[8-K] Cartesian Growth Corp III Reports Material Event
Rhea-AI Filing Summary
Factorial Energy Inc. completed its business combination with Cartesian Growth Corporation III, converting the SPAC into a Delaware holding company and listing on Nasdaq under the symbols FAC (Series A Common Stock) and FACWW (public warrants). The deal generated gross proceeds of about $112.1 million, including $11.2 million released from the SPAC trust and $100.9 million from PIPE investments, while holders redeemed 23,051,313 SPAC Class A shares for roughly $240.1 million.
After closing, Factorial had 91,510,501 Series A and 15,512,744 Series B shares outstanding. Roughly 80.6 million Series A shares, or 88.1% of those outstanding, are covered by registration rights for future resale. Shareholder‑approved 2026 equity and employee stock purchase plans initially reserve 21,000,000 and 1,830,211 Series A shares, respectively, with automatic annual increases.
For the quarter ended March 31 2026, legacy Factorial reported a net loss of $8.6 million on operating expenses focused on research and development and selling, general and administrative costs. Cash, cash equivalents and restricted cash totaled $26.3 million before reflecting the business combination proceeds, and management states that the additional capital alleviates prior substantial doubt about continuing as a going concern.
Positive
- None.
Negative
- None.
Insights
De-SPAC brings cash and liquidity, but heavy redemptions and large overhang keep the picture balanced.
The combination of Factorial Inc. with Cartesian Growth Corporation III turns Factorial into a Nasdaq-listed company with gross proceeds of about $112.1 million from trust funds and PIPE investments. This capital helps fund continued R&D and commercialization of its solid-state battery technology.
Redemptions were substantial: investors redeemed 23,051,313 SPAC shares for roughly $240.1 million, leaving a smaller public float than originally contemplated. At closing, 91,510,501 Series A and 15,512,744 Series B shares were outstanding, and about 80.6 million Series A shares are subject to registration rights, representing 88.1% of that class.
Legacy Factorial remains loss-making, with a quarterly net loss of $8.6 million and cash and restricted cash of $26.3 million as of March 31 2026 before the transaction closes. Management discloses that the de‑SPAC and PIPE proceeds alleviate prior going concern doubts, but future performance will depend on execution of development agreements and cost control as outlined in the risk factors and MD&A incorporated by reference.
8-K Event Classification
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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INTRODUCTORY NOTE
Overview
Business Combination
On June 5, 2026 (the “Closing Date”), Cartesian Growth Corporation III, a Cayman Islands exempted company (“CGC”), consummated the previously announced business combination pursuant to the terms of the business combination agreement, dated December 17, 2025, by and among CGC, Fenway MS, Inc., a Delaware corporation and wholly-owned subsidiary of CGC (“Merger Sub”), and Factorial Inc., a Delaware corporation (“Factorial”) (as amended by the Amendment No. 1 to Business Combination Agreement, dated as of March 26, 2026 and Amendment No. 2 to Business Combination Agreement, dated as of May 18, 2026, the “Business Combination Agreement”). Pursuant to the terms of the Business Combination Agreement, among other things, the following occurred: (1) the domestication of CGC as a Delaware corporation, in which CGC de-registered from the Register of Companies in the Cayman Islands and transferred by way of continuation out of the Cayman Islands and into the State of Delaware so as to migrate to and domesticate as a Delaware corporation in accordance with CGC’s amended and restated memorandum and articles of association (the “CGC Articles”), Section 388 of the Delaware General Corporation Law (the “DGCL”) and Part XII of the Cayman Islands Companies Act (As Revised) (the “Domestication”); (2) the merger of Merger Sub with and into Factorial with Factorial surviving the merger as a wholly-owned subsidiary of CGC (the “Merger”), in accordance with the Business Combination Agreement and DGCL; and (3) the consummation of the other transactions contemplated by the Business Combination Agreement and documents related thereto (such transactions, together with the Domestication and the Merger, the “Business Combination”). In connection with the consummation of the Business Combination, CGC changed its corporate name to Factorial Energy Inc. (“PubCo”). This Current Report on Form 8-K (this “Current Report”) references and incorporates by reference certain sections in CGC’s definitive proxy statement/prospectus dated as of, and filed with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 424(b) on, May 6, 2026 (the “Proxy Statement/Prospectus”). Terms used but not defined in this Current Report, or for which definitions are not otherwise incorporated by reference herein, shall have the meaning given to such terms in the Proxy Statement/Prospectus, and such definitions are incorporated herein by reference.
