v3.26.1
Business Combination
 6 Months Ended
Jun. 30, 2026
Business Combination [Abstract]  
Business Combination

Note 3 — Business Combination

 

Business Combination

 

On December 31, 2024, the Company consummated its Business Combination pursuant to the terms of the Business Combination Agreement. The Business Combination was structured as follows:

 

  a) Prior to Closing, the sole outstanding share of Coliseum’s Class B ordinary shares was converted into one of Coliseum’s Class A ordinary shares, which was then converted into one share of the Company’s Class A common stock at Closing.

 

  b) Prior to Closing, pursuant to Extension Non-Redemption Agreements and the Sponsor Support Agreement, the Previous Sponsor and Sponsor Affiliate forfeited and surrendered for no consideration an aggregate of 606,972 of Coliseum’s Class A ordinary shares, and Coliseum issued 606,972 newly-issued Class A ordinary shares to the Extension Non-Redeeming Shareholders.

 

  c) On the Closing Date, each of Coliseum’s Class A ordinary shares issued and outstanding immediately prior to Closing (excluding redeemed public shares) was automatically converted into the right to receive one share of the Company’s Class A common stock, and each whole public warrant of Coliseum issued and outstanding immediately prior to Closing was assumed by the Company and became exercisable for shares of the Company’s Class A common stock.

 

  d) On the Closing Date, each of Coliseum’s private placement warrants was exchanged for 0.25 shares of the Company’s Class A common stock in the Warrant Exchange.

 

  e) On the Closing date, (i) each outstanding share of RET’s preferred stock and RET’s Class A common stock issued and outstanding immediately prior to Closing was converted into the right to receive a number of shares of the Company’s Class A common stock equal to the Exchange Ratio and (ii) each share of RET’s Class B common stock issued and outstanding immediately prior to Closing was converted into the right to receive a number of shares of the Company’s Class B common stock equal to the Exchange Ratio. The Exchange Ratio was approximately 1,434 shares of the Company’s common stock for every outstanding share of RET’s common stock. Following the Closing, an aggregate of 1,232 shares of RET’s preferred stock and 250 shares of RET’s Class A common stock were converted into 2,125,539 shares of the Company’s Class A common stock, and an aggregate of 40 shares of RET’s Class B common stock were converted into 57,752 shares of the Company’s Class B common stock.

 

  f) At Closing, each of RET’s 1,500 options outstanding was converted into 2,150,838  options of the Company on the same terms and conditions as were in effect with respect to RET’s option immediately prior to Closing, except that the exercise price per share of such option of the Company is equal to the quotient of (x) the exercise price per share of such option of RET in effect immediately prior to Closing divided by (y) the Exchange Ratio (the exercise price per share, as so determined, being rounded up to the nearest full cent), which is equal to an exercise price of $2.06 per share.

 

PIPE Subscriptions Receivable

 

In connection with the Closing, the Company entered into subscription agreements (collectively, the “PIPE Subscription Agreements”) with certain investors and related parties (the “PIPE Investors”) to sell an aggregate of 118,557 shares of Class A common stock at a purchase price of approximately $11.39 per share, for gross proceeds of $1.35 million. At the Closing, the Company received $700,000 of the PIPE investment and issued an aggregate of 61,474 shares of Class A common stock to the PIPE Investors and recorded a subscription receivable of $650,000 for the remaining PIPE investment on the consolidated balance sheet as of December 31, 2024.

 

On January 29, 2025, the Company received $500,000 pursuant to the PIPE Subscription Agreements and issued 43,910 shares of Class A common stock. On February 6, 2025, the Company received the remaining $150,000 and issued 13,173 shares of Class A common stock. The subscription receivable was fully paid on February 6, 2025.

 

Forward Purchase Agreement with Meteora

 

On December 30, 2024, Holdco entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Meteora Capital Partners, LP and affiliated funds (“Meteora”) for an OTC equity prepaid forward transaction. An aggregate of 361,858 shares of Class A common stock (the “Forward Purchase Shares”) are subject to the Forward Purchase Agreement, for which Meteora was paid approximately $4.1 million at Closing (the “Prepayment”) and the Company retained approximately $20,000 (the “Prepayment Shortfall”). The Forward Purchase Agreement matures on the date of the effectiveness of a certain registration statement filed by Holdco with the Securities and Exchange Commission following the Closing Date (the “Maturity Date”). Meteora may sell the Forward Purchase shares at any time following the Closing Date until the Maturity Date at a price not less than $10.00 per share. If Meteora sells any of the Forward Purchase Shares, Meteora will pay to Holdco $10.00 for each share sold, less the Prepayment Shortfall. On Maturity Date, any Forward Purchase Shares that have not been sold by Meteora will be returned to the Company for no consideration, provided that if the proceeds of the shares sold by Meteora prior to the Maturity Date is less than the Prepayment Shortfall, then Holdco will pay cash to Meteora in an amount equal to such difference.

