PNAQ-UN 8-K
Pinnacle Acquisition Corp (PNAQ-UN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Item 1.01. Entry into a Material Definitive Agreement.
On August 14, 2026, Pinnacle Acquisition Corporation (the “Company”) entered into a First Amendment (the “Underwriting Agreement Amendment”) to the Underwriting Agreement, dated August 6, 2026 (the “Original Underwriting Agreement”), by and between the Company and Santander US Capital Markets LLC, as representative (the “Representative”) of the several underwriters named therein, relating to the Company’s initial public offering (the “IPO”).
The Underwriting Agreement Amendment amends Section 3(c) of the Original Underwriting Agreement to provide that the deferred underwriting discount of $0.30 per Unit (as defined below) shall not accrue or be payable with respect to the aggregate of 2,250,000 Units purchased in the IPO by Steven K. Hudson and AVR Capital Holdings, LLC, an affiliate of Andrew Rechtschaffen, each a co-managing member of PAC Sponsor, LLC (the “Sponsor”), the Company’s sponsor (or their respective permitted transferees). As a result, the maximum deferred discount payable is $5,325,000 in the aggregate (or up to $6,225,000 in the aggregate if the underwriters purchase the over-allotment option in full).
The foregoing description of the Underwriting Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Underwriting Agreement Amendment, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01. Other Events.
On August 10, 2026, the Company consummated its IPO of 20,000,000 units (the “Units”). Each Unit consists of one Class A ordinary share of the Company, par value $0.0001 per share (the “Class A Ordinary Shares”), and one right to receive one-eighth (1/8) of one Class A Ordinary Share upon the consummation of the Company’s initial business combination. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $200,000,000.
Simultaneously with the closing of the IPO, the Company completed the private sale (the “Private Placement”) of an aggregate of 225,000 units (the “Private Placement Units”) to the Sponsor, at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds to the Company of $2,250,000.
A total of $200,000,000 (which amount includes up to $6,000,000 in the aggregate of the underwriters’ deferred underwriting commissions), or $10.00 per Unit, comprised of $199,750,000 of the net proceeds from the IPO and $250,000 of the proceeds of the sale of the Private Placement Units, was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
An audited balance sheet as of August 10, 2026 reflecting the receipt of the proceeds from the IPO and the Private Placement has been issued by the Company and is included as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being filed herewith:
| Exhibit No. | Description | |
| 1.1 | First Amendment to Underwriting Agreement, dated August 14, 2026, by and between Pinnacle Acquisition Corporation and Santander US Capital Markets LLC, as representative of the several underwriters. | |
| 99.1 | Audited Balance Sheet as of August 10, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
1
SIGNATURE
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 hereunto duly authorized.
| PINNACLE ACQUISITION CORPORATION | |||
| By: | /s/ Steven K. Hudson | ||
| Name: | Steven K. Hudson | ||
| Title: | Chief Executive Officer | ||
| By: | /s/ Jack Schneider | ||
| Name: | Jack Schneider | ||
| Title: | Chief Financial Officer | ||
| Dated: August 14, 2026 | |||
2
Exhibit 1.1
FIRST AMENDMENT TO UNDERWRITING AGREEMENT
This First Amendment to Underwriting Agreement (this “Amendment”) is made and entered into as of August 14, 2026, by and among Pinnacle Acquisition Corporation, a Cayman Islands exempted company (the “Company”), and Santander US Capital Markets LLC, as representative (the “Representative”) of the several underwriters named in Schedule I to the Underwriting Agreement referred to below (collectively, the “Underwriters”).
RECITALS
WHEREAS, the Company and the Representative, on behalf of itself and the several Underwriters, entered into that certain Underwriting Agreement, dated August 6, 2026 (the “Underwriting Agreement”), relating to the offer and sale of 20,000,000 Units of the Company, plus up to 3,000,000 additional Units subject to the Underwriters’ over-allotment option (the “Offering”);
WHEREAS, Section 3(c) of the Underwriting Agreement provides for a deferred discount of $0.30 per Unit, or $6,000,000 in the aggregate (or up to $6,900,000 in the aggregate if the Underwriters purchase the Optional Securities in full), purchased under the Underwriting Agreement (the “Deferred Discount”);
WHEREAS, Steven K. Hudson and AVR Capital Holdings, LLC, an affiliate of Andrew Rechtschaffen, are co-managing members of PAC Sponsor, LLC, the sponsor of the Company (the “Sponsor”), and purchased, in the aggregate, 2,250,000 Units in the Offering (the “Managing Member Units”); and
WHEREAS, the Company and the Representative desire to amend the Underwriting Agreement to provide that the Deferred Discount shall not apply to, and shall not be payable in respect of, the Managing Member Units, as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment to Section 3(c).
