee*
We
have established an audit committee of the board of directors. The members of our audit committee are Messrs. Flores and Fox and Ms.
Burke. Mr.Flores serves as chair of the audit committee.
Each
member of the audit committee is financially literate and our board of directors has determined that Mr.Flores qualifies as an
audit committee financial expert as defined in applicable SEC rules and has accounting or related financial management
expertise.
We
have adopted an audit committee charter, which details the purpose and principal functions of the audit committee, including:
|
| assisting
board oversight of (1)the integrity of our financial statements, (2)our compliance with legal and regulatory requirements,
(3)our independent auditors qualifications and independence, and (4)the performance of our internal audit function
and independent auditors; |
|
|
| the
appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered
public accounting firm engaged by us; |
|
|
| pre-approvingall
audit and non-auditservices to be provided by the independent auditors or any other registered public accounting firm engaged by
us, and establishing pre-approvalpolicies and procedures; |
|
|
| reviewing
and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence; |
|
|
| setting
clear hiring policies for employees or former employees of the independent auditors; |
|
|
| setting
clear policies for audit partner rotation in compliance with applicable laws and regulations; |
|
80
|
| obtaining
and reviewing a report, at least annually, from the independent auditors describing the independent auditors internal quality-controlprocedures
and (2)any material issues raised by the most recent internal quality-controlreview, or peer review, of the audit firm, or
by any inquiry or investigation by governmental or professional authorities, within the preceding fiveyears respecting one or more
independent audits carried out by the firm and any steps taken to deal with such issues; |
|
|
| meeting
to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent
auditor, including reviewing our specific disclosures under Managements Discussion and Analysis of Financial Condition
and Results of Operations; |
|
|
| reviewing
and approving any related party transaction required to be disclosed pursuant to Item404 of RegulationS-Kpromulgated
by the SEC prior to us entering into such transaction; and |
|
|
| reviewing
with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including
any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues
regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by
the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
|
**
*Compensation
Committee*
We
have established a compensation committee of the board of directors. The members of our compensation committee are Messrs. Fox and Wang
and Ms. Burke. Ms.Burke serves as chair of the compensation committee. We have adopted a compensation committee charter, which
details the purpose and responsibility of the compensation committee, including:
|
| reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officers compensation, evaluating
our Chief Executive Officers performance in light of such goals and objectives and determining and approving the remuneration
(if any) of our Chief Executive Officer based on such evaluation; |
|
|
| reviewing
and making recommendations to our board of directors with respect to the compensation, and any incentive-compensationand equity-basedplans
that are subject to board approval of all of our other officers; |
|
|
| reviewing
our executive compensation policies and plans; |
|
|
| implementing
and administering our incentive compensation equity-basedremuneration plans; |
|
|
| assisting
management in complying with our proxy statement and annual report disclosure requirements; |
|
|
| approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
|
|
| producing
a report on executive compensation to be included in our annual proxy statement; and |
|
|
| reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors. |
|
The
charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and
oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external
legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the
factors required by Nasdaq and the SEC.
81
**
*Corporate
Governance and Nominating Committee*
We
have established a corporate governance and nominating committee of the board of directors. The members of our corporate governance and
nominating committee are Messrs. Fox and Flores and Ms. Burke. In accordance with Rule5605 of the Nasdaq listing rules, all such
directors are independent. Mr.Fox serves as chair of the corporate governance and nominating committee. The board of directors
will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed
nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our
stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.
We
have adopted a corporate governance and nominating committee charter, which details the purpose and responsibility of the corporate governance
and nominating committee, including ensuring that the Board is properly constituted to meet its fiduciary obligations to stockholders
and the Company and that the Company has and follows appropriate corporate governance practices and standards.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of
professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent
the best interests of our stockholders.
****
**Code
of Ethics**
We
have adopted a code of ethics (our Code of Ethics) applicable to our directors, officers and employees. We have
incorporated by reference a copy of our form of our Code of Ethics as an exhibit to this Report. You will be able to review this document
by accessing our public filings at the SECs website at*www.sec.gov*.
In addition, a copy of our Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments
to or waivers of certain provisions of our Code of Ethics in a Current Report on Form8-K.
****
**Conflicts
of Interest**
Our
management team is responsible for the management of our affairs. As described above and below, each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities,
pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly,
if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to
which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present
such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he
or she determines to present the opportunity to us. These conflicts may not be resolved in our favor and a potential target business
may be presented to another entity prior to its presentation to us. In addition to the above, directors also owe a duty of care, which
is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general
knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that
director in relation to the company and the general knowledge, skill and experience which that director has.
As
set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in
self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of
this duty can be forgiven and/or authorized in advance by the stockholders; provided that there is full disclosure by the directors.
This can be done by way of permission granted in the amended and restated certificate of incorporation or alternatively by
stockholder approval at stockholder meetings.
82
All
of our officers have fiduciary and contractual duties to our sponsor and to certain companies in which it has invested or to certain
other entities. While the risk is partially mitigated as a result of our sponsor seeking targets of different enterprise sizes than us,
if these entities decide to pursue any such opportunity, we may be precluded from pursuing such opportunities. None of the members of
our management team who are also employed by our sponsor or its affiliates have any obligation to present us with any opportunity for
a potential business combination of which they become aware, subject to his or her fiduciary duties under applicable law. Our sponsor
and directors and officers are also not prohibited from sponsoring, investing or otherwise becoming involved with, any other blank check
companies, including in connection with their initial business combinations, prior to us completing our initial business combination.
Our management team, in their capacities as directors, officers or employees of our sponsor or its affiliates or in their other endeavors,
may choose to present potential business combinations to the related entities described above, current or future entities affiliated
with or managed by our sponsor, or third parties, before they present such opportunities to us, subject to his or her fiduciary duties
under applicable law and any other applicable fiduciary duties.
Our
directors and officers presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other
entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity.
