CNDA 10-Q
Concord Acquisition Corp II (CNDA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
(Exact name of registrant as specified in its charter)
|
| |||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: | Trading Symbol: | Name of Each Exchange on Which Registered: | ||
OTC Pink | ||||
OTC Pink | ||||
OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
☒ | Smaller reporting company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 6, 2025, there were
CONCORD ACQUISITION CORP II
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
CONCORD ACQUISITION CORP II
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2025 |
| December 31, 2024 | |||
(unaudited) | ||||||
Assets | ||||||
Cash | $ | | $ | | ||
Income tax receivable | — | | ||||
Financing proceeds receivable | — | | ||||
Prepaid expenses |
| |
| | ||
Total Current Assets | | | ||||
Cash held in Trust Account | | | ||||
Total Assets | $ | | $ | | ||
Liabilities and Stockholders’ Deficit |
|
|
|
| ||
$ | | $ | | |||
Accrued income taxes | | — | ||||
Accounts payable and accrued expenses | | | ||||
Excise tax payable | | | ||||
Total Current Liabilities | | | ||||
Warrant liability |
| |
| | ||
Capital Contribution Note, at fair value | | | ||||
Deferred underwriters’ commission |
| |
| | ||
Total Liabilities |
| |
| | ||
|
|
|
| |||
Commitments and Contingencies |
|
|
|
| ||
Class A common stock subject to possible redemption, | | | ||||
|
|
| ||||
Stockholders’ Deficit: |
|
|
|
| ||
Preferred stock, $ |
|
| ||||
Class A common stock, $ |
| — |
| — | ||
Class B common stock, $ |
| |
| | ||
Additional paid-in capital |
| — |
| — | ||
Accumulated deficit |
| ( |
| ( | ||
Total Stockholders’ Deficit |
| ( |
| ( | ||
Total Liabilities and Stockholders’ Deficit | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
CONCORD ACQUISITION CORP II
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended | ||||||
March 31, | ||||||
| 2025 |
| 2024 | |||
Operating costs | $ | | $ | | ||
Loss from operations | ( | ( | ||||
|
|
| ||||
Other (expense) income: |
| |||||
Other income | — | | ||||
Income from cash held in Trust Account | | | ||||
Change in fair value of Capital Contribution Note | | — | ||||
Excess of fair value of Capital Contribution Note over initial principal balance at issuance | — | ( | ||||
Change in fair value of warrant liability | ( | | ||||
Total other (expense) income, net | ( | | ||||
|
| |||||
(Loss) income before provision for income taxes | ( | | ||||
Provision for income taxes | ( | ( | ||||
Net (loss) income | $ | ( | $ | | ||
|
| |||||
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption |
| | | |||
Basic and diluted net (loss) income per share, Class A common stock subject to possible redemption | $ | ( | $ | | ||
| ||||||
Basic and diluted weighted average shares outstanding, Class B common stock |
| | | |||
Basic and diluted net (loss) income per share, Class B common stock | $ | ( | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
CONCORD ACQUISITION CORP II
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2025
Class A | Class B | Additional | Total | |||||||||||||||||||||
| Preferred Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Accumulated |
| Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance as of January 1, 2025 | — | $ | — | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||||
Excise tax payable attributable to redemption of common stock | — | — | — | — | — | — | — | ( | ( | |||||||||||||||
Increase in redemption value of shares subject to possible redemption | — | — | — | — | — | — | — | ( | ( | |||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | |||||||||||||||
Balance as of March 31, 2025 | — | $ | — | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Class A | Class B | Additional | Total | |||||||||||||||||||||
| Preferred Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Accumulated |
| Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | |||||||
Balance as of January 1, 2024 | — | $ | — | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | |||||||||
Increase in redemption value of shares subject to possible redemption | — | — | — | — | — | — | — | ( | ( | |||||||||||||||
Net income |
| — | — | — | — | — | — | — | | | ||||||||||||||
Balance as of March 31, 2024 |
| — | $ | — | — | $ | — | | $ | | $ | — | $ | ( | $ | ( | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONCORD ACQUISITION CORP II
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three | ||||||
Months Ended March 31, | ||||||
| 2025 |
| 2024 | |||
Cash flows from operating activities: |
|
| ||||
Net (loss) income | $ | ( | $ | | ||
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
| ||||
Income from cash held in Trust Account | ( | ( | ||||
Changes in fair value of Capital Contribution Note | ( | — | ||||
Excess of fair value of Capital Contribution Note over initial principal balance at issuance | — | | ||||
Changes in fair value of warrant liability | | ( | ||||
Changes in operating assets and liabilities: |
|
|
| |||
Prepaid expenses | ( | ( | ||||
Excise tax payable | ( | — | ||||
Due to related party |
| |
| | ||
Accrued income taxes | | | ||||
Accounts payable and accrued expenses | | | ||||
Net cash used in operating activities |
| ( |
| ( | ||
Cash Flows from Investing Activities: | ||||||
Cash withdrawn from Trust Account in connection with redemptions | | — | ||||
Amounts withdrawn from Trust Account to pay taxes | | — | ||||
Net cash provided by investing activities | | — | ||||
|
|
|
| |||
Cash flows from financing activities: | ||||||
Proceeds from Interim Financing | | — | ||||
Redemption of Common Stock | ( | — | ||||
Net cash used in financing activities | ( | — | ||||
Net change in cash |
| ( |
| ( | ||
Cash, beginning of the period |
| |
| | ||
Cash, end of the period | $ | | $ | | ||
|
|
|
| |||
Supplemental disclosure of cash flow information: |
|
|
|
| ||
Non-cash financing transactions: | ||||||
Increase in redemption value of shares subject to possible redemption | $ | | $ | | ||
Excise tax attributable to redemption of common stock | $ | | $ | — | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
NOTE 1 — ORGANIZATION, BUSINESS OPERATIONS AND LIQUIDITY
Organization and General
Concord Acquisition Corp II (the “Company”) is a blank check company incorporated on February 18, 2021, as a Delaware corporation. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
As of March 31, 2025, the Company had not commenced any operations. All activity since February 18, 2021 (inception) through March 31, 2025, relates to the Company’s formation, the Initial Public Offering (as defined below) and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination and completion of the proposed Business Combination (described below). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering, and non-operating income or expense from the changes in the fair value of warrant liability and Capital Contribution Note (which is described in Note 2 – Capital Contribution Note).
The Company’s sponsors are Concord Sponsor Group II LLC (an affiliate of Atlas Merchant Capital LLC) (the “Sponsor”), and CA2 Co-Investment LLC (an affiliate of one of the underwriters of the Initial Public Offering) (“CA2 Co-Investment” and, together with the Sponsor, the “Sponsors”).
The registration statements for the Initial Public Offering were declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on August 31, 2021 (the “Effective Date”). On September 3, 2021, the Company consummated the initial public offering (the “Initial Public Offering” or “IPO”) of
Ten qualified institutional buyers or institutional accredited investors that are not affiliated with the Company, the Sponsor, the Company’s directors or any member of the Company’s management (“Anchor Investors”) each expressed to the Company an interest in purchasing up to
Simultaneously with the closing of the IPO, the Company consummated the private placement of
The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least
5
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Upon the closing of the Initial Public Offering, an aggregate of $
The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either: (1) in connection with a stockholder meeting called to approve the Business Combination; or (2) by means of a tender offer. Except as required by applicable law or stock exchange rules, the decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem all or a portion of their public shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of business days prior to the consummation of the initial Business Combination, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations. As of March 31, 2025, the amount in the Trust Account redeemable by common stockholders is approximately $
The shares of common stock subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination, among other things, if the Company seeks stockholder approval, and a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
In August 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders (“NRA Investors”) in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO (the “Non-Redeemed Shares”) in connection with the special meeting of stockholders called by the Company and held on August 29, 2023 (described below). In exchange for the foregoing commitments not to redeem such shares, the Company has agreed to issue, or cause to be issued, to such investors an aggregate of
On August 29, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s amended and restated certificate of incorporation (the “charter”) to extend the date by which the Company has to consummate a Business Combination from September 3, 2023 (the “Termination Date”) to June 3, 2024, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Extended Date”). In connection with the votes to approve the Charter Amendment, the holders of
6
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
In May 2024, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders (“2024 NRA Investors”) in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO (the “2024 Non-Redeemed Shares”) in connection with the special meeting of stockholders called by the Company and held on May 31, 2024 (described below). In exchange for the foregoing commitment to the Company to not redeem the 2024 Non-Redeemed Shares, the Company agreed to issue, or cause to be issued, to such stockholders, an aggregate of
As the 2023 Promote Shares and 2024 Promote Shares will be issued only upon closing of an initial Business Combination, such shares will not be subject to redemption.
On May 31, 2024, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a Business Combination from June 3, 2024 to March 3, 2025, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Second Extended Date”). In connection with the votes to approve the Second Charter Amendment, the holders of an additional
On February 28, 2025, the Company held a special meeting of stockholders (the “February 2025 Special Meeting”) and the Company’s stockholders approved a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a Business Combination from March 3, 2025 to December 31, 2025, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Third Extended Date”). In connection with the votes to approve the Third Charter Amendment, the holders of an additional
Deferred Underwriters’ Commission
The underwriters were entitled to a deferred underwriters’ commission of
Securities Listing
On May 23, 2024, the Company announced the transfer of the listing of its Class A common stock, Units and warrants from the New York Stock Exchange to NYSE American LLC (“NYSE American”). The Company’s Class A common stock, Units and warrants began trading on NYSE American on May 29, 2024 under the same ticker symbols.
