10-K: ClimateRock Faces Nasdaq Delisting and Going Concern Doubts Amidst Repeated SPAC Extension Failures and GreenRock Merger Revisions

ClimateRock, a blank check company, has been delisted from Nasdaq and faces substantial doubt about its ability to continue as a going concern after failing to complete a business combination by its deadline, despite multiple extensions and significant shareholder redemptions.

Summary

• ClimateRock, a Cayman Islands-exempted blank check company, was formed on December 6, 2021, to effect an initial Business Combination, primarily targeting the sustainable energy industry.
• The company consummated its Initial Public Offering (IPO) on May 2, 2022, raising $78,750,000 gross proceeds from 7,875,000 Units at $10.00 per Unit, with $79,931,250 placed in a Trust Account.
• The Combination Period, initially 12 months, has been extended multiple times: from November 2, 2023, to May 2, 2024; then to May 2, 2025; and most recently to November 2, 2025.
• These extensions were accompanied by significant shareholder redemptions: 5,297,862 Public Shares for $55,265,334 (approx. $10.43/share) in 2023; 111,915 Public Shares for approx. $1.27 million (approx. $11.37/share) in 2024; and 2,016,792 Public Shares for approx. $24.67 million (approx. $12.23/share) in 2025.
• The company's securities were suspended from Nasdaq trading on April 10, 2025, and are subject to delisting, due to failure to comply with the Public Holders Requirement and to complete a business combination by the April 7, 2025, deadline; they now trade on the OTC Pink tier.
• A previously proposed business combination with E.E.W. Eco Energy World PLC (EEW) was terminated on November 29, 2023, as closing conditions were not met.
• The company entered into a Business Combination Agreement with GreenRock Corp. on December 30, 2023, which was amended on November 6, 2024.
• The GreenRock amendment reduced the overall merger consideration from 44,685,000 to 32,000,000 Pubco Ordinary Shares and the escrowed share portion from 16,685,000 to 4,000,000, with full release contingent on GreenRock's Adjusted EBITDA for fiscal year 2025 equaling or exceeding $25,000,000.
• The $15,000,000 minimum cash closing condition for the GreenRock Business Combination was removed.
• For the year ended December 31, 2024, the company reported a net loss of $(390,001), a decline from a net income of $483,430 in 2023.
• As of December 31, 2024, cash held outside the Trust Account was $14,384, and the working capital deficit was $5,753,598.
• The company has substantial doubt about its ability to continue as a going concern.
• Internal control over financial reporting was deemed ineffective as of December 31, 2024, due to deficiencies in identifying, approving, and disclosing related party transactions.

Sentiment

Score: 2

Explanation: The company is in a precarious position, having been delisted from Nasdaq, facing significant shareholder redemptions, and operating with a substantial working capital deficit that raises going concern doubts. Its reliance on related-party financing and past failures to complete business combinations indicate high operational and financial risk, despite ongoing efforts for a new merger.

Positives

• The company has identified a target in the sustainable energy industry (GreenRock) and is actively pursuing a business combination.
• The management team possesses over two decades of combined experience in capital markets, investment, and operations within the renewable energy and clean technology sectors.
• The company's investment strategy aligns with global trends towards de-carbonization and renewable energy, targeting significant investment opportunities in OECD countries.
• The Sponsor continues to provide financial support through convertible promissory notes and loans to extend the Combination Period and cover operational costs.

Negatives

• The company has experienced multiple significant shareholder redemptions, substantially reducing the funds in its Trust Account.
• ClimateRock's securities were suspended from Nasdaq and are subject to delisting, now trading on the less liquid OTC Pink tier, which may adversely affect trading prices.
• The company reported a net loss of $(390,001) for the fiscal year ended December 31, 2024, compared to a net income in the prior year.
• There is substantial doubt about the company's ability to continue as a going concern due to insufficient cash and working capital deficit of $5,753,598 as of December 31, 2024.
• A previous proposed business combination with EEW was terminated, indicating challenges in deal completion.
• The GreenRock Business Combination terms were amended to reduce the merger consideration and remove the minimum cash closing condition, potentially signaling financial constraints or a lower valuation.
• The company relies heavily on related-party loans for its working capital needs, raising concerns about financial independence and potential conflicts of interest.
• Internal control over financial reporting was found to be ineffective, specifically regarding the identification, approval, and disclosure of related party transactions.

