CAPITALWORKS EME(CMCAU) - 2024 Q1 - Quarterly Report

Financial Performance - As of June 30, 2023, the company reported a net income of $1,056,119, primarily from interest income of $1,811,142 and a change in fair value of the derivative warrant liability of $48,720[153]. - For the three months ended June 30, 2023, net cash used in operating activities was $327,363, influenced by non-cash adjustments related to the change in fair value of the derivative warrant liability[158]. - The company incurred $60,000 in general and administrative expenses for the three months ended June 30, 2023, with an outstanding balance of $80,000 as of June 30, 2023[165]. - The company has not commenced any operations and will not generate operating revenues until after the completion of a Business Combination[152]. - The company faces substantial doubt about its ability to continue as a going concern for at least one year from the issuance date of the financial statements due to liquidity concerns[164]. Capital Structure - The company had a working capital deficit of approximately $1.8 million and only $12,920 in cash as of June 30, 2023[156]. - The company has no long-term debt obligations or off-balance sheet arrangements as of June 30, 2023[155]. - The company has the potential to raise up to $1,500,000 through Working Capital Loans, of which $1,050,000 had been borrowed as of June 30, 2023[157]. - The underwriters of the IPO received a cash underwriting discount of $0.20 per Unit, totaling $4,600,000, and are entitled to a deferred fee of $0.35 per Unit, amounting to $8,050,000, contingent on the completion of a Business Combination[167]. Shareholder Agreements - The company entered into an amendment to the 2022 Consulting Agreement, which stipulates a Capital Markets Advisory Fee of $500,000 in cash and $500,000 in stock if Trust Proceeds are equal to or greater than $4 million[148]. - The company entered into an agreement with the Second Strategic Advisor for consulting services related to a potential Business Combination, involving the purchase of 250,000 Class B ordinary shares at $0.04 per share, totaling $10,000[170]. - The Class A ordinary shares sold in the Initial Public Offering have a redemption feature that allows for redemption in connection with liquidation or shareholder votes related to the Business Combination[172]. Accounting and Valuation - The company recognizes changes in the redemption value of redeemable Class A ordinary shares immediately, impacting additional paid-in capital and accumulated deficit[175]. - Net income (loss) per share for Class A and Class B non-redeemable ordinary shares is calculated by dividing net income (loss) adjusted for Class A redeemable shares by the weighted average number of non-redeemable shares outstanding[176]. - Public Warrants and Private Placement Warrants are classified as liabilities at fair value, with changes in fair value recognized in the statement of operations[177]. - The Forward Purchase Agreement allows the Forward Purchase Investor to purchase up to $20.0 million in Forward Purchase Units at $10.00 per unit, which will close concurrently with the Business Combination[178]. - The company adopted ASU 2020-06, simplifying accounting for convertible instruments and did not impact its financial position or results of operations[179]. - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[180].