On September 3, 2024, the Company received a letter from NYSE American LLC (“NYSE American” or the “Exchange”) stating that the staff of NYSE Regulation has determined to commence proceedings to delist the Company’s Class A common stock, Units and warrants (collectively, the “Securities”) pursuant to Sections 119(b) and 119(f) of the NYSE American Company Guide because the Company failed to consummate a Business Combination within 36 months of the effectiveness of its Initial Public Offering registration statement, or such shorter period that the Company specified in its registration statement. As a result of the determination, trading of the Company’s Securities on the NYSE American has been suspended.
7
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
On October 11, 2024, the Company joined OTCQX® Best Market (“OTCQX”) and began trading its Class A common stock under the symbol “CNDA”. The Company’s Units trade on the OTC Markets’ Pink Market under the symbol CNDAU. The Company’s redeemable warrants, each one whole warrant exercisable for
Proposed Business Combination
On August 26, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Events.com, Inc., a California corporation (“Events.com”), and Concord Merger Sub, Inc., a California corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, the parties will consummate a Business Combination transaction pursuant to which Merger Sub will merge with and into Events.com, with Events.com surviving the merger as a wholly-owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions” and the closing of the Transactions, the “Closing”). In connection with the Closing, it is expected that the Company will change its name to Events.com, Inc. and is referred to herein as “New CND” as of the time following such change of name.
Consideration
The aggregate equity consideration (other than the Unvested Earn Out Shares described below) to be issued to Events.com’s stockholders and issuable to certain other Events.com securityholders in the Transactions (the “Merger Consideration”) will be a number of shares of New CND Class A common stock, par value $
Prior to the Closing, Events.com will complete a recapitalization, pursuant to which all outstanding shares of preferred stock will be converted into shares of common stock of Events.com. If the Events.com Charter Amendment (as defined below) is approved, at the Closing, each share of common stock of Events.com that is issued and outstanding immediately prior to the effective time of the Merger (other than treasury shares and Dissenting Shares, as defined in the Merger Agreement) will be cancelled and converted into the right to receive a number of shares of New CND common stock equal to an exchange ratio (the “Exchange Ratio”) determined by dividing the number of shares of New CND common stock constituting the Merger Consideration by the number of Aggregate Fully Diluted Company Common Shares (as defined in the Merger Agreement). All outstanding Events.com stock options will be converted into options for New CND common stock, adjusted by the Exchange Ratio, and any outstanding warrants and, to the extent permissible, convertible notes issued by Events.com will be assumed by New CND.
If the Events.com Charter Amendment is not approved, at the Closing, each share of common stock of Events.com that is issued and outstanding immediately prior to the effective time of the Merger (other than Dissenting Shares) will be converted into shares of New CND common stock in accordance with the terms of Events.com’s existing articles of incorporation. In such case, the Merger Consideration will be distributed to all holders of Events.com’s capital stock and other securities convertible into Events.com stock, provided those securities are vested, in-the-money, or automatically convertible at the time of the Merger.
Earnout
At the Closing, New CND will issue
| ● |
| ● |
8
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
| ● |
| ● |
If a “change of control” of New CND occurs prior to the end of the Earnout Period, Triggering Event I and Triggering Event II will be deemed to have occurred, and if the consideration payable in the change of control has a per share value in excess of the prices applicable to Triggering Event III and/or Triggering Event IV, Triggering Event III and/or Triggering Event IV, as applicable, will also be deemed to have occurred. Any Unvested Earn Out Shares that do not vest prior to the end of the Earnout Period will be automatically forfeited.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of the parties, which will terminate and be of no further force and effect as of the Closing.
Covenants
The Merger Agreement contains customary covenants of the parties, including, among others, covenants providing for (i) certain limitations on the operation of the parties’ respective businesses prior to consummation of the Transactions, (ii) the parties’ efforts to satisfy conditions to consummation of the Transactions, including by obtaining necessary approvals from governmental agencies as applicable, (iii) prohibitions on the parties soliciting alternative transactions, (iv) the parties preparing and the Company filing a registration statement on Form S-4 (the “Form S-4”) with the Securities and Exchange Commission (the “SEC”) and taking certain actions to obtain the requisite approval of the Company’s stockholders to vote in favor of certain matters (the “Company Stockholder Matters”), including the adoption and approval of the Merger Agreement and the Transactions, at a special meeting to be called therefor (the “Company Stockholders’ Meeting”), (v) Events.com using reasonable best efforts to prepare and deliver certain financial statements required to be included in the Form S-4 (the “Required Financials”), (vi) the parties’ efforts to obtain commitments from additional investors as to the Financings (as defined below) and cooperate with respect to the Interim Financings and (vii) the protection of, and access to, confidential information of the parties.
The Merger Agreement also requires Events.com to use its reasonable best efforts to obtain the requisite approval of its shareholders to (i) approve the Merger and (ii) an amended and restated articles of incorporation of Events.com (the “Events.com Charter Amendment”) providing for, among other things, the contemplated treatment of securities of Events.com set forth in the Merger Agreement and summarized above.
Interim Financing
The Merger Agreement provides for the parties to cooperate, between the date of the Merger Agreement and the Closing, to raise capital for Events.com through the sale of equity securities, or securities convertible into equity securities (the “Interim Financing”). Following the date of the Merger Agreement and until the earlier of the Closing or the termination of the Merger Agreement (the “Interim Period”), Events.com will be required to pay to the Company an amount equal to the lesser of (i) the amount of unpaid Company transaction expenses actually incurred by the Company as of the applicable payment date and (ii) the Interim Parent Funding Amount (as defined below), in each case, within three business days after receipt by Events.com of reasonably detailed evidence of the incurrence of such expenses. “Interim Parent Funding Amount” is calculated as of any given date during the Interim Period, an amount equal to (i)
9
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Second Amended and Restated Certificate of Incorporation
Pursuant to the terms of the Merger Agreement, at the Closing the amended and restated certificate of incorporation of New CND will be further amended and restated (the “Second Restated Charter”) to, among other things, create a class of common stock of New CND, Class B common stock. The shares of Class B common stock will be entitled to the rights and privileges set forth in the Second Restated Charter, the form of which is attached as Exhibit D to the Merger Agreement, including ten votes per share on any matter that such share is entitled to vote upon.
Conditions to Closing
The consummation of the Transactions is subject to customary closing conditions, including, among others: (i) approval by the Company’s and Events.com’s respective stockholders, (ii) no law, regulation, judgment, decree, executive order or award enjoining or prohibiting the consummation of the Transactions, (iii) Available Closing Cash (as defined below) as of immediately after the Closing being at least $
Termination
The Merger Agreement may be terminated at any time prior to the effective time of the Merger: (i) by mutual written consent of the Company and Events.com; (ii) by either the Company or Events.com if the Closing has not occurred by March 3, 2025 (or such later date as the Company’s deadline to consummate a Business Combination shall be extended to, if applicable) (the “Outside Date”), provided that the right to terminate the Merger Agreement upon the occurrence of the Outside Date will not be available to a party if a breach or violation by such party or its affiliates of any representation, warranty, covenant or obligation under the Merger Agreement was the primary cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date; (iii) by Events.com if there has been a Change in Recommendation, or if, at the Company Stockholders’ Meeting, approval of the Company Stockholder Matters is not obtained; (iv) by the Company if Events.com does not deliver approval of the Transactions by the requisite holders of its capital stock within ten business days after the date that the Form S-4 is declared effective; (v) by Events.com if the Company’s Class A common stock has been delisted from the NYSE American, and such delisting has become final and non-appealable; or (vi) in the event of certain uncured breaches by the other party. On April 30, 2025, the Company extended the Outside Date to May 31, 2025.
Transaction Expenses
The Merger Agreement provides that each party to the Merger Agreement is generally responsible for its own expenses related to the Transactions. However, Events.com has agreed to pay all filing fees pursuant to antitrust laws or other regulatory approvals required in connection with the Merger and all costs, fees and expenses incurred in connection with the preparation, filing and mailing of the Form S-4 (including the proxy statement to be included therein) and the review and approval of the Registration Statement by the SEC. If the Merger Agreement is terminated as a result of Events.com failing to obtain the requisite shareholder approval, Events.com will be required to pay the Company the total amount of the Company’s unpaid transaction expenses, not to exceed $
10
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Lock-Up Agreement
Concurrently with the execution and delivery of the Merger Agreement, and effective upon Closing, the Company entered into a Lock-Up Agreement (the “Lock-Up Agreement”) with Mitch Thrower and Steven Partridge (the “Founders”), and following the execution of the Merger Agreement Events.com will seek to have certain additional Events.com stockholders enter into the Lock-Up Agreement. Pursuant to the terms of the Lock-Up Agreement, the Founders have agreed, and the other stockholders who become party to the Lock-Up Agreement will agree, to not effect any sale or other transfer of New CND common stock, subject to certain customary exceptions set forth in the Lock-Up Agreement, during the period commencing at the Closing and ending on the earlier of (i) one year following the Closing, (ii) such date as New CND completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of New CND’s stockholders having the right to exchange their shares of New CND common stock for cash, securities or other property or (iii) the date on which the last sale price of the New CND common stock equals or exceeds $
Sponsor Support Agreement
Concurrently with the execution and delivery of the Merger Agreement, the Company entered into a sponsor support agreement (the “Sponsor Support Agreement”) with Events.com, the Sponsor and CA2. Pursuant to the Sponsor Support Agreement, the Sponsor and CA2 have, among other things, agreed (i) to vote all of their shares of the Company’s common stock in favor of the approval of the Transactions, including the Merger, (ii) not to redeem any of their shares of the Company’s common stock, (iii) to waive their anti-dilution protections with respect to their shares of the Company’s Class B common stock and (iv) to forfeit an aggregate of
Stockholder Support Agreement
In connection with the execution of the Merger Agreement, the Company entered into a support agreement (the “Stockholder Support Agreement”) with certain stockholders of Events.com pursuant to which such stockholders have, among other things, agreed to (i) vote all of their shares of Events.com stock to adopt and approve the Merger Agreement and all other documents and transactions contemplated thereby and (ii) subject their shares of Events.com common stock to certain transfer restrictions.
