Climaterock(CLRCU) - 2023 Q4 - Annual Report

PART I Item 1. Business. ClimateRock, a blank check company, seeks to acquire a sustainable energy target in OECD countries, recently shifting from EEW to a merger agreement with GreenRock by May 2, 2024 Overview - ClimateRock is a blank check company formed on December 6, 2021, focused on acquiring a target within the sustainable energy industry in OECD countries, such as GreenRock[22] - The 2024 SPAC Rules, effective July 1, 2024, may materially affect the company's ability to negotiate and complete its initial business combination, potentially increasing costs and time[23][10] Initial Public Offering - On May 2, 2022, ClimateRock consummated its IPO of 7,875,000 units at $10.00 per unit, generating gross proceeds of $78,750,000[24] - Simultaneously, 3,762,500 private placement warrants were sold to the sponsor for $3,762,500, with a total of $79,931,250 placed in a trust account[25] Extension of our Combination Period - On April 27, 2023, shareholders approved an extension of the business combination deadline from November 2, 2023, to May 2, 2024[27] - In connection with the extension, shareholders holding 5,297,862 shares redeemed their shares, resulting in $55,265,334.22 (approximately $10.43 per share) being removed from the trust account[27] Founder Share Conversion - On March 31, 2023, 1,968,749 Class B ordinary shares held by the sponsor were converted into an equal number of Class A ordinary shares[30] - Following the conversion and redemptions, the sponsor held 42.21% of the outstanding Class A ordinary shares[30] Termination of Proposed Business Combination with EEW - ClimateRock terminated its Business Combination Agreement with E.E.W. Eco Energy World PLC on November 29, 2023, as closing conditions were not satisfied by the September 30, 2023, outside date[33] GreenRock Business Combination - On December 30, 2023, ClimateRock entered into a merger agreement with GreenRock Corp, where ClimateRock will become a wholly-owned subsidiary of Holdings, and GreenRock will merge into Company Merger Sub, also becoming a wholly-owned subsidiary of Holdings[34][35] - The merger consideration for GreenRock shareholders will be 44,685,000 newly-issued Holdings Ordinary Shares, with 16,685,000 shares held in escrow subject to GreenRock's Adjusted EBITDA targets for 2024[37][38] - The transaction requires approval from both ClimateRock's and GreenRock's shareholders, and the post-Closing board of Holdings will consist of seven individuals, with a majority being independent directors[42][44] Our Team - The management team is led by Per Regnarsson (CEO) and Charles Ratelband V (Executive Chairman), both with extensive experience in sustainable energy investment and management[59][61] Business and Investment Strategies - The investment strategy focuses on the sustainable energy industry in OECD countries, particularly within climate change, environment, renewable energy, and emerging clean technologies[63] - The company adheres to UN Principles for Responsible Investment (PRI) and ESG principles, aiming to contribute to Sustainable Development Goals 7, 11, 12, and 13[65] Business Combination Criteria - Key criteria for evaluating business combinations include alignment with corporate values, differentiated technology, sustainable business models, defensible market positions, recurring revenues, growth potential, and positive environmental/social impact[71] Competitive Strengths - Competitive strengths include a strong management team with extensive experience in acquisitions and renewable energy, broad sourcing channels, rigorous underwriting and execution capabilities, and public company operating expertise[75][76][77][78][79] Initial Business Combination - Nasdaq rules require the business combination to have an aggregate fair market value of at least 80% of the assets in the trust account[80] - The company must complete its initial business combination by May 2, 2024, with potential for further extensions requiring shareholder approval and redemption opportunities[82] - The sponsor has agreed to contribute $75,000 per month as a non-interest bearing loan to extend the combination period until May 2, 2024[83] Our Business Combination Process - The company conducts thorough due diligence, including financial and operational data review, management meetings, and legal reviews[85] - Conflicts of interest may arise due to officers and directors owning founder shares and private placement warrants, or having obligations to other entities[87][88][89] Our Management Team - Management team members devote time as necessary to business combination matters and leverage their broad network of contacts in various industries[91][92] Status as a Public Company - Being a public company offers target businesses greater access to capital, enhanced management incentives, and increased profile, potentially making it a more expeditious and cost-effective method than a traditional IPO[93][94][95] - ClimateRock is an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of reduced disclosure and accounting compliance requirements[98][101] Effecting Our Initial Business Combination - The company intends to effectuate its initial business combination using cash from IPO proceeds, private placement warrants, sale of shares, debt, or a combination thereof[104] - Additional financing may be sought through private offerings of debt or equity securities, especially for larger target businesses[106] Sources of Target Businesses - Target candidates are sourced from unaffiliated