At the extraordinary general meeting of CGC shareholders held on May 27, 2026 (the “EGM”), CGC shareholders considered and adopted, among other matters, the Business Combination Proposal and all of the other proposals related thereto as described in the Proxy Statement/Prospectus.
In connection with the Domestication, immediately prior to the Domestication, (1) CGC effected the redemption of 23,051,313 Class A ordinary shares of CGC, par value $0.0001 per share (the “CGC Class A Shares”), initially issued in CGC’s initial public offering (the “Public Shares”) that were validly submitted for redemption and not withdrawn; and (2) each holder, including CGC III Sponsor LLC, a Cayman Islands limited liability company and the sponsor of CGC (the “Sponsor”), of each issued and outstanding Class B ordinary share of CGC, par value $0.0001 per share (the “CGC Class B Shares” or the “Founder Shares,” and together with the CGC Class A Shares, the “CGC Ordinary Shares”) irrevocably and unconditionally elected to convert, on a one-for-one basis, each CGC Class B Share held by it into one CGC Class A Share (the “Class B Share Conversion”). At the effective time of the Domestication, each outstanding CGC Class A Share (excluding Public Shares validly submitted for redemption, but including CGC Class A Shares issued upon the Class B Share Conversion) was reclassified as one share of Series A common stock, par value $0.00001 per share, of PubCo (the “PubCo Series A Common Stock”).
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective time of the Merger (the “Merger Effective Time”):
| · | each share of Factorial’s capital stock that was issued and outstanding as of immediately prior to the Merger Effective Time (excluding treasury shares, dissenting shares and shares held by Siyu Huang and Alex Yu (the Factorial Founders”)) was automatically cancelled and converted into the right to receive a corresponding number of shares of PubCo Series A Common Stock, equal to the consideration ratio of approximately 3.6684 (the “Consideration Ratio”); |
| · | each share of Factorial’s capital stock that was issued and outstanding as of immediately prior to the Merger Effective Time held by the Factorial Founders was automatically cancelled and converted into the right to receive a corresponding number of shares of Series B common stock, par value $0.00001 per share, of PubCo (the “PubCo Series B Common Stock,” and together with the PubCo Series A Common Stock, the “PubCo Common Stock”) equal to the Consideration Ratio; |
| · | each CGC Public Warrant that was issued and outstanding as of immediately prior to the Merger Effective Time was automatically canceled and converted into the right to receive a PubCo Public Warrant and each CGC Private Warrant that was issued and outstanding as of immediately prior to the Merger Effective Time was automatically canceled and converted into the right to receive a PubCo Private Warrant; |
| · | each option to purchase shares of common stock of Factorial (“Factorial Common Stock”) that was outstanding and unexercised as of immediately prior to the Merger Effective Time (each, a “Factorial Option”), whether vested or unvested, ceased to represent the right to purchase Factorial Common Stock and was canceled in exchange for an option to purchase a number of shares of PubCo Series A Common Stock (rounded down to the nearest whole share) equal to the number of shares of Factorial Common Stock subject to the Factorial Option as of immediately prior to the Merger Effective Time multiplied by the Consideration Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient of the per share exercise price of the Factorial Option immediately prior to the Merger Effective Time divided by the Consideration Ratio (each, a “PubCo Option”). Each PubCo Option is generally subject to the same terms and conditions (including applicable vesting, expiration and forfeiture provisions) that applied to the corresponding Factorial Option immediately prior to the Merger Effective Time; |
| · | each restricted stock unit award with respect to Factorial Common Stock that was outstanding as of immediately prior to the Merger Effective Time (each, a “Factorial RSU”), whether vested or unvested, ceased to have any rights in respect of Factorial Common Stock and was canceled in exchange for a restricted stock unit award of PubCo relating to the number of shares of PubCo Common Stock set forth on an allocation schedule (each, a “PubCo RSU”). Each PubCo RSU is generally subject to the same terms, conditions (including vesting, expiration and forfeiture provisions) that applied to the corresponding Factorial RSU immediately prior to the Merger Effective Time; |
| · | all convertible debt securities of Factorial as of immediately prior to the Merger Effective Time were converted into Factorial Common Stock pursuant to their respective terms; |
| · | each issued and outstanding share of preferred stock of Factorial as of immediately prior to the Merger Effective Time (“Factorial Preferred Stock”) was converted into and became a number of shares of Factorial Common Stock in accordance with the terms of Section 5.1 of Factorial’s Fourth Amended and Restated Certificate of Incorporation, dated as of December 15, 2021; and |
| · | each issued and outstanding warrant of Factorial as of immediately prior to the Merger Effective Time (each, a “Factorial Warrant”) was converted into and became a number of shares of Factorial Common Stock in accordance with the terms of the corresponding warrant agreement. |
On the Closing Date, the PubCo Series A Common Stock and PubCo Public Warrants were approved for listing on the Nasdaq Capital Market (“Nasdaq”) under the new trading symbols “FAC” and “FACWW,” respectively.