Tax Receivable Agreement
In connection with the Closing, Events.com, the Company and certain Events.com shareholders will enter into a Tax Receivable Agreement (the “TRA”), pursuant to which, among other things, New CND will agree to pay certain Events.com stockholders
Registration Rights Agreement
The Merger Agreement provides that, in connection with the Closing, New CND, certain stockholders of the Company (including the Sponsor) and certain stockholders of Events.com will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which New CND will agree to register for resale certain shares of New CND common stock and other equity securities that are held by the parties thereto from time to time.
11
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Founder Shares
Founder Shares refers to the Class B common stock (the “Founder Shares”) acquired by the Sponsor, officers and board of directors prior to the Company’s IPO.
The Company’s initial stockholders, officers and directors have agreed not to transfer, assign or sell, except to permitted transferees, any Founder Shares held by them until the earlier to occur of: (1)
Initial Business Combination
The Company will have until December 31, 2025, or during any Extension Period, (the “Combination Period”) to complete the initial Business Combination. If the Company is unable to complete the initial Business Combination within such period or during any additional Extension Period (as defined below), the Company will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (which interest shall be net of taxes payable (excluding excise taxes), and less up to $
The Sponsors, officers and directors have agreed to waive: (1) their redemption rights with respect to any Founder Shares and public shares held by them, as applicable, in connection with the completion of the initial Business Combination; (2) their redemption rights with respect to any Founder Shares and public shares held by them in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the obligation to allow redemptions in connection with the initial Business Combination or to redeem
12
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below: (1) $
Liquidity and Going Concern Considerations
As of March 31, 2025, the Company had cash of $
On March 28, 2024, the Company entered into a subscription agreement (the “March Subscription Agreement”) with the Sponsor and the Capital Contribution Note Investor (see Note 6), pursuant to which the Capital Contribution Note Investor has agreed to provide up to $
On May 31, 2024, the Company issued an unsecured promissory note (the “Note”) in the principal amount of up to $
Pursuant to the Merger Agreement with Events.com, the Merger Agreement provides for the parties to cooperate, between the date of the Merger Agreement and the Closing, to raise capital for Events.com through the sale of equity securities, or securities convertible into equity securities (the “Interim Financing”). In association with the Merger Agreement, Events.com will be required to pay to the Company an amount based on funds raised by Events.com (see Note 2).
If the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to completing a Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because the Company becomes obligated to redeem a significant number of additional public shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of a Business Combination. In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.
13
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Company has until December 31, 2025, or during any Extension Period, to consummate a Business Combination. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or before December 31, 2025, or during any Extension Period, it is uncertain whether the Company will be able to consummate a Business Combination by this time. In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, Management has determined that the mandatory liquidation, should a Business Combination not occur and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate its business prior to completing a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts and classification of assets or liabilities should the Company be required to liquidate after December 31, 2025, or during any Extension Period.
Risks and Uncertainties
The continuing military conflict between the Russian Federation and Ukraine, the military actions between Hamas and Israel and the risk of escalations of other military conflicts have created and are expected to create global economic consequences. The specific impact on the Company’s financial condition, results of operations, cash flows and completion of a Business Combination is not determinable as of the date of these unaudited condensed consolidated financial statements.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8-03 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025, which contains the audited financial statements and notes thereto. The accompanying condensed consolidated balance sheet as of December 31, 2024, has been derived from those audited financial statements. The interim results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future interim periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Merger Sub. All intercompany transactions have been eliminated.
Segment Reporting
The Company complies with ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements. The Company initially adopted ASU 2023-07 in its annual financial statements for the year ended December 31, 2024, and in its interim condensed consolidated financial statements for the three months ended March 31, 2025. The amendments were applied retrospectively to all prior periods presented in these condensed consolidated financial statements (see Note 9).
14
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did
Cash Held in Trust Account
As of March 31, 2025 and December 31, 2024, funds held in Trust Account consisted of interest bearing demand deposits that generally have a readily determinable fair value. Such funds are presented on the unaudited condensed consolidated balance sheets at fair value at the end of the reporting period. Interest on the demand deposits is included in income from cash held in Trust Account in the accompanying unaudited condensed consolidated statements of operations.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed, and as of December 31, 2024 did exceed, the Federal Depository Insurance Coverage of $250,000. As of March 31, 2025 and December 31, 2024, the Company has not experienced losses on this account.
15
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Offering Costs
The Company complies with the requirements of ASC 340-10-S99-1 and SAB Topic 5A - “Expenses of Offering”. Offering costs consist of legal, accounting, underwriting discount and other costs that are directly related to the IPO. Accordingly, offering costs were initially charged to stockholders’ equity (consisting of underwriting discount, deferred underwriters’ commission, and other offering costs offset by offering costs attributable to the warrant liability and recorded in the unaudited condensed consolidated statement of operations). The Company adopted the residual method to allocate the gross proceeds between Class A common stock and warrants based on their relative fair values.
Common Stock Subject to Possible Redemption
The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity”. Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of Class A common stock (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity.
The Class A common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation. In accordance with the accounting treatment for redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require Class A common stock subject to redemption to be classified outside of permanent equity. Therefore, all shares of Class A common stock have been classified outside of permanent equity.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in-capital (to the extent available) and accumulated deficit.
For the three months ended March 31, 2025 and the year ended December 31, 2024, the changes in Class A common stock subject to possible redemption is as follows:
| Shares |
| Amount | ||
January 1, 2024 |
| | $ | | |
Less: |
| ||||
Redemptions | ( | ( | |||
Plus: |
| ||||
Increase in redemption value of shares subject to possible redemption | — |
| | ||
December 31, 2024 | | $ | | ||
January 1, 2025 | | $ | | ||
Less: | |||||
Redemptions | ( | ( | |||
Plus: | |||||
Increase in redemption value of shares subject to possible redemption | — | | |||
March 31, 2025 | | $ | | ||
16
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurement” approximates the carrying amounts represented in the unaudited condensed consolidated balance sheets, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statement of operations. Derivative assets and liabilities are classified in the unaudited condensed consolidated balance sheet as current or non-current based on whether net- cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Stock-Based Compensation
The sale or transfers of the Founder Shares to members of the Company’s board of directors is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity classified awards is measured at fair value upon the grant date. The Founder Shares were effectively sold or transferred subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. A business combination is not probable until it is completed. Stock-based compensation would be recognized at the date a Business Combination is considered probable in an amount equal to the number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares. As of March 31, 2025 and for all prior periods, the Company determined that a Business Combination is not considered probable until the Business Combination is completed, and therefore, no stock-based compensation expense has been recognized.
17
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Capital Contribution Note
The Company elected to account for the Capital Contribution Note entered into with an investor (the “Capital Contribution Note Investor”) and the Sponsor pursuant to the fair value option under ASC 825. ASC 825-10-15-4 provides for the “fair value option” election, to the extent not otherwise prohibited by ASC 825-10-15-5, to be afforded to financial instruments, wherein the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Differences between the face value of the Capital Contribution Note and fair value at issuance are recognized as either an expense in the unaudited condensed consolidated statement of operations (if issued at a premium) or as a capital contribution (if issued at a discount). Any material changes in the estimated fair value of the Capital Contribution Note are recognized as non-cash gains or losses in the unaudited condensed consolidated statements of operations. The Company has determined that the fair value option better reflects the underlying economics of the Capital Contribution Note. The fair value of the Capital Contribution Note includes both the fair value of the
Events.com Interim Financing
The Company accounts for the funds received and receivable recognized in association with the Interim Financing from Events.com in accordance with SAB Topic 5.A. As such, the Company records a receivable when funds are raised by Events.com and it is probable the Company will collect. Such amounts are offset against either expense on the statement of operations or accumulated deficit on the statement of changes in stockholders’ deficit depending on the nature of the funding.
For the three months ended March 31, 2025 and 2024, the Company reported no reduction in operating expenses or equity related to the Interim Financing.
In January 2025, the Company received $
Warrant Liability
The Company accounts for the
Non-Redemption Agreements
In August 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Non-Redeemed Shares in connection with the special meeting of stockholders called by the Company and held on August 29, 2023 (described below). In exchange for the foregoing commitments not to redeem such shares, the Company has agreed to issue, or cause to be issued, to such investors the 2023 Promote Shares and the Sponsor has agreed to surrender and forfeit to the Company for
18
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
In May 2024, the Company and the Sponsor entered into Non-Redemption Agreements with the 2024 NRA Investors in exchange for them agreeing not to redeem shares of the 2024 Non-Redeemed Shares in connection with the special meeting of stockholders called by the Company and held on May 31, 2024 (described below). In exchange for the foregoing commitment to the Company to not redeem the 2024 Non-Redeemed Shares, the Company agreed to issue, or cause to be issued, to such stockholders the 2024 Promote Shares, upon closing of the initial Business Combination, and the Sponsor agreed to surrender and forfeit, for
The Company complies with the requirements of SEC Staff Accounting Bulletin (“SAB”) Topic 5(A) – “Expenses of Offering” and SAB Topic 5(T): Miscellaneous Accounting - Accounting for Expenses or Liabilities Paid by Principal Stockholder(s). As such, the value of 2023 Promote Shares and the 2024 Promote Shares assigned to the Investors is recognized as offering costs and charged to stockholders’ deficit. The value of the Class B common stock to be forfeited by the Sponsors is reported as an increase to stockholders’ deficit.
