KBON

Business Context and Reporting Period

Karbon Capital Partners Corp. is a Cayman Islands exempted company and a blank check entity (SPAC) formed to effect a business combination with one or more businesses, focusing on power generation, energy infrastructure, and energy technology sectors. The company is an emerging growth company and a shell company. This Form 10-Q covers the quarter and six months ended June 30, 2026. The company consummated its Initial Public Offering (IPO) on December 12, 2025, and has not yet commenced any operations other than organizational activities and the search for a target business.

Key Financial Metrics

Material Changes and Financial Position

• Trust Account Growth: The balance in the Trust Account increased from $345,597,290 as of December 31, 2025, to $351,773,580 as of June 30, 2026, primarily due to interest earned on marketable securities held in the account.
• Redemption Value Accretion: The redemption value of Class A ordinary shares subject to possible redemption increased to $10.20 per share as of June 30, 2026, from $10.02 per share at year-end 2025. This accretion resulted in a charge to accumulated deficit.
• Cash Position: Operating cash decreased from $834,527 at December 31, 2025, to $418,044 at June 30, 2026, reflecting a net cash outflow of $416,117 from operating activities.
• Share-Based Compensation: A significant non-cash expense of $1,337,856 was recognized in the second quarter related to the grant of Class P Units to independent directors and a consultant, recorded as a capital contribution from the Sponsor.

Outlook, Risks, and Contingencies

• Going Concern Uncertainty: Management has raised substantial doubt about the company's ability to continue as a going concern within one year of the report date. The company has limited cash outside the Trust Account ($418,044) and may not have sufficient working capital to fund operations through the end of the Combination Period (24 months from IPO, potentially extendable to 27 months) without additional financing or reduced expenditures.
• Business Combination Deadline: The company must complete an initial business combination by December 12, 2027 (24 months from IPO), or potentially 27 months if a letter of intent is signed within the first 24 months. Failure to do so will result in liquidation and redemption of public shares.
• Deferred Obligations: The company has significant deferred liabilities, including $12,075,000 in deferred underwriting fees and $325,000 in deferred legal fees, payable only upon the consummation of a business combination.
• Shareholder Redemption: Public shareholders have the right to redeem their shares for a pro rata portion of the Trust Account upon the completion of a business combination. The redemption price is currently approximately $10.20 per share.
• Warrants: There are 8,847,500 warrants outstanding (Public and Private) exercisable at $11.50 per share. These will expire worthless if no business combination is completed.

Investor Verification Checklist

• Verify the company's ability to secure additional working capital loans from the Sponsor or affiliates to fund operations until the business combination deadline.
• Confirm the status of the search for a target business and whether a letter of intent has been signed to potentially extend the combination period to 27 months.
• Review the Sponsor's financial capacity to satisfy indemnification obligations if third-party claims reduce the Trust Account balance below $10.00 per share.
• Monitor the redemption rights of public shareholders and the potential impact of mass redemptions on the company's ability to close a transaction.
• Assess the valuation assumptions used for the share-based compensation grants, specifically the probability of a successful business combination.