Risks

• Inability to complete the initial Business Combination, including the GreenRock Business Combination, within the extended Combination Period (November 2, 2025).
• Expectations regarding the performance of the prospective target business (GreenRock) may not be realized.
• Difficulty in retaining or recruiting required officers, key employees, or directors following the initial Business Combination.
• Potential conflicts of interest among officers and directors due to their time allocation to other businesses and their financial interests in Founder Shares.
• Inability to obtain additional financing to complete the initial Business Combination or to reduce the number of Public Shareholders requesting redemption.
• Issuance of Ordinary Shares to investors in connection with the initial Business Combination at a price less than the prevailing market price.
• Trust Account funds may not be fully protected against third-party claims or bankruptcy, potentially reducing the per-share redemption amount for Public Shareholders.
• Limited liquidity and trading for the company's public securities due to Nasdaq delisting and trading on the OTC Pink tier.
• The financial performance of the post-Business Combination company may be negatively affected by a lack of established revenue, cash flows, and experienced management.
• Increased competition to find an attractive target for an initial Business Combination, potentially increasing costs and hindering success.
• Changes in the market for directors and officers liability insurance could make it more difficult and expensive to complete a Business Combination.
• Potential for resources to be wasted on researching acquisitions that are not completed.
• Regulatory review or approval by authorities like CFIUS could impede or prevent the completion of a Business Combination.
• Recent fluctuations in inflation and interest rates could make it more difficult to consummate a Business Combination.
• Geopolitical instability (e.g., conflicts in Ukraine, Middle East) may affect potential target companies' operations or financial condition.
• Potential imposition of the U.S. federal 1% excise tax on stock repurchases in connection with a Business Combination involving a U.S. target.
• Substantial doubt about the company's ability to continue as a going concern.
• Adverse regulatory changes in the geographies of operation could inhibit the development of solar energy projects.
• Technological breakthroughs that deem solar energy substantially less profitable could be highly detrimental to the business post-Business Combination.
• The share price of the post-Business Combination company may be less than the Redemption Price of the Public Shares.
• Agreements related to the IPO may be amended or waived without shareholder approval, potentially benefiting the Sponsor, officers, and/or directors.
• Changes in international trade policies, tariffs, and treaties could adversely affect the search for a target or the performance of a post-Business Combination company.
• Adverse developments affecting the financial services industry could impact the company's liquidity and ability to acquire financing.
• Cybersecurity incidents or attacks could result in information theft, data corruption, operational disruption, and/or financial loss.

Future Outlook

The company intends to complete its initial Business Combination with GreenRock by November 2, 2025. It may seek further extensions beyond this date, which would require shareholder approval and provide an opportunity for additional redemptions. The post-Business Combination entity is expected to benefit from greater access to capital and the ability to use its shares for future acquisitions. The full release of GreenRock's escrowed shares is contingent on GreenRock achieving an Adjusted EBITDA of $25,000,000 or more for fiscal year 2025. The company anticipates incurring increased expenses as a public entity and plans for some current management team members to remain with the combined company.

Management Comments

• "Management believes that this offers considerable, attractive acquisition opportunities given the current principles of the OECD, the Environmental, Social and Corporate Governance (ESG) principles and the opportunity for growth and financial return."
• "We capitalize on the seasoned operating experience of our Management Team, led by Per Regnarsson, our Chief Executive Officer and a director, who has over 15 years of investment and management experience and a successful track record across several sustainable energy sectors."
• "We believe our investment discipline allows us to identify opportunities where our Management Team can create shareholder value, which may include operational or capital structure improvements, as well as the introduction of new technologies and/or products to drive growth."
• "We anticipate that one or more members of our directors or officers would remain with the post-Business Combination company."
• "Management determined that the Cayman Islands is the Companys only major tax jurisdiction."
• "Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months."
• "Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024... Management determined that we did not maintain effective internal control over financial reporting as of December 31, 2024."
• "Management is taking steps to address these control weaknesses and enhance compliance going forward."

Industry Context

ClimateRock is positioned within the sustainable energy industry, focusing on climate change, environment, renewable energy, and emerging clean technologies, particularly in OECD countries. This focus aligns with global efforts to accelerate the transition to renewable sources, driven by targets like those from COP26 and the International Energy Agency (IEA), which project a need for annual global investment in clean power to rise from US$380 billion in 2020 to $1.6 trillion by 2030. The company adheres to UN Principles for Responsible Investment and ESG principles, aiming to contribute to Sustainable Development Goals. The recent 2024 SEC SPAC Rules are noted as potentially affecting the company's ability to complete its initial Business Combination, increasing associated costs and time.