investment bankers, investment professionals, and the management team's broad network[107] - The company pays a monthly fee of $10,000 to an affiliate of its sponsor for administrative services and reimburses out-of-pocket expenses related to identifying and completing a business combination[107] Selection of a Target Business and Structuring of a Business Combination - The business combination must have an aggregate fair market value of at least 80% of the assets in the trust account, determined by the board or an independent firm[110] - The company will only complete a business combination where it owns or acquires 50% or more of the target's voting securities or a controlling interest to avoid being an investment company[112] Lack of Business Diversification - The company's success may depend entirely on the future performance of a single business, leading to risks associated with lack of diversification in a single industry[116][118] Limited Ability to Evaluate the Target Business' Management - There is no assurance that the assessment of a target business's management will be correct or that future management will have the necessary skills for a public company[120] Shareholders May Not Have the Ability to Approve an Initial Business Combination - The company will either seek shareholder approval with redemption rights or conduct a tender offer, but must maintain at least $5,000,001 in net tangible assets post-combination[123][124] - The sponsor, initial shareholders, officers, and directors have agreed to vote in favor of any proposed business combination and not to convert or sell their shares[125] Permitted Purchases of Our Securities - The sponsor, initial shareholders, directors, officers, advisors, or their affiliates may purchase shares or public warrants in privately negotiated transactions or the open market to influence votes or meet closing conditions[130][132] Redemption Rights for Public Shareholders upon Completion of our Initial Business Combination - Public shareholders have the opportunity to redeem their ordinary shares at a per-share price equal to the pro rata portion of the trust account, approximately $11.06 per public share[136] - The sponsor, officers, and directors have waived their redemption rights for founder shares and any public shares they hold[136] Manner of Conducting Redemptions - Redemptions can be conducted either in connection with a general meeting to approve the business combination or by means of a tender offer, at the company's discretion[137] - If shareholder approval is required, the company will complete the business combination only if an ordinary resolution (majority vote) is obtained under Cayman Islands law[145] Limitation on Redemption upon Completion of our Initial Business Combination if we Seek Shareholder Approval - Public shareholders are restricted from seeking redemption rights for more than an aggregate of 15% of the shares sold in the initial public offering ('Excess Shares') without prior consent[149] Tendering Share Certificates in Connection with a Tender Offer or Redemption Rights - Public shareholders exercising redemption rights may be required to tender their certificates to the transfer agent prior to the specified date or deliver shares electronically via the DWAC System[152] Time to Complete Business Combination - The company has until May 2, 2024, to consummate an initial business combination, with potential for extensions funded by sponsor loans of $75,000 per month[159] Liquidation if No Business Combination - If no business combination is completed by May 2, 2024, the company will cease operations, redeem all public shares at a pro rata portion of the trust account (approximately $11.06 per share), and liquidate[161][167] - Warrants will expire worthless if a business combination is not completed by the deadline[162] - The sponsor, officers, and directors have waived their rights to liquidating distributions from the trust account for founder shares[163] Amended and Restated Memorandum and Articles of Association - Key provisions include seeking shareholder approval or tender offer for business combinations, maintaining $5,000,001 net tangible assets, and redeeming public shares if no combination by May 2, 2024[176] Competition - The company faces competitive disadvantages due to shareholder approval obligations, redemption rights, and outstanding warrants, but its public entity status and access to equity markets may offer advantages[180][181] Facilities - Principal executive offices are in London, United Kingdom, with costs covered by a $10,000 per-month fee paid to an affiliate of the sponsor[183] Employees - The company currently has two officers and no full-time employees, with officers dedicating time as needed for business combination efforts[185] Periodic Reporting and Audited Financial Statements - As a public company, ClimateRock has reporting obligations with the SEC, including annual, quarterly, and current reports with audited financial statements[186] - The company is an 'emerging growth company,' allowing it to delay adoption of certain accounting standards until private companies are required to comply[99][189] - ClimateRock is a blank check company formed to effect an initial business combination, primarily targeting the sustainable energy industry in OECD countries, including climate change, environment, renewable energy, and clean technologies[22] - The company terminated its proposed business combination with E.E.W. Eco Energy World PLC on November 29, 2023, due to unfulfilled closing conditions by