Securities outstanding as presented in the unaudited pro forma condensed combined financial information attached hereto as Exhibit 99.2 include (a) 73,570,292 shares of PubCo Series A Common Stock issued to holders of Factorial’s capital stock (excluding treasury shares, dissenting shares and shares held by the Factorial Founders) (“Non-Founder Stockholders”), (b) 15,512,744 shares of PubCo Series B Common Stock issued to the Factorial Founders (together with the Non-Founder Stockholders, the “Factorial Stockholders”), (c) 4,548,687 shares of PubCo Series A Common Stock issued to CGC’s shareholders (other than the Sponsor and certain initial shareholders of CGC), (d) 5,810,000 shares of PubCo Series A Common Stock issued to the Sponsor and certain initial shareholders of CGC, (e) 7,519,404 shares of PubCo Series A Common Stock issued in connection with the PIPE Investments to PIPE Investors, (f) PubCo Options to purchase 19,639,374 shares of PubCo Series A Common Stock issued to Factorial Stockholders, (g) PubCo RSUs to purchase 5,116,217 shares of PubCo Series A Common Stock issued to Factorial Stockholders, (h) PubCo Public Warrants to purchase 13,800,000 shares of PubCo Series A Common Stock, (i) PubCo Private Warrants to purchase 6,800,000 shares of PubCo Series A Common Stock and (j) 62,118 shares of PubCo Series A Common Stock issued to Cantor Fitzgerald & Co. (“Cantor”) pursuant to a financial advisor engagement letter.
PubCo received gross proceeds of approximately $112.1 million in connection with the Business Combination, prior to the payment of transaction expenses, which included funds held in CGC’s trust account of $11.2 million (excluding approximately $36.2 million of proceeds from the trust account resulting from NRA Shares (as defined below) acquired by PIPE Investors to satisfy their obligations under the applicable Investor Stock Purchase Agreement (the “NRA Proceeds”)) and $100.9 million in proceeds from the PIPE Investments (inclusive of the NRA Proceeds) that closed concurrently with the consummation of the Business Combination. In connection with the Business Combination, the holders of 23,051,313 CGC Class A Shares exercised their right to redeem their shares for cash at a redemption price of approximately $10.4159 per share, for an aggregate redemption amount of approximately $240.1 million.
A more detailed description of the Business Combination and the terms of the Business Combination Agreement is included in the Proxy Statement/Prospectus. The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by the full text of the Business Combination Agreement, copies of which are included hereto as Exhibits 2.1 through 2.3 to this Current Report and are incorporated herein by reference.
PIPE Investment
On the Closing Date, a certain institutional investor purchased from PubCo an aggregate of 6,340,000 shares of PubCo Series A Common Stock for an aggregate purchase price of $55.0 million, pursuant to a stock purchase agreement and an affiliate of Sponsor purchased from PubCo an aggregate of 1,179,404 shares of PubCo Series A Common Stock, for an aggregate purchase price of $9.7 million pursuant to a stock purchase agreement. The institutional investor and the Sponsor affiliate satisfied in part their purchase obligations under the stock purchase agreements through purchases of 3,470,764 CGC Class A Shares (the “NRA Shares”) in the aggregate at market prices. Such shares were subject to Non-Redemption Agreements and the proceeds from CGC’s trust account released at Closing reflect non-redemption of such shares.