Management Changes

Corporate Governance

Legal Proceedings

• To the knowledge of Management, there is no material litigation currently pending or contemplated against the company, its subsidiaries, officers, or directors in their capacity as such or against any of its property.
• A prior legal proceeding involved Charles Ratelband V (Executive Chairman) and WindShareFund N.V. with the Netherlands Authority for the Financial Markets (AFM) regarding failure to make certain disclosures related to wind turbine investments. The proceeding has been resolved, with some findings of violation upheld and others vacated.

Related Party Transactions

• **Founder Shares:** The Sponsor initially purchased 2,156,250 Class B Ordinary Shares for $25,000. The Sponsor transferred 151,875 Founder Shares to certain directors and officers, with 71,875 vesting upon IPO and 80,000 vesting upon Business Combination completion. An additional 60,300 Founder Shares were transferred to directors/officers on May 20, 2024, vesting upon Business Combination completion.
• **Private Placement Warrants:** The Sponsor purchased 3,762,500 Private Placement Warrants for $3,762,500.
• **Administrative Services Agreement:** The company pays Gluon Group, an affiliate of the Sponsor and managed by CEO Per Regnarsson, $10,000 per month for office space, utilities, and administrative support. As of December 31, 2024, $304,941 was accrued.
• **Eternal Loans:** The company has multiple unsecured, non-interest bearing loans from Eternal B.V., an affiliate controlled by Executive Chairman Charles Ratelband V. As of December 31, 2024, the total outstanding balance for these loans was $3,074,064. As of June 24, 2025, the Seventh Eternal Loan's outstanding balance was $1,788,448.
• **Convertible Promissory Notes (Extension Notes):** The Sponsor issued a $900,000 note (2023 Extension Note) and a $600,000 note (2024 Extension Note) to the company, deposited into the Trust Account for extensions. As of December 31, 2024, $900,000 and $400,000, respectively, were outstanding. A $107,623.44 note (2025 Extension Note) was issued on June 20, 2025.
• **Gluon Loan:** A $20,000 loan from Gluon (managed by CEO Per Regnarsson) was advanced to assist with short-term cash demands, with the repayment deadline extended to August 31, 2025.
• **Advisory Services (Gluon Letter Agreement):** The company is obligated to pay Gluon a 'Transaction Success Fee' of $250,000 upon successful completion of a business combination with an aggregate purchase price of $400,000,000 or more, and additional fees for introduced financings.
• **GreenRock Business Combination:** GreenRock is considered a related party due to shared management (Per Regnarsson as CEO of both, Charles Ratelband V as Chairman of ClimateRock and Executive Director of GreenRock, and Mr. Ratelband's control over WindShareFund N.V., a seller of GreenRock's assets).
• **Internal Control Deficiencies:** Deficiencies were identified in the identification, approval, and disclosure of related party transactions, including Founder Share transfers and related party borrowings, indicating a lack of adequate controls in this area.

Stakeholder Impact

• **Shareholders:** Public shareholders have experienced significant dilution of their pro rata share in the Trust Account due to redemptions and face reduced liquidity and trading options following the Nasdaq delisting. Founder shareholders, particularly the Sponsor, maintain a substantial ownership stake and have a strong incentive to complete a business combination, even if it's not optimal for public shareholders, due to the low initial cost of their shares.
• **Employees:** The company has no full-time employees prior to a business combination. The future employment of current officers and directors with the post-Business Combination company is subject to negotiation, which could influence their decisions regarding a target.
• **Creditors:** The company's financial instability and going concern doubts pose risks to creditors. While the company seeks waivers from vendors, there's no guarantee against claims on the Trust Account, and the Sponsor's indemnification obligations are not assured.
• **Underwriters:** Maxim Group LLC is entitled to a significant deferred underwriting commission upon the completion of a business combination, creating a potential conflict of interest in their advisory role.

Next Steps

• Complete the proposed GreenRock Business Combination by the extended deadline of November 2, 2025.
• GreenRock is covenanted to complete the acquisition of certain operating subsidiaries prior to the closing of the GreenRock Business Combination.
• The company may seek shareholder approval to further extend the Combination Period beyond November 2, 2025.
• The company plans to seek shareholder approval to eliminate the Redemption Limitation from its Amended and Restated Articles.
• Management is taking steps to address and enhance compliance regarding internal control weaknesses, particularly concerning related party transactions.
• The company's Form 25-NSE has not yet been filed to officially delist its securities from Nasdaq.

Key Dates

Recommendation

Keywords

SPAC, blank check company, sustainable energy, renewable energy, climate change, GreenRock, business combination, Nasdaq delisting, OTC Pink, shareholder redemptions, going concern, SEC filing, financial reporting, corporate governance, related party transactions, trust account, financial analysis