CO2 Energy Transition Corp.(NOEMU) - 2025 Q2 - Quarterly Report

Part I. Financial Information This part presents the company's unaudited condensed financial statements and management's financial analysis Item 1. Condensed Interim Financial Statements This section presents the unaudited condensed financial statements, including the balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with their accompanying notes, for the periods ended June 30, 2025, and December 31, 2024 Condensed Balance Sheets This section presents the unaudited condensed balance sheets as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | Change | | :-------------------------------- | :------------------------ | :------------------ | :------------------ | | Cash | $469,288 | $953,069 | $(483,781) | | Prepaid expenses | $167,691 | $220,947 | $(53,256) | | Total Current Assets | $636,979 | $1,174,016 | $(537,037) | | Long-term prepaid insurance | $33,333 | — | $33,333 | | Investments held in Trust Account | $70,686,381 | $69,310,897 | $1,375,484 | | TOTAL ASSETS | $71,356,693 | $70,484,913 | $871,780 | | Accrued expenses | $115,716 | $297,787 | $(182,071) | | Accrued offering costs | $75,000 | $75,000 | $0 | | Income tax payable | $289,597 | $61,039 | $228,558 | | Promissory note – related party | $11,730 | $11,730 | $0 | | Total Current Liabilities | $492,043 | $445,556 | $46,487 | | Deferred underwriting fee | $2,070,000 | $2,070,000 | $0 | | TOTAL LIABILITIES | $2,562,043 | $2,515,556 | $46,487 | | Common stock subject to possible redemption | $70,332,415 | $69,233,258 | $1,099,157 | | Accumulated deficit | $(1,538,034) | $(1,264,170) | $(273,864) | | Total Stockholders' Deficit | $(1,537,765) | $(1,263,901) | $(273,864) | Condensed Statements of Operations This section presents the unaudited condensed statements of operations for the three and six months ended June 30, 2025 and 2024 - The company reported a net income of $418,891 for the three months ended June 30, 2025, compared to a net loss of $20,055 for the same period in 2024. For the six months ended June 30, 2025, net income was $825,293, a significant improvement from a net loss of $40,453 in 2024[14] - A primary driver of the income was interest earned on investments held in the Trust Account, totaling $729,611 for the three months and $1,455,374 for the six months ended June 30, 2025, with no such income in 2024[14] - General and administrative costs increased substantially, from $20,055 to $162,313 for the three-month period and from $40,453 to $333,033 for the six-month period, reflecting increased operational activities as a public company[14] | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | General and administrative costs | $162,313 | $20,055 | $333,033 | $40,453 | | Loss from operations | $(162,313) | $(20,055) | $(333,033) | $(40,453) | | Interest expense | $(1,657) | — | $(4,282) | — | | Interest earned on investments held in Trust Account | $729,611 | — | $1,455,374 | — | | Total other income, net | $727,954 | — | $1,451,092 | — | | Income (loss) before provision for income taxes | $565,641 | $(20,055) | $1,118,059 | $(40,453) | | Provision for income taxes | $(146,750) | — | $(292,766) | — | | Net income (loss) | $418,891 | $(20,055) | $825,293 | $(40,453) | | Basic and diluted net income per share, non-redeemable common stock | $0.04 | $(0.01) | $0.09 | $(0.02) | Condensed Statements of Changes in Stockholders' Deficit This section presents the unaudited condensed statements of changes in stockholders' deficit for the three and six months ended June 30, 2025 and 2024 - The accumulated deficit increased from $(1,264,170) at January 1, 2025, to $(1,538,034) at June 30, 2025, primarily due to accretion for common stock to redemption amount, partially offset by net income[17] | Metric | January 1, 2025 | March 31, 2025 | June 30, 2025 | | :------------------------------------ | :-------------- | :------------- | :------------ | | Accumulated Deficit (Start) | $(1,264,170) | $(1,469,071) | $(1,538,034) | | Accretion for common stock to redemption amount | — | $(611,303) | $(487,854) | | Net income | — | $406,402 | $418,891 | | Total Stockholders' Deficit (End) | $(1,263,901) | $(1,468,802) | $(1,537,765) | | Metric | January 1, 2024 | March 31, 2024 | June 30, 2024 | | :-------------------- | :-------------- | :------------- | :------------ | | Accumulated Deficit (Start) | $(361,845) | $(382,243) | $(402,298) | | Net loss | — | $(20,398) | $(20,055) | | Total Stockholders' Deficit (End) | $(336,845) | $(357,243) | $(377,298) | Condensed Statements of Cash Flows This section presents the unaudited condensed statements of cash flows for the six months ended June 30, 2025 and 2024 - Net cash used in operating activities increased significantly from $(76,718) for the six months ended June 30, 2024, to $(563,672) for the same period in 2025, primarily due to interest earned on Trust Account investments being a non-cash operating adjustment[21] - The company provided $79,891 in cash from investing activities in 2025, representing cash withdrawn from the Trust Account for taxes, compared to no investing activities in 2024[21] | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Net income (loss) | $825,293 | $(40,453) | | Interest earned on Investments held in Trust Account | $(1,455,374) | — | | Changes