Section 3(c) of the Underwriting Agreement is hereby to delete Section 3(c) in its entirety and replace it with the following:
“In addition to the amounts set forth in Section 3(a) of this Agreement representing a portion of the underwriting commission of $0.0125 per unit, the Company hereby agrees to pay to the Underwriters a deferred discount of $0.30 per Unit purchased hereunder, including the Optional Securities (the “Deferred Discount”); provided that such amount shall be subject to pro-rata reduction based on the number of Ordinary Shares redeemed by our Public Shareholders (as defined below) in connection with an initial Business Combination and in accordance with the redemption rights provided for in the Company’s Amended and Restated Memorandum and Articles of Association; and further provided that the Deferred Discount shall not accrue or be payable with respect to the aggregate of 2,250,000 Units purchased in the Offering by Steven K. Hudson and AVR Capital Holdings, LLC, an affiliate of Andrew Rechtschaffen, each a co-managing member of the Sponsor (or their respective permitted transferees) (such Units, the “Managing Member Units”), and the aggregate amount of the Deferred Discount otherwise payable pursuant to this Section 3(c) shall be reduced by $0.30 per Managing Member Unit, or $675,000 in the aggregate. As a result, and without duplication of the pro rata reduction described in the proviso above, the maximum Deferred Discount payable pursuant to this Section 3(c) shall be $5,325,000 in the aggregate (or up to $6,225,000 in the aggregate if the Underwriters purchase the Optional Securities). The Deferred Discount shall be paid to the Underwriters in the following amounts: Santander US Capital Markets LLC shall receive 40% of the Deferred Discount; CIBC World Markets Corp. shall receive 25% of the Deferred Discount; and 35% of the Deferred Discount shall be payable to any one or more FINRA members, which may or may not include the Underwriters, at the sole and absolute discretion of the Company. Any portion of the Deferred Discount payable to the Representative as determined by the Company in accordance with the foregoing sentence will be paid directly to the Representative, on behalf of the Underwriters, by the Trustee from amounts on deposit in the Trust Account by wire transfer payable in same-day funds if and when the Company consummates its initial Business Combination. The Underwriters hereby agree that if no Business Combination is consummated within the time period provided in the Trust Agreement, as may be amended, and the funds held in the Trust Account are distributed to the holders of the Ordinary Shares included in the Offered Securities sold pursuant to this Agreement (the “Public Shareholders”), (i) the Underwriters will forfeit any rights or claims to the Deferred Discount and (ii) the Trustee under the Trust Agreement, as may be amended, is authorized to distribute the Deferred Discount to the Public Shareholders on a pro rata basis.”
2. No Other Amendment.
Except as expressly amended by this Amendment, the Underwriting Agreement remains unchanged and in full force and effect, and is hereby ratified and confirmed in all respects. All references in the Underwriting Agreement to “this Agreement” shall be deemed to refer to the Underwriting Agreement as amended by this Amendment.
3. Miscellaneous.
This Amendment shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of laws principles thereof. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Underwriting Agreement.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.
| PINNACLE ACQUISITION CORPORATION | ||
| By: | /s/ Jack Schneider | |
| Name: | Jack Schneider | |
| Title: | Chief Financial Officer | |
| SANTANDER US CAPITAL MARKETS LLC | ||
| as Representative of the several Underwriters | ||
| By: | /s/ Ryan Kelley | |
| Name: | Ryan Kelley | |
| Title: | Managing Director | |
| By: | /s/ Molly Deale Kramer | |
| Name: | Molly Deale Kramer | |
| Title: | Executive Director | |
| CIBC WORLD MARKETS CORP. | ||
| as Underwriter | ||
| By: | /s/ Gregory M. Ogborn | |
| Name: | Gregory M. Ogborn | |
| Title: | Managing Director | |
[Signature Page to the First Amendment to Underwriting Agreement]
3
Exhibit 99.1
Pinnacle Acquisition Corporation
INDEX TO FINANCIAL STATEMENT
| Page | ||
| Financial Statement of Pinnacle Acquisition Corporation: | ||
| Report of Independent Registered Public Accounting Firm | F-2 | |
| Balance Sheet as of August 10, 2026 | F-3 | |
| Notes to Financial Statement | F-4 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Pinnacle Acquisition Corporation:
Opinion on the Financial Statement
We have audited the accompanying balance sheet of Pinnacle Acquisition Corporation (the “Company”) as of August 10, 2026, and the related notes (collectively referred to as the “financial statement”). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of August 10, 2026, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2026.