A more detailed description of the Investor Stock Purchase Agreements is included in the Proxy Statement/Prospectus in the section titled “Proposal No. 1 - The Business Combination Proposal - Ancillary Agreements – Investor Stock Purchase Agreements.” The foregoing description of the Investor Stock Purchase Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Investor Stock Purchase Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report and incorporated herein by reference.
Item 1.01. Entry into a Material Definitive Agreement
A&R Registration Rights Agreement
In connection with the Closing, PubCo, Sponsor, Cantor and certain stockholders of Factorial entered into an amended and restated registration rights agreement (“A&R Registration Rights Agreement”). Pursuant to the A&R Registration Rights Agreement, among other things, PubCo agreed that, within 30 calendar days following the Closing Date, PubCo will file with the Commission (at PubCo’s sole cost and expense) a registration statement registering the resale of certain shares of PubCo Series A Common Stock held by or issuable to the parties thereto (the “Resale Registration Statement”), and PubCo will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable after the filing thereof. Such holders are entitled to customary piggyback registration rights and demand registration rights, including underwritten demands.
The PIPE Investors also have demand registration rights pursuant to the terms of the Investor Stock Purchase Agreements.
Approximately 80.6 million shares of PubCo Series A Common Stock will be subject to registration rights pursuant to the A&R Registration Rights Agreement and Investor Stock Purchase Agreements immediately following the Closing, representing approximately 88.1% of the total issued and outstanding shares of PubCo Series A Common Stock following the Business Combination. For more information, see “Proposal No. 1 - The Business Combination Proposal - Ancillary Agreements - A&R Registration Rights Agreement.”
The foregoing description for the A&R Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R Registration Rights Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.
Lock-Up Provisions of PubCo Bylaws
Reference is made to the disclosure set forth below under Item 5.03 of this Current Report concerning the lock-up provisions in the PubCo Bylaws (as defined below), which is incorporated herein by reference.
A&R Warrant Agreement
In connection with the Closing, PubCo and Continental Stock Transfer & Trust Company entered into an amended and restated warrant agreement (“A&R Warrant Agreement”). Reference is made to the disclosure in the Proxy Statement/Prospectus in the section titled “Description of PubCo Securities – PubCo Warrants,” which is incorporated herein by reference. This description is qualified in its entirety by reference to the full text of the A&R Warrant Agreement, a copy of which is attached as Exhibit 4.2 hereto and is incorporated herein by reference.
Indemnification Agreements
On the Closing Date, PubCo entered into indemnification agreements with each of its directors and officers and, prior to the Closing Date, purchased directors’ and officers’ liability insurance. The indemnification agreements require PubCo to indemnify its directors and officers to the fullest extent permitted under Delaware law.
The foregoing description of the indemnification agreements with each of the directors and officers does not purport to be complete and is qualified in its entirety by reference to the full text of the forms of indemnification agreement, which are filed as Exhibit 10.14 and Exhibit 10.15 to this Current Report, respectively, and are incorporated herein by reference.
Factorial Energy Inc. 2026 Equity Incentive Plan
At the EGM, CGC shareholders approved the Factorial Energy Inc. 2026 Equity Incentive Plan (the “PubCo Incentive Plan”), which became effective on the day immediately prior to the Closing. The PubCo Incentive Plan allows PubCo to make equity and equity-based incentive awards to officers, employees, non-employee directors and consultants. The board of directors of PubCo (the “PubCo Board”) anticipates that providing such persons with a direct stake in PubCo will assure a closer alignment of the interests of such individuals with those of PubCo and its stockholders, thereby stimulating their efforts on PubCo’s behalf and strengthening their desire to remain with PubCo.