in operating assets and liabilities (net) | $149,410 | $(42,315) | | Net cash used in operating activities | $(563,672) | $(76,718) | | Cash withdrawn from Trust Account for taxes | $79,891 | — | | Net cash provided by investing activities | $79,891 | — | | Net cash provided by financing activities | — | $74,925 | | Net Change in Cash | $(483,781) | $(1,793) | | Cash – End of year | $469,288 | $319 | Notes to Condensed Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed financial statements and their notes Note 1. Description of Organization, Business Operations and Going Concern This note describes the company's organization, business operations as a blank check company, and going concern considerations - CO2 Energy Transition Corp. was incorporated on September 30, 2021, as a blank check company to effect a business combination, primarily targeting the Oil, Gas, and LNG sectors. It is an early-stage and emerging growth company[24] - The company has not commenced operations and will not generate operating revenues until after completing its initial Business Combination. Non-operating income is generated from interest on Trust Account proceeds[25] - The Initial Public Offering (IPO) closed on November 22, 2024, selling 6,900,000 units at $10.00 each, generating $69,000,000 gross proceeds. Each unit includes one common stock share, one redeemable warrant, and one right[26] - Simultaneously, 265,000 private units were sold to the Sponsor for $2,650,000[27] - $69,000,000 from the IPO and private placement proceeds was placed in a Trust Account, invested in U.S. government securities or money market funds, to be used for a Business Combination or distributed to public stockholders[33] - The company must complete a Business Combination with a fair market value of at least 80% of the net assets in the Trust Account within 18 months (or up to 24 months with extensions) from the IPO closing[32][41] - Public stockholders can redeem their shares for a pro rata portion of the Trust Account upon completion of a Business Combination. Initial Stockholders waive redemption rights for Founder Shares[34][40] - Management has determined that a potential liquidity shortfall and mandatory liquidation if a Business Combination is not completed by May 22, 2026, raise substantial doubt about the company's ability to continue as a going concern[51] Note 2. Significant Accounting Policies This note outlines the significant accounting policies used in preparing the unaudited condensed financial statements - Unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information, condensed or omitted certain disclosures per SEC rules[52] - The company is an Emerging Growth Company (EGC) and has elected to use the extended transition period for complying with new or revised financial accounting standards, aligning with private company adoption dates[54][56] - As of June 30, 2025, cash was $469,288 (December 31, 2024: $953,069), with no cash equivalents[59] - Assets in the Trust Account are held in money market funds primarily invested in U.S. government securities, accounted for as trading securities at fair value[62] - The company follows the asset and liability method for income taxes (ASC 740). As of June 30, 2025, and December 31, 2024, a full valuation allowance was established against deferred tax assets. The effective tax rate for the three and six months ended June 30, 2025, was 25.94% and 26.19%, respectively, differing from the 21% statutory rate due to the valuation allowance[66][68][70] - Net income (loss) per common share is calculated by dividing net income (loss) by weighted average shares outstanding. Diluted EPS is the same as basic EPS as warrants are contingent on future events and anti-dilutive[73][74] - Common stock subject to redemption is classified as temporary equity outside of permanent equity, with changes in redemption value recognized immediately and adjusted to equal redemption value at each reporting period end[81] Note 3. Initial Public Offering This note details the terms and proceeds of the company's Initial Public Offering (IPO) - On November 22, 2024, the Company sold 6,900,000 Units at $10.00 per Unit, including the full exercise of the over-allotment option. Each Unit consists of one common stock share, one Public Right (1/8 share upon Business Combination), and one redeemable Public Warrant ($11.50 exercise price)[84] Note 4. Private Placement This note describes the terms and proceeds of the private placement of units to the Sponsor - The Sponsor purchased 265,000 Private Units at $10.00 each, totaling $2,650,000. Each Private Unit includes one Private Share, one Private Right (1/8 share upon Business Combination), and one redeemable Private Warrant ($11.50 exercise price)[85] - Proceeds from Private Units were added to the Trust Account. If no Business Combination, these units and underlying securities expire worthless[85] Note 5. Related Parties This note details transactions and relationships with related parties, including the Sponsor and its affiliates - The Sponsor holds 2,300,000 Founder Shares, which were initially subject to forfeiture but are no longer due to the full exercise of the over-allotment option. These shares are subject to transfer restrictions[86] - An unsecured promissory note from the Sponsor, initially for $400,000 