/s/ WithumSmith+Brown, PC
New York, New York
August 14, 2026
F-2
Pinnacle Acquisition Corporation
BALANCE SHEET
AUGUST 10, 2026
| Assets | ||||
| Current assets | ||||
| Cash | $ | 1,478,746 | ||
| Prepaid expenses | 20,726 | |||
| Total current assets | 1,499,472 | |||
| Cash held in Trust Account | 200,000,000 | |||
| Total Assets | $ | 201,499,472 | ||
| Liabilities, Class A Ordinary Shares Subject to Possible Redemption, and Shareholders’ Deficit | ||||
| Current liabilities | ||||
| Accrued offering costs | $ | 115,865 | ||
| Accrued expenses | 5,099 | |||
| Promissory note - related party | 11,793 | |||
| Over-allotment option liability | 181,100 | |||
| Total current liabilities | 313,857 | |||
| Advisory fee payable | 5,325,000 | |||
| Deferred underwriting commissions | 5,325,000 | |||
| Total Liabilities | 10,963,857 | |||
| Commitments and Contingencies (Note 6) | ||||
| Class A ordinary shares subject to possible redemption, $0.0001 par value; 20,000,000 shares at redemption value of $10.00 per share | 200,000,000 | |||
| Shareholders’ Deficit | ||||
| Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding | — | |||
| Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 225,000 shares issued and outstanding (excluding 20,000,000 shares subject to possible redemption) | 23 | |||
| Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 5,750,000 shares issued and outstanding(1) | 575 | |||
| Additional paid-in capital | — | |||
| Accumulated deficit | (9,464,983 | ) | ||
| Total Shareholders’ Deficit | (9,464,385 | ) | ||
| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption, and Shareholders’ Deficit | $ | 201,499,472 | ||
| (1) | Includes up to 750,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5). |
The accompanying notes are an integral part of the financial statement.
F-3
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 1 — Organization and Business Operations
Pinnacle Acquisition Corporation (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on March 16, 2026. The Company was incorporated for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company has not selected any specific Business Combination target and the Company has not, nor has anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any Business Combination target with respect to an initial Business Combination with the Company.
As of August 10, 2026, the Company had not commenced any operations. All activity for the period from March 16, 2026 (inception) through August 10, 2026 relates to the Company’s formation and the Initial Public Offering (as defined 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 from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is PAC Sponsor, LLC (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on August 6, 2026. On August 10, 2026, the Company consummated the Initial Public Offering of 20,000,000 units (the “Units”), at $10.00 per Unit, generating gross proceeds of $200,000,000. Each Unit consists of one Class A ordinary share (the “Public Share”) and one right entitling the holder thereof to receive one eighth (1/8) of one Class A ordinary share upon the consummation of an initial Business Combination (the “Public Right”) upon the consummation of an initial Business Combination.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of an aggregate of 225,500 private placement units (each “Private Placement Unit,” collectively the “Private Placement Units”) to Sponsor, at a price of $10.00 per Private Placement Unit, generating gross proceeds of $2,250,000. Each Private Placement Unit consists of one Class A ordinary share (each, a “Private Placement Share”) and one right entitling the holder thereof to receive one eighth (1/8) of one Class A ordinary share upon the consummation of an initial Business Combination (each, a “Private Placement Right”).
Transaction costs amounted to $6,093,029, consisting of $250,000 of cash underwriting fee, $5,325,000 of deferred underwriting commissions, and $518,029 of other offering costs.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).
The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net balance in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the signing of an agreement to enter into a Business Combination. The board of directors will make the determination as to the fair market value of the initial Business Combination. If the board of directors is not able to independently determine the fair market value of the initial Business Combination, the Company will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. There is no assurance that the Company will be able to successfully effect a Business Combination.
F-4
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 1 — Organization and Business Operations (cont.)