the outside date of September 30, 2023[33] - On December 30, 2023, ClimateRock entered into a merger agreement with GreenRock Corp, involving a share exchange of 44,685,000 newly-issued Holdings Ordinary Shares, with 16,685,000 escrowed shares subject to GreenRock's Adjusted EBITDA targets for 2024[34][35][37] Item 1A. Risk Factors. The company faces significant risks including failure to complete a business combination, conflicts of interest, new SEC SPAC rules, and material weaknesses in internal controls - Key risks include the inability to complete an initial business combination (including GreenRock), potential conflicts of interest for officers/directors, and the trust account funds not being protected against third-party claims[191] - The SEC's 2024 SPAC Rules, effective July 1, 2024, will increase disclosure requirements and may affect the ability to negotiate and complete business combinations, potentially increasing costs and time[10][201][203] - The company has identified material weaknesses in internal control over financial reporting related to the classification of cash in the trust account and deferred underwriting commissions, leading to restatements of prior financial statements[213][214][216] Item 1B. Unresolved Staff Comments. The company has no unresolved staff comments applicable to its operations - The company has no unresolved staff comments[219] Item 1C. Cybersecurity. ClimateRock, lacking internal data security investments, relies on third-party technologies, making it vulnerable to cyber incidents with limited remediation resources - As a blank check company, ClimateRock has no operations but relies on third-party digital technologies, making it susceptible to cyber incidents[220] - The company lacks significant investments in data security protection and sufficient resources to adequately protect against or remediate cyber vulnerabilities[198][220] - Management reports cybersecurity incidents to the board and provides updates on response plans, but no incidents have been encountered since the IPO[220] Item 2. Properties. The company's principal executive offices are in London, with costs covered by a monthly administrative fee to an affiliate - The company's principal executive offices are located at 25 Bedford Square, London, WC1B 3HH, United Kingdom[221] - The cost for the office space is included in the $10,000 per month fee paid to Gluon Group, an affiliate of the sponsor, for administrative services[183][221] Item 3. Legal Proceedings. No material litigation is currently pending or contemplated against the company or its officers and directors - There is no material litigation currently pending or contemplated against ClimateRock or its officers or directors[222] Item 4. Mine Safety Disclosures. Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to the company[222] PART II Item 5. Market For Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. ClimateRock's securities trade on Nasdaq, with limited holders; no dividends are planned before a business combination, and the sponsor holds 42.21% of Class A shares post-conversion Market Information - Units, public shares, public warrants, and public rights are traded on Nasdaq[224] Holders - As of March 18, 2024, there was one holder of record for units, two for Class A ordinary shares, one for warrants, and one for rights[225] Dividends - The company has not paid cash dividends and does not intend to prior to completing its initial business combination[226] Securities Authorized for Issuance Under Equity Compensation Plans - No securities are authorized for issuance under equity compensation plans[227] Recent Sales of Unregistered Securities - On March 31, 2023, 1,968,749 Class B ordinary shares were converted to Class A ordinary shares for the sponsor, which remain unregistered until demanded by the sponsor[227] - Following the conversion and redemptions, the sponsor held 42.21% of the outstanding Class A ordinary shares[227] Use of Proceeds from the Initial Public Offering - There has been no material change in the planned use of proceeds from the initial public offering and private placement[228] Purchases of Equity Securities by the Issuer and Affiliated Purchasers - There were no purchases of equity securities by the issuer or affiliated purchasers[229] - ClimateRock's units, public shares, public warrants, and public rights are traded on Nasdaq under symbols 'CLRCU', 'CLRC', 'CLRCW', and 'CLRCR' respectively[224] - As of March 18, 2024, there were 4,664,012 Class A ordinary shares and 1 Class B ordinary share issued and outstanding[7] - The company has not paid any cash dividends and does not intend to prior to the completion of its initial business combination[226] - On March 31, 2023, 1,968,749 Class B ordinary shares were converted to Class A ordinary shares, with the sponsor holding 42.21% of the outstanding Class A ordinary shares[227] Item 6. [RESERVED] This item is reserved and contains no information - Item 6 is reserved[229] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. ClimateRock, a blank check company, reported a net income of $483,430 in 2023, driven by trust account interest, but faces going concern doubts due to working capital deficit and reliance on related-party loans Overview - ClimateRock is a Cayman Islands exempted company, a blank check company formed on December 6, 2021, to effect an initial business combination[232] - The company focuses on opportunities in environmental protection, renewable energy, and fighting climate change, targeting companies with established operating