v3.26.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6 – Commitments and Contingencies

 

Risks and Uncertainties

 

Global geopolitical and economic conditions, including the ongoing Russia-Ukraine conflict, tensions in the Middle East, including recent military actions involving the United States and Iran, and related sanctions, trade restrictions, and disruptions in global energy, supply chain, and financial markets, continue to create significant uncertainty and market volatility. In addition, changes in U.S. trade and tariff policies, including tariffs imposed on imports from certain countries, particularly China, and recent legal challenges and Supreme court rulings regarding the executive branch’s tariff authority, have increased uncertainty in international trade and capital markets. These developments, together with retaliatory measures imposed by other countries, may adversely affect global economic conditions, liquidity, commodity prices, inflation, cybersecurity risks, and overall market stability.

 

Any of the above mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions 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.

 

Underwriters Agreement

 

The Company granted the underwriters a 45-day option to purchase up to 1,500,000 Units (over and above the 10,000,000 units referred to above) solely to cover over-allotments at $10.00 per Unit. On December 15, 2021, the underwriters exercised the over-allotment option in full to purchase 1,500,000 Units at a purchase price of $10.00 per Unit.

 

On December 15, 2021, the Company paid a cash underwriting commission of 2.0% of the gross proceeds of the IPO, or $2,300,000.

 

 

The underwriters are entitled to a deferred underwriting commission of 2.5% of the gross proceeds of the IPO, or $2,875,000, which will be paid from the funds held in the Trust Account upon completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.

 

The Company has deferred underwriting commissions of $950,000 and $950,000 as of March 31, 2026, and December 31, 2025, respectively.

 

The waived amount of $1,925,500 was recorded as a reduction of deferred underwriting commissions and reflected as an increase to additional paid-in capital, consistent with the SEC’s guidance in SAB Topic 5A. As the Deferred Underwriting Commission is directly associated with the Company’s equity offering, no gain was recognized in the consolidated statements of operations.

 

The Company also considered the guidance in ASC 405-20-40 related to the derecognition of liabilities and concluded that the reduction in the Deferred Underwriting Commission does not represent a gain on extinguishment, as the original obligation was recorded as an equity issuance cost rather than through earnings.

 

Registration Rights

 

The holders of the Founder Shares will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO. 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 “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

 

Contingencies and Dismissal of the Then-Legal Counsel

 

The Company may from time to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. As of March 31, 2026 and December 31, 2025, there were no legal or administrative proceedings for which a loss was probable and expected to be material to the unaudited consolidated financial statements.

 

On February 5, 2024, the management and the Sponsor determined to dismiss the Company’s then-legal counsel and also terminated its services of maintaining and managing the escrow account. The former legal counsel alleged that there was an approximate $200,000 balance due with the Sponsor and disputed legal fee due from the Company. On May 23, 2024, the Sponsor and the Company entered into an indemnity agreement that contractually indemnifies, holds harmless, and exonerates the Company from any potential litigation or related proceedings arising from the service termination with the former legal counsel. The Company does not believe that either the above Sponsor Balance due to the former legal counsel or the disputed legal fee would have a material impact on the Company’s unaudited consolidated financial statements.