CAPITALWORKS EME(CMCAU) - 2024 Q2 - Quarterly Report

Financial Performance - As of September 30, 2023, the company reported a net income of $1,077,425, primarily from interest income of $588,753 and a change in fair value of the derivative warrant liability of $1,199,440 [154]. - For the six months ended September 30, 2023, the company had a net income of $2,133,544, with interest income from cash and marketable securities amounting to $2,399,895 [156]. - For the six months ended September 30, 2023, net cash used in operating activities was $617,655, primarily due to non-cash adjustments related to the change in fair value of the derivative warrant liability [162]. - The company incurred $60,000 in general and administrative expenses for the three months ended September 30, 2023 [168]. Capital Structure and Financing - The company had $102,628 in cash and a working capital deficit of approximately $2.3 million as of September 30, 2023 [159]. - The company may need to raise additional capital through Working Capital Loans to finance transaction costs related to a Business Combination [167]. - The underwriters of the IPO received a cash underwriting discount of $4,600,000 and are entitled to a deferred fee of $8,050,000 contingent on the completion of a Business Combination [171]. - The company has no long-term debt obligations or off-balance sheet arrangements as of September 30, 2023 [158]. Compliance and Regulatory Matters - The company received a Nasdaq deficiency notice on September 7, 2023, indicating it did not meet the requirement of having at least 400 shareholders [149]. - The company submitted a plan to Nasdaq on October 18, 2023, to regain compliance with the Minimum Total Holders Rule [150]. Advisory Agreements - The company entered into a 2022 Consulting Agreement with the First Strategic Advisor, which includes a Capital Markets Advisory Fee of $1,500,000 plus an Incremental Advisory Fee based on Trust Proceeds, with potential fees ranging from $250,000 to $2,500,000 depending on the amount of Trust Proceeds [172]. - An amendment to the 2022 Consulting Agreement on August 3, 2023, revised the Capital Markets Advisory Fee structure, establishing a fee of $500,000 in cash and $500,000 in stock if Trust Proceeds are equal to or greater than $4 million [172]. - The company has a separate agreement with the Second Strategic Advisor to purchase 250,000 Class B ordinary shares at $0.04 per share, totaling $10,000, with plans to amend the agreement to Class A ordinary shares [173]. Shareholder and Equity Matters - The company recognizes changes in the redemption value of Class A ordinary shares immediately, impacting additional paid-in capital and accumulated deficit [178]. - Net income (loss) per share for non-redeemable Class A and Class B ordinary shares is calculated by dividing adjusted net income (loss) by the weighted average number of non-redeemable shares outstanding, with no dilutive securities reported as of September 30, 2023 [179]. - Public Warrants and Private Placement Warrants are classified as liabilities and re-measured at fair value at each reporting period, with an initial charge of $1,532,700 recorded for the excess fair value of private warrant liabilities [180]. - The Forward Purchase Agreement allows the Forward Purchase Investor to purchase up to $20 million in Forward Purchase Units at $10.00 per unit, which will close concurrently with the Business Combination [181]. Accounting Policies - The company adopted ASU 2020-06, simplifying accounting for convertible instruments, with no impact on its financial position or results of operations [182]. - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures [183].