models and positive cash flow prospects[233] Initial Public Offering - The IPO of 7,875,000 units at $10.00 per unit, including over-allotment, generated $78,750,000 gross proceeds on May 2, 2022[235] - Simultaneously, 3,762,500 private placement warrants were sold to the sponsor for $3,762,500, with $79,931,250 placed in the trust account[236][239] Extension of our Combination Period - The business combination deadline was extended from November 2, 2023, to May 2, 2024, following shareholder approval on April 27, 2023[241] - Shareholders redeemed 5,297,862 shares, resulting in $55,265,334 (approximately $10.43 per share) being removed from the trust account[241] Founder Share Conversion - On March 31, 2023, 1,968,749 Class B ordinary shares were converted to Class A ordinary shares, with the sponsor holding 42.21% of outstanding Class A shares post-redemptions[244] Termination of the EEW Business Combination - The Business Combination Agreement with EEW was terminated on November 29, 2023, due to unfulfilled closing conditions by the September 30, 2023, outside date[246] GreenRock Business Combination - On December 30, 2023, ClimateRock entered into a merger agreement with GreenRock, where both companies will become wholly-owned subsidiaries of Pubco[247] Results of Operations Net Income (Loss) Comparison | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------- | :---------------------- | :---------------------- | | Net Income (Loss) | $483,430 | $(675,874) | | Dividend Income | $2,134,446 | $1,107,852 | | Operating Costs | $1,528,302 | $1,666,924 | Factors That May Adversely Affect our Results of Operations - Results of operations and ability to complete a business combination may be adversely affected by economic uncertainty, financial market volatility, inflation, interest rate increases, supply chain disruptions, and geopolitical instability[252] Liquidity, Capital Reserves and Going Concern - As of December 31, 2023, the company had a cash balance of $57,290 and a working capital deficit of $3,168,483, raising substantial doubt about its ability to continue as a going concern[422] - The company relies on non-interest bearing, unsecured loans from Eternal (an affiliate) and a convertible promissory note from the Sponsor to finance operations and transaction costs[255][256][257][259][260][262] Related Party Loans Outstanding (as of Dec 31, 2023) | Loan Type | Outstanding Balance | Maturity Date | Interest Rate | | :------------------ | :------------------ | :------------ | :------------ | | Second Eternal Loan | $170,603 | Mar 31, 2024 | 0% | | Third Eternal Loan | $300,000 | Mar 31, 2024 | 0% | | Fourth Eternal Loan | $50,000 | Mar 31, 2025 | 0% | | Fifth Eternal Loan | $653,619 | May 1, 2024 | 0% | | Sixth Eternal Loan | $357,302 | Aug 1, 2024 | 0% | | Extension Note | $600,000 | May 2, 2024 | 0% | Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements as of December 31, 2023[264] Contractual Obligations - Holders of founder shares and private placement warrants are entitled to registration rights[266] - Underwriters are entitled to a deferred commission of $2,362,500, payable upon completion of an initial business combination, and a right of first refusal for future offerings[267][268] - The company has agreements for legal (EGS), financial advisory (Maxim, ALANTRA), and consulting (Gluon Partners) services, with fees often contingent on successful business combination completion[269][270][271][277] Critical Accounting Estimates - The preparation of financial statements requires management to make estimates and assumptions in conformity with GAAP, which could materially differ from actual results[283] - ClimateRock is a blank check company with no operating revenues, generating non-operating income from interest on trust account proceeds[234][249] Net Income (Loss) Comparison | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------- | :---------------------- | :---------------------- | | Net Income (Loss) | $483,430 | $(675,874) | | Dividend Income | $2,134,446 | $1,107,852 | | Operating Costs | $1,528,302 | $1,666,924 | - As of December 31, 2023, the company had a cash balance of $57,290 and a working capital deficit of $3,168,483, raising substantial doubt about its ability to continue as a going concern[422] Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, ClimateRock is exempt from market risk disclosures - As a smaller reporting company, ClimateRock is exempt from providing quantitative and qualitative disclosures about market risk[285] Item 8. Financial Statements and Supplementary Data. Audited financial statements and supplementary data are incorporated by reference, commencing on page F-1 of this report - The audited financial statements and supplementary data are incorporated by reference and can be found starting on page F-1 of this report[286] Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure. The company reports no changes or disagreements with its accountants on financial disclosure matters - There have been no changes in or disagreements with accountants on accounting and financial disclosure[286] Item 9A. Controls and Procedures. Disclosure controls were ineffective as of December 31, 2023, due to material weaknesses in financial statement classification, leading to restatements, despite partial remediation efforts Evaluation of Disclosure Controls and Procedures - The company's disclosure controls and procedures were concluded to be not effective as of December 31, 2023[288] Material Weaknesses - Deficiencies in internal control over financial