and amended multiple times, had $11,730 outstanding as of June 30, 2025, and December 31, 2024. This amount was rolled into a new Working Capital Note[87] - The Sponsor or affiliates may provide Working Capital Loans up to $1,500,000 to finance transaction costs. These loans are non-interest bearing and convertible into units at $10.00 per unit. As of June 30, 2025, no amounts were outstanding under the Working Capital Note[90][91][94] - The Company pays the Sponsor $10,000 per month for office space, utilities, and administrative services. For the three and six months ended June 30, 2025, $30,000 and $60,000, respectively, were incurred and paid[95] Note 6. Commitments and Contingencies This note outlines the company's commitments and contingencies, including registration rights and deferred underwriting fees - Holders of Founder Shares, Private Placement Units, and Working Capital Note Units have rights to require the Company to register their securities for resale. The Company bears the expenses[96] - The underwriters fully exercised their over-allotment option for 900,000 units. They received a cash underwriting discount of $517,500 and are entitled to a deferred underwriting discount of $2,070,000, payable upon closing of a Business Combination[98][99] Note 7. Stockholders' Deficit This note details the components of stockholders' deficit, including common stock, rights, and warrants - Authorized 1,000,000 shares of preferred stock, none issued or outstanding[100] - Authorized 40,000,000 shares of common stock, with 2,685,750 shares issued and outstanding (excluding 6,900,000 shares subject to possible redemption) as of June 30, 2025, and December 31, 2024[101] - Each right entitles the holder to receive one-eighth (1/8) of one common stock share upon Business Combination. As of June 30, 2025, there were 6,900,000 Public Rights and 265,000 Private Rights outstanding. Rights expire worthless if no Business Combination is completed[102][103][106] - Public Warrants become exercisable 30 days after Business Combination or 12 months from IPO closing, expiring five years from Business Combination. The Company may redeem Public Warrants at $0.01 if common stock price exceeds $18.00 for 20 trading days within a 30-day period. Private Warrants are identical but non-transferable until 30 days post-Business Combination and non-redeemable while held by initial purchasers[107][109][113][114] Note 8. Representative Shares This note describes the issuance and terms of Representative Shares to the underwriters' representative - The Company issued 138,000 Representative Shares to Kingswood Capital Partners LLC, the underwriters' representative, valued at $77,280[117] - These shares are subject to a 180-day lock-up period post-IPO and waivers of redemption and liquidation rights[117][118] Note 9. Fair Value Measurements This note explains the company's fair value measurements and their classification within the hierarchy - Fair value measurements are classified into a three-tier hierarchy (Level 1, 2, 3)[119][121] - As of June 30, 2025, and December 31, 2024, investments held in the Trust Account ($70,686,381 and $69,310,897, respectively) are classified as Level 1, as they are held in money market funds primarily invested in U.S. government securities[119] Note 10. Segment Information This note clarifies that the company operates as a single reportable operating segment - The Chief Financial Officer, as the CODM, reviews the company's operating results as a whole, determining that the company has only one reportable operating segment[123] - The CODM assesses performance based on net income or loss, total assets, general and administrative expenses, and interest earned on the Trust Account[124] Note 11. Subsequent Events This note confirms that no subsequent events requiring adjustment or disclosure were identified - The Company evaluated events up to the financial statement issuance date and identified no subsequent events requiring adjustment or disclosure[125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operating results, liquidity, capital resources, and critical accounting estimates General Information This section provides general information and defines key terms used throughout the management discussion and analysis - This section should be read in conjunction with the interim unaudited condensed financial statements and the notes thereto included in this Quarterly Report on Form 10-Q[127] - References to the 'Company,' 'we,' 'us,' 'our,' and 'CO2 Energy' refer specifically to CO2 Energy Transition Corp. References to our 'management' or our 'management team' refer to our officers and directors, and references to the 'Sponsor' refer to CO2 Energy Transition, LLC[131] Special Note Regarding Forward-Looking Statements This section highlights the forward-looking nature of certain statements and associated risks and uncertainties - The report includes forward-looking statements about future events or performance, reflecting management's current beliefs, but actual results may differ materially due to various risks and uncertainties[132] - Key risks highlighted include the company's lack of operating history, ability to continue as a 'going concern,' ability to complete an initial Business Combination within the prescribed timeframe, potential liability