Following the closing of the Initial Public Offering, on August 10, 2026, an amount of $200,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units and the Private Placement Units was placed in the Trust Account (the “Trust Account”), with U.S.-based trust account, Continental Stock Transfer & Trust Company, acting as trustee. The proceeds will initially be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 (the “Investment Company Act”) which invest only in direct U.S. government treasury obligations; the holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended Business Combination. To mitigate the risk that the Company might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that the Company holds investments in the Trust Account, the Company may, at any time (based on the management team’s ongoing assessment of all factors related to the Company’s potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest bearing demand deposit account at a bank. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, if any, the proceeds from the Initial Public Offering and the sale of the Private Placement Units will not be released from the Trust Account until the earliest of (i) the completion of the Company’s initial Business Combination, (ii) the redemption of the Company’s Public Shares if the Company is unable to complete the initial Business Combination within 21 months from the closing of the Initial Public Offering or by such earlier liquidation date as the Company’s board of directors may approve (the “Completion Window”), subject to applicable law, or (iii) the redemption of the Company’s Public Shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association to (A) modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Company’s Public Shares if the Company has not consummated an initial Business Combination within the Completion Window or (B) with respect to any other material provisions relating to the rights of holders of Class A ordinary shares or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public shareholders.
The Company will provide the Company’s public shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account (less taxes payable), divided by the number of then outstanding Public Shares, subject to the limitations. The amount in the Trust Account is initially anticipated to be $10.00 per Public Share.
The Public Shares are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
The Company will have only the duration of the Completion Window to complete the initial Business Combination. However, if the Company is unable to complete its initial Business Combination within the Completion Window, the Company will as promptly as reasonably possible but not more than ten 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 (less taxes payable and up to $100,000 of interest income to pay liquidation and dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will constitute full and complete payment for the Public Shares and completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation or other distributions, if any), subject to the Company’s obligations under Cayman Islands law to provide for claims of creditors and subject to the other requirements of applicable law.
F-5
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 1 — Organization and Business Operations (cont.)
The Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights with respect to their Founder Shares (as defined below), Private Placement Shares and Public Shares in connection with the completion of the initial Business Combination; (ii) waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association; (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares and Private Placement Shares if the Company fails to complete the initial Business Combination within the Completion Window, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Completion Window and to liquidating distributions from assets outside the Trust Account; and (iv) vote any Founder Shares and Private Placement Shares held by them and any Public Shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions, aside from shares they may purchase in compliance with the requirements of Rule 14e-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would not be voted in favor of approving the Business Combination) in favor of the initial Business Combination.
The Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent public accountants) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations.
Liquidity and Capital Resources
At August 10, 2026, the Company had $1,478,746 cash and a working capital of $1,185,615.
In connection with the Company’s assessment of going concern in accordance with FASB ASC 205-40, “Presentation of Financial Statement - Going Concern,” the Company does not believe it will need to raise additional funds in order to meet the expenditures required to operate its business. However, 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 its business prior to the initial Business Combination. Management has determined that upon the consummation of the Initial Public Offering and the sale of the Private Placement Units, the Company has sufficient funds to finance the working capital needs of the Company within one year from the date of issuance of the financial statement.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statement is presented in conformity with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, 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 shareholder approval of any golden parachute payments not previously approved.
F-6
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 2 — Significant Accounting Policies (cont.)
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 an emerging growth 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 financial statement 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 financial statement in conformity with U.S. 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 financial statement.
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 had cash of $1,478,746 and did not have any cash equivalent as of August 10, 2026.
Cash Held in Trust Account
As of August 10, 2026, the assets held in the Trust Account, amounting to $200,000,000, were held in cash.
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 the Federal Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
Offering Costs
The Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” Deferred offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate Initial Public Offering proceeds from the Units between Class A ordinary shares and rights, by allocating Initial Public Offering proceeds first to assigned value of the rights and then to the Class A ordinary shares. Offering costs allocated to the public Units and Private Placement Units are allocated to temporary equity and shareholder’s deficit, based on the classification of underlying financial instruments.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Income Taxes
The Company accounts for income taxes under FASB ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
F-7
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 2 — Significant Accounting Policies (cont.)
FASB ASC Topic 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’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of August 10, 2026, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Share Rights
The Company accounted for the Public Rights and Private Placement Rights issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging.” Accordingly, the Company evaluated and classified the rights under equity treatment at their assigned values.
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 FASB ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statement of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The underwriters’ over-allotment option is deemed to be a freestanding financial instrument indexed on the shares subject to redemption and was accounted for as a liability pursuant to FASB ASC Topic 480 since the underwriters did not exercise their over-allotment option at the closing of the Initial Public Offering.