The PubCo Incentive Plan will be administered by the PubCo Board, the compensation committee of the PubCo Board or such other similar committee pursuant to the terms of the PubCo Incentive Plan. The plan administrator, which initially will be the compensation committee of the PubCo Board, will have full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants and to determine the specific terms and conditions of each award, subject to the provisions of the PubCo Incentive Plan. The plan administrator may delegate to a subcommittee consisting of one or more members of the PubCo Board, or a committee consisting of one or more officers, the authority to grant awards to employees who are not subject to the reporting and other provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and not members of the delegated subcommittee or committee, subject to certain limitations and guidelines.
The total number of shares of PubCo Series A Common Stock initially reserved for issuance under the PubCo Incentive Plan was 21,000,000 shares (the “Initial Limit”). The PubCo Incentive Plan provides that the number of shares reserved and available for issuance thereunder will automatically increase on January 1, 2027 and each January 1 thereafter by (i) 5% of the sum of (a) the number of shares of PubCo Common Stock issued and outstanding and (b) the number of shares of PubCo Series A Common Stock issuable pursuant to the exercise of any outstanding, pre-funded warrants to acquire PubCo Common Stock for a nominal exercise price (“Outstanding Shares”) on the immediately preceding December 31 or (ii) such lesser number of shares as determined by the administrator of the PubCo Incentive Plan (the “Annual Increase”). These limits are subject to adjustment in the event of a reorganization, recapitalization, reclassification, stock split, stock dividend, extraordinary cash dividend, reverse stock split or other similar change in PubCo’s capitalization. The maximum aggregate number of shares of PubCo Series A Common Stock that may be issued upon exercise of incentive stock options under the PubCo Incentive Plan shall not exceed the Initial Limit cumulatively increased on January 1, 2027 and on each January 1 thereafter by the lesser of the Annual Increase or 7,250,000 shares of PubCo Series A Common Stock, subject, in each case, to any adjustments permitted under the PubCo Incentive Plan. Shares of PubCo Series A Common Stock underlying any awards under the PubCo Incentive Plan that are forfeited, canceled, held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding, reacquired by PubCo prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) are added back to the shares of PubCo Series A Common Stock available for issuance under the PubCo Incentive Plan and, to the extent permitted under Section 422 of the Code and the regulations promulgated thereunder, the shares that may be issued as incentive stock options. Shares repurchased by PubCo on the open market will not be added to the shares of available for issuance under the PubCo Incentive Plan. A more complete summary of the terms of the PubCo Incentive Plan is included in the Proxy Statement/Prospectus in the section titled “Proposal No. 6 - The Incentive Plan Proposal”. That summary and the foregoing description of the PubCo Incentive Plan are qualified in their entirety by reference to the full text of the PubCo Incentive Plan, a copy of which is filed as Exhibit 10.17 to this Current Report and is incorporated herein by reference.
Factorial Energy Inc. 2026 Employee Stock Purchase Plan
At the EGM, CGC shareholders approved the Factorial Energy Inc. 2026 Employee Stock Purchase Plan (the “ESPP”), which became effective on the day immediately prior to the Closing. The ESPP has two components: a component intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code (the “423 Component”) and a component that is not intended to so qualify, (the “Non-423 Component”). Except as otherwise provided, the Non-423 Component will be operated and administered in the same manner as the 423 Component, except where prohibited by law.
The number of shares of PubCo Common Stock initially reserved and authorized for issuance under the ESPP was 1,830,211 shares of PubCo Series A Common Stock. The ESPP provides that the number of shares reserved and available for issuance thereunder will automatically increase each January 1, beginning on January 1, 2027 and ending on January 1, 2036, by the least of (i) 2% of our Outstanding Shares on the immediately preceding December 31, (ii) 3,000,000 shares of PubCo Series A Common Stock and (iii) such number of shares of PubCo Series A Common Stock as determined by the administrator of the ESPP. If our capital structure changes because of a stock dividend, stock split or similar event, the number of shares that can be issued under the ESPP will be appropriately adjusted.
A more complete summary of the terms of the ESPP is included in the Proxy Statement/Prospectus in the section titled “Proposal No. 7 - The ESPP Proposal”. That summary and the foregoing description of the ESPP are qualified in their entirety by reference to the full text of the ESPP, a copy of which is filed as Exhibit 10.18 to this Current Report and incorporated herein by reference.