Income Taxes
The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The effective tax rate differs from the statutory tax rate of
While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period if they are significant, unusual or infrequent. Computing the effective tax rate for the Company is complicated due to the potential impact of the Company’s change in fair value of warrants (or any other change in fair value of a complex financial instrument), the timing of any potential business combination expenses and the actual interest income that will be recognized during the year. The Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “If an entity is unable to estimate a part of its ordinary income or loss or the related tax provision or benefit but is otherwise able to make a reasonable estimate, the tax provision or benefit applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effective tax rate. As such, the Company is computing its taxable income or loss and associated income tax provision or benefit based on actual results through March 31, 2025 and 2024.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s unaudited condensed consolidated financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits. There were
The Company has identified the United States as its only “major” tax jurisdiction.
19
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The Company is subject to income tax examinations by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The Company was formed in 2021 and files U.S. federal and various state income tax returns. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into federal law. The IRA provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded U.S. corporations and certain U.S. subsidiaries of publicly traded non-U.S. corporations (each, a “covered corporation”). Because the Company is a Delaware corporation and its securities are publicly traded, the Company is a “covered corporation” for this purpose. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of Treasury has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The IRA applies only to repurchases that occur after December 31, 2022.
Any redemption or other repurchase that occurs in connection with a Business Combination may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with a Business Combination, (ii) the timing, nature and amount of the equity issued in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination), and (iii) the content of regulations and other guidance from the U.S. Department of the Treasury. In addition, because the excise tax would be payable by the Company, and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination.
The IRS issued final regulations with respect to the timing and payment of the excise tax. Pursuant to those regulations, the Company would need to file a return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024. The excise tax liability due as of October 31, 2024 was $
For the three months ended March 31, 2025 and 2024, the Company has $
Because the Company did not complete a Business Combination by December 31, 2024, any additional redemption or other repurchase that occurs in connection with an initial Business Combination may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, (ii) the nature and amount of the equity issued in connection with the Business
20
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Combination (or otherwise issued not in connection with the Business Combination but issued within the same taxable year of the Business Combination), and (iii) the content of regulations and other guidance from the U.S. Department of the Treasury.
Net (Loss) Income Per Common Share
The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of stock. For purposes of computing diluted earnings per share, the weighted-average shares outstanding of common stock reflects the dilutive effect that could occur if convertible securities or other contracts to issue common stock were converted into or exercised for common stock as of the beginning of the period in which the conditions were satisfied (or as of the date of the contingent stock agreement, if later). The calculation of diluted net (loss) income per common share does not consider the effect of the warrants issued in connection with the IPO since the exercise of the warrants would be anti-dilutive. The Capital Contribution Note Investor may elect at the closing of an initial Business Combination to receive such Business Combination Payment (as defined below) in cash or Class A common stock at a rate of
For the three months ended March 31, 2025 and 2024, basic and diluted net (loss) income per common share is as follows:
| For the Three Months ended March 31, | |||||||||||
| 2025 |
| 2024 | |||||||||
| Class A |
| Class B |
| Class A |
| Class B | |||||
Basic and diluted net (loss) income per share: |
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
| ||||
Allocation of net (loss) income |
| $ | ( |
| $ | ( |
| $ | |
| $ | |
Denominator |
|
|
|
| ||||||||
Basic and diluted weighted-average shares outstanding |
| |
| |
| |
| | ||||
Basic and diluted net (loss) income per share | $ | ( | $ | ( | $ | | $ | | ||||
Recent Accounting Pronouncements
On December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed consolidated financial statements.
21
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
NOTE 3. RELATED PARTY TRANSACTIONS
Founder Shares
On March 1, 2021, the Sponsors paid $
The Company’s initial stockholders, officers and directors have agreed not to transfer, assign or sell, except to permitted transferees, any Founder Shares held by them until the earlier to occur of: (1)
Promissory Note — Related Party
On May 3, 2022, the Sponsor agreed to loan the Company up to $
Related Party Loans
In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsors, an affiliate of the Sponsors or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). If the Company completes an initial Business Combination, the Company will repay such loaned amounts out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts. Up to $
Administrative Service Fee
The Company has agreed to pay an affiliate of its Sponsor a total of $
22
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Due to Related Party
In the normal course of business, certain expenses of the Company may be paid by, and then reimbursed to an affiliate of the Sponsor. As of March 31, 2025 and December 31, 2024, the Company had an outstanding balance due to the affiliate of the Sponsor of $
NOTE 4. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement entered into on the effective date of the Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to
Capital Markets Advisor Agreement
On August 21, 2023, the Company engaged a capital markets advisor in connection with seeking an extension for completing a Business Combination, a possible acquisition of a third party by merger, consolidation, acquisition of stock or assets or other business combination, and as a placement agent in connection with a private placement of debt, equity, equity-linked or convertible securities. The Company agreed to pay the capital markets advisor a transaction fee in connection with the services provided, payable upon and subject to the Company’s consummation of an initial business combination (“Capital Markets Advisor Fee”). The fee consists of a fixed and determinable portion and a variable portion contingent upon certain future events expected to take place upon completion of a Business Combination. As of March 31, 2025 and December 31, 2024, $
Expenses Contingent on the Closing of a Business Combination
As of March 31, 2025 and December 31, 2024, the Company has incurred $
23
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Deferred Underwriters’ Commission
The underwriters were entitled to a deferred underwriters’ commission of
NOTE 5. STOCKHOLDERS’ DEFICIT
Preferred Stock — The Company is authorized to issue a total of
Class A Common Stock — The Company is authorized to issue a total of
In association with the Company’s March Subscription Agreement with the Sponsor, the Company will issue
Class B Common Stock — The Company is authorized to issue a total of
24
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The shares of Class B common stock not previously forfeited will automatically convert into shares of Class A common stock at the time of the initial Business Combination on a
Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, with each share of common stock entitling the holder to
Warrants — Each whole warrant entitles the holder to purchase
The warrants will expire at 5:00 p.m., New York City time on the warrant expiration date, which is five years after the completion of the initial Business Combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to the Company and not placed in the Trust Account.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such Unit.
The Company did not register the shares of Class A common stock issuable upon exercise of the warrants in connection with the IPO. However, the Company has agreed that as soon as practicable, but in no event later than
25
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
Redemption of warrants when the price per share of Class A common stock equals or exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding public warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ |
Redemption of warrants when the price per share of Class A common stock equals or exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding public warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ |
| ● | if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the |
The “fair market value” of the Class A common stock shall mean the average last reported sale price of the Class A common stock for the
NOTE 6. CAPITAL CONTRIBUTION NOTE
On March 28, 2024, the Company entered into the March Subscription Agreement with the Sponsor and the Capital Contribution Note Investor, pursuant to which the Sponsor raised $
26
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
In April and June 2024, the Company borrowed an aggregate of $
NOTE 7. FAIR VALUE MEASUREMENTS
The following table presents fair value information as of March 31, 2025 and December 31, 2024, for the Company’s assets and liabilities that are accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
March 31, | December 31, | |||||||
Liabilities: |
| Level |
| 2025 |
| 2024 | ||
Warrant Liability – Public Warrants | 2 | $ | | $ | | |||
Warrant Liability – Private Placement Warrants |
| 3 | $ | | $ | | ||
Capital Contribution Note | 3 | $ | | $ | | |||
As of March 31, 2025 and December 31, 2024, cash held in the Trust Account was held in an interest-bearing demand deposit account. Such cash in the Trust Account is presented on the unaudited condensed consolidated balance sheets at fair value.
The Company’s warrant liability for the Public Warrants is based on unadjusted quoted prices at the close of market. At March 31, 2025 and December 31, 2024, there was insufficient trading volume for the Company’s Public Warrants to be classified as Level 1 and as a result, they were classified as Level 2.
At March 31, 2025 and December 31, 2024, the Company concluded that the Public Warrant price was indicative of the Private Placement Warrant price. The Public Warrant price as of March 31, 2025 and December 31, 2024 was $
To the extent that valuations are based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuations, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for investments categorized in Level 3.
The Capital Contribution Note is measured at fair value at inception and on a recurring basis, with changes in fair value presented in the unaudited condensed consolidated statements of operations. Valuation of the Capital Contribution Note was determined using a Probability Weighted Expected Return Method (“PWERM”) and classified as a Level 3 valuation. The PWERM is a multistep process in which value is estimated based on the probability-weighted present value of various future outcomes. The PWERM model requires management to make assumptions related to the Company’s stock volatility, the risk-free rate, the amount of time until the loan is repaid, and the probability of successfully closing on a business combination.
27
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
The following table provides a reconciliation of changes in fair value of the beginning and ending balances for our financial liabilities classified as Level 3 for the period ended March 31, 2025 and 2024:
Capital Contribution | Private Placement | |||||
Changes in fair value of financial liabilities measured with level 3: |
| Note |
| Warrants | ||
December 31, 2024 | $ | | $ | | ||
Change in fair value | ( | | ||||
March 31, 2025 | $ | | $ | | ||
Capital Contribution | Private Placement | |||||
Changes in fair value of financial liabilities measured with level 3: | Note |
| Warrants | |||
December 31, 2023 | $ | — | $ | | ||
| — | |||||
Change in fair value | — | ( | ||||
March 31, 2024 | $ | | $ | |||
NOTE 8. SEGMENT INFORMATION
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
The Company is a blank check company formed for the purpose of effecting a Business Combination. As of March 31, 2025, the Company had not commenced any operations. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering, and non-operating income or expense from the changes in the fair value of warrant liability and Capital Contribution Note.