Share-Based Payment Arrangements
The Company accounts for share awards in accordance with FASB ASC 718, “Compensation—Stock Compensation,” which requires that all equity awards be accounted for at their “fair value.” Fair value is measured on the grant date and is equal to the underlying value of the share.
Costs equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to vest, in the period of grant for awards that vest immediately and have no future service condition, or in the period the awards vest immediately after meeting a performance condition becomes probable (i.e., the occurrence of a Business Combination). For awards that vest over time, cumulative adjustments in later periods are recorded to the extent actual forfeitures differ from the Company’s initial estimates; previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and the award is forfeited.
F-8
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 2 — Significant Accounting Policies (cont.)
Class A Ordinary Shares Subject to Possible Redemption
The Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with FASB ASC 480-10-S99, the Company classifies Public Shares subject to possible redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available) and accumulated deficit. Accordingly, as of August 10, 2026, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheet. As of August 10, 2026, the Class A ordinary shares subject to possible redemption reflected in the balance sheet are reconciled in the following table:
| Gross proceeds | $ | 200,000,000 | ||
| Less: | ||||
| Proceeds allocated to Public Rights | (3,200,000 | ) | ||
| Proceeds allocated to over-allotment option | (181,100 | ) | ||
| Public Shares issuance costs | (5,984,358 | ) | ||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | 9,365,458 | |||
| Class A ordinary shares subject to possible redemption, August 10, 2026 | $ | 200,000,000 |
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statement.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering on August 10, 2026, the Company sold 20,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and one Public Right entitling the holder thereof to receive one eighth (1/8) of one Class A ordinary share upon the consummation of an initial Business Combination.
Note 4 — Private Placement
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of an aggregate of 225,500 Private Placement Units to the Sponsor, at a price of $10.00 per Private Placement Unit, generating gross proceeds of $2,250,000. Each Private Placement Unit consists of one Class A ordinary share and one right entitling the holder thereof to receive one eighth (1/8) of one Class A ordinary share upon the consummation of an initial Business Combination.
F-9
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 4 — Private Placement (cont.)
The Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares in connection with the completion of the initial Business Combination; (ii) waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within the Completion Window or (B) with respect to any other material provisions relating to the rights of holders of Class A ordinary shares or pre-initial Business Combination activity; (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares and Private Placement Shares if the Company fails to complete the initial Business Combination within the Completion Window, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Completion Window and to liquidating distributions from assets outside the Trust Account; and (iv) vote any Founder Shares and Private Placement Shares held by them and any Public Shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions, aside from shares they may purchase in compliance with the requirements of Rule 14e-5 under the Exchange Act, which would not be voted in favor of approving the Business Combination) in favor of the initial Business Combination.
Note 5 — Related Party Transactions
Founder Shares
On April 7, 2026, the Sponsor made a capital contribution of $25,000, or approximately $0.0035 per share, to cover certain of the Company’s offering costs and expenses, for which the Company repurchased the one share outstanding and issued 5,750,000 Class B ordinary shares (the “Founder Shares”) to the Sponsor. On July 21, 2026, the Sponsor surrendered 1,437,500 Founder Shares for no consideration and now holds 5,750,000 Founder Shares. Up to 750,000 of the Founder Shares may be forfeited by the Sponsor for no consideration depending on the extent to which the underwriters’ over-allotment is exercised.
On August 5, 2026, the Sponsor granted membership interests equivalent to an aggregate of 225,000 Founder Shares to Chief Financial Officer and three independent directors of the Company in exchange for their services as an officer or independent directors through the Company’s initial Business Combination. The Founder Shares will remain with the Sponsor if the holders of the Founder Shares are no longer serving the Company prior to the initial Business Combination. The granted membership interests equivalent to the Founder Shares are in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under FASB ASC 718, stock-based compensation associated with equity classified awards is measured at fair value upon the assignment date. The total fair value of the 225,000 Founder Shares on August 5, 2026 was $265,500 or $1.18 per share. The Company established the initial fair value of the Founder Shares on August 5, 2026, the date of the grant agreement, using a calculation prepared by a third-party valuation team which takes into consideration the implied Class A share price of $9.85, and probability of an initial Business Combination and market adjustment of 12.0%. The membership interests equivalent to the Founder Shares were granted subject to a performance condition (i.e., providing services through a Business Combination). Share-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of membership interests that ultimately vest times the assignment date fair value per share (unless subsequently modified) less the amount initially received for the Founder Shares. As of August 10, 2026, the Company determined that the initial Business Combination is not considered probable and therefore no compensation expense has been recognized.