reporting were identified regarding the classification of cash and cash equivalents in the trust account and deferred underwriting commissions[290] - These deficiencies resulted in accounting errors and required the restatement of previously issued financial statements[290] Partial Remediation of Material Weakness - Management successfully remediated the material weakness related to properly recording and accruing expenses as of December 31, 2023[292][293] Management's Annual Report on Internal Controls Over Financial Reporting - Management determined that the company did not maintain effective internal control over financial reporting as of December 31, 2023, due to the identified material weaknesses[296] - Remediation steps include expanding and improving the review process for complex securities and accounting standards[298] Changes in Internal Control Over Financial Reporting - Other than the discussed material weaknesses and remediation efforts, there have been no other material changes to internal control over financial reporting during 2023[300] - Disclosure controls and procedures were not effective as of December 31, 2023, due to material weaknesses[288] - Material weaknesses were identified in internal control over financial reporting relating to the classification of cash and cash equivalents held in the trust account and deferred underwriting commissions[290] - These accounting errors led to the restatement of previously issued financial statements for multiple periods, including the audited balance sheet as of May 2, 2022, and subsequent quarterly and annual reports[290] - Management has remediated a previously reported material weakness related to properly recording and accruing expenses through enhanced controls and oversight[292][293] Item 9B. Other Information. No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q4 2023 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended December 31, 2023[301] Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections. This disclosure item is not applicable to the company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the company[301] PART III Item 10. Directors Executive Officers and Corporate Governance. The board comprises six members, including independent directors, with staggered terms and committees, operating under a Code of Ethics, insider trading, and clawback policies Directors and Officers ClimateRock Directors and Officers | Name | Age | Position | | :----------------- | :-- | :---------------------------- | | Per Regnarsson | 57 | Director and Chief Executive Officer | | Charles Ratelband V| 43 | Director and Executive Chairman | | Abhishek Bawa | 40 | Chief Financial Officer | | Niels Brix | 50 | Independent Director | | Randolph Sesson, Jr.| 59 | Independent Director | | Caroline Harding | 43 | Independent Director | | Sean Kidney | 66 | Independent Director | - Per Regnarsson and Charles Ratelband V will also serve on the board of directors of Pubco following the GreenRock Business Combination[303][304] Family Relationships - No family relationships exist between any of the directors or executive officers[314] Involvement in Certain Legal Proceedings - Mr. Charles Ratelband V was involved in a legal proceeding with the Netherlands Authority for the Financial Markets (AFM) regarding disclosure violations by WindShareFund N.V., which has since been resolved[315] Number and Terms of Office of Officers and Directors - The board of directors is divided into three classes with staggered three-year terms, with one class elected each year[317] - Officers are appointed by and serve at the discretion of the board of directors[317] Committees of the Board of Directors - The board has three standing committees: an audit committee, a compensation committee, and a nominating and corporate governance committee[319] - Nasdaq rules require these committees to be comprised solely of independent directors[319] Audit Committee - Randolph Sesson, Jr., Niels Brix, and Caroline Harding serve on the audit committee, with Ms. Harding as chair and qualifying as an 'audit committee financial expert'[320][321] - The audit committee's functions include appointing and overseeing the independent registered public accounting firm, pre-approving services, and reviewing related party transactions[321] Compensation Committee - Randolph Sesson, Jr. and Niels Brix serve on the compensation committee, with Mr. Brix as chair, and all members are independent[323] - The committee reviews and approves executive compensation, policies, and incentive plans, but no compensation will be paid to existing shareholders, officers, or directors prior to an initial business combination, except for administrative fees and expense reimbursements[324][325] Nominating and Corporate Governance Committee - Randolph Sesson, Jr., Niels Brix, and Caroline Harding serve on the nominating and corporate governance committee, with Mr. Sesson, Jr. as chair, and all members are independent[328] - The committee identifies and recommends director candidates, develops corporate governance guidelines, and oversees board self-evaluation[330] Code of Ethics - The company has adopted a Code of Ethics applicable to its directors, officers, and employees[332] Trading Policies - An Insider Trading Policy was adopted on April 27, 2022, to govern securities transactions by directors, officers, and employees[333] Compensation Recovery and Clawback Policies - The board adopted an Executive Compensation Clawback Policy on October 1, 2023, to comply with SEC rules, allowing mandatory recovery