Item 2.01. Completion of Acquisition of Disposition of Assets
The disclosure set forth in the “Introductory Note” above is incorporated by reference in Item 2.01 of this Current Report. A more complete summary of the material provisions of the Business Combination Agreement is included in the Proxy Statement/Prospectus in the section titled “Proposal No. 1 - The Business Combination - Structure of the Business Combination”. That summary and the description of the Business Combination Agreement included in this Current Report are qualified in their entirety by reference to the full text of the Business Combination Agreement, a copy of which is filed as Exhibits 2.1 through 2.3 to this Current Report and are incorporated herein by reference.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if a predecessor registrant was a “shell company” (as defined in Rule 12b-2 under the Exchange Act), as PubCo was immediately before the consummation of the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration on Form 10. As a result of the consummation of the Business Combination, PubCo ceased to be a shell company. Accordingly, PubCo is providing the information below that would otherwise be included in a Form 10 if it were to file a Form 10. Note that the information provided below relates to PubCo after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.
On the Closing Date and after the consummation of the Business Combination, CGC became a holding company whose only assets consist of equity interests in Factorial, its wholly-owned subsidiary.
Forward-Looking Statements
Certain statements included in this Current Report and the exhibits hereto that are not historical facts are forward-looking statements. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity; expectations and timing related to the success, cost and timing of product development activities; financing and other business milestones; and potential benefits of the Business Combination. These statements are based on various assumptions, whether or not identified in this Current Report, and on the current expectations of PubCo’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from assumptions. Many actual events and circumstances are beyond the control of PubCo. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; economic uncertainty and capital markets disruption, which has been significantly impacted by a new U.S. presidential administration and accompanying regulatory activities and economic policies and events related thereto, ongoing military conflicts and geopolitical instability and inflation and interest rates; failure to realize the anticipated benefits of the Business Combination; the ability to maintain the listing of the PubCo Series A Common Stock on Nasdaq; future financial performance of PubCo following the Business Combination; international trade disputes, including threatened or implemented tariffs by the U.S. and threatened or implemented tariffs by foreign countries in retaliation; the effects of competition on PubCo’s future business; PubCo’s limited operating history; risks associated with PubCo’s efforts to commercialize its products; PubCo’s ability to maintain its existing agreements with third parties and to negotiate and enter into new definitive agreements on favorable terms, if at all; the impact of competing products on PubCo’s business; intellectual property-related claims; PubCo’s dependence upon its key personnel and ability to attract and retain such personnel and additional qualified personnel; and PubCo’s ability to source the raw materials for its products.
These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Current Report and in any document incorporated by reference herein are more fully described in the Proxy Statement/Prospectus in the section titled “Risk Factors.” Such risk factors are not exhaustive. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can PubCo assess the impact of all such risk factors on its business, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to PubCo or to persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. PubCo undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Business
The business of PubCo is described in the Proxy Statement/Prospectus in the section titled “Information about Factorial,” which is incorporated herein by reference.
Risk Factors
The risk factors related to the business and operations of PubCo are described in the Proxy Statement/Prospectus in the section titled “Risk Factors,” which is incorporated herein by reference.
Financial Information
Historical Audited Financial Statements
The audited financial statements of Factorial as of and for the years ended December 31, 2025 and 2024 are included in the Proxy Statement/Prospectus beginning on page F-25, and are incorporated herein by reference.
Historical Unaudited Condensed Financial Statements
The unaudited condensed financial statements as of and for the three months ended March 31, 2026 and 2025 of Factorial are set forth in Exhibit 99.1 hereto and are incorporated herein by reference. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the regulations of the Commission. The unaudited condensed financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of Factorial’s financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year.
These unaudited condensed financial statements should be read in conjunction with the audited financial statements of Factorial as of and for the years ended December 31, 2025 and December 31, 2024, and the related notes included in the Proxy Statement/Prospectus and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Factorial” included herein and incorporated by reference.