for third-party claims, conflicts of interest, and market volatility from geopolitical events[134][136][139] - The company disclaims any intention or obligation to update or revise any forward-looking statements unless expressly required by applicable securities law[137] Overview This section provides an overview of CO2 Energy Transition Corp. as a blank check company and its business combination strategy - CO2 Energy Transition Corp. is a blank check company incorporated 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[138] - The company intends to effectuate its initial business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the private placement units, its shares, debt or a combination of cash, shares and debt[138] Liquidity, Capital Resources and Going Concern This section discusses the company's liquidity, capital resources, and the going concern assessment - As of June 30, 2025, the Company had $469,288 in cash and working capital of $434,534[140] - The Initial Public Offering generated $69,000,000 gross proceeds, and a private placement generated $2,650,000, with $69,000,000 placed in the Trust Account[141][142] - For the six months ended June 30, 2025, cash used in operating activities was $563,672, primarily due to interest earned on marketable securities held in the trust account being a non-cash item[143] - Substantially all funds held in the trust account (less income taxes payable) are intended to complete the initial business combination. Remaining proceeds will be used as working capital for the target business[148] - The company entered into a convertible promissory note with its Sponsor on April 15, 2025, allowing drawdowns up to $1,500,000 for working capital, with no interest, convertible into units at $10.00 per unit[150][151][152] - Management has identified a potential liquidity shortfall and mandatory liquidation if a Business Combination is not completed by May 22, 2026, raising substantial doubt about the company's ability to continue as a going concern[154][155] Off-Balance Sheet Financing Arrangements This section confirms the absence of off-balance sheet financing arrangements as of June 30, 2025 - As of June 30, 2025, the company has no obligations, assets, or liabilities considered off-balance sheet arrangements[157] Contractual Obligations This section outlines the company's contractual obligations, including administrative services and deferred underwriting fees - The company has an agreement to pay the Sponsor $10,000 per month for office space, utilities, secretarial support, and other administrative and consulting services[158] - A deferred underwriting discount of $2,070,000 is payable to underwriters upon the closing of an initial business combination[160] Results of Operations This section analyzes the company's operating results, highlighting net income/loss and interest income from the Trust Account - The company has neither engaged in any operations nor generated any revenues to date and does not expect to until after the completion of its Business Combination[161] - Non-operating income is generated in the form of interest income on marketable securities held in the Trust Account[161] - For the three months ended June 30, 2025, net income was $418,891, driven by $729,611 in interest income from the Trust Account, offset by $162,313 in operating costs and $146,750 in income taxes. This compares to a net loss of $20,055 for the same period in 2024[162] - For the six months ended June 30, 2025, net income was $825,293, primarily from $1,455,374 in interest income, offset by $333,033 in operating costs and $292,766 in income taxes. This compares to a net loss of $40,453 for the same period in 2024[163] Critical Accounting Estimates This section states that the company did not have any critical accounting estimates to disclose as of June 30, 2025 - As of June 30, 2025, the company did not have any critical accounting estimates to disclose[164] Recent Accounting Standards This section discusses the impact of recently issued accounting pronouncements on the company's financial statements - Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the company's unaudited condensed financial statements[165] Commitments and Contractual Obligations (MD&A) This section details the company's commitments and contractual obligations, including registration rights - The holders of founder shares, private placement warrants, and warrants that may be issued upon conversion of Working Capital Loans are entitled to certain registration rights, with the company bearing the expenses incurred in connection with the filing of any such registration statements[166] Underwriting Agreement This section outlines the deferred underwriting discount payable upon completion of a business combination - A deferred underwriting discount of $2,070,000 is payable to the underwriter from the amounts held in the trust account solely in the event that the Company completes an initial business combination[167][168] JOBS Act This section explains the company's election to use extended transition periods as an 'emerging growth company' under the JOBS Act - As an 'emerging growth company,' the company is allowed to comply with new or revised accounting pronouncements based on the effective date for private companies, and has elected to delay the adoption