Accordingly, if any of our directors or officers becomes aware of a business combination opportunity that is suitable for an entity to
which he or she has then-currentfiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual
obligations to present such business combination opportunity to such entity, subject to his or her fiduciary duties under applicable
law. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or
officer of the company and it is an opportunity that we are able to complete on a reasonable basis. Our directors and officers are also
not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
See Item 1A. Risk FactorsCertain of our directors and officers are now, and all of them may in the future
become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may
have conflicts of interest in determining to which entity a particular business opportunity should be presented.
We
do not believe, however, that the fiduciary duties or contractual obligations of our directors or officers will materially adversely
affect our ability to identify and pursue business combination opportunities or complete our initial business combination. You should
not rely on the historical record of our founders and managements performance as indicative of our future performance.
See Item 1A. Risk FactorsPast performance by our management team and their respective affiliates may not
be indicative of future performance of an investment in the company.
Potential
investors should also be aware of the following potential conflicts of interest:
|
| None
of our directors or officers is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest
in allocating his or her time among various business activities. |
|
|
| In
the course of their other business activities, our directors and officers may become aware of investment and business opportunities that
may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts
of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our managements
other affiliations, see Directors and Officers. |
|
83
|
| Our
initial stockholders, directors and officers have agreed to waive their redemption rights with respect to any founder shares and public
shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders have
agreed to waive their redemption rights with respect to their founder shares if we fail to consummate our initial business combination
within 18months after the closing of our IPO (or up to 24months from the closing of our IPO if we extend the period of time
to consummate a business combination, as described in more detail in this Report) or during any Extension Period. However, if our initial
stockholders or any of our directors, officers or affiliates acquire public shares, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to consummate our initial business combination within the prescribed
time frame. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the
private placement units held in the trust account will be used to fund the redemption of our public shares, and the private placement
units will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable or salable by our
initial stockholders until the earlier of: (1)one year after the completion of our initial business combination; and (2)subsequent
to our initial business combination (x)if the last reported sale price of shares of our common stock equals or exceeds $12.00 per
share (as adjusted for stock splits, stock dividends, rights issuances, consolidations, reorganizations, recapitalizations and other
similar transactions) for any 20trading days within any 30-tradingday period commencing at least 150days after our
initial business combination or (y)the date on which we complete a liquidation, merger, capital stock exchange, reorganization
or other similar transaction that results in all of our public stockholders having the right to exchange their shares of common stock
for cash, securities or other property. With certain limited exceptions, the private placement units and the shares of common stock underlying
such private placement units, will not be transferable, assignable or salable by our sponsor until 30days after the completion
of our initial business combination. Since our sponsor and directors and officers may directly or indirectly own shares of common stock,
warrants and rights following the date of this Report, our directors and officers may have a conflict of interest in determining whether
a particular target business is an appropriate business with which to effectuate our initial business combination. |
|
|
| Our
directors and officers may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a result,
may cause them to have conflicts of interest in determining whether to proceed with a particular business combination. |
|
|
| Our
directors and officers may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such directors and officers was included by a target business as a condition to any agreement with respect to our
initial business combination. |
|
The
conflicts described above may not be resolved in our favor.
Accordingly,
as a result of multiple business affiliations, our directors and officers have similar legal obligations relating to presenting business
opportunities meeting the above-listedcriteria to multiple entities. Below is a table summarizing the entities to which our directors
and officers currently have fiduciary duties or contractual obligations:
|
Individual |
|
Entity |
|
Entitys
Business |
|
Affiliation | |
|
William
H.Flores |
|
ElectricReliabilityCouncilofTexas |
|
Electric
Coop |
|
Chairman | |
|
|
|
Veriten
Holdings, LLC |
|
VC
Fund |
|
Advisory
Director | |
|
Charles
E.Fox |
|
Windy
Cove EnergyII, LLC |
|
Energy |
|
CEO
and Director | |
|
|
|
Pure
Earth Plasma Holdings, LLC |
|
Technology |
|
Director | |
|
Brady
Rodgers |
|
Antelope
Energy Partners, LLC |
|
Energy |
|
President | |
84
Accordingly,
if any of the above directors or officers become aware of a business combination opportunity which is suitable for any of the above
entities to which he or she has then-currentfiduciary or contractual obligations, he or she will honor his or her fiduciary or
contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity
rejects the opportunity, subject to his or her fiduciary duties under applicable law. Our amended and restated certificate of
incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such
opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is an
opportunity that we are able to complete on a reasonable basis. We do not believe, however, that any of the foregoing fiduciary
duties or contractual obligations will materially adversely affect our ability to identify and pursue business combination
opportunities or complete our initial business combination.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, directors or officers.
In the event we seek to complete our initial business combination with such a company, we, or a committee of independent and disinterested
directors, would obtain an opinion from an independent investment banking firm or another valuation or appraisal firm that regularly
renders fairness opinions on the type of target business we are seeking to acquire that such an initial business combination is fair
to our company from a financial point of view.
In
addition, our sponsor or any of its affiliates may make additional investments in the company in connection with the initial business
combination, although our sponsor and its affiliates have no obligation or current intention to do so. If our sponsor or any of its affiliates
elects to make additional investments, such proposed investments could influence our sponsors motivation to complete an initial
business combination.
In
the event that we submit our initial business combination to our public stockholders for a vote, our initial stockholders, directors
and officers have agreed, pursuant to the terms of a letter agreement entered into with us, to vote any founder shares (and their respective
permitted transferees will agree) and public shares held by them in favor of our initial business combination.
****
**Limitation
on Liability and Indemnification of Directors and Officers**
Our
amended and restated certificate of incorporation provides that our officers and directors will be indemnified by us to the fullest extent
authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation
provides that our directors and officers will not be personally liable for monetary damages to us or stockholders for breaches of their
fiduciary duty as directors, except to the extent such exemption from liability or limitation thereof is not permitted by DGCL.
We
will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification
provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to maintain insurance on behalf of any
officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such
indemnification. We have obtained a policy of directors and officers liability insurance that insures our officers and
directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations
to indemnify our officers and directors.