The Company’s initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issued upon conversion thereof until the earlier to occur of (i) one year after the completion of the initial Business Combination or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. Any permitted transferees will be subject to the same restrictions and other agreements of the Company’s initial shareholders with respect to any Founder Shares (the “Lock-up”). Notwithstanding the foregoing, if (1) the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the Lock-up.
F-10
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 5 — Related Party Transactions (cont.)
Related Party Public Units Purchased
At the closing of the Initial Public Offering, an officer and the directors, including an affiliate of a director, purchased in their individual capacities an aggregate of 2,305,000 Units sold at the Initial Public Offering at a price of $10.00 per Unit, for an aggregate purchase price of $23,050,000. As disclosed above in Note 1 and Note 4, the officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their redemption rights in connection with the completion of the initial Business Combination and in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association. The Public Shares owned by the officer and directors retain redemption rights in connection with the Company’s liquidation. Accordingly, these Public Shares are recorded in Class A ordinary shares as subject to possible redemption.
Promissory Note — Related Party
On April 7, 2026, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to be used for a portion of the expenses of the Initial Public Offering. The loan is non-interest bearing and unsecured. The promissory note is payable on the earlier of December 31, 2026 or the date the Company consummates the Initial Public Offering out of the $1,000,000 of offering proceeds that has been allocated to the payment of offering expenses, from amounts available for working capital or from the net proceeds of the Initial Public Offering and the sale of the Private Placement Units not held in the Trust Account. As of August 10, 2026, the Company had borrowed $199,067, of which $187,274 has been paid partially by the Company at the closing of the Initial Public Offering and the remaining balance of $11,793 is still outstanding. Borrowings under the promissory note are no longer available.
Administrative Services Agreement
Commencing on August 6, 2026, the effective date of registration statement, the Company entered into an agreement with the Sponsor to pay an aggregate of $10,000 per month for accounting, bookkeeping, office space, IT support, research, professional, secretarial and administrative services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. As of August 10, 2026, no amount had been accrued for these services in the Company’s balance sheet.
Working Capital Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor 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 a Business Combination, the Company would repay the Working Capital Loans. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into Private Placement Units of the post-Business Combination entity at a price of $10.00 per unit, at the option of the lender. Such units would be identical to the Private Placement Units. As of August 10, 2026, the Company had no borrowings under the Working Capital Loans.
Note 6 — Commitments and Contingencies
Risks and Uncertainties
The United States and global markets have experienced and may continue to experience volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the conflict in the Middle East and Southwest Asia involving the United States, Israel and Iran and others. Recent hostilities between the United States, Israel and Iran and others have caused significant disruption in the normal flow of oil, refined petroleum products and related commodities, with consequent price rises and associated economic volatility. In response to the ongoing Russia-Ukraine conflict in the Ukraine, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, or have undertaken or will undertake military strikes in the Middle East and Southwest Asia, including but not limited to in Iran, and there have been retaliatory military responses, increasing geopolitical tensions among a number of nations.
F-11
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 6 — Commitments and Contingencies (cont.)
The invasion of Ukraine by Russia and the escalation of the conflict involving the United States, Israel and Iran and others in the Middle East and Southwest Asia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts and geopolitical turmoil are highly unpredictable, they could lead to market disruptions, including significant volatility in energy and other commodity prices, credit and capital markets, as well as supply chain interruptions, changes in consumer or producer purchasing behavior, reduced availability of certain types of energy for use in the global economy and increased cyber-attacks and potentially other attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets. Any of the above-mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search for an initial Business Combination and any target business with which the Company may ultimately consummate an initial Business Combination.
Registration Rights
The holders of the (i) Founder Shares, (ii) Private Placement Units, (iii) Private Placement Rights, (iv) Private Placement Shares, (v) Class A ordinary shares that may be issued upon conversion of the Private Placement Rights upon the consummation of an initial Business Combination, and (vi) Private Placement Shares that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of the securities held by them and any other securities of the company acquired by them prior to the consummation of the initial Business Combination pursuant to a registration rights agreement signed on August 6, 2026. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain piggyback registration rights with respect to registration statements filed subsequent to completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 3,000,000 additional Units to cover any over-allotments, at the Initial Public Offering price less the underwriting discounts. As of August 10, 2026, the full over-allotment option remained open.
The underwriters received a cash underwriting commission of $250,000 upon the closing of the Initial Public Offering.
