10-Q: ClimateRock Extends Merger Deadline Amid Financial Strain

ClimateRock extends its business combination deadline to May 2026, facing significant cash depletion, Nasdaq delisting, and a going concern warning, despite securing new financing for its GreenRock merger.

Summary

• ClimateRock reported a net loss of $487,305 for the three months ended September 30, 2025, a significant decline from a net income of $172,722 in the same period of 2024.
• The net loss for the nine months ended September 30, 2025, increased to $844,755, compared to $409,112 for the nine months ended September 30, 2024.
• Cash held outside the Trust Account decreased to $6,194 as of September 30, 2025, from $14,384 at December 31, 2024.
• The Trust Account balance significantly decreased to $5,574,021 as of September 30, 2025, from $29,381,085 at December 31, 2024, primarily due to shareholder redemptions.
• Total liabilities increased to $9,823,823 as of September 30, 2025, from $8,130,482 at December 31, 2024.
• The company has a working capital deficit of $7.5 million as of September 30, 2025.
• Shareholders approved an extension of the business combination period from November 2, 2025, to May 2, 2026.
• ClimateRock's securities were delisted from Nasdaq on April 10, 2025, due to failure to meet the public holders requirement and complete a business combination by the deadline, and are now quoted on the Pink Limited tier of OTC Markets.
• The company entered into agreements for up to $75.0 million in future equity financing and up to $11.0 million in senior convertible promissory notes and warrants for its GreenRock Business Combination.
• Material weaknesses in internal control over financial reporting were identified, specifically related to the under accrual of legal fees.

Sentiment

Score: 2

Explanation: The sentiment is overwhelmingly negative due to severe cash depletion, a going concern warning, Nasdaq delisting, and increasing losses. While new financing agreements for the merger exist, they are contingent on a successful combination, which remains uncertain given the company's history of extensions and financial distress. The identified material weaknesses in internal controls further compound the negative outlook.

Positives

• Secured agreements for up to $75.0 million in future equity financing and up to $11.0 million in senior convertible promissory notes and warrants for the GreenRock Business Combination, indicating continued efforts to fund the merger.
• The business combination period has been extended to May 2, 2026, providing more time to complete the GreenRock merger.

Negatives

• Reported a net loss of $487,305 for the three months ended September 30, 2025, a significant deterioration from a net income of $172,722 in the prior year period.
• The net loss for the nine months ended September 30, 2025, more than doubled to $844,755 from $409,112 in the prior year period.
• Cash held outside the Trust Account is critically low at $6,194 as of September 30, 2025.
• The Trust Account balance has significantly depleted to $5,574,021 from $29,381,085, primarily due to substantial shareholder redemptions totaling approximately $24.67 million in connection with the 2025 EGM.
• Total liabilities increased to $9,823,823, and the company faces a working capital deficit of $7.5 million.
• The company received a going concern warning due to its low cash balance and significant working capital deficit, raising substantial doubt about its ability to continue operations.
• ClimateRock's securities were delisted from Nasdaq on April 10, 2025, and now trade on the less liquid Pink Limited tier of OTC Markets.
• Identified material weaknesses in internal control over financial reporting, specifically regarding the under accrual of legal fees, and concluded that disclosure controls and procedures were not effective.
• The Sponsor failed to pay $100,000 in March and April 2025 extension payments for the 2024 Extension Note, requiring the company to use proceeds from a related party loan to cover these deposits into the Trust Account.

Risks

• Substantial doubt about the ability to continue as a going concern due to low cash balance ($6,194) and significant working capital deficit ($7.5 million).
• Failure to consummate the initial Business Combination with GreenRock by the extended deadline of May 2, 2026, which would lead to liquidation.
• Continued reliance on funding from the Sponsor or other related parties to cover operating costs and extension fees, with no assurance of securing such funding.
• The delisting of securities from Nasdaq to the Pink Limited tier of OTC Markets may reduce liquidity and investor interest.
• Material weaknesses in internal control over financial reporting could lead to financial misstatements or operational inefficiencies.
• Contingent liabilities, such as the $2,362,500 deferred underwriting commission and various success fees to advisors (Maxim, ALANTRA, Gluon), become payable upon Business Combination, further straining post-merger finances.
• The GreenRock merger consideration includes escrow shares contingent on GreenRock's adjusted EBITDA for fiscal year 2025 meeting or exceeding $25,000, posing a risk of forfeiture if not met.
• Potential for significant interest accrual (5% per month) on related party loans if not repaid within 10 days of the Business Combination.

Future Outlook

ClimateRock's future outlook is critically dependent on successfully completing its Business Combination with GreenRock by the newly extended deadline of May 2, 2026. The company anticipates incurring significant costs in pursuit of its financing and acquisition plans and acknowledges substantial doubt about its ability to continue as a going concern without securing additional funding, primarily from its Sponsor or related parties. The recently secured equity financing and convertible note agreements are crucial for the proposed GreenRock merger, but their realization is contingent on the combination's consummation.

Management Comments

• Management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating an initial Business Combination.
• Management believes that the interim financial statements and footnote disclosures included in this Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, cash flows and disclosures as of and for the periods presented in accordance with generally accepted accounting principles, despite identified material weaknesses in internal control over financial reporting.

Industry Context

ClimateRock operates as a Special Purpose Acquisition Company (SPAC) focused on climate change, environment, renewable energy, and clean technologies. The current environment for SPACs has been challenging, with increased shareholder redemptions and regulatory scrutiny. ClimateRock's repeated extensions of its business combination deadline and subsequent delisting from Nasdaq reflect broader difficulties faced by SPACs in identifying and completing suitable mergers within initial timelines, often leading to significant trust account depletion. The focus on renewable energy aligns with growing global trends, but the company's current financial distress and operational challenges highlight the high-risk nature of SPAC investments, particularly those struggling to finalize a target acquisition.

Comparison to Industry Standards

• ClimateRock's delisting from Nasdaq due to failing to meet the public holders requirement and complete a business combination by the deadline is a severe underperformance compared to successful SPACs that either complete mergers or liquidate in an orderly fashion on major exchanges.
• The significant shareholder redemptions (e.g., $24.67 million in May 2025) are indicative of a lack of investor confidence in the proposed business combination or the SPAC's ability to execute, a common challenge for SPACs that extend their deadlines multiple times.
• The company's current cash balance of $6,194 and a working capital deficit of $7.5 million are far below the operational liquidity typically expected for a publicly traded entity, even a SPAC, and signal severe financial distress compared to industry benchmarks.
• The reliance on related party loans and promissory notes from the Sponsor to fund operations and extension payments, including covering missed payments, is a red flag often seen in distressed SPACs, contrasting with well-capitalized SPACs that maintain sufficient independent working capital or secure third-party financing more readily.

Management Changes

Corporate Governance

Legal Proceedings

• To the knowledge of management, there is no litigation currently pending or contemplated against the company, its officers, or directors in their capacity as such, or against any of its property.

Related Party Transactions

• Outstanding loans from Eternal B.V. (an affiliate of the company through common ownership) totaling $3,454,216 as of September 30, 2025, with some loans accruing 5% interest per month if not repaid within 10 days of the Business Combination.
• Outstanding loan from Gluon Renewable Energies Limited (an affiliate) for $330,153 plus $1 interest as of September 30, 2025, which also covered $100,000 in missed extension payments by the Sponsor.
• Convertible promissory notes issued to the Sponsor (U.N. SDG Support LLC) totaling $1,500,000 ($900,000 for 2023 Extension Note and $600,000 for 2024 Extension Note) and $107,623 for the 2025 Extension Note, deposited into the Trust Account.
• Administrative service fees of $10,000 per month paid to Gluon Group (an affiliate of the Sponsor), with $388,941 accrued as of September 30, 2025.
• Advisory services agreements with Gluon (affiliate) and Maxim (underwriter) for success fees contingent on the completion of a Business Combination, and with ALANTRA and MZHCI for various advisory and consulting services, some with monthly retainers and success fees.

Stakeholder Impact

• Shareholders: Significant redemptions have reduced the number of public shares and the Trust Account value. Delisting from Nasdaq reduces liquidity and visibility. The going concern warning and repeated extensions create high uncertainty and risk of total loss if a business combination is not completed.
• Employees/Management: Continued employment and potential contingent compensation (e.g., Founder Shares vesting, success fees) are tied to the successful completion of the Business Combination.
• Creditors (Related Parties): Eternal B.V. and Gluon Renewable Energies Limited have significant outstanding loans to the company, with repayment contingent on the Business Combination and potential interest accrual if delayed.
• Potential Target (GreenRock): The amended merger terms, including reduced consideration and performance-based escrow shares, indicate increased pressure and risk for GreenRock to meet financial targets post-merger. The new financing agreements are positive for the merger's viability.

Next Steps

• Complete the Business Combination with GreenRock by the extended deadline of May 2, 2026.
• Address the substantial doubt about the ability to continue as a going concern by securing additional funding and successfully executing the merger.
• Publish final redemption numbers and amounts within four business days of the October 29, 2025, EGM.
• Remediate identified material weaknesses in internal control over financial reporting and improve disclosure controls and procedures.

Key Dates

Recommendation

ClimateRock faces severe financial distress, evidenced by a critically low cash balance, a substantial working capital deficit, and a going concern warning. The company has been delisted from Nasdaq, significantly reducing liquidity and investor confidence. Despite securing new financing agreements for its proposed GreenRock merger, the repeated extensions of the business combination deadline and the Sponsor's failure to meet prior financial commitments highlight significant execution risks. The identified material weaknesses in internal controls further compound the negative outlook. Given the high probability of liquidation if the merger fails, the current financial state, and the operational challenges, the stock presents an extremely high-risk profile with a strong likelihood of further value erosion.

Keywords

SPAC, ClimateRock, GreenRock, Business Combination, Merger, SEC 10-Q, Financial Report, Going Concern, Nasdaq Delisting, Renewable Energy, Climate Change, Equity Financing, Convertible Notes, Shareholder Redemptions, Internal Controls