of such standards[169] - The company may also rely on other JOBS Act provisions, such as delaying the auditor's attestation report on internal controls and reduced executive compensation disclosures[170] Common Stock Subject to Possible Redemption This section explains the classification of common stock subject to redemption as temporary equity - Shares of common stock subject to mandatory redemption or conditionally redeemable common stock are classified as temporary equity, outside of the stockholders' equity section, due to redemption rights being outside the company's control[171] Net Income Per Common Share This section details the calculation of basic and diluted net income (loss) per common share - Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period, shared pro rata between redeemable and non-redeemable classes[172] - Diluted earnings per common share is the same as basic earnings per common share because the warrants are anti-dilutive under the treasury stock method[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, CO2 Energy Transition Corp. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this Item[174] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section reports on management's conclusion regarding the effectiveness of disclosure controls and procedures - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[176] - Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that their objectives are met, and are subject to inherent limitations and resource constraints[177] Changes in Internal Control over Financial Reporting This section reports no material changes in internal control over financial reporting during the quarter - There was no change in the company's internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting[178] Part II. Other Information This part covers legal proceedings, risk factors, unregistered equity sales, and other disclosures Item 1. Legal Proceedings The company reported no legal proceedings - The company is not currently involved in any legal proceedings[180] Item 1A. Risk Factors This section refers to the significant risk factors previously disclosed in the company's Annual Report on Form 10-K, noting no material changes - The significant factors known to the company that could materially adversely affect its business, financial condition, or operating results are described in the Annual Report on Form 10-K for the year ended December 31, 2024[180] - As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K[180] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered sales of equity securities and details the use of proceeds from the Initial Public Offering and private placement Recent Sales of Unregistered Securities This section reports no previously undisclosed unregistered sales of equity securities during the quarter - There have been no sales of unregistered securities during the quarter ended June 30, 2025, and for the period from July 1, 2025, to the filing date of this Report, which have not previously been disclosed[181] Purchases of equity securities by the issuer and affiliated purchasers This section reports no purchases of equity securities by the issuer and affiliated purchasers - There were no purchases of equity securities by the issuer and affiliated purchasers[182] Use of Proceeds This section details the gross proceeds from the IPO and private placement and their allocation to the Trust Account and offering expenses - The Initial Public Offering generated gross proceeds of $69,000,000 from 6,900,000 Units, and the private placement generated gross proceeds of $2,650,000 from 265,000 Private Units[183] - An aggregate of $69,000,000 was placed in the Trust Account, to be invested in U.S. government securities or money market funds[184] - Total expenses incurred in connection with the Initial Public Offering amounted to $3,423,710, including cash underwriting discount, deferred underwriting fees, fair value of Representative Shares, and other offering costs[185] - There has been no material change in the planned use of proceeds from the offering as described in the final prospectus[186] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[187] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - There were no mine safety disclosures[187] Item 5. Other Information This section provides other material information, including personnel changes and trading plan disclosures - Mr. Mark Mathews's services as General Counsel of the Company were terminated by the Board of Directors, effective August 8, 2025[187] - During the quarter ended June 30, 2025, none of the Company's directors or officers adopted or terminated any 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'[188] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and XBRL - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and various Inline XBRL documents (Exhibits 101.INS, SCH, CAL, DEF, LAB, PRE, 104)[190] Part III. Signatures This section contains the required signatures for the Quarterly Report on Form 10-Q Signatures This section contains the required signatures for the Quarterly Report on Form 10-Q, certifying its submission on behalf of CO2 Energy Transition Corp - The report is signed by Brady Rodgers, Chief Executive Officer, and Harold R. DeMoss, III, Chief Financial Officer, on August 12, 2025[196]