Additionally, the underwriters are entitled to a deferred underwriting discount of 3.0% of the gross proceeds of the Units sold to the public shareholders in the Initial Public Offering held in the Trust Account, $6,000,000 in the aggregate upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement. Of this amount, the underwriters have agreed to waive any deferred underwriting discount in relation to the gross proceeds of the Units purchased in the Initial Public Offering by Steven Hudson, the Chief Executive Officer, and by Andrew Rechtschaffen, a director. As a result, $5,325,000 of deferred underwriting discount is currently held in the Trust Account.
Advisory Fee
In addition to the underwriting agreement, in connection with the Initial Public Offering, the Company entered into an agreement with the underwriters in which the underwriters are entitled to an advisory fee equal to 3% of the gross proceeds of the Units sold to the public shareholders in the Initial Public Offering upon and subject to the closing of the initial Business Combination. However, the underwriters have agreed not to charge an advisory fee in relation to the gross proceeds of the Units purchased in the Initial Public Offering by Steven Hudson, the Chief Executive Officer, and by Andrew Rechtschaffen, a director. The termination clause in the agreement deems the fee earned and recorded as of August 10, 2026. As of August 10, 2026, $5,325,000 had been recorded as advisory fee payable on the accompanying balance sheet.
F-12
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 7 — Shareholder’s Deficit
Preference Shares — The Company is authorized to issue a total of 5,000,000 preference shares at par value of $0.0001 each. At August 10, 2026, there were no preference shares issued or outstanding.
Class A Ordinary Shares — The Company is authorized to issue a total of 500,000,000 Class A ordinary shares at par value of $0.0001 each. At August 10, 2026, there were 225,000 Class A ordinary shares issued and outstanding, excluding 20,000,000 shares subject to possible redemption.
Class B Ordinary Shares — The Company is authorized to issue a total of 50,000,000 Class B ordinary shares at par value of $0.0001 each. On April 7, 2026, the Company repurchased the one share outstanding and issued 7,187,500 Class B ordinary shares to the Sponsor for $25,000, or approximately $0.0035 per share. On July 21, 2026, the Sponsor surrendered 1,437,500 Founder Shares for no consideration and now holds 5,750,000 Founder Shares. The Founder Shares include an aggregate of up to 750,000 shares subject to forfeiture if the over-allotment option is not exercised by the underwriters in full. At August 10, 2026, there were 5,750,000 Class B ordinary shares issued and outstanding.
The Founder Shares will automatically convert into Class A ordinary shares in connection with the consummation of the initial Business Combination or earlier at the option of the holder on a one-for-one basis, subject to adjustment for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or any other equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Initial Public Offering and related to or in connection with the closing of the initial Business Combination, the ratio at which Class B ordinary shares convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, 20% of the sum of (i) the total number of all ordinary shares outstanding upon the completion of the Initial Public Offering (including any Class A ordinary shares issued pursuant to the underwriters’ over-allotment option and excluding the Class A ordinary shares underlying the shares underlying the Private Placement Units issued to the Sponsor), plus (ii) all Class A ordinary shares and equity-linked securities issued or deemed issued, in connection with the closing of the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent shares issued to the Sponsor or any of its affiliates or to the Company’s officers or directors upon conversion of Working Capital Loans). Such adjustment may result in material dilution to the Company’s public shareholders.
Holders of record of the Company’s Class A ordinary shares and Class B ordinary shares are entitled to one vote for each share held on all matters to be voted on by shareholders. Unless specified in the amended and restated memorandum and articles of association or as required by the Companies Act or stock exchange rules, an ordinary resolution under Cayman Islands law and the amended and restated memorandum and articles of association, which requires the affirmative vote of at least a simple majority of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the Company is generally required to approve any matter voted on by the Company’s shareholders. Approval of certain actions require a special resolution under Cayman Islands law, which (except as specified below) requires the affirmative vote of at least two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting, and pursuant to the Company’s amended and restated memorandum and articles of association, such actions include amending the amended and restated memorandum and articles of association and approving a statutory merger or consolidation with another company. There is no cumulative voting with respect to the appointment of directors, meaning, following the Company’s initial Business Combination, the holders of more than 50% of the ordinary shares voted for the appointment of directors can appoint all of the directors. Prior to the consummation of the initial Business Combination, only holders of the Class B ordinary shares will (i) have the right to vote on the appointment and removal of directors and (ii) be entitled to vote on continuing the Company in a jurisdiction outside the Cayman Islands (including any special resolution required to adopt new constitutional documents, in each case, as a result of approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands). Holders of the Class A ordinary shares will not be entitled to vote on these matters during such time. These provisions of the amended and restated memorandum and articles of association may only be amended if approved by a special resolution passed by the affirmative vote of at least 90% (or, where such amendment is proposed in respect of the consummation of the initial Business Combination, two-thirds) of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the Company.