These
provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholders investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We
believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced
officers and directors.
Notwithstanding
the above, insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or
persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
85
**Stockholder
Communications with the Board**
A
stockholder who wishes to communicate with our Board of Directorsmay do so by directing a written request addressed toour
Secretary, 1334 Brittmoore Rd, Suite 190, Houston Texas 77043, who, upon receipt of any communication other than one that is clearly
marked Confidential, will note the date the communication was received, open the communication, make a copy of it
for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that
is clearly marked Confidential, our Secretary will not open the communication, but will note the date the communication
was received and promptly forward the communication to the director(s) to whom it is addressed.
****
**Policy
on Equity Ownership**
The
Company does not have a policy on equity ownership at this time.
**Insider
Trading/Policy Against Hedging**
The
Companyadoptedan insider trading policy in March 2025 which governs the purchase, sale and other dispositions of the Companys
securities that applies to all Company personnel, including directors, officers, employees, and other covered persons. The Company also
plans to follow procedures for the repurchase of any shares of its securities. The Company believes that its insider trading policy and
planned repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing
standards applicable to the Company. A copy of the Companys insider trading policy is incorporated by reference herein asExhibit
19.1.
****
**Policy
on Timing of Equity Grants**
****
The
Board has not established policies and practices (whether written or otherwise) regarding the timing of option grants or other awards
in relation to the release of material nonpublic information (MNPI) anddoes not plan to take MNPI into account
when determining the timing and terms of stock option or other equity awards to executive officers.The Company does not time the
disclosure of MNPI, whether positive or negative, for the purpose of affecting the value of executive compensation.
**Compensation
Recovery and Clawback Policies**
The
Company Board of Directors adopted a clawback policy on November 20, 2024 (the Clawback Policy), with an effective
date of November 20, 2024, in order to comply with the final clawback rules adopted by the SEC under Section 10D and Rule 10D-1 of the
Exchange Act (Rule 10D-1), and the listing standards, as set forth in the Nasdaq Listing Rule 5608 (the Final Clawback
Rules).
The
Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive
officers as defined in Rule 10D-1 (Covered Officers) of the Company in the event that the Company is required to
prepare an accounting restatement, in accordance with the Final Clawback Rules. The recovery of such compensation applies regardless
of whether a Covered Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement.
Under the Clawback Policy, the Board of Directors may recoup from the Covered Officers erroneously awarded incentive compensation received
within a lookback period of the three completed fiscal years preceding the date on which the Company is required to prepare an accounting
restatement.
**Delinquent
Section 16(a) Reports**
Section
16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our common
stock to file reports of their ownership of, and transactions in, our common stock with the SEC and to furnish us with copies of the
reports they file. Based solely upon our review of the Section 16(a) filings that have been furnished to us, we believe that all
required Section 16(a) filings were timely filed during fiscal 2025, except that CO2 Energy Transition, LLC, our sponsor, failed to
timely disclose one transaction, and as a result, one Form 4 was not timely filed.
86
ITEM
11. EXECUTIVE COMPENSATION
****
**Executive
Officer and Director Compensation**
****
None
of our officers has received any cash compensation for services rendered to us. Commencing on the date of the IPO, we agreed to pay CO2
Energy Transition, LLC, a Delaware limited liability company, our sponsor, a total of $10,000 per month for office space, utilities and
secretarial and administrative support. Upon completion of our initial business combination or our liquidation, we will cease paying
these monthly fees. No compensation of any kind, including any finders fee, reimbursement, consulting fee or monies in respect
of any payment of a loan, will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors,
prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless
of the type of transaction that it is). However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection
with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors or our or their
affiliates. Any such payments prior to an initial business combination will be made using funds held outside the trust account. Other
than quarterly audit committee review of such payments, we do not expect to have any additional controls in place governing our reimbursement
payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with identifying and consummating
an initial business combination.
After
the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting
or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in
the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed initial business
combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or
members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination,
because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation
to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee
constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We
do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation
of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment
or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or
consulting arrangements to retain their positions with us may influence our managements motivation in identifying or selecting
a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business
combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any
agreements with our officers and directors that provide for benefits upon termination of employment.
**Employment
Agreements; Outstanding Equity Awards; Key Man Insurance**
**Employment
Agreements**
The
Company does not have any employment agreements in place with any of its executive officers.
**Outstanding
Equity Awards at Fiscal Year-End**
The
Company: (i) did not grant any stock options to its executive officers or directors during the year ended December 31, 2025; (ii) did
not have any outstanding unvested equity awards as of December 31, 2025; and (iii) had no options exercised by its Named Executive Officers
in the fiscal year ended December 31, 2025.
**Key
Man Insurance**
The
Company does not hold Key Man life insurance on any of its officers or directors.
**Compensation
Of Directors**
Directors
who are not employees of the Company do not receive any fees for meetings that they attend, but they are entitled to reimbursement for
reasonable expenses incurred while attending such meetings. In 2025, no compensation was paid to the Companys directors for their
services.
87
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
****
**Principal
Stockholders**
The
following table presents certain information regarding the beneficial ownership of all shares of common stock as ofMarch 13, 2026by
(i) each person who owns beneficially more than five percent (5%) of the outstanding shares of common stock based on 9,585,750 shares
outstanding as ofMarch 13, 2026, (ii) each of our directors, (iii) each named executive officer, and (iv) all directors and officers
as a group. Except as otherwise indicated, all shares are owned directly.
Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and/or investing
power with respect to securities. We believe that, except as otherwise noted and subject to applicable community property laws, each
person named in the following table has sole investment and voting power with respect to the shares of common stock shown as
beneficially owned by such person. Additionally, shares of common stock subject to options, warrants or other convertible securities
that are currently exercisable or convertible, or exercisable or convertible within 60 days ofMarch 13, 2026,are deemed to
be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities
for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or group.