The Company’s CODM has been identified as the Chief Executive Officer, who reviews the unaudited condensed consolidated operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has
28
CONCORD ACQUISITION CORP II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2025
(UNAUDITED)
When evaluating the Company’s primary measure of performance and making key decisions regarding resource allocation, the CODM reviews several key metrics, which include the following:
For the Three Months Ended March 31, | ||||||
| 2025 |
| 2024 | |||
Operating costs |
| $ | | $ | | |
Add: Excise tax incurred and reported in accumulated deficit |
|
| |
| — | |
Less: Adjustment to remove impact from excise tax |
|
| ( |
| — | |
Loss from operations |
|
| ( |
| ( | |
Total other (expense) income, net |
|
| ( |
| | |
(Loss) income before provision for income taxes |
| ( | | |||
Net (loss) income |
| $ | ( | $ | | |
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, other than those discussed above, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
29
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Concord Acquisition Corp II. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsors” refer to Concord Sponsor Group II LLC and CA2 Co-Investment, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, the business strategy, plans and objectives of management for future operations, and the impact of the changes in international trade policies and macroeconomic conditions on the Company’s ability to complete a Business Combination (as defined below), are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on February 18, 2021, for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”). We intend to effectuate our initial business combination using cash from the proceeds of our offering and the sale of the private placement warrants, our shares, debt or a combination of cash, equity and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Recent Developments
The underwriters were entitled to a deferred underwriters’ commission of 3.5% of the gross proceeds of the IPO, or $9,803,413 in the aggregate (including the commission related to the underwriters’ exercise of the over-allotment option) upon the completion of the Company’s initial Business Combination. In December 2023, one of the underwriters waived their right to receive the deferred underwriters’ commission and in August 2024 a second underwriter waived their right to receive the deferred underwriters’ commission. As a result, neither underwriter will receive additional underwriting commissions in connection with the closing of a Business Combination. As a result of the waived deferred underwriters’ commission during the period ended March 31, 2025 and December 31, 2024, the Company recognized $0 and $397,281 of income, respectively; $0 and $3,386,836 was recorded to accumulated deficit, respectively, and the deferred underwriters’ commission liability was reduced by $0 and $3,784,117, respectively.
30
On March 28, 2024, we entered into a subscription agreement (the “March Subscription Agreement”) with the Sponsor and an investor (the “Capital Contribution Note Investor”), pursuant to which the Capital Contribution Note Investor agreed to provide up to $600,000 to the sponsor and, subsequently, the sponsor would loan the funds to the Company. In consideration of the March Subscription Agreement, the Company will issue 600,000 Class A common shares to the Capital Contribution Note Investor upon the closing of our initial Business Combination. Amounts funded by the sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the sponsor upon the closing of an initial Business Combination. Following receipt of such sums from the Company, and in any event within five business days of the closing of an initial Business Combination, the sponsor or the Company shall pay the Capital Contribution Note Investor an amount equal to Capital Calls funded under the March Subscription Agreement (the “Business Combination Payment”). The Company and sponsor are jointly and severally obligated to make the Business Combination Payment to the Capital Contribution Note Investor. The Capital Contribution Note Investor may elect at the closing of an initial Business Combination to receive such Business Combination Payment in cash or Class A common stock at a rate of one share of Class A common stock for each $10.00 of the Capital Calls funded under the March Subscription Agreement. If the Company liquidates without consummating a Business Combination, any amounts remaining in the sponsor’s or the Company’s cash accounts (excluding any amounts in the Trust Account) after paying any outstanding third-party invoices will be paid to the Capital Contribution Note Investor within ten (10) days of the liquidation.
In May 2024, we and the sponsor entered into Non-Redemption Agreements with a number of our stockholders (“2024 NRA Investors”) in exchange for them agreeing not to redeem shares of our Class A common stock sold in the IPO (the “2024 Non-Redeemed Shares”) in connection with the special meeting of stockholders called by the Company and held on May 31, 2024 (described below). In exchange for the foregoing commitment to us to not redeem the 2024 Non-Redeemed Shares, we agreed to issue, or cause to be issued, to such stockholders, an aggregate of 75,000 shares of Class A common stock for the first six months of extension, and an aggregate of 9,000 additional shares of Class A common stock for each additional month of extension, up to three additional months (such shares, the “2024 Promote Shares”), upon closing of the initial Business Combination, and the sponsor agreed to surrender and forfeit, for no consideration, a number of shares of Class B common stock, par value $0.0001 per share, of the Company equal to the number of 2024 Promote Shares upon closing of the initial Business Combination.
On May 31, 2024, our stockholders approved at the special meeting of stockholders a proposal to amend our charter to extend the date by which we have to consummate a Business Combination from June 3, 2024 to March 3, 2025, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Second Extended Date”). In connection with the votes to approve the Second Charter Amendment, the holders of an additional 12,498,716 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.61 per share, for an aggregate redemption amount of $132,667,234, leaving $23,355,048 in the Trust Account immediately after the redemptions.
On August 26, 2024, we entered into the Merger Agreement with Events.com and Merger Sub. Pursuant to the Merger Agreement, the parties will consummate a Business Combination transaction pursuant to which Merger Sub will merge with and into Events.com, with Events.com surviving the merger as a wholly-owned subsidiary of the Company. The proposed Transaction is expected to be consummated after receipt of the required approvals by the stockholders of the Company and shareholders of Events.com and the satisfaction or waiver of certain other customary conditions. See “Proposed Business Combination” below.
On February 28, 2025, we held a special meeting of stockholders (the “February 2025 Special Meeting”) and our stockholders approved a proposal to amend the Company’s charter to extend the date by which we have to consummate a Business Combination from March 3, 2025 to December 31, 2025, or such earlier date as may be determined by our board of directors (such later date, the “Third Extended Date”). In connection with the votes to approve the Third Charter Amendment, the holders of an additional 2,191,753 shares of our Class A common stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.84 per share, for an aggregate redemption amount of $23,765,518, leaving approximately $92,709 in the Trust Account immediately after the redemptions.
On March 21, 2025, we were notified by Marcum LLP (“Marcum”) that Marcum resigned as the independent registered accounting firm of the Company. On March 21, 2025, upon Marcum’s resignation as auditors of the Company and with the approval of the Company’s Board of Directors, CBIZ CPAs P.C. was engaged as the Company’s independent registered public accounting firm.
31
Securities Listing
On May 23, 2024, the Company announced the transfer of the listing of its Class A common stock, Units and warrants from the New York Stock Exchange to NYSE American LLC (“NYSE American”). The Company’s Class A common stock, Units and warrants began trading on NYSE American on May 29, 2024 under the same ticker symbols.
On September 3, 2024, the Company received a letter from NYSE American LLC (“NYSE American” or the “Exchange”) stating that the staff of NYSE Regulation has determined to commence proceedings to delist the Company’s Class A common stock, Units and warrants (collectively, the “Securities”) pursuant to Sections 119 (b) and 119 (f) of the NYSE American Company Guide because the Company failed to consummate a Business Combination within 36 months of the effectiveness of its Initial Public Offering registration statement, or such shorter period that the Company specified in its registration statement. As a result of the determination, trading of the Company’s Securities on the NYSE American has been suspended.
On October 11, 2024, the Company joined OTCQX® Best Market (“OTCQX”) and began trading its Class A common stock under the symbol “CNDA”. The Company’s Units trade on the OTC Markets’ Pink Market under the symbol CNDAU. The Company’s redeemable warrants, each one whole warrant exercisable for one share of Class A common stock at a price of $11.50 per share, began trading on the OTCQB® Venture Market under the symbol CNDAW on October 21, 2024.
Proposed Business Combination
On August 26, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Events.com, Inc., a California corporation (“Events.com”), and Concord Merger Sub, Inc., a California corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, the parties will consummate a Business Combination transaction pursuant to which Merger Sub will merge with and into Events.com, with Events.com surviving the merger as a wholly-owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions” and the closing of the Transactions, the “Closing”). In connection with the Closing, it is expected that the Company will change its name to Events.com, Inc. and is referred to herein as “New CND” as of the time following such change of name. The proposed Merger is expected to be consummated after receipt of the required approvals by the stockholders of the Company and shareholders of Events.com and the satisfaction or waiver of certain other customary conditions.
Consideration
The aggregate equity consideration (other than the Unvested Earn Out Shares described below) to be issued to Events.com’s stockholders and issuable to certain other Events.com securityholders in the Transactions (the “Merger Consideration”) will be a number of shares of New CND Class A common stock, par value $0.0001 per share (“New CND common stock”), equal to 1,000,000 plus the quotient obtained by dividing (i) the sum of (a) $314,100,000, (b) the total amount raised by Events.com in any Interim Financing (as defined below), and (c) the aggregate exercise price of all vested and “in - the - money” stock options and warrants of Events.com outstanding immediately prior to the Closing, by (ii) $10.00.
Prior to the Closing, Events.com will complete a recapitalization, pursuant to which all outstanding shares of preferred stock will be converted into shares of common stock of Events.com. If the Events.com Charter Amendment (as defined below) is approved, at the Closing, each share of common stock of Events.com that is issued and outstanding immediately prior to the effective time of the Merger (other than treasury shares and Dissenting Shares, as defined in the Merger Agreement) will be cancelled and converted into the right to receive a number of shares of New CND common stock equal to an exchange ratio (the “Exchange Ratio”) determined by dividing the number of shares of New CND common stock constituting the Merger Consideration by the number of Aggregate Fully Diluted Company Common Shares (as defined in the Merger Agreement). All outstanding Events.com stock options will be converted into options for New CND common stock, adjusted by the Exchange Ratio, and any outstanding warrants and, to the extent permissible, convertible notes issued by Events.com will be assumed by New CND.
