10-Q: ClimateRock Secures $86M Financing, Faces Delisting & Going Concern

ClimateRock, a SPAC, secured up to $86 million in new financing and extended its business combination deadline to November 2025, but faces Nasdaq delisting and significant going concern doubts.

Summary

• ClimateRock, a blank check company, is pursuing a business combination with GreenRock Corp., an agreement amended in November 2024.
• The deadline for completing a business combination has been extended from May 2, 2025, to November 2, 2025.
• The company was delisted from Nasdaq on April 10, 2025, due to failure to meet public holder requirements and inability to close a business combination by the extended deadline, now trading on the OTC Pink tier.
• Significant shareholder redemptions occurred, with 2,016,792 Class A shares redeemed for approximately $24.67 million in April/May 2025, reducing the Trust Account balance to $5,498,808 as of June 30, 2025.
• New financing agreements were secured on September 19, 2025, including an Equity Line of Credit (ELOC) for up to $75.0 million and a Securities Purchase Agreement (SPA) for up to $11.0 million in convertible promissory notes and warrants.
• The SPA includes an initial tranche of $4.8 million (with $0.8 million original issue discount) and a second tranche of $1.2 million (with $0.2 million original issue discount), with a third tranche of up to $5.0 million conditional on share price performance.
• The lead investor in the SPA will receive 3,450,000 Class A ordinary shares (Advanced Shares) as fully earned, with net proceeds from their sale applied against the initial and second tranches of notes.
• The company reported a net loss of $172,412 for the three months ended June 30, 2025, and $357,450 for the six months ended June 30, 2025.
• A material weakness in internal control over financial reporting was identified related to the under accrual of legal fees.
• The company has a working capital deficit of $6,892,611 as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The company faces severe financial distress, evidenced by its Nasdaq delisting, critically low cash balance, and substantial working capital deficit, leading to a going concern warning. Although new financing agreements totaling up to $86 million have been secured, these are largely contingent on the business combination closing and involve significant potential dilution. The high redemption rates indicate a lack of investor confidence, and the reliance on related-party loans highlights underlying financial fragility.

Positives

• Secured new financing agreements totaling up to $86.0 million (ELOC for $75.0 million and SPA for $11.0 million) to support the business combination and working capital.
• Extended the business combination deadline to November 2, 2025, providing more time to close the GreenRock transaction.
• Net loss for the three months ended June 30, 2025, improved to $(172,412) from $(254,323) in the prior year period.
• Net loss for the six months ended June 30, 2025, improved to $(357,450) from $(581,834) in the prior year period.
• The GreenRock Business Combination Agreement was amended to remove the $15,000,000 minimum cash closing condition, potentially easing the path to closing.

Negatives

• Delisted from Nasdaq on April 10, 2025, and now trades on the less liquid OTC Pink tier, which may impact investor confidence and access to capital.
• Experienced significant shareholder redemptions, with 2,016,792 Class A shares redeemed for approximately $24.67 million in April/May 2025, drastically reducing the Trust Account balance.
• Current cash balance is very low at $3,909 as of June 30, 2025, down from $14,384 at December 31, 2024.
• Reported a working capital deficit of $6,892,611 as of June 30, 2025, indicating severe liquidity issues.
• Accumulated deficit increased to $(9,255,320) as of June 30, 2025, from $(8,116,098) at December 31, 2024.
• Identified a material weakness in internal control over financial reporting related to the under accrual of legal fees.
• Outstanding related party loans increased to $3,509,080 as of June 30, 2025, from $3,074,064 at December 31, 2024.
• Convertible promissory notes payable to related parties increased to $1,400,000 as of June 30, 2025, from $1,300,000 at December 31, 2024.
• The 2024 Extension Note had $100,000 in March and April extension payments that were not paid by the Sponsor and were covered by a loan from Gluon Renewable Energies Limited.
• Four monthly installments of approximately $71,748 for the 2025 Extension Note remained outstanding as of September 25, 2025.

