Velos Acquisition I Corp. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to M3-Brigade Acquisition V Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Original Sponsor” refer to M3-Brigade Sponsor V LLC and “Sponsor” refer to MI7 Sponsor, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated in the Cayman Islands on March 12, 2024, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the IPO and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, shares and debt. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful. Business Combination Agreement On July 7, 2025, the Company, ReserveOne, Pubco, SPAC Merger Sub, and Company Merger Sub, entered into the Business Combination Agreement. Pursuant to the Business Combination Agreement, the Company will effect the Domestication to Delaware. Following the Domestication, SPAC Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, and as a result of which the Company will be a wholly-owned subsidiary of Pubco. Promptly following the SPAC Merger, Company Merger Sub will merge with and into ReserveOne, with ReserveOne continuing as the surviving company, and as a result of which ReserveOne will be a wholly-owned subsidiary of Pubco. As a result of the Mergers, Pubco will become a publicly traded company, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with applicable laws. The shares of Pubco Class A common stock, par value $0.0001 per share, will be listed for trading and will be freely transferable, subject to the transfer restrictions set forth in the Sponsor Support Agreement and the Lock-Up Agreement and any restrictions pursuant to applicable laws. The shares of Pubco Class B common stock, par value $0.0001 per share, will not be listed or freely transferable. 24 The Closing is expected to occur in the second quarter of 2026, subject to the satisfaction of certain customary closing conditions. See Note 1. Description of Organization and Business Operations - Proposed Business Combination for additional information. The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Combination Agreement, a copy of which is attached hereto as Exhibit 2.1, and incorporated by reference herein. 2026 Note On February 18, 2026, we issued a promissory note (the “2026 Note”) to the Sponsor, pursuant to which we can borrow up to an aggregate principal amount of $2,000,000 from the Sponsor. On February 18, 2026, we borrowed $600,000 under the 2026 Note and on March 27, 2026 the Company borrowed an additional $500,000 under the 2026 Note. As of March 31, 2026, the outstanding principal balance under the 2026 Note was $1,100,000. The proceeds of the 2026 Note will be used for general working capital purposes. The 2026 Note bears no interest and is payable in full upon the consummation of our initial business combination. The foregoing description of the 2026 Note does not purport to be complete and is qualified in its entirety by reference to the full text of the 2026 Note, a copy of which is attached hereto as Exhibit 10.1, and incorporated by reference herein. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from March 12, 2024 (inception), through March 31, 2026, were organizational activities, those necessary to prepare for the IPO, described below, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the three months ended March 31, 2026, we had a net income of $1,713,069, which consists of $2,698,384 from interest earned on cash held in Trust Account, partially offset by $985,315 of general and operating costs. For the three months ended March 31, 2025, we had a net income of $2,913,268, which consists of $3,085,128 from interest earned on marketable securities held in Trust Account, offset by $171,860 of general and administrative costs. Going Concern, Liquidity and Capital Resources Until the consummation of the IPO, our only source of liquidity was an initial purchase of shares of Class B ordinary shares, par value $0.0001 per share, by the Sponsor and loans or advances from the Sponsor or another related party. On August 2, 2024, we consummated the IPO of 28,750,000 Units at $10.00 per Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,750,000 Units generating gross proceeds of $287,500,000. Simultaneously with the closing of the IPO, we consummated the sale of an aggregate of 8,337,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, in a private placement to the Sponsor and Cantor Fitzgerald & Co., the representative of the underwriters of the IPO, generating gross proceeds of $8,337,500. Following the IPO, the full exercise of the over-allotment option, and the sale of the Units, a total of $288,937,500 was placed in the Trust Account. We incurred $19,406,996 of transaction costs, consisting of $5,000,000 of cash underwriting fee, $13,400,000 of deferred underwriting fee, and $1,006,996 of other offering costs. As of March 31, 2026, we had marketable securities held in the Trust Account of $309,579,292. We may withdraw interest from the Trust Account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our initial business combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. On June 16, 2025, we issued the Sponsor Note to the Sponsor pursuant to which the Company has borrowed $2,500,000 from the Sponsor as of March 31, 2026. Up to $1,500,000 of the Sponsor Note may be convertible into private placement warrants of the post business combination entity at a price of $1.00 per warrant at the option of the Sponsor. The warrants will be identical to the Private Placement Warrants. 25 On February 18, 2026, the Company issued a promissory note (the “2026 Note”) to the Sponsor, pursuant to which the Company can borrow up to an aggregate principal amount of $2,000,000 from the Sponsor. On February 18, 2026, the Company borrowed $600,000 under the 2026 Note and on March 27, 2026 the Company borrowed an additional $500,000 under the 2026 Note. As of March 31, 2026, the outstanding principal balance under the 2026 note was $1,100,000. The proceeds of the 2026 Note will be used to provide the Company with general working capital. As of March 31, 2026, we had cash of $876,078 and working capital deficit of $6,981,202. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination. In connection with our assessment of going concern considerations in accordance with ASC 205-40, “Presentation of Financial Statements -Going Concern,” management has determined that our liquidity concerns and mandatory liquidation date raise substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the period in which we have to complete our initial business combination. The Company cannot assure that its plans to consummate an initial business combination will be successful. In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Off-Balance Sheet Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. The underwriters had a 45-day option from the date of the IPO to purchase up to an additional 3,750,000 units to cover over-allotments, if any. Simultaneously with the closing of the IPO, the underwriters elected to fully exercise the over-allotment option to purchase the additional 3,750,000 Units at a price of $10.00 per Unit. Promissory Notes – Related Party Prior to the IPO, we issued a promissory note to the Original Sponsor, pursuant to which we could borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable upon the earlier of (i) December 31, 2024, or (ii) the completion of the IPO. No amounts were borrowed under the Promissory Note and borrowings under the Promissory Note are no longer available. On June 16, 2025, we issued a promissory note, pursuant to which we could borrow up to an aggregate principal amount of $2,500,000 from the Sponsor (the “ Sponsor Note ”). As of December 31, 2025, the full $2,500,000 available under the Sponsor Note had been drawn, and the entire amount was outstanding. Up to $1,500,000 of the aggregate principal amount drawn under the Sponsor Note may be convertible into Private Placement Warrants of the post business combination entity at a price of $1.00 per warrant at the option of the Sponsor. If the Business Combination or another initial business combination is not consummated, the Sponsor Note may not be repaid and may not be able to be converted into Pubco Warrants, pursuant to its terms. Such warrants would be identical to the Private Placement Warrants. On February 18, 2026, we and the 2026 Note to the Sponsor, pursuant to which we can borrow up to an aggregate principal amount of $2,000,000 from the Sponsor. On February 18, 2026, we borrowed $600,000 under the 2026 Note. On March 27, 2026 the Company borrowed an additional $500,000 under the 2026 Note. As of March 31, 2026, the outstanding principal balance under the 2026 Note was $1,100,000. The proceeds of the 2026 Note will be used for general working capital purposes. The 2026 Note bears no interest and is payable in full upon the consummation of our initial business combination. 26 Critical Accounting Estimates The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified no critical accounting estimates or policies that has had or is reasonably likely to have a material impact on our financial condition or results of operations. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required for smaller reporting companies.