If the Events.com Charter Amendment is not approved, at the Closing, each share of common stock of Events.com that is issued and outstanding immediately prior to the effective time of the Merger (other than Dissenting Shares) will be converted into shares of New CND common stock in accordance with the terms of Events.com’s existing articles of incorporation. In such case, the Merger Consideration will be distributed to all holders of Events.com’s capital stock and other securities convertible into Events.com stock, provided those securities are vested, in - the - money, or automatically convertible at the time of the Merger.
32
Earnout
At the Closing, New CND will issue up to 4,000,000 additional shares (the “Unvested Earn Out Shares”) of New CND common stock to the stockholders of Events.com as of immediately prior to the Closing. The Unvested Earn Out Shares will be unvested at issuance, and will vest if the volume weighted average price (the “VWAP”) of the shares of New CND Class A common stock equals or exceeds certain minimum share prices for any 20 trading days during a period of 30 consecutive trading days at any time during the seven years following the Closing (the “Earnout Period”), as follows:
| ● | 1,000,000 shares if the VWAP of the shares of New CND common stock equals or exceeds $12.50 (“Triggering Event I”); |
| ● | 1,000,000 shares if the VWAP of the shares of New CND common stock equals or exceeds $15.00 (“Triggering Event II”); |
| ● | 1,000,000 shares if the VWAP of the shares of New CND common stock equals or exceeds $17.50 (“Triggering Event III”); and |
| ● | 1,000,000 shares if the VWAP of the shares of New CND common stock equals or exceeds $20.00 (“Triggering Event IV”). |
If a “change of control” of New CND occurs prior to the end of the Earnout Period, Triggering Event I and Triggering Event II will be deemed to have occurred, and if the consideration payable in the change of control has a per share value in excess of the prices applicable to Triggering Event III and/or Triggering Event IV, Triggering Event III and/or Triggering Event IV, as applicable, will also be deemed to have occurred. Any Unvested Earn Out Shares that do not vest prior to the end of the Earnout Period will be automatically forfeited.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of the parties, which will terminate and be of no further force and effect as of the Closing.
Covenants
The Merger Agreement contains customary covenants of the parties, including, among others, covenants providing for (i) certain limitations on the operation of the parties’ respective businesses prior to consummation of the Transactions, (ii) the parties’ efforts to satisfy conditions to consummation of the Transactions, including by obtaining necessary approvals from governmental agencies as applicable, (iii) prohibitions on the parties soliciting alternative transactions, (iv) the parties preparing and the Company filing a registration statement on Form S-4 (the “Form S-4”) with the Securities and Exchange Commission (the “SEC”) and taking certain actions to obtain the requisite approval of the Company’s stockholders to vote in favor of certain matters (the “Company Stockholder Matters”), including the adoption and approval of the Merger Agreement and the Transactions, at a special meeting to be called therefor (the “Company Stockholders’ Meeting”), (v) Events.com using reasonable best efforts to prepare and deliver certain financial statements required to be included in the Form S-4 (the “Required Financials”), (vi) the parties’ efforts to obtain commitments from additional investors as to the Financings (as defined below) and cooperate with respect to the Interim Financings and (vii) the protection of, and access to, confidential information of the parties.
The Merger Agreement also requires Events.com to use its reasonable best efforts to obtain the requisite approval of its shareholders to (i) approve the Merger and (ii) an amended and restated articles of incorporation of Events.com (the “Events.com Charter Amendment”) providing for, among other things, the contemplated treatment of securities of Events.com set forth in the Merger Agreement and summarized above.
33
Events.com Interim Financing
The Merger Agreement provides for the parties to cooperate, between the date of the Merger Agreement and the Closing, to raise capital for Events.com through the sale of equity securities, or securities convertible into equity securities (the “Interim Financing”). Following the date of the Merger Agreement and until the earlier of the Closing or the termination of the Merger Agreement (the “Interim Period”), Events.com will be required to pay to the Company an amount equal to the lesser of (i) the amount of unpaid Company transaction expenses actually incurred by the Company as of the applicable payment date and (ii) the Interim Parent Funding Amount (as defined below), in each case, within three business days after receipt by Events.com of reasonably detailed evidence of the incurrence of such expenses. “Interim Parent Funding Amount” is calculated as of any given date during the Interim Period, an amount equal to (i) 10% of the first $7,000,000 of net proceeds received by Events.com from investors or other financing sources introduced by any person other than the Company, Cohen & Company Capital Markets or their respective affiliates in connection with any Interim Financing, (ii) 25% of the net proceeds received by Events.com from investors or other financing sources introduced by any person other than the Company, Cohen & Company Capital Markets or their respective affiliates in connection with any Interim Financing in excess of the first $7,000,000 and (iii) 25% of the net proceeds received by Events.com from investors or other financing sources introduced by the Company, Cohen & Company Capital Markets or their respective affiliates in connection with any Interim Financing. The Interim Parent Funding Amount as of a given date shall be reduced by any amounts previously paid by or on behalf of Events.com to or as directed by the Company pursuant to any prior payments of an Interim Parent Funding Amount, and in no event shall the aggregate amount of Interim Parent Funding Amounts exceed $10,000,000 in the aggregate.
Second Amended and Restated Certificate of Incorporation
Pursuant to the terms of the Merger Agreement, at the Closing the amended and restated certificate of incorporation of New CND will be further amended and restated (the “Second Restated Charter”) to, among other things, create a class of common stock of New CND, Class B common stock. The shares of Class B common stock will be entitled to the rights and privileges set forth in the Second Restated Charter, the form of which is attached as Exhibit D to the Merger Agreement, including ten votes per share on any matter that such share is entitled to vote upon.
Conditions to Closing
The consummation of the Transactions is subject to customary closing conditions, including, among others: (i) approval by the Company’s and Events.com’s respective stockholders, (ii) no law, regulation, judgment, decree, executive order or award enjoining or prohibiting the consummation of the Transactions, (iii) Available Closing Cash (as defined below) as of immediately after the Closing being at least $30 million, (iv) the effectiveness of the Form S-4, (v) receipt of approval for listing on the New York Stock Exchange of the shares of New CND common stock to be issued in connection with the Transactions, (vi) no material adverse effect with respect to the Company or Events.com having occurred and continuing and (vii) the accuracy of the parties’ respective representations and warranties (subject to specified materiality thresholds) and the material performance of the parties’ respective covenants and other obligations. “Available Closing Cash” is defined in the Merger Agreement as (i) the aggregate cash proceeds in the Company’s trust account, after giving effect to any redemptions by the Company’s public stockholders, plus any additional funds raised by the Company (other than non-convertible debt securities and working capital loans), plus the aggregate amount of cash funded to Events.com pursuant to any Interim Financing during the period commencing on the day prior to the signing of the Merger Agreement and ending at Closing, minus (ii) the amount of all of the Company’s transaction expenses and Events.com’s transaction expenses (subject, for purposes of such calculation, to a cap of $10,000,000).
34
Termination
The Merger Agreement may be terminated at any time prior to the effective time of the Merger: (i) by mutual written consent of the Company and Events.com; (ii) by either the Company or Events.com if the Closing has not occurred by March 3, 2025 (or such later date as the Company’s deadline to consummate a business combination shall be extended to, if applicable) (the “Outside Date”), provided that the right to terminate the Merger Agreement upon the occurrence of the Outside Date will not be available to a party if a breach or violation by such party or its affiliates of any representation, warranty, covenant or obligation under the Merger Agreement was the primary cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date; (iii) by Events.com if there has been a Change in Recommendation, or if, at the Company Stockholders’ Meeting, approval of the Company Stockholder Matters is not obtained; (iv) by the Company if Events.com does not deliver approval of the Transactions by the requisite holders of its capital stock within ten business days after the date that the Form S-4 is declared effective; (v) by Events.com if the Company’s Class A common stock has been delisted from the NYSE American, and such delisting has become final and non-appealable; or (vi) in the event of certain uncured breaches by the other party. On April 30, 2025, the Company extended the Outside Date to May 31, 2025.
Transaction Expenses
The Merger Agreement provides that each party to the Merger Agreement is generally responsible for its own expenses related to the Transactions. However, Events.com has agreed to pay all filing fees pursuant to antitrust laws or other regulatory approvals required in connection with the Merger and all costs, fees and expenses incurred in connection with the preparation, filing and mailing of the Form S-4 (including the proxy statement to be included therein) and the review and approval of the Registration Statement by the SEC. If the Merger Agreement is terminated as a result of Events.com failing to obtain the requisite shareholder approval, Events.com will be required to pay the Company the total amount of the Company’s unpaid transaction expenses, not to exceed $3,000,000, reduced (but not below zero) by the aggregate Interim Parent Funding Amount previously paid to or as directed by the Company.
Lock-Up Agreement
Concurrently with the execution and delivery of the Merger Agreement, and effective upon Closing, the Company entered into a Lock - Up Agreement (the “Lock - Up Agreement”) with Mitch Thrower and Steven Partridge (the “Founders”), and following the execution of the Merger Agreement Events.com will seek to have certain additional Events.com stockholders enter into the Lock - Up Agreement. Pursuant to the terms of the Lock - Up Agreement, the Founders have agreed, and the other stockholders who become party to the Lock - Up Agreement will agree, to not effect any sale or other transfer of New CND common stock, subject to certain customary exceptions set forth in the Lock - Up Agreement, during the period commencing at the Closing and ending on the earlier of (i) one year following the Closing, (ii) such date as New CND completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of New CND’s stockholders having the right to exchange their shares of New CND common stock for cash, securities or other property or (iii) the date on which the last sale price of the New CND common stock equals or exceeds $12.00 per share (as adjusted for share splits, share consolidations, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing.; provided that for the stockholders other than the Founders, 25% of each holder’s shares will be released from lock - up every 3 months following the Closing.