 

The Company’s management determined that the prepaid Forward Purchase Agreement is a hybrid instrument with an embedded derivative (forward purchase contract), which meets the definition of a derivative and does not meet the criteria for the derivative accounting scope exception in ASC 815. As such, the embedded derivative is recognized initially and subsequently at fair value, with changes in fair value reported in earnings in accordance with ASC 815. Because the bifurcated embedded derivative is a forward contract, it must have an initial fair value of zero. As a result, the prepayment amount was allocated entirely to the host contract, which represents a receivable classified as contra-equity. Any shares issued under the Forward Purchase Agreement were accounted for and classified as issued and outstanding for accounting purposes.

 

Until the earlier of 1) the Maturity Date, and 2) the date that gross proceeds from the sale of the shares by Meteora equal 100% of the “Prepayment Shortfall”, the Company recognizes a liability for the Prepayment Shortfall at fair value, with subsequent changes in fair value recognized in the Company’s consolidated statements of operations each reporting period until the Maturity Date. As of December 31, 2024, the prepayment shortfall liability was recorded at maximum value.

 

Upon receipt of consideration related to the sale of any shares sold by Meteora, the Company will record the receipt of funds as an increase to cash and a decrease to the “Prepayment Shortfall liability” until the “Prepayment Shortfall Liability” is zero, and then any remaining proceeds received will reduce the receivable previously recorded as contra-equity.

 

The Company incurred no transaction costs that were directly related to issuance of the Forward Purchase Agreement.

 

The Company recorded the $4.1 million of Prepayment amount paid at closing on December 31, 2024 within additional paid-in capital and approximately $21,000 in shortfall payment liability in the accompanying consolidated balance sheet.

 

As of June 30, 2026 and December 31, 2025, the value of the shortfall payment liability of approximately $21,000 remained unchanged.

 

Public and Private Placement Warrants

 

Prior to Closing, Coliseum had 5,000,000 public warrants and 3,225,000 private placement warrants outstanding. In connection with the Business Combination, as discussed above, an aggregate of 3,225,000 private placement warrants were converted into 806,250 shares of Class A common stock, and all of the public warrants were exchanged into warrants to purchase 5,000,000 shares of Class A common stock on a one-to-one basis.

 

Redemption 

 

Prior to the Closing, certain Coliseum public shareholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of 1,063,698 Coliseum public shares for an aggregate payment of approximately $12.1 million. After redemptions, there was a total of 723,414 Coliseum public shares and an aggregate of approximately $8.25 million remaining in Coliseum’s trust account, and was later converted into Class A common stock in connection with the Business Combination.

 

Transaction Proceeds

 

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statement of changes in stockholders’ equity for the year ended December 31, 2024:

 

Cash-Trust Account, net of redemptions   $ 8,251,024  
Less: transaction costs and professional fees, paid directly from Trust Account     (4,270,760 )
Net proceeds received from Trust     3,980,264  
Less: private placement warrant liabilities     (350,000 )
Less: related party notes     (2,558,340 )
Less: accounts payable and accrued expenses     (2,113,096 )
Reverse recapitalization, net   $ (1,041,172 )

 

The number of shares of common stock issued immediately following the consummation of the Business Combination were:

 

 

    Class A
Common
Stock		     Class B
Common
Stock		  
Coliseum Public Shares, outstanding prior to the Business Combination     1,787,112       -  
Less: Redemption of Coliseum Class A common stock     (1,063,698 )     -  
Public shares of Coliseum, including 361,556 shares subject to the Forward Purchase Agreement (as described below)     723,414       -  
Coliseum Founder Shares, outstanding prior the Business Combination     3,750,000       -  
Coliseum Private Placement Warrants converted to Class A Common shares     806,250       -  
Business Combination shares                
RET Shares     2,125,539       57,752  
Issuance of shares in connection with PIPE     118,557       -  
Class A common stock issued for services     5,000       -  
Common Stock immediately after the Business Combination     7,528,761       57,752  

 

The number of RET shares was determined as follows:

 

    Legacy
RET
Shares		     RET
Shares after
conversion
ratio		  
Preferred Stock     1,232       1,766,554  
Class A Common Stock     250       358,985  
Class B Common Stock     40       57,752  
Total     1,522       2,183,291