Reference is further made to the disclosure contained in CGC’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 and filed with the Commission on May 15, 2026 (“CGC’s 10-Q”), including the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025, and related notes, which is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of the financial condition and results of operation of Factorial for the years ended December 31, 2025 and 2024 is included in the Proxy Statement/Prospectus in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Factorial,” which is incorporated herein by reference. Management’s discussion and analysis of the financial condition and results of operations of Factorial for the three months ended March 31, 2026 and 2025 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.
Management’s discussion and analysis of financial condition and results of operations of CGC for the three months ended March 31, 2026 is described in CGC’s Form 10-Q in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.
Qualitative and Quantitative Disclosures about Market Risk
As a “smaller reporting company,” PubCo is not required to provide this information.
Properties
The properties of PubCo are described in the Proxy Statement/Prospectus in the section titled “Information about Factorial - Facilities,” which is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of the PubCo Common Stock following consummation of the Business Combination by:
| · | each person known by PubCo to be the beneficial owner of more than 5% of the PubCo Series A Common Stock immediately following the consummation of the Business Combination; |
| · | each of the named executive officers and directors of PubCo; and |
| · | all of the executive officers and directors of PubCo as a group after the consummation of the Business Combination. |
Beneficial ownership is determined in accordance with the rules and regulations of the Commission. A person is a “beneficial owner” of a security if that person has or shares “voting power”, which includes the power to vote or to direct the voting of the security, or “investment power”, which includes the power to dispose of or to direct the disposition of the security, or has the right to acquire such powers within 60 days. Unless otherwise indicated, PubCo believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.
The beneficial ownership of the PubCo Common Stock is based on 91,510,501 shares of PubCo Series A Common Stock and 15,512,744 shares of PubCo Series B Common Stock issued and outstanding as of the Closing Date.
| Beneficial Owner(1) | PubCo Series A Common Stock | PubCo Series B Common Stock | Total PubCo Common Stock | |||||||||||||||||||||
| Number | % | Number | % | Number | % | |||||||||||||||||||
| Siyu Huang(2) | 6,085,121 | 6.2 | % | 15,512,744 | 100 | % | 21,597,865 | 19.1 | % | |||||||||||||||
| Alex Yu(3) | 6,085,121 | 6.2 | % | 15,512,744 | 100 | % | 21,597,865 | 19.1 | % | |||||||||||||||
| Jason Duva(4) | 834,038 | * | — | — | 834,038 | * | ||||||||||||||||||
| Joseph Taylor(5) | 3,869,152 | 4.1 | % | — | — | 3,869,152 | 3.5 | % | ||||||||||||||||
| Uwe Keller | — | — | — | — | — | — | ||||||||||||||||||
| Liad Meidar(6) | 3,025,950 | 3.3 | % | — | — | 3,025,950 | 2.8 | % | ||||||||||||||||
| Dieter Zetsche(7) | 1,133,709 | 1.2 | % | — | — | 1,133,709 | 1.1 | % | ||||||||||||||||
| Jon Nelson | — | — | — | — | — | — | ||||||||||||||||||
| All Current Directors and Executive Officers as a Group (9 individuals)(8) | 15,865,298 | 15.3 | % | 15,512,744 | 100 | % | 31,378,042 | 26.4 | % | |||||||||||||||
| 5% Stockholders | ||||||||||||||||||||||||
| WAVE Equity Fund, L.P.(9) | 11,474,452 | 12.5 | % | — | — | 11,474,452 | 10.7 | % | ||||||||||||||||
| Mercedes-Benz Corporate Investments LLC(10) | 8,669,995 | 9.5 | % | — | — | 8,669,995 | 8.1 | % | ||||||||||||||||
| Stellantis Europe S.p.A(11) | 8,669,995 | 9.5 | % | — | — | 8,669,995 | 8.1 | % | ||||||||||||||||
| Sponsor, DirectorCo and Pangaea Three-B, LP(12) | 8,460,168 | 9.2 | % | — | — | 8,460,168 | 7.9 | % | ||||||||||||||||
* Represents beneficial ownership of less than 1%.