We
believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has
sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Unless otherwise
indicated, the address for each of the officers or directors listed in the table below is 1334 Brittmoore Rd., Suite 190, Houston, Texas
77043.
|
Name and Address of Beneficial Owner(1) | |
Number of Shares Beneficially Owned After Offering | | |
Approximate Percentageof Issuedand Outstanding Sharesof CommonStock AfterOffering | | |
|
Brady Rodgers(1) | |
| | | |
| | | |
|
Harold R.DeMossIII(1) | |
| | | |
| | | |
|
Mike Lessard(1) | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Charles E.Fox(1) | |
| | | |
| | | |
|
William H.Flores(1) | |
| | | |
| | | |
|
Marcella Burke(1) | |
| | | |
| | | |
|
James Wang(1) | |
| | | |
| | | |
|
All Directors and Executive Officers asa Group(7 persons) | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Greater than 5% Stockholders | |
| | | |
| | | |
|
CO2 Energy Transition, LLC(1) | |
| 2,830,000 | (2) | |
| 28.7 | % | |
|
Mizuho Financial Group, Inc.(3) | |
| 838,309 | | |
| 8.7 | % | |
|
Karpus Management, Inc.(4) | |
| 721,246 | | |
| 7.5 | % | |
|
MMCAP International Inc. SPC(5) | |
| 590,000 | | |
| 6.2 | % | |
|
AQR Capital Management Holdings, LLC(6) | |
| 590,000 | | |
| 6.2 | % | |
|
Aristeia Capital, L.L.C.(7) | |
| 590,000 | | |
| 6.2 | % | |
|
Barclays PLC(8) | |
| 497,499 | | |
| 5.2 | % | |
|
* | less
than 1% |
|
|
(1) | Each
of our officers, directors is, directly or indirectly, a member of our sponsor or have direct or indirect economic interests in our sponsor,
and each of them disclaims any beneficial ownership of any shares held by our sponsor except to the extent of his or her ultimate pecuniary
interest. The shares held by our sponsor are beneficially owned by Andrew J. Martin, Charles E. Fox, and David Gow, its Managers. Address:
1334 Brittmoore Rd., Suite 190, Houston, Texas 77043. |
|
|
(2) | Includes
265,000 shares of common stock of the Company issuable upon the exercise of 265,000 private placement warrants. Each warrant is exercisable
to purchase one share of common stock at $11.50 per share, subject to adjustment, and became exercisable beginning 30 days after the
completion of the Companys initial business combination (November 22, 2025) and expires five years after the completion of the
Company initial business combination or earlier upon redemption or liquidation. Excludes 265,000 rights. Each eight rights entitle the
holder thereof to receive one share of common stock at the closing of the Companys initial business combination. Also excludes
1,173 warrants to purchase shares of common stock of the Company and 1,173 rights (with the same terms of the warrants and rights discussed
above), issuable upon conversion of an outstanding convertible promissory note, which are convertible at the option of the holder thereof
(CO2 Energy Transition LLC) only upon the closing of the Companys initial business combination. |
|
88
|
(3) | Address:
1-5-5, Otemachi, Chiyoda-ku, Tokyo, 100-8176, Japan . Mizuho Financial Group, Inc., Mizuho Bank, Ltd. and Mizuho Americas LLC may be
deemed to be indirect beneficial owners of said equity securities directly held by Mizuho Securities USA LLC, which is their wholly-owned
subsidiary. All information comes from the Schedule 13G which the stockholder filed with the Securities and Exchange Commission on August
13, 2025. |
|
|
(4) | Address:
183 Sully's Trail, Pittsford, New York 14534. Karpus Management, Inc., d/b/a Karpus Investment Management (Karpus) is a
registered investment adviser under Section 203 of the Investment Advisers Act of 1940. Karpus is controlled by City of London Investment
Group plc (CLIG), which is listed on the London Stock Exchange. However, in accordance with SEC Release No. 34-39538 (January
12, 1998), effective informational barriers have been established between Karpus and CLIG such that voting and investment power over
the subject securities is exercised by Karpus independently of CLIG, and, accordingly, attribution of beneficial ownership is not required
between Karpus and CLIG. The shares reported owned by Karpus are owned directly by the accounts managed by Karpus. All information comes
from the Schedule 13G which the stockholder filed with the Securities and Exchange Commission on May 14, 2025. |
|
|
(5) | Address:
c/o Mourant Governance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, P.O. Box 1348, Grand Cayman, KY1-1108, Cayman Islands
(MMCAP) and 161 Bay Street, TD Canada Trust Tower, Suite 2240, Toronto, ON, M5J 2S1, Canada (MM Asset). MMCAP International Inc. SPC
(MMCAP) and MM Asset Management Inc. (MM Asset) share voting and dispositive control over the
shares. All information comes from the Schedule 13G/A which the stockholder filed with the Securities and Exchange Commission on August
12, 2025. |
|
|
(6) | Address:
One Greenwich Plaza, Suite 130, Greenwich, Connecticut, 06830. The shares are beneficially owned by AQR Capital Management, LLC, AQR
Capital Management Holdings, LLC and AQR Arbitrage, LLC. All information comes from the Schedule 13G which the stockholder filed with
the Securities and Exchange Commission on February 14, 2025. |
|
|
(7) | Address:
One Greenwich Plaza, Suite 300 Greenwich, CT 06830. All information comes from the Schedule 13G which the stockholder filed with the
Securities and Exchange Commission on February 14, 2025. |
|
|
(8) | Address:
1 Churchill Place, London - E14 5HP. All information comes from the Schedule 13G which the stockholder filed with the Securities and
Exchange Commission on May 13, 2025. |
|
Our
initial stockholder, our sponsor, beneficially owns 28.7% of the issued and outstanding shares of common stock. Because of its ownership
block, our initial stockholder may be able to effectively influence the outcome of all other matters requiring approval by our stockholders,
including amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions.
Our
sponsor and our directors and officers are deemed to be our promoters as such term is defined under the federal
securities laws. See Item 13. Certain Relations and Related Transactions and Director Independence for additional
information regarding our relationships with our promoters.