F-13
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 7 — Shareholder’s Deficit (cont.)
Rights
Except in cases where the Company is not the surviving company in a Business Combination, each holder of a right will automatically receive one eighth (1/8) of one Class A ordinary share upon consummation of the initial Business Combination, even if the holder of a Public Right redeemed all Class A ordinary shares held by him, her or it in connection with the initial Business Combination or an amendment to the amended and restated memorandum and articles of association with respect to the pre-initial Business Combination activities. In the event the Company will not be the surviving company upon completion of its initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one eighth (1/8) of one Class A ordinary share underlying each right upon consummation of the Business Combination. No additional consideration will be required to be paid by a holder of rights in order to receive his, her or its additional Class A ordinary shares upon consummation of an initial Business Combination. The Class A ordinary shares issuable upon conversion of the rights will be freely tradable (except to the extent held by affiliates of the Company). If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same consideration per ordinary share the holders of the Class A ordinary shares will receive in the transaction Class A ordinary shares on an as-converted basis.
The Company will not issue fractional Class A ordinary shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with Cayman Islands law. As a result, the holder must hold rights in multiples of eight in order to receive Class A ordinary shares for all of their rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the Completion Window and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from assets held outside of the Trust Account with respect to such rights. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial Business Combination. Additionally, in no event will the Company be required to cash settle the rights. Accordingly, the rights may have no value to the holder.
Note 8 — Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| ● | Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
| ● | Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
| ● | Level 3, | Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability. |
F-14
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 8 — Fair Value Measurements (cont.)
The over-allotment option was accounted for as a liability in accordance with FASB ASC 480 and was presented within liabilities on the balance sheet. The over-allotment option liability is measured at fair value at inception and on a recurring basis, with changes in fair value presented within changes in fair value of over-allotment option liability in the statement of operations. The fair value of the over-allotment option is $181,100 or $0.06 per option unit.
The Company used a Black-Scholes model to value the over-allotment option. The over-allotment option liability was classified within Level 3 of the fair value hierarchy at the measurement date due to the use of unobservable inputs. Inherent in pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical volatility that matches the expected remaining life of the option. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the option. The expected life of the option is assumed to be equivalent to their remaining contractual term.
| August 10, 2026 | ||||
| Exercise price | $ | 10.00 | ||
| Volatility | 2.29 | % | ||
| Risk-free rate | 3.80 | % | ||
| Expected term (years) | 0.12 | |||
The fair value of the Public Rights is $3,200,000, or $0.16 per Public Right. The fair value of Public Rights was determined using Monte Carlo Simulation Model. The Public Rights have been classified within shareholders’ deficit and will not require remeasurement after issuance. The following table presents the quantitative information regarding market assumptions used in the Level 3 valuation of the Public Rights issued in the Initial Public Offering:
| August 10, 2026 | ||||
| Underlying stock price | $ | 9.84 | ||
| Probability of De-SPAC and instrument-specific market adjustment | 13.00 | % | ||
| Risk-free rate | 4.15 | % | ||
| Expected term to De-SPAC (years) | 1.75 | |||
F-15
Pinnacle Acquisition Corporation
NOTES TO FINANCIAL STATEMENT
AUGUST 10, 2026
Note 9 — Segment Information
FASB ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and 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’s CODM has been identified as the Chief Executive Officer, who reviews the assets, operating results, and financial metrics 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 one reportable segment.
The measure of segment assets is reported on the balance sheet as total assets. When evaluating the Company’s performance and making key decisions regarding resource allocation, CODM reviews several key metrics, which include the following:
| August 10, 2026 | ||||
| Cash | $ | 1,478,746 | ||
| Cash held in Trust Account | $ | 200,000,000 | ||
The CODM reviews the position of total assets to assess if the Company has sufficient resources available to discharge its liabilities. The CODM is provided with details of cash and liquid resources available with the Company. The CODM will review the interest that will be earned and accrued on cash held in Trust Account to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the trust agreement, dated as of August 6, 2026.
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through August 14, 2026, the date that the financial statement was available to be issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.
F-16