Sponsor Support Agreement
Concurrently with the execution and delivery of the Merger Agreement, the Company entered into a sponsor support agreement (the “Sponsor Support Agreement”) with Events.com, the Sponsor and CA2. Pursuant to the Sponsor Support Agreement, the Sponsor and CA2 have, among other things, agreed (i) to vote all of their shares of the Company’s common stock in favor of the approval of the Transactions, including the Merger, (ii) not to redeem any of their shares of the Company’s common stock, (iii) to waive their anti - dilution protections with respect to their shares of the Company’s Class B common stock and (iv) to forfeit an aggregate of 1,000,000 shares of the Company’s Class B common stock at the Closing. In addition, if the accrued and unpaid transaction expenses of the Company exceed $10,000,000 then, immediately prior to the Closing, the Sponsor must either forfeit a number of shares of Parent Class B Stock, valued at $10 per share, to cover the excess amount, or pay such excess amount by wire transfer of immediately available funds to an account designated by Events.com.
35
Stockholder Support Agreement
In connection with the execution of the Merger Agreement, the Company entered into a support agreement (the “Stockholder Support Agreement”) with certain stockholders of Events.com pursuant to which such stockholders have, among other things, agreed to (i) vote all of their shares of Events.com stock to adopt and approve the Merger Agreement and all other documents and transactions contemplated thereby and (ii) subject their shares of Events.com common stock to certain transfer restrictions.
Tax Receivable Agreement
In connection with the Closing, Events.com, the Company and certain Events.com shareholders will enter into a Tax Receivable Agreement (the “TRA”), pursuant to which, among other things, New CND will agree to pay certain Events.com stockholders 85% of the tax benefits realized from the post - closing utilization of Events.com’s pre - closing tax attributes. Under the TRA, New CND will be required to calculate realized tax benefits on an annual basis. Unless there is an early termination of the TRA, the TRA will remain in effect until all of Events.com’s pre - closing tax attributes have been realized (which may never occur). New CND will have the right to terminate the TRA at any time by giving notice and paying an “early termination payment.” For purposes of calculating the early termination payment, it is assumed that New CND will generate enough income to use all remaining pre - closing tax attributes in the earliest possible tax year. In addition, a change of control of New CND, or a divestiture of Events.com by Parent, generally would require an early termination payment.
Registration Rights Agreement
The Merger Agreement provides that, in connection with the Closing, New CND, certain stockholders of the Company (including the Sponsor) and certain stockholders of Events.com will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which New CND will agree to register for resale certain shares of New CND common stock and other equity securities that are held by the parties thereto from time to time.
The foregoing descriptions of the Merger Agreement, the Lock - Up Agreement, the Sponsor Support Agreement, the Stockholder Support Agreement, the Tax Receivable Agreement, the Registration Rights Agreement and other agreements and transactions contemplated thereunder are not complete and are qualified in their entirety by reference to the respective agreements, copies of which (or the forms of which, as applicable) are respectively filed as exhibits to the Current Report on Form 8 - K filed with the SEC on August 27, 2024.
Events.com Interim Financing
The Company accounts for the funds received and receivable recognized in association with the Interim Financing from Events.com in accordance with SAB Topic 5.A. As such, the Company records a receivable when funds are raised by Events.com and it is probable the Company will collect. Such amounts are offset against either expense on the statement of operations or accumulated deficit on the statement of changes in stockholders’ deficit depending on the nature of the funding.
For the three months ended March 31, 2025 and 2024, the Company reported no reduction in operating expenses or equity related to the Interim Financing.
In January 2025, the Company received $225,000 from Events.com in relation to the Interim Financing and at March 31, 2025 and December 31, 2024, the Company reported $0 and $225,000 of financing proceeds receivable on the condensed consolidated balance sheets related to the Interim Financing.
36
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary for our initial public offering (“IPO”) and activities related to seeking and consummating a business combination with Events.com. We do not expect to generate any operating revenues until after completion of our initial business combination. Until such time that a business combination occurs, we will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering, and non-operating income or expense from the changes in the fair value of warrant liability and Capital Contribution Note. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. Until the completion of our initial business combination, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2025, we had net loss of $990,974, which consisted of operating costs of $474,341, change in fair value of the warrant liability of $1,473,658, and income taxes of $20,893, partially offset by income from cash held in the Trust Account of $134,016 and change in the fair value of the Capital Contribution Note of $843,902.
For the three months ended March 31, 2024, we had net income of $689,518, which consisted of other income of $34, change in the fair value of the warrant liability of $290,594 and income from cash held in the Trust Account of $1,688,163, partially offset by operating costs of $345,251, excess of fair value of Capital Contribution Note over proceeds at issuance of $600,000, and income taxes of $344,022.
Liquidity and Capital Resources
As of March 31, 2025, we had available to us $134,681 of cash held outside the Trust Account. We will use cash primarily to perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, to pay our administrative fees, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient or available to pay our taxes.
Additionally, the Company has an excise tax liability of $2,516,676 inclusive of $66,299 in interest and penalties, net of a payment of $475,000. Of the excise tax liability, approximately $2,300,000 was due on April 30, 2025. The Company currently has insufficient funds to pay this liability, absent any additional financing.
On March 28, 2024, the Company entered into the March Subscription Agreement with the Sponsor and the Capital Contribution Note Investor, pursuant to which the Capital Contribution Note Investor has agreed to provide $600,000 to the Company under the Capital Contribution Note as discussed in Note 6. As of March 31, 2025 and December 31, 2024, the Company has borrowed $600,000 under such note.
On May 31, 2024, the Company issued an unsecured promissory note (the “Note”) in the principal amount of up to $650,000 to the Sponsor, a significant stockholder of the Company, which may be drawn down from time to time prior to the Maturity Date (defined below) upon request by the Company. The Note amended, replaced and superseded in its entirety that certain promissory note, dated May 3, 2022, made by the Company in favor of the Sponsor in the principal amount of up to $350,000 (the “Original Note”), and any unpaid principal balance of the indebtedness evidenced by the Original Note has been merged into and evidenced by the Note. The Note does not bear interest and the principal balance will be payable on the date on which the Company consummates its initial business combination (such date, the “Maturity Date”). The Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Note and all other sums payable with regard to the Note becoming immediately due and payable. The Company has not borrowed any amount as of March 31, 2025 and December 31, 2024.
Pursuant to the Merger Agreement with Events.com, the Merger Agreement provides for the parties to cooperate, between the date of the Merger Agreement and the Closing, to raise capital for Events.com through the sale of equity securities, or securities convertible into equity securities (the “Interim Financing”). In association with the Merger Agreement, Events.com will be required to pay to the Company an amount based on funds raised by Events.com (see Note 2). During the period beginning with the execution of the Interim Financing agreement through March 31, 2025, the Company has received $1,000,000 from Events.com pursuant to the Interim Financing. For the period ended December 31, 2024, the Company has received $775,000 and was due $225,000 from Events.com pursuant to the Interim Financing, (which was received from Events.com during the three months ended March 31, 2025).
37
If the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to completing a Business Combination. Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because the Company becomes obligated to redeem a significant number of additional public shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of a Business Combination. If the Company is unable to complete a Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.
The Company has until December 31, 2025, or during any Extension Period, to consummate a Business Combination. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Although the Company intends to consummate a Business Combination on or before December 31, 2025, or during any Extension Period, it is uncertain whether the Company will be able to consummate a Business Combination by this time. In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, Management has determined that the mandatory liquidation, should a Business Combination not occur and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate our business prior to completing a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 31, 2025, or during any Extension Period.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2025. We do not participate in transactions that create relationships with unaudited condensed consolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than discussed below, that affects the liquidity or capital resources of the Company.
We have an agreement to pay an affiliate of the Sponsor a monthly fee of $20,000 for office space, administrative and support services.
On May 31, 2024, the Company issued an unsecured promissory note (the “Note”) in the principal amount of up to $650,000 to the Sponsor, a significant stockholder of the Company, which may be drawn down from time to time prior to the Maturity Date (defined below) upon request by the Company. The Note amended, replaced and superseded in its entirety that certain promissory note, dated May 3, 2022, made by the Company in favor of the Sponsor in the principal amount of up to $350,000 (the “Original Note”), and any unpaid principal balance of the indebtedness evidenced by the Original Note has been merged into and evidenced by the Note. The Note does not bear interest and the principal balance will be payable on the date on which the Company consummates its initial business combination (such date, the “Maturity Date”). The Company has not borrowed any amount as of March 31, 2025 and December 31, 2024.
Our underwriters are entitled to a deferred underwriting commission of $343,120 of the gross proceeds of the IPO held in the Trust Account upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.
38
On August 21, 2023, we engaged a capital markets advisor in connection with seeking an extension for completing a Business Combination, a possible acquisition of a third party by merger, consolidation, acquisition of stock or assets or other business combination, and as a placement agent in connection with a private placement of debt, equity, equity-linked or convertible securities. We agreed to pay the capital markets advisor a transaction fee in connection with the services provided, payable upon and subject to our consummation of an initial business combination (“Capital Markets Advisor Fee”). The fee consists of a fixed and determinable portion and a variable portion contingent upon certain future events expected to take place upon completion of a Business Combination. As of March 31, 2025 and December 31, 2024, $1,000,000 was accrued for the fee as the amount was fixed and determinable and reported on the condensed consolidated balance sheets within accounts payable and accrued expenses. These costs may be paid using the proceeds of the cash available once a Business Combination is complete.