****
**Transfers
of Founder Shares and Private Placement Units**
The
founder shares, private placement units and any shares of our common stock issued upon conversion or exercise of the private warrants
and rights included in the private placement units are each subject to transfer restrictions pursuant to lock-upprovisions in the
letter agreement with us to be entered into by our initial stockholders, directors and officers Those lock-upprovisions provide
that such securities are not transferable or salable (1)in the case of the founder shares, until the earlier of: (A)one year
after the completion of our initial business combination; and (B)subsequent to our initial business combination (x)if the
last reported sale price of shares of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20trading days within
any 30-tradingday period commencing at least 150days after our initial business combination or (y)the date on which
we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our public
stockholders having the right to exchange their shares of common stock for cash, securities or other property, and (2)in the case
of the private placement units and the respective shares of our common stock underlying such units, until 30days after the completion
of our initial business combination, except in each case (a)to our directors or officers, any affiliates or family members of any
of our directors or officers, any members of our sponsor, or any affiliates of our sponsor, (b)in the case of an individual, by
gift to a member of the individuals immediate family or to a trust, the beneficiary of which is a member of the individuals
immediate family or an affiliate of such person, or to a charitable organization; (c)in the case of an individual, by virtue of
laws of descent and distribution upon death of the individual; (d)in the case of an individual, pursuant to a qualified domestic
relations order; (e)by private sales or transfers made in connection with the consummation of a business combination at prices
no greater than the price at which the securities were originally purchased; (f)in the event of our liquidation prior to our completion
of our initial business combination; (g)in the case of an entity, by virtue of the laws of its jurisdiction or its organizational
documents or operating agreement; or (h)in the event of our completion of a liquidation, merger, capital stock exchange, reorganization
or other similar transaction which results in all of our stockholders having the right to exchange their shares of our common stock for
cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case
of clauses (a)through (e)these permitted transferees must enter into a written agreement agreeing to be bound by these transfer
restrictions.
89
****
**Registration
Rights**
The
holders of the founder shares, private placement units and any units that may be issued on conversion of working capital loans up to
$1,500,000 (and any shares of our common stock issuable upon the exercise of the warrants included in the private placement units or
units issued upon conversion of the working capital loans) are, and will be, entitled to registration rights pursuant to a registration
rights agreement requiring us to register such securities for resale. In addition, our initial stockholders and their permitted transferees
will be entitled to make up to three demands, excluding short form registration demands, that we register such securities. Notwithstanding
the foregoing, the Company shall use its best efforts to file a registration statement within 30days of our business combination
to register such securities. In addition, the holders have certain piggy-back registration rights with respect to
registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for
resale such securities pursuant to Rule415 under the Securities Act. However, the registration rights agreement provides that we
will not be required to effect or permit any registration or cause any registration statement to become effective until termination of
the applicable lock-upperiod as described under Transfers of Founder Shares and Private Placement Units.
We will bear the expenses incurred in connection with the filing of any such registration statements.
**Change
of Control**
The
Company is not aware of any arrangements which may at a subsequent date result in a change of control of the Company.
****
**Securities
Authorized for Issuance under Equity Compensation Table**
As
of December 31, 2025, we had no compensation plans (including individual compensation arrangements) under which equity securities were
authorized for issuance.
****
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
****
Except
as discussed below, or otherwise disclosed above under Executive Compensation, there have been no transactions since
January 1, 2024, and there is not currently any proposed transaction, in which the Company was or is to be a participant, where the amount
involved exceeds the lesser of $120,000 or one percent of the average of the Companys total assets at year-end, for the last two
completed fiscal years, and in which any officer, director, or any stockholder owning greater than five percent (5%) of our outstanding
voting shares, nor any member of the above:
On
January 8, 2022, the sponsor issued an unsecured promissory note to the Company (the Promissory Note), pursuant
to which the Company could borrow up to an aggregate principal amount of $400,000. On February 15, 2023, the Company amended the Promissory
Notes principal amount from $400,000 to $450,000. On April 20, 2024, the Company further amended the Promissory Notes principal
amount from $450,000 to $800,000. The Promissory Note was non-interest bearing and payable on the earlier of (i) December 31, 2025 or
(ii) the consummation of the Initial Public Offering. As of December 31, 2023, there was $432,880, outstanding under the Promissory Note.
On November 22, 2024, upon the closing of the Initial Public Officer, the Company repaid the note and borrowings with the exception of
$11,730 which remains outstanding under the note as of December 31, 2025, and has been included in the Working Capital Note discussed
below.
90
Simultaneously
with the closing of the Initial Public Offering on November 22, 2024, the sponsor purchased an aggregate of 265,000 private
placement units at a price of $10.00 per private placement unit, for an aggregate purchase price of $2,650,000 in a private
placement. Each private placement unit consists of one private share, one private right and one redeemable private warrant. Each
private right entitles the holder thereof to receive one-eighth (1/8) of one share of common stock upon the consummation of our
initial business combination. Each whole private warrant is exercisable for one share of common stock at a price of $11.50 per
share, subject to adjustment. The proceeds from the sale of the private placement units were added to the net proceeds from the
Initial Public Offering held in the trust account. If the Company does not complete an initial business combination within 18 months
(or up to 24 months from the closing of our IPO if we extend the period of time to consummate a business combination, as described
in more detail in this Report) from the closing of our IPO or during any extended time that we have to consummate a business
combination beyond 18 months (or up to 24 months if the period of time in which we have to complete an initial business combination
is extended in accordance with the procedures set forth in this Report) or as a result of a stockholder vote to amend our
certificate of incorporation (although they will be entitled to liquidating distributions from the trust account with respect to any
public shares they hold if we fail to complete our initial business combination within the prescribed time frame), the proceeds from
the sale of the private placement units held in the trust account will be used to fund the redemption of the public shares (subject
to the requirements of applicable law) and the private placement units and all underlying securities will expire
worthless.
The
private placement units (including the shares of our common stock issuable upon exercise of the private placement warrants) may not,
subject to certain limited exceptions, be transferred, assigned or sold by it until 30days after the completion of our initial
business combination.