Risks

• Substantial doubt about the ability to continue as a going concern due to low cash balance and significant working capital deficit.
• Failure to consummate the initial Business Combination by November 2, 2025, could lead to liquidation.
• Delisting from Nasdaq and trading on the OTC Pink tier may negatively impact liquidity, investor interest, and ability to raise capital.
• Material weakness in internal control over financial reporting related to under accrual of legal fees could lead to inaccurate financial reporting and loss of investor confidence.
• Reliance on related party loans and promissory notes for funding, which may not be sufficient or sustainable.
• The GreenRock Business Combination is subject to conditions, including GreenRock completing the acquisition of certain operating subsidiaries and achieving a $25,000,000 adjusted EBITDA for fiscal year 2025 to avoid forfeiture of escrowed shares.
• The new financing agreements (ELOC and SPA) are contingent on the consummation of the Business Combination and other conditions, and may not fully materialize or be sufficient.
• The ELOC and SPA involve significant potential dilution to existing shareholders through the issuance of new equity and convertible securities.
• The company is subject to various risks associated with early-stage and emerging growth companies.

Future Outlook

The company aims to complete its business combination with GreenRock Corp. by November 2, 2025. It has secured new financing commitments, including an Equity Line of Credit for up to $75.0 million and a Securities Purchase Agreement for up to $11.0 million in convertible notes and warrants, contingent on the business combination closing and other conditions. These funds are intended for working capital and general corporate purposes. The company is also working to remediate a material weakness in internal controls related to legal fee accruals.

Management Comments

• Management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
• Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Companys consolidated financial statements.
• Management is redesigning and implementing existing and additional controls to remediate these material weaknesses.
• 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.
• We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud.

Industry Context

ClimateRock operates as a Special Purpose Acquisition Company (SPAC) in the climate change, renewable energy, and clean technologies sector. The significant redemptions and subsequent delisting from Nasdaq reflect broader challenges faced by many SPACs in the current market environment, including increased investor scrutiny, higher redemption rates, and difficulties in completing de-SPAC transactions. The need for multiple extensions and reliance on related-party financing are common indicators of SPACs struggling to find and close suitable targets. The new financing agreements, particularly the ELOC and convertible notes, are typical strategies for SPACs to secure capital post-redemptions and prior to or concurrent with a business combination, especially when public market access is limited (e.g., after delisting). The focus on a specific sector (climate tech) aligns with current investment trends, but the company's operational and financial challenges highlight the execution risks inherent in the SPAC model.

Comparison to Industry Standards

• Redemption Rates: The high redemption rates (e.g., 2,016,792 shares redeemed in 2025 EGM) are significantly above industry averages for successful SPACs, indicating a lack of investor confidence in the proposed GreenRock business combination or the SPAC's ability to execute. Many SPACs have seen redemption rates exceeding 90% in recent years, leading to significantly reduced trust account balances.
• Trust Account Value: The drastic reduction of the Trust Account from $29.38 million to $5.50 million (December 2024 to June 2025) is a critical indicator of a SPAC's diminished financial capacity, making it harder to meet minimum cash conditions for a business combination. This is a common trend among SPACs that have faced high redemptions.
• Delisting: The delisting from Nasdaq to the OTC Pink tier is a severe negative event, indicating a failure to meet listing standards (e.g., public float, shareholder count, or timely business combination completion). This significantly reduces liquidity and institutional investor interest compared to Nasdaq-listed SPACs.
• Related Party Financing: Heavy reliance on loans and promissory notes from the Sponsor and affiliates (e.g., Eternal B.V., Gluon Renewable Energies Limited) is common for SPACs facing liquidity issues, but it also raises questions about potential conflicts of interest and the long-term financial viability without independent funding.
• Business Combination Conditions: The amendment to remove the $15 million minimum cash closing condition for the GreenRock merger reflects the company's struggle to retain sufficient cash after redemptions, a common adjustment in SPAC deals to salvage transactions with reduced capital. The $25 million adjusted EBITDA target for GreenRock for escrow release is a performance-based earnout, a standard mechanism to align interests and mitigate risk for the SPAC shareholders.
• New Financing Structure: The ELOC and convertible note structures are typical post-redemption financing tools for SPACs, designed to provide capital in tranches, often with conversion prices tied to market performance, which can lead to significant dilution.