| (1) | Unless otherwise noted, the business address of each of the individuals and entities listed in the table above is c/o Factorial Energy Inc., 805 Middlesex Turnpike, Billerica, MA 01821. |
| (2) | Reflects (i) 7,762,710 shares of PubCo Series B Common Stock, all of which are held by trusts of which Dr. Huang serves as investment trustee, (ii) 4,090,616 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date, (iii) 7,750,034 shares of PubCo Series B Common Stock held by Dr. Yu and his affiliated entities, and (iv) 1,994,505 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date held by Dr. Yu. |
| (3) | Reflects (i) 7,750,034 shares of PubCo Series B Common Stock, of which 366,840 are held by Dr. Yu and 7,383,194 are held by a trust of which Dr. Yu serves as investment trustee, (ii) 1,994,505 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date and (iii) 7,762,710 shares of PubCo Series B Common Stock and 4,090,616 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date, each held by Dr. Huang and her affiliated entities. |
| (4) | Reflects (i) 44,681 shares of PubCo Series A Common Stock and (ii) 789,357 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date. |
| (5) | Reflects (i) 23,041 shares of PubCo Series A Common Stock and (ii) 3,846,111 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date. |
| (6) | Reflects 3,025,950 shares of PubCo Series A Common Stock, which consists of (i) 761,964 shares held by Mr. Meidar, (ii) 446,782 shares held by trusts of which Mr. Meidar serves as investment trustee, (iii) 556,193 shares held by Elm Tree Investments LLC, of which Mr. Meidar is the manager, (iv) 1,152,137 shares held by Gatemore Special Opportunities Fund, of which Mr. Meidar is the portfolio manager, and (v) 108,874 shares held by GVP Climate Fund I LP, of which Mr. Meidar has investment decision-making power as one of the managing members of the ultimate general partner of such fund. |
| (7) | Reflects (i) 230,427 shares of PubCo Series A Common Stock and (ii) 903,282 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date, each held by memang GmbH of which Mr. Zetsche is general manager. |
| (8) | Reflects 11,990,711 shares of PubCo Series A Common Stock underlying PubCo Options vested or to be vested and exercisable within 60 days of the Closing Date. |
| (9) | Reflects (i) 10,584,189 shares of PubCo Series A Common Stock held by WAVE Equity Fund, L.P., (ii) 255,548 shares of PubCo Series A Common Stock held by WAVE AAC/LIO Co-Invest III, LLC, and (iii) 634,715 shares of PubCo Series A Common Stock held by WAVE Factorial Energy I, LLC. WAVE AAC/LIO Co-Invest III, LLC, WAVE Factorial Energy I, LLC and WAVE Factorial Energy I, LLC (the “WAVE entities”) are managed by WAVE Equity Partners LLC, which may be deemed to be a beneficial owner of the shares held or held by the WAVE entities. The address of WAVE Equity Fund, L.P., WAVE AAC/LIO Co-Invest III, LLC and WAVE Factorial Energy I, LLC is 67 Batterymarch St, Suite 500, Boston, MA 02110. |
| (10) | Reflects 8,669,995 shares of PubCo Series A Common Stock held by Mercedes-Benz Corporate Investments LLC. The address of Mercedes-Benz Corporate Investments LLC is 35555 W. Twelve Mile Rd., St. 100, Farmington Hills, MI 48331. |
| (11) | Reflects (i) 8,234,493 shares of PubCo Series A Common Stock held by Stellantis Europe S.p.A and (ii) 435,502 shares of PubCo Series A Common Stock held by Stellantis Ventures B.V. Stellantis Europe S.p.A. and Stellantis Ventures B.V. are both wholly owned subsidiaries of Stellantis N.V., which may be deemed to be a beneficial owner of the shares held by Stellantis Europe S.p.A. and Stellantis Ventures B.V. The address of Stellantis Europe S.p.A. is Corso Giovanni Agnelli 200, 10135 Turin (Torino), Italy. |
| (12) | Reflects 5,710,000 shares of PubCo Series A Common Stock held by Sponsor, 100,000 shares of PubCo Series A Common Stock held by CGC III Sponsor DirectorCo (“DirectorCo”) and 2,648,298 shares of PubCo Series A Common Stock held by Pangaea Three-B, LP (“Pangaea”). Excludes 4,400,000 PubCo Private Warrants held by Sponsor and 324,120 PubCo Public Warrants held by Pangaea, each of which are exercisable for PubCo