Our
initial stockholders holding founder shares, directors and officers have entered into a letter agreement with us dated November 20, 2024,
pursuant to which they have agreed to waive: (1) their redemption rights with respect to any founder shares and public shares held by
them, as applicable, in connection with the completion of our initial business combination; (2) their redemption rights with respect
to any founder shares and public shares held by them in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify 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 18 months from the closing
of the IPO (May 22, 2026)(or up to 24 months from the closing of our IPO (November 22, 2026) if we extend the period of time to consummate
a business combination, as described in more detail in this Report) or (B) with respect to any other provision relating to stockholders
rights or pre-initial business combination activity; and (3) their rights to liquidating distributions from the trust account with respect
to any founder shares they hold if we fail to complete our initial business combination within 18 months (or up to 24 months from the
closing of our IPO if we extend the period of time to consummate a business combination, as described in more detail in this Report)
from the closing of our IPO or during any extended time that we have to consummate a business combination beyond 18 months (or up to
24 months if the period of time in which we have to complete an initial business combination is extended in accordance with the procedures
set forth in this Report) or as a result of a stockholder vote to amend our certificate of incorporation (although they will be entitled
to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business
combination within the prescribed time frame).
Notwithstanding
that such shares are already registered, the Company agreed to use its best efforts to file a registration statement within 30days
of the business combination to register certain securities for sale under the Securities Act. These holders, and holders of units issued
upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands that
we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered
for resale pursuant to Rule415 under the Securities Act. In addition, these holders have the right to include their securities
in other registration statements filed by us. However, the registration rights agreement provides that we will not be required to effect
or permit any registration or cause any registration statement to become effective until the securities covered thereby are released
from their lock-uprestrictions, as described herein. We will bear the costs and expenses of filing any such registration statements.
See Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersPrincipal
StockholdersRegistration Rights.
91
As
more fully discussed in Item 10. Directors, Executive Officers, and Corporate GovernanceConflicts of
Interest, if any of our directors or officers becomes aware of a business combination opportunity that falls within the
line of business of any entity to which he or she has then-currentfiduciary or contractual obligations, he or she may be
required to present such business combination opportunity to such entity prior to presenting such business combination opportunity
to us. Our directors and officers currently have certain relevant fiduciary duties or contractual obligations that may take priority
over their duties to us.
The
Company entered into an administration agreement with the sponsor, commencing on November 12, 2024, through the earlier of consummation
of the initial business combination and the Companys liquidation, to pay the sponsor $10,000 per month for office space, utilities,
secretarial support and other administrative and consulting services. For the year ended December 31, 2025, the Company had incurred
and paid $120,000 of administrative services fees. For the year ended December 31, 2024, the Company had incurred and paid $3,667 of
administrative services fees. The administrative services fees are included in General and administrative costs in the Companys
statements of operations.
Our
sponsor, directors and officers, or any of their respective affiliates, will be reimbursed for any out- of-pocketexpenses incurred
in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, directors, officers
or our or any of their respective affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There
is no cap or ceiling on the reimbursement of out-of-pocketexpenses incurred by such persons in connection with activities on our
behalf.
In
order to finance transaction costs in connection with an initial business combination, the sponsor or an affiliate of the sponsor, or
certain of the Companys officers and directors may, but are not obligated to, loan the Company funds as may be required. If the
Company completes an initial business combination, the Company would repay the Working Capital Loans out of the proceeds of the trust
account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the trust account.
In the event that an initial business combination does not close, the Company may use a portion of proceeds held outside the trust account
to repay the Working Capital Loans, but no proceeds held in the trust account would be used to repay the Working Capital Loans. Except
for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect
to such loans. The Working Capital Loans would either be repaid upon consummation of an initial business combination, without interest,
or, at the lenders discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units at a price of $10.00
per unit. The units would be identical to the private placement units. As of December 31, 2025, no such Working Capital Loans were outstanding.
On
April 15, 2025, the Company entered into a convertible promissory note dated March 31, 2025 (the Working Capital Note)
with its sponsor. Pursuant to the Working Capital Note, the Company may request, and in the sole discretion of the sponsor, the sponsor
may loan the Company, drawdowns of up to an aggregate $1,500,000 in principal from time to time, less $11,730 which was advanced prior
to the execution of the Working Capital Note, and included as outstanding thereunder, with such amounts to be used for working capital.
Amounts
owed under the Working Capital Note do not accrue interest and are payable on the earlier of: (i) the effective date of the consummation
of the Companys Business Combination; or (ii) the date that the winding up of the Company is effective (such date, as applicable,
the Maturity Date), unless accelerated upon the occurrence of an Event of Default (as defined in the Working Capital
Note).
Amounts
outstanding under the Working Capital Note, are convertible, at the option of the sponsor, into units of the Company (Working
Capital Note Units), at a conversion price of $10.00 per Working Capital Note Unit. The Working Capital Note Units will be
identical to the Private Units issued to the sponsor at the time of the Companys Initial Public Offering.
As
of December 31, 2025 and 2024, $11,730 and $0, respectively, was outstanding under the Working Capital Note.
****
92
****
After
our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees
from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the
tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held
to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to
determine executive officer and director compensation.
We
have entered into a registration rights agreement with respect to the founder shares, private placement units and units issued upon conversion
of working capital loans (if any), which is described under the heading Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder MattersPrincipal StockholdersRegistration Rights.
****
**Related
Party Policy**
Our
Code of Ethics, requires us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved
by our board of directors (or the appropriate committee of our board of directors) or as disclosed in our public filings with the SEC.Under
our Code of Ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any
indebtedness or guarantee of indebtedness) involving the company.
In
addition, our audit committee charter provides that the audit committee will be responsible for reviewing and approving related party
transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee
present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the
members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members
of the audit committee will be required to approve a related party transaction. Our audit committee will review on a quarterly basis
all payments that were made by us to our sponsor, directors or officers, or our or any of their respective affiliates.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a
conflict of interest on the part of a director, employee or officer.