Corporate Governance

Legal Proceedings

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

Related Party Transactions

• Founder Shares: Sponsor holds approximately 77.65% of issued and outstanding Ordinary Shares as of June 30, 2025.
• Eternal B.V. Loans: Multiple non-interest bearing, unsecured loans totaling $3,509,080 as of June 30, 2025, with maturity dates extended to December 31, 2025. Interest of 5% per month accrues if not repaid within 10 days of Business Combination. Charles Ratelband V (Executive Chairman) controls Eternal B.V.
• Gluon Renewable Energies Limited Loan: $20,000 loan, repayment extended to December 31, 2025. Gluon Renewable Energies Limited made payments totaling $365,017 on behalf of the company between May 16, 2025, and June 16, 2025, and an additional $60,000 on September 22, 2025. Per Regnarsson (CEO) is Managing Partner of Gluon Group.
• Promissory Notes (from Sponsor): $900,000 outstanding from the 2023 Extension Note and $500,000 outstanding from the 2024 Extension Note as of June 30, 2025. A $107,623 2025 Extension Note was issued on June 20, 2025, with $71,748 remaining outstanding as of September 25, 2025.
• Administrative Service Fee: $10,000 monthly fee paid to Gluon Group (an affiliate of the company), with $358,941 accrued as of June 30, 2025.
• Advisory Services (Gluon Letter Agreement): Gluon (an affiliate) is entitled to a success fee of $250,000 upon completion of transactions with an aggregate purchase price of $400,000,000 or more, plus financing fees (2.0% for debt, 5.0% for equity).
• Business Combination Agreement with GreenRock: GreenRock is a related party through shared management.

Stakeholder Impact

• Shareholders: Significant dilution risk from new equity financing (ELOC, convertible notes) and potential forfeiture of escrowed shares in the GreenRock transaction if EBITDA targets are not met. Existing public shareholders have faced substantial redemptions and the delisting to OTC markets reduces liquidity and potentially share value.
• Creditors (Related Parties): Eternal B.V. and Gluon Renewable Energies Limited have extended loans, but repayment is contingent on the business combination and carries interest penalties if delayed.
• Management/Sponsor: The Sponsor continues to provide financial support through loans and promissory notes, indicating a strong vested interest in completing the business combination. Management's compensation includes potential equity vesting upon business combination completion.
• Employees: No direct impact mentioned, but the going concern risk and uncertainty around the business combination could affect future employment stability.
• Customers/Suppliers: Not directly impacted by this SPAC filing, as the company has not commenced operations. Future impact depends on the successful integration and operation of GreenRock.

Next Steps

• Complete the business combination with GreenRock Corp. by November 2, 2025.
• Secure the funding from the Equity Line of Credit and Securities Purchase Agreement, contingent on the business combination closing and other conditions.
• Remediate the identified material weakness in internal control over financial reporting related to legal fee accruals.
• Ensure timely payment of remaining installments for the 2025 Extension Note ($71,748 outstanding as of September 25, 2025).
• GreenRock Corp. must complete the acquisition of certain operating subsidiaries prior to the business combination closing.
• GreenRock Corp. needs to achieve an adjusted EBITDA of $25,000,000 for fiscal year 2025 to prevent forfeiture of escrowed shares.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by its Nasdaq delisting, critically low cash balance, and substantial working capital deficit, leading to a going concern warning. While new financing agreements totaling up to $86 million have been secured, these are largely contingent on the business combination closing and involve significant potential dilution. The high redemption rates indicate a lack of investor confidence, and the reliance on related-party loans highlights underlying financial fragility. The identified material weakness in internal controls further adds to operational risk. Given the high uncertainty, severe liquidity issues, and the move to a less liquid trading platform, the stock presents a very high-risk profile with significant downside potential.

Keywords

SPAC, ClimateRock, GreenRock, Business Combination, Convertible Notes, Equity Line of Credit, Nasdaq Delisting, Going Concern, SEC Filing, Financial Reporting, Risk Factors, Shareholder Redemptions, Related Party Transactions, Capital Raise, OTC Markets, Financial Health, Investment