Company: NOEMW
Filing Date: 2025-08-12
Form Type: 10-Q
Source: 0001213900-25-075048
Chunk: 66

Company: CO2 Energy Transition Corp.
Filing Date: 2025-08-12
Form: 10-Q
Item: Part I, Item 8
Chunk 66
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 debt into its equity and debt components. The Company applies this guidance to allocate Initial Public
Offering proceeds from the Units between common stock, warrants, and rights, using the residual method by allocating Initial Public
Offering proceeds first to the assigned value of the warrants and rights and then to the common stock. Offering costs allocated to Public
Shares were charged to temporary equity, and offering costs allocated to Public Rights, Public Warrants and Private Units were charged
to stockholders’ deficit, as Public and Private Rights and Warrants, after management’s evaluation, were accounted for under
equity treatment.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which
qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying
amounts represented in the condensed balance sheets, primarily due to its short-term nature.

Income Taxes

The Company follows the asset
and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

11

CO2 ENERGY TRANSITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2025

(Unaudited) 

The Company accounts for
income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets
and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and
for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of June
30, 2025 and December 31, 2024, the Company had a full valuation allowance against the deferred tax assets.

ASC 740 also clarifies the