425: Focus Impact BH3 Acquisition Company Waives Key Conditions to Advance XCF Global Capital Merger

Focus Impact BH3 Acquisition Company (BHAC) has entered into a waiver agreement with XCF Global Capital, Inc. (XCF), allowing their business combination to proceed despite several unfulfilled closing conditions, including unresolved disputes and unexecuted agreements.

Summary

• Focus Impact BH3 Acquisition Company (BHAC) and XCF Global Capital, Inc. (XCF) entered into a Waiver to the Business Combination Agreement on June 5, 2025.
• The waiver allows the business combination to close even if certain conditions precedent, originally stipulated in the agreement dated March 11, 2024 (and subsequent amendments), are not met.
• Key waived conditions include: the NewCo board composition deviating from original terms, unresolved matters related to a Greater Nevada Credit Union Loan, a Twain Ground Lease dispute, and SAF Production issues previously disclosed in a June 3, 2025 Form 8-K.
• Additionally, the waiver covers the Phillips 66 Company's right of first refusal on the Reno, Nevada production facility not being permanently waived, the Amended Key Agreement not being executed, and the Company Service Level Insurance Coverage not being purchased prior to closing.
• The NewCo board of directors immediately after the merger will consist of six directors: four designated by XCF (Mihir Dange, Anne Anderson, Sanford Cockrell, Si-Yeon Kim), one by BHAC (Wray Thorn), and one independent director mutually designated (Carter McCain).

Sentiment

Score: 4

Explanation: The sentiment is slightly negative. While the waiver allows the merger to proceed, it reveals that several material conditions, including resolution of significant financial and operational disputes, were not met. This suggests underlying issues with the target company that BHAC is now accepting, increasing the risk profile of the combined entity.

Positives

• The waiver facilitates the closing of the business combination between BHAC and XCF, indicating progress towards the merger's completion.
• The agreement on the NewCo board composition ensures a clear governance structure post-merger, with representation from both XCF and BHAC.

Negatives

• The waiver highlights that several material conditions precedent to the business combination, such as resolving loan and ground lease disputes, executing key agreements, and purchasing essential insurance, have not been met by the original closing timeline.
• The continued existence of a right of first refusal held by Phillips 66 Company on a key production facility (New Rise Reno Renewables, LLC) could impact future strategic flexibility or asset sales.

Risks

• Changes in domestic and foreign business, market, financial, political, and legal conditions could adversely affect the combined entity.
• The potential for termination of negotiations and agreements related to the business combination or XCF's offtake arrangements.
• The outcome of any legal proceedings that may be instituted against Focus Impact, XCF, NewCo, or others.
• Inability of the parties to successfully or timely close the business combination, including risks related to regulatory approvals.
• Changes to the proposed transaction structure due to applicable laws or regulations.
• Inability to meet stock exchange listing standards following the consummation of the business combination.
• Challenges for XCF to integrate the operations of New Rise and implement its business plan on its anticipated timeline.
• Risks that New Rise may not produce anticipated quantities of SAF without interruption or material changes to the production process.
• XCF's ability to resolve current disputes between New Rise and its landlord regarding the ground lease for the Reno facility.
• XCF's ability to resolve current disputes between New Rise and its primary lender regarding outstanding loans used for the Reno facility's development.
• The proposed transactions disrupting current plans and operations of Focus Impact or XCF.
• Challenges in recognizing the anticipated benefits of the proposed transactions due to competition, growth management, customer/supplier relationships, and employee retention.
• Costs related to the proposed transactions.
• Changes in applicable laws or regulations, and risks related to extensive regulation, compliance obligations, and rigorous enforcement.
• Adverse effects from other economic, business, and/or competitive factors.
• Uncertainty regarding the availability of tax credits and other federal, state, or local government support.
• Risks relating to XCF's and New Rise's key intellectual property rights.
• Various factors beyond management's control, including general economic conditions.

Future Outlook

The document includes forward-looking statements regarding Focus Impact's and XCF's expectations for future performance, anticipated financial impacts of the business combination, market opportunity projections, and the timing of the consummation of the business combination. However, these are subject to significant risks and uncertainties, and actual results could differ materially.

Management Comments

• Carl Stanton, Chief Executive Officer of Focus Impact BH3 Acquisition Company, signed the Form 8-K and the Waiver on behalf of BHAC and its subsidiaries.
• Mihir Dange, Chief Executive Officer of XCF Global Capital, Inc., signed the Waiver on behalf of XCF.

Industry Context

This filing is typical for Special Purpose Acquisition Companies (SPACs) nearing the completion of their de-SPAC transaction. The waiver of conditions, particularly those related to operational disputes and unfulfilled agreements, highlights the complexities and potential challenges in merging with private companies, especially those in emerging sectors like Sustainable Aviation Fuel (SAF) production, which often involve significant capital expenditure and regulatory hurdles.

Management Changes

Corporate Governance

Legal Proceedings

• XCF's ability to resolve current disputes between New Rise and its landlord with respect to the ground lease for the New Rise Reno facility.
• XCF's ability to resolve current disputes between New Rise and its primary lender with respect to loans outstanding that were used in the development of the New Rise Reno facility.
• The outcome of any legal proceedings that may be instituted against Focus Impact, XCF, NewCo or others.

Stakeholder Impact

• Shareholders of BHAC and XCF: The waiver facilitates the completion of the business combination, which could impact share value depending on the market's perception of the waived conditions and the combined entity's future prospects.
• Employees of XCF/New Rise: The integration of New Rise operations by XCF and the implementation of its business plan could affect employees, as well as the ability to retain key management and employees.
• Customers and Suppliers of XCF/New Rise: The ability of NewCo to grow profitably and maintain relationships with customers and suppliers is a key factor in the success of the combined entity.
• Creditors of New Rise: The unresolved disputes with the primary lender could impact the financial stability and creditworthiness of New Rise and, by extension, the combined entity.

Next Steps

• Consummation of the business combination between Focus Impact BH3 Acquisition Company and XCF Global Capital, Inc.

Key Dates

Recommendation

Keywords

Business Combination Agreement, Waiver, SEC Filing, Form 425, SPAC, Merger, Acquisition, Focus Impact BH3 Acquisition Company, XCF Global Capital, NewCo, Closing Conditions, Corporate Governance, Board of Directors, Renewable Energy, SAF Production, Ground Lease Dispute, Loan Dispute, Phillips 66, Right of First Refusal