To
further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated
with any of our sponsor, directors or officers unless we, or a committee of independent and disinterested directors, have obtained an
opinion from an independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on
the type of target business we are seeking to acquire that our initial business combination is fair to our company from a financial point
of view. Furthermore, there will be no finders fees, reimbursements or cash payments made by us to our sponsor, directors or officers,
or our or any of their respective affiliates, for services rendered to us prior to or in connection with the completion of our initial
business combination, other than the following payments, none of which will be made from the proceeds of our IPO and the sale of the
private placement units held in the trust account prior to the completion of our initial business combination:
|
| repayment
of an aggregate of up to $800,000 under the amended promissory note made to us by our sponsor to cover offering- related and organizational
expenses; |
|
|
| reimbursement
for any out-of-pocketexpenses related to identifying, investigating and completing an initial business combination; and |
|
|
| repayment
of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our directors and officers to fund working capital
deficiencies or finance transaction costs in connection with an intended initial business combination, the terms of which have not been
determined, nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into
units, at a price of $10.00 per unit at the option of the lender. |
|
93
The
above payments may be funded using the net proceeds of our IPO and the sale of the private placement units not held in the trust account
or, upon completion of the initial business combination, from any amounts remaining from the proceeds of the trust account released to
us in connection therewith.
****
**Indemnification
Agreements**
We
have entered into indemnification agreements with each of our directors and officers. The indemnification agreements and our amended
and restated certificate of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted
by Delaware law.
****
**Director
Independence**
Nasdaq
listing standards require that a majority of our board of directors be independent. An independent director is defined
generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship
which in the opinion of the companys board of directors, would interfere with the directors exercise of independent judgment
in carrying out the responsibilities of a director. Our board of directors has determined that all of our directors, other than Mr. Rodgers
are independent directors as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors
will have regularly scheduled meetings at which only independent directors are present.
****
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
WithumSmith+Brown,
PC, or Withum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Withum for services
rendered during 2025 and 2024.
*Audit
Fees*. For the year ended December31, 2025 and 2024, fees were approximately $102,000 and $86,000, for the services Withum performed
in connection with our initial public offering, review of the financial information included in our Quarterly Reports on Form 10-Q for
the respective periods and the audit of our December31, 2025 and 2024 financial statements included in this Annual Report.
*Audit-Related
Fees.* For the year ended December31, 2025 and 2024, no fees were paid to Withum for audit-related services.
*Tax
Fees*. For the year ended December31, 2025 and 2024, no fees were paid to Withum for services rendered to us for tax compliance,
tax advice and tax planning.
*All
Other Fees*. For the year ended December31, 2025 and 2024, Withum did not render any services to us other than those set forth
above.
**Pre-Approval
Policy**
Our
audit committee was formed in connection with the effectiveness of our registration statement for our initial public offering. As a result,
the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit
committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit
committee has and will pre-approve all audit services and permitted non-audit services to be performed for us by our auditors, including
the fees and terms thereof (subject to the*de minimis*exceptions for non-audit services described in the Exchange Act
which are approved by the audit committee prior to the completion of the audit).
94
****
PART
IV
****
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a) | Documents
filed as part of this Annual Report: |
|
|
(1) | Financial
Statements |
|
The financial statements and notes are
included herein under Part II-Item 8. Financial Statements and Supplementary Data.
**CO2
ENERGY TRANSITION CORP.**
**TABLE
OF CONTENTS TO FINANCIAL STATEMENTS**
|
|
Page | |
|
Index to Financial Statements |
| |
|
Report of Independent Registered Public Accounting Firm (ID #100) |
F-2 | |
|
Balance Sheets |
F-3 | |
|
Statements of Operations |
F-4 | |
|
Statements of Stockholders Deficit |
F-5 | |
|
Statements of Cash Flows |
F-6 | |
|
Notes to Financial Statements |
F-7 | |
|
(2) | Financial
Statement Schedules |
|
All
schedules are omitted because they are inapplicable or not required or the required information is shown in the financial statements
or notes thereto.
|
(3) | Exhibits
required by Item 601 of Regulation S-K |
|
|
No. |
|
Description
of Exhibit | |
|
1.1 |
|
Underwriting
Agreement, dated November 20, 2024 by and between the Company and Kingswood Capital Partners, LLC, as representative of the underwriters
listed on Schedule A thereto (filed as Exhibit 1.1 to the Companys Current Report on Form 8-K filed with the Securities and
Exchange Commission on November 25, 2024, and incorporated herein by reference)(File No. 001-42417). | |
|
3.1 |
|
Certificate
of Incorporation (filed as Exhibit 3.1 to the Companys Form S-1/A Registration Statement (Amendment No. 1), filed with the
Securities and Exchange Commission on March 17, 2023, and incorporated herein by reference)(File No. 333-269932). | |
|
3.2 |
|
Certificate
of Amendment to Certificate of Incorporation, filed with the Secretary of State on December 15, 2021 (filed as Exhibit 3.2 to the
Companys Form S-1/A Registration Statement (Amendment No. 1), filed with the Securities and Exchange Commission on March 17,
2023, and incorporated herein by reference)(File No. 333-269932). | |
|
3.3 |
|
Amended
& Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on November 25, 2024, and incorporated herein by reference)(File No. 001-42417). | |