On March 28, 2024, the Company entered into the March Subscription Agreement with the Sponsor and the Capital Contribution Note Investor, pursuant to which the Sponsor sought to raise $600,000 to provide working capital to the Company. The Company will request funds from the Sponsor for working capital purposes (“Drawdown Request”). Upon at least five (5) calendar days’ prior written notice, the Sponsor may request a drawdown in order to meet the Sponsor’s commitment to the SPAC under a Drawdown Request (“Capital Call”). In consideration of the March Subscription Agreement, the Company will issue 600,000 Class A common shares to the Capital Contribution Note Investor at the Closing. Any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the closing of an initial Business Combination. Following receipt of such sums from the Company, and in any event within five (5) business days of the closing of an initial Business Combination, the Sponsor or the Company shall pay the Capital Contribution Note Investor an amount equal to Capital Calls funded under the March Subscription Agreement (the “Business Combination Payment”). The Company and Sponsor are jointly and severally obligated to make the Business Combination Payment to the Capital Contribution Note Investor. The Capital Contribution Note Investor may elect at the closing of an initial Business Combination to receive such Business Combination Payment in cash or Class A common stock at a rate of one share of Class A common stock for each $10.00 of the Capital Calls funded under the March Subscription Agreement. If the Company liquidates without consummating a Business Combination, any amounts remaining in the Sponsor’s or the Company’s cash accounts (excluding any amounts in the Trust Account) after paying any outstanding third-party invoices will be paid to the Capital Contribution Note Investor within ten (10) days of the liquidation.
The Company classified the Capital Contribution Note as a liability and elected the fair value option, and records changes in fair value at each reporting period in the unaudited condensed consolidated statements of operations. The fair value of the Capital Contribution Note will include both the fair value of the 600,000 shares in consideration for the Capital Calls and the principal as of each reporting date. As of March 31, 2025 and December 31, 2024, the Company has borrowed $600,000 under such note and no additional borrowings are available under this note.
As of March 31, 2025 and December 31, 2024, the Company has incurred $2,373,880 and $2,320,000, respectively, in fees contingent on the closing of a business combination. These costs may be paid for using the proceeds of the cash available once the business combination is complete. The amounts are included in accounts payable and accrued expenses on the unaudited condensed consolidated balance sheets.
Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of unaudited condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management.We have identified the following critical accounting estimates:
Warrant Liability
We classify each warrant as a liability at its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statement of operations. The fair value of our Private Placement Warrants requires significate estimates by management. Deviations from these estimates could result in a significate difference to our financial results.
Income Taxes
39
We account for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. We assess the likelihood that deferred tax assets will be recovered from the existing deferred tax liabilities or future taxable income. To the extent the Company believes that recovery will not meet the more likely than not threshold, it establishes a valuation allowance.
Non-Redemption Agreements
We comply with the requirements of SEC Staff Accounting Bulletin (“SAB”) Topic 5(A) – “Expenses of Offering” and SAB Topic 5(T): Miscellaneous Accounting - Accounting for Expenses or Liabilities Paid by Principal Stockholder(s). As such, management used significant estimates to determine the fair value of the Promote Shares assigned to the Investors.
Capital Contribution Note
The Company has elected to report its Capital Contribution Note at fair value. Changes in the estimated fair value of the Capital Contribution Note are recognized as non-cash gains or losses in the unaudited condensed consolidated statements of operations. The fair value of our Capital Contribution Note was determined using a Probability Weighted Expected Return Method (“PWERM ”). The PWERM is a multistep process in which value is estimated based on the probability-weighted present value of various future outcomes and requires significant estimates by management. The PWERM model requires management to make assumptions related to the Company’s stock volatility, the risk-free rate, the amount of time until the loan is repaid, and the probability of successfully closing on a business combination. As each of these items are out of the control of management, significant uncertainty exists in the PWERM model and the underlying assumptions. Deviations from these estimates could result in a significate difference to our financial results. As the changes in fair value have no impact to our cash, changes in fair value of the Capital Contribution Note and derivations from our estimates of fair value have no impact on our cash inflows or outflows.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our unaudited condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things: (1) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; (2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the unaudited condensed consolidated financial statements (auditor discussion and analysis); and (4) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
40
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have identified all of the information required to be disclosed, and that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based upon their evaluation, and due to a material weakness in our internal control over financial reporting over the accounting for complex financial instruments, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2025, covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The Company has made changes in its internal control over financial reporting to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements, including providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The Company can offer no assurance that these changes will ultimately have the intended effects.
41
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 19, 2025 (the “Annual Report”), and described below. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our search for an initial business combination target or the performance or business prospects of a post-business combination company.
There have recently been significant changes to international trade policies and tariffs affecting imports and exports. Any significant increases in tariffs on goods or materials or other changes in trade policy could negatively affect our search for a target and/or our ability to complete our initial business combination.
Recently, the U.S. has implemented a range of new tariffs and increases to existing tariffs. In response to the tariffs announced by the U.S., other countries have imposed, are considering imposing, and may in the future impose new or increased tariffs on certain exports from the United States. There is currently significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations and tariffs. and we cannot predict whether, and to what extent, current tariffs will continue or trade policies will change in the future.
Tariffs, or the threat of tariffs or increased tariffs, could have a significant negative impact on certain businesses (either due to domestic businesses’ reliance on imported goods or dependence on access to foreign markets, or foreign businesses’ reliance on sales into the United States). In addition, retaliatory tariffs could have a significant negative impact on foreign businesses that rely on imports from the United States, and domestic businesses that rely on exporting goods internationally. These tariffs and threats of tariffs and other potential trade policy changes could negatively affect the attractiveness of certain initial business combination targets, or lead to material adverse effects on a post-business combination company. Among other things, historical financial performance of companies affected by trade policies and/or tariffs may not provide useful guidance as to the future performance of such companies, because future financial performance of those companies may be materially affected by new U.S. tariffs or foreign retaliatory tariffs, or other changes to trade policies. The business prospects of a particular target for a business combination could change even after we enter into a business combination agreement, as a result of tariffs or the threat of tariffs that may have a material impact on that target’s business, and it may be costly or impractical for us to terminate that business combination agreement. These factors could affect our selection of a business combination target.
We may not be able to adequately address the risks presented by these tariffs or other potential trade policy changes. As a result, we may deem it costly, impractical or risky to complete an initial business combination with a particular target or with a target in a particular industry or from a particular country. Consequently, the pool of potential target companies may be reduced, which could impair our ability to identify a suitable target and to complete an initial business combination. If we complete an initial business combination with such a target, the post-business combination company’s operations and financial results could be adversely affected as a result of tariffs or changes to trade policies, which may cause the market value of the securities of the post-business combination company to decline.
42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On September 3, 2021, the Company completed its IPO of 25,000,000 Units, generating gross proceeds of $250,000,000. On September 28, 2021, the Underwriters partially exercised their option to purchase additional Units, resulting in the issuance of an additional 3,009,750 Units (the “Option Units”), generating additional proceeds of $30,097,500.
On September 3, 2021, simultaneously with the consummation of the IPO, the Company completed a private placement of an aggregate of 5,000,000 warrants (the “Private Placement Warrants”) to the Sponsors and two anchor investors at a price of $1.50 per Private Placement Warrant, generating total gross proceeds of $7,500,000 (the “Private Placement”). On September 28, 2021, in connection with the sale of Option Units, the Company consummated a private sale of an additional 401,300 Private Placement Warrants to the Sponsors (the “Additional Private Placement Warrants”) at a price of $1.50 per Additional Private Placement Warrant, generating gross proceeds of $601,950.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.
On August 29, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a business combination from the Termination Date to the Extended Date. In connection with the votes to approve the Charter Amendment, the holders of 13,310,731 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.35 per share, for an aggregate redemption amount of $137,792,552, leaving $152,164,096 in the Trust Account immediately after the redemptions.
On May 31, 2024, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a business combination from the First Extended Date to the Second Extended Date. In connection with the votes to approve the Second Charter Amendment, the holders of an additional 12,498,716 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.61 per share, for an aggregate redemption amount of $132,667,234, leaving $23,355,048 in the Trust Account immediately after the redemptions.
On February 28, 2025, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a Business Combination from March 3, 2025 to December 31, 2025, or such earlier date as may be determined by the board of directors of the Company. In connection with the votes to approve the Third Charter Amendment, the holders of an additional 2,191,753 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.84 per share, for an aggregate redemption amount of $23,765,518, leaving $92,709 in the Trust Account immediately after the redemptions.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
43
Item 6. Exhibits.
Exhibit |
| Description |
3.1(1) | ||
10.1(2) | Form of Non-Redemption Agreement and Assignment of Economic Interest. | |
31.1 |
| |
31.2 |
| |
| ||
32.1* |
| |
| ||
32.2* |
| |
| ||
101.INS | Inline XBRL Instance Document. | |
| ||
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
|
| |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Link base Document. |
|
| |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
|
| |
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
| |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| ||
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
(1)Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 5, 2023.
(2) | Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 23, 2023. |
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 6th day of May 2025.
CONCORD ACQUISITION CORP II | ||
By: | /s/ Jeff Tuder | |
Name: | Jeff Tuder | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) | ||
By: | /s/ Michele Cito | |
Name: | Michele Cito | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
45