Note 13. Commitments and Contingencies

Registration Rights:

The holders of the public warrants that may be issued upon conversion of working capital loans or time extension funding loans are entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form registration 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 Merger and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Legal Fees

The Company had a legal arrangement requiring a $25,000 retainer fee (see Note 14) and additional legal fees of $75,000 and the issuance of 2,500 shares of the Company’s Class B common stock contingent upon the successful consummation of the Merger (see Note 1). During the period ended June 30, 2026, the agreement was amended to replace the issuance of the 2,500 shares of the Company’s Class B common stock upon the Merger with a required one time payment of $80,000. The amount has been recognized as an accrual as of June 30, 2026.

Legal Proceedings

From time to time, the Company may become involved in claims or other legal matters arising in the ordinary course of business. The Company records accruals for outstanding legal proceedings when it is probable a liability will be incurred, and the amount of loss can be reasonably estimated. The Company does not believe that there are any pending legal proceedings or other loss contingencies that will, either individually or in the aggregate, have a material adverse effect on the Company’s condensed consolidated financial statements.

IT Service Contract

In August 2025, the Company executed a contract with a related party for outsourced information technology management, support and development services. The contract term is the earlier of the (i) termination of the Business Combination Agreement or (ii) three (3) years from the Closing of the Merger.  Upon expiration, the agreement shall automatically renew for successive one (1) year periods unless cancelled by either party.  The contract included a provision for free services until the consummation of the Merger. Thereafter fees for services performed were fifteen (15) thousand per month and adjusted to five (5) thousand per month with the execution of additional service contracts for additional development activity. Under the 2026 agreements, the Company is committed to a monthly payment totaling sixty (60) thousand, some of which has been capitalized as software costs. See Notes 3, 8 and 14.