of erroneously awarded incentive-based compensation from executive officers[337][338] - The board of directors consists of six members, including Per Regnarsson (CEO), Charles Ratelband V (Executive Chairman), Abhishek Bawa (CFO), and independent directors Niels Brix, Randolph Sesson, Jr., Caroline Harding, and Sean Kidney[303] - The board is divided into three classes with staggered terms, and officers are appointed by the board[317] - The company has established an audit committee, compensation committee, and nominating and corporate governance committee, all comprised solely of independent directors[319][320][323][328] - ClimateRock has adopted a Code of Ethics, Insider Trading Policy, and an Executive Compensation Clawback Policy to ensure compliance and governance[332][333][337] Item 11. Executive Compensation. Officers receive no cash compensation, with administrative fees paid to an affiliate and expense reimbursements; post-combination, consulting fees may be paid and disclosed - No cash compensation has been paid to officers for services rendered to the company[339] - An affiliate of the sponsor receives $10,000 per month for office space, utilities, and administrative support, and the sponsor is reimbursed for out-of-pocket expenses[339] - After the initial business combination, remaining directors or management team members may receive consulting or management fees from the combined company, with amounts to be fully disclosed[340] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. This section details beneficial ownership as of March 18, 2024, with the sponsor holding 42.2% of outstanding ordinary shares, alongside other 5% stockholders - As of March 18, 2024, beneficial ownership is based on 4,664,013 ordinary shares outstanding (4,664,012 Class A and 1 Class B)[344] Beneficial Ownership of Ordinary Shares (as of March 18, 2024) | Name and Address of Beneficial Owner | Class A Number of Shares Beneficially Owned | Ordinary Shares Approximate Percentage of Class | Class B Number of Shares Beneficially Owned | Ordinary Shares Approximate Percentage of Class | Approximate Percentage of Outstanding Ordinary Shares | | :----------------------------------- | :------------------------------------------ | :---------------------------------------------- | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------------- | | U.N. SDG Support LLC (our sponsor) | 1,968,749 | 42.2% | 1 | 100% | 42.2% | | Charles Ratelband V | — | —% | 1 | 100% | 42.2% | | All directors and officers as a group (seven individuals) | 1,968,749 | 42.2% | 1 | 100% | 42.2% | | Yakira Capital Management | 287,500 | 6.2% | — | —% | 6.2% | | Lawrence Feis | 325,684 | 7.0% | — | —% | 7.0% | | Shaolin Capital Management LLC | 268,822 | 5.8% | — | —% | 5.8% | | Meteora Capital, LLC | 265,552 | 5.7% | — | —% | 5.7% | Item 13. Certain Relationships and Related Transactions and Director Independence. The company has numerous related party transactions, including founder shares, private placement warrants, and non-interest-bearing loans from affiliates, with a Special Committee addressing GreenRock merger conflicts and a majority independent board - The sponsor initially received 2,156,250 founder shares for $25,000 and purchased 3,762,500 private placement warrants for $3,762,500[353][355] - The company has multiple non-interest-bearing loans from Eternal (an affiliate controlled by Charles Ratelband V, Executive Chairman) and a convertible promissory note from the Sponsor for monthly extension fees[362][363][364][365][366][370] Related Party Loans Outstanding (as of Dec 31, 2023) | Loan Type | Outstanding Balance | Maturity Date | Interest Rate | | :------------------ | :------------------ | :------------ | :------------ | | Second Eternal Loan | $170,603 | Mar 31, 2024 | 0% | | Third Eternal Loan | $300,000 | Mar 31, 2024 | 0% | | Fourth Eternal Loan | $50,000 | Mar 31, 2025 | 0% | | Fifth Eternal Loan | $653,619 | May 1, 2024 | 0% | | Sixth Eternal Loan | $357,302 | Aug 1, 2024 | 0% | | Extension Note | $600,000 | May 2, 2024 | 0% | - A Special Committee of disinterested directors negotiated the GreenRock Merger Agreement due to apparent conflicts of interest involving shared management[381] - Randolph Sesson, Jr., Niels Brix, Caroline Harding, and Sean Kidney are determined to be independent directors, forming a majority of the board[385] Item 14. Principal Accountant Fees and Services. This section details UHY LLP's audit and audit-related fees for 2023 and 2022, with no tax or other service fees, and all services pre-approved by the audit committee Principal Accountant Fees (UHY LLP) | Fee Type | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------- | :---------------------- | :---------------------- | | Audit Fees | $107,000 | $112,000 | | Audit-Related Fees| $56,000 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee pre-approves all auditing and permitted non-audit services performed by the auditors[390] PART IV Item 15. Exhibit and Financial Statement Schedules. This section lists the audited consolidated financial statements for 2023 and 2022, along with various agreements and certifications, filed as part of the 10-K report Financial Statements - The financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Shareholders' (Deficit) Equity, and Consolidated Statements of Cash Flows[392] Financial Statement Schedules - All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the consolidated financial statements and notes[392] Exhibits - The report includes an Exhibit Index listing various documents