|
3.4 |
|
Bylaws
of CO2 Energy Transitions Corp. (filed as Exhibit 3.4 to the Companys Form S-1/A Registration Statement (Amendment No. 1),
filed with the Securities and Exchange Commission on March 17, 2023, and incorporated herein by reference)(File No. 333-269932). | |
|
4.1 |
|
Warrant
Agreement, dated November 20, 2024, by and between the Company and Continental Stock Transfer & Trust Company, LLC (filed as
Exhibit 4.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024,
and incorporated herein by reference)(File No. 001-42417). | |
|
4.2 |
|
Rights
Agreement, dated November 20, 2024, by and between the Company and Continental Stock Transfer & Trust Company, LLC (filed as
Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024,
and incorporated herein by reference)(File No. 001-42417). | |
|
4.3 |
|
Description
of Registrants Securities(filed as Exhibit 4.3 to the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 2025, and incorporated herein by reference)(File No. 001-42417) | |
95
|
10.1 |
|
Promissory
Note, dated April 20, 2024, issued to CO2 Energy Transfer, LLC(filed as Exhibit 10.1 to the Companys Form S-1/A
Registration Statement (Amendment No. 5), filed with the Securities and Exchange Commission on May 3, 2023, and incorporated herein
by reference)(File No. 333-269932). | |
|
10.2 |
|
Revised
Securities Subscription Agreement, dated December 1, 2023, between the Registrant and CO2 Energy Transition, LLC as amended and restated(filed
as Exhibit 10.5 to the Companys Form S-1/A Registration Statement (Amendment No. 3), filed with the Securities and Exchange
Commission on March 22, 2024, and incorporated herein by reference)(File No. 333-269932). | |
|
10.3 |
|
Letter
Agreement, dated November 20, 2024, by and among the Company and its officers, directors and the Sponsor (filed as Exhibit 10.1 to
the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024, and incorporated
herein by reference)(File No. 001-42417). | |
|
10.4 |
|
Investment
Management Trust Agreement, dated November 20, 2024, by and between the Company and Continental Stock Transfer & Trust Company,
LLC (filed as Exhibit 10.2 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 25, 2024, and incorporated herein by reference)(File No. 001-42417). | |
|
10.5 |
|
Registration
Rights Agreement, dated November 20, 2024, by and among the Company and certain security holders (filed as Exhibit 10.3 to the Companys
Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024, and incorporated herein by reference)(File
No. 001-42417). | |
|
10.6 |
|
Administrative
Services Agreement, dated November 20, 2024, by and between the Company and the Sponsor (filed as Exhibit 10.4 to the Companys
Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024, and incorporated herein by reference)(File
No. 001-42417). | |
|
10.7 |
|
Indemnity
Agreement, dated as of November 20, 2024, by and between the Company and each of the officers and directors of the Company (filed
as Exhibit 10.5 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25,
2024, and incorporated herein by reference) (File No. 001-42417). | |
|
10.8 |
|
Private
Placement Units Purchase Agreement, dated November 20, 2024, by and between the Company and the Sponsor (filed as Exhibit 10.6 to
the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2024, and incorporated
herein by reference)(File No. 001-42417). | |
|
10.9 |
|
Convertible
Promissory Note, dated March 31, 2025, and entered into on April 15, 2025, by and between CO2 Energy Transition Corp. and CO2 Energy
Transition, LLC (filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission
on April 21, 2025, and incorporated herein by reference)(File No. 001-42417) | |
|
14.1 |
|
Code
of Ethics and Business Conduct (filed as Exhibit 14.1 to the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 2025, and incorporated herein by reference)(File No. 001-42417) | |
|
16.1 |
|
Letter
from BDO USA, P.C.(filed as Exhibit 16.1 to the Companys Form S-1/A Registration Statement (Amendment No. 2), filed
with the Securities and Exchange Commission on January 9, 2024, and incorporated herein by reference)(File No. 333-269932). | |
|
19.1 |
|
CO2
Energy Transition Corp. Policy on Insider Trading (filed as Exhibit 19.1 to the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 2025, and incorporated herein by reference)(File No. 001-42417) | |
|
31.1* |
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
31.2* |
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
32.1** |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
32.2** |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
97.1 |
|
CO2
Energy Transition Corp. Clawback Policy (filed as Exhibit 97.1 to the Companys Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 2025, and incorporated herein by reference)(File No. 001-42417) | |
|
101.INS* |
|
Inline
XBRL Instance Document | |
|
101.SCH* |
|
Inline
XBRL Taxonomy Extension Schema Document | |
|
101.CAL* |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase Document | |
|
101.DEF* |
|
Inline
XBRL Taxonomy Extension Definition Linkbase Document | |
|
101.LAB* |
|
Inline
XBRL Taxonomy Extension Labels Linkbase Document | |
|
101.PRE* |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase Document | |
|
104 |
|
Inline
XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set* | |
|
* | Filed
herewith. |
|
|
** | Furnished
herewith. |
|
The
Company does not have any subsidiaries.
****
ITEM
16. FORM 10K SUMMARY.
****
Not
provided.
96
****
**SIGNATURES**
****
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned there under duly authorized.
|
|
CO2 Energy Transitions Corp. | |
|
|
|
| |
|
Dated: March 13, 2026 |
By: |
/s/ Brady Rodgers | |
|
|
|
Brady Rodgers, Chief Executive Officer | |
|
|
|
(Principal Executive Officer) | |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
|
Name |
|
Title |
|
Date | |
|
|
|
|
|
| |
|
/s/
Brady Rodgers |
|
Chief
Executive Officer |
|
| |
|
Brady
Rodgers |
|
(Principal
Executive Officer) |
|
March 13, 2026 | |
|
|
|
|
|
| |
|
/s/
Harold R. DeMoss, III |
|
Chief
Financial Officer |
|
| |
|
Harold
R. DeMoss, III |
|
(Principal
Financial and Accounting Officer) |
|
March
13, 2026 | |
|
|
|
|
|
| |
|
/s/
William H. Flores |
|
|
|
| |
|
William
H. Flores |
|
Director
|
|
March
13, 2026 | |
|
|
|
|
|
| |
|
/s/
Marcella Burke |
|
|
|
| |
|
Marcella
Burke |
|
Director |
|
March
13, 2026 | |
|
|
|
|
|
| |
|
/s/
James Wang |
|
|
|
| |
|
James
Wang |
|
Director |
|
March
13, 2026 | |
|
|
|
|
|
| |
|
/s/
Charles E. Fox |
|
|
|
| |
|
Charles
E. Fox |
|
Director
and Chairman of the Board |
|
March
13, 2026 | |
97