Company: NOEMW
Filing Date: 2025-08-12
Form Type: 10-Q
Source: 0001213900-25-075048
Chunk: 18

Company: CO2 Energy Transition Corp.
Filing Date: 2025-08-12
Form: 10-Q
Item: Part I, Item 1
Chunk 18
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.02)

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance
with ASC 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value upon issuance and remeasured at each reporting date, with changes in the fair value
reported in the condensed statements of operations. The classification of derivative financial instruments is evaluated at the end of
each reporting period. There were no derivative financial instruments as of June 30, 2025 and December 31, 2024.

Warrant and Right Instruments

The Company accounted for
the Public Warrants and Private Warrants and Public Rights and Private Rights issued in connection with the Initial Public Offering and
the private placement in accordance with the guidance contained in FASB ASC Topic 815 “Derivatives and Hedging”. Accordingly,
the Company evaluated and classified the warrant and right instruments under equity treatment.

13

CO2 ENERGY TRANSITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2025

(Unaudited) 

Common Stock Subject to Possible Redemption

The Public Shares contain a redemption feature which allows for the
redemption of such Public Shares in connection with the Company’s liquidation, or if there is a stockholder vote or tender offer
in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies Public
Shares subject to redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company.
The Public Shares sold as part of the Units in the Initial Public Offering were issued with other freestanding instruments (i.e., Public
Warrants and Public Rights) and as such, the initial carrying value of Public Shares classified as temporary equity are the allocated
proceeds determined in accordance with ASC 470-20. The Company recognizes changes in redemption value immediately as it occurs and will
adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the
closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change
in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available) and accumulated
deficit. Accordingly, at June 30, 2025 and December 31, 2024, common stock subject to