such as the Underwriting Agreement, Business Combination Agreements (EEW and GreenRock), Amended and Restated Memorandum and Articles of Association, and related party loan agreements[516] - The report includes audited financial statements for ClimateRock and Subsidiaries as of and for the years ended December 31, 2023 and 2022[392][395] - All financial statement schedules are omitted as they are not applicable, immaterial, or the information is presented in the consolidated financial statements and notes[392] - A comprehensive exhibit index is provided, listing various agreements, certificates, and policies, many of which are incorporated by reference[393][516] Item 16. Form 10-K Summary This item is omitted at the company's option - Form 10-K Summary is omitted at the company's option[393] Signatures The report is signed by ClimateRock's Chief Executive Officer, Executive Chairman, Chief Financial Officer, and other directors on March 18, 2024 - The report is signed by Per Regnarsson (Chief Executive Officer), Charles Ratelband V (Director and Executive Chairman), Abhishek Bawa (Chief Financial Officer), and independent directors Niels Brix, Randolph Sesson, Jr., Caroline Harding, and Sean Kidney[519][520] - The signing date for the report is March 18, 2024[519][520] Financial Statements Report of Independent Registered Public Accounting Firm UHY LLP audited ClimateRock's 2023 and 2022 financial statements, expressing a fair opinion but noting substantial doubt about the company's going concern ability - UHY LLP audited the consolidated financial statements for ClimateRock and Subsidiaries for the years ended December 31, 2023 and 2022, expressing a fair opinion in conformity with GAAP[395] - The auditors noted substantial doubt about the company's ability to continue as a going concern due to its business plan's dependence on future financing and the completion of an initial business combination, with insufficient cash and working capital[396] Consolidated Balance Sheets Total assets decreased from $81.56 million in 2022 to $28.57 million in 2023, primarily due to reduced trust account cash, while total liabilities increased to $5.64 million, leading to a higher shareholders' deficit Consolidated Balance Sheet Highlights | Metric | December 31, 2023 | December 31, 2022 | | :---------------------------------------- | :---------------- | :---------------- | | Total assets | $28,565,916 | $81,557,355 | | Cash and cash equivalents held in trust account | $28,508,214 | $81,039,102 | | Total current liabilities | $3,226,185 | $1,485,720 | | Total non-current liabilities | $2,412,500 | $2,362,500 | | TOTAL LIABILITIES | $5,638,685 | $3,848,220 | | Total shareholders' deficit | $(5,580,983) | $(3,329,967) | - The significant decrease in cash and cash equivalents held in the trust account is primarily due to shareholder redemptions in connection with the extension of the business combination period[27][401] - The increase in current liabilities is largely attributable to an increase in related-party loans and accrued liabilities[401] Consolidated Statements of Operations The company reported a net income of $483,430 in 2023, a significant improvement from a $675,874 net loss in 2022, driven by increased trust account dividend income Consolidated Statements of Operations Highlights | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :------------------------------------ | :---------------------- | :---------------------- | | Formation and operating costs | $1,528,302 | $1,666,924 | | Administrative service fees - related party | $122,904 | $101,223 | | Net loss from operations | $(1,651,206) | $(1,768,147) | | Dividend income on trust account | $2,134,446 | $1,107,852 | | Net income (loss) for the year | $483,430 | $(675,874) | - Dividend income from the trust account increased significantly from $1,107,852 in 2022 to $2,134,446 in 2023, contributing to the net income[403] - Operating expenses, including formation and administrative service fees, remained substantial in both periods[403] Consolidated Statements of Changes in Shareholders' (Deficit) Equity Shareholders' deficit increased from $(3,329,967) in 2022 to $(5,580,983) in 2023, reflecting net income offset by adjustments for redeemable Class A shares and Class B to Class A conversions Shareholders' (Deficit) Equity Changes | Metric | December 31, 2023 | December 31, 2022 | | :---------------------------------------- | :---------------- | :---------------- | | Total shareholders' deficit | $(5,580,983) | $(3,329,967) | | Net income (loss) | $483,430 | $(675,874) | | Adjustment to increase Class A ordinary shares subject to possible redemption to maximum redemption value | $(2,734,446) | $(81,039,102) | | Conversion of Class B to Class A ordinary shares | $197 | — | - The accumulated deficit increased from $(3,330,176) in 2022 to $(5,581,192) in 2023, despite a net income for the year, primarily due to the reclassification of redeemable shares[407] - The conversion of 1,968,749 Class B ordinary shares to Class A ordinary shares occurred in 2023[407] Consolidated Statements of Cash Flows Net cash decreased by $354,421 in 2023, resulting in an ending balance of $57,290, primarily due to cash used in operations and share redemptions, partially offset by investing activities Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :-------------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(1,405,945) | $(884,548) | | Net cash provided by (used in) investing activities | $54,665,334 | $(79,931,250) | | Net cash (used in) provided by financing activities | $(53,613,810) | $81,227,509 | | Net (decrease) increase in cash | $(354,421) | $411,711 | | Cash – end of the period | $57,290 | $411,711 | - Cash used in financing activities in 2023 was primarily due to $55,265,334 paid for redemption of ordinary shares[409] - Proceeds from related party loans and a convertible promissory note provided $1,060,921 and $600,000, respectively, in 2023[409] Notes to the Consolidated Financial Statements These notes detail ClimateRock's organization, accounting policies, IPO, business combination extension, and going concern doubts, along with related party transactions and commitments NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - ClimateRock is a Cayman Islands exempted company formed on December 6, 2021, as a blank check company to effect a business combination, focusing on sustainable energy[410] - The IPO on May 2, 2022, raised $78,750,000, and a private placement of warrants raised $3,762,500, with $79,931,250 placed in a trust account[413][414][416] - The business combination deadline was extended to May 2, 2024, and shareholder redemptions of 5,297,862 shares resulted in $55,265,334 being removed from the trust account[421] - The company's cash balance of $57,290 and working capital deficit of $3,168,483 as of December 31, 2023, raise substantial doubt about its ability to continue as a going concern[422] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The consolidated financial statements are presented in U.S. dollars in conformity with GAAP and include the accounts of the company and its subsidiaries[424] - Cash and cash equivalents held in the trust account are invested in U.S. government securities or money market funds and are classified as cash equivalents[428][430] - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[432][433] - Ordinary shares subject to possible redemption are classified as temporary equity and measured at redemption value[436] NOTE 3. INITIAL PUBLIC OFFERING - The IPO on May 2, 2022, involved 7,875,000 units at $10.00 each, with each unit consisting of one Class A ordinary share, one-half of one redeemable warrant, and one right[452][453] - Class A ordinary shares subject to possible redemption are classified outside of permanent equity due to redemption features not solely within the company's control[454] NOTE 4. PRIVATE PLACEMENT - On May 2, 2022, the company sold 3,762,500 private placement warrants to its sponsor at $1.00 per warrant, generating $3,762,500[458] - These warrants are exercisable for one Class A ordinary share at $11.50 per share and will expire worthless if a business combination is not completed within the combination period[458] NOTE 5. RELATED PARTY TRANSACTIONS - The company issued 2,156,250 founder shares to the Sponsor for $25,000, with 1,968,749 Class B shares converted to Class A shares on March 31, 2023[459][461] - Multiple non-interest-bearing loans (Second, Third, Fourth, Fifth, and Sixth Eternal Loans) were entered into with Eternal B.V., an affiliate controlled by Charles Ratelband V, with total outstanding balance of $1,481,524 as of December 31, 2023[464][465][466][467][468] - A convertible promissory note (Extension Note) of $900,000 was issued to the Sponsor for monthly installments into the Trust Account, with an outstanding balance of $600,000 as of December 31, 2023[472] - Administrative services are provided by Gluon Group, an affiliate, for a monthly fee of $10,000, and advisory services are provided by Gluon Partners, with fees contingent on successful transactions[473][474] NOTE 6. COMMITMENTS AND CONTINGENCIES - Holders of founder shares and private placement warrants are entitled to registration rights[480] - Underwriters are entitled to a deferred underwriting commission of $2,362,500, payable upon completion of a business combination, and were issued 118,125 Representative Shares[482][485] - The company has various transaction expense agreements, including with Ellenoff, Grossman & Schole LLP, Maxim, and ALANTRA Corporate Finance, S.A.U., with fees often contingent on transaction completion[488][490][492] - The Business Combination Agreement with EEW was terminated, and a new GreenRock Merger Agreement was entered into on December 30, 2023[497][498] NOTE 7. SHAREHOLDER'S EQUITY - The company is authorized to issue 479,000,000 Class A ordinary shares, 20,000,000 Class B ordinary shares, and 1,000,000 preference shares[499][500][501] - Warrants become exercisable 30 days after a business combination or 12 months from IPO closing, expire five years after a business combination, and may be redeemed by the company under certain conditions[505][506] - Each right entitles the holder to receive one-tenth (1/10) of one ordinary share upon consummation of a business combination, with no additional consideration required[512] NOTE 8. SUBSEQUENT EVENTS - On January 2, 2024, the company received an additional $203,409 transfer from the Sponsor, constituting further borrowing beyond the initial terms of the Sixth Eternal Loan[516] - ClimateRock is a Cayman Islands exempted blank check company focused on a business combination in climate change, environment, renewable energy, and clean technologies[410] - The company's financial statements are prepared in conformity with GAAP, and it is an 'emerging growth company' taking advantage of extended transition periods for new accounting standards[424][432][433] - As of December 31, 2023, the company had a working capital deficit of $3,168,483, raising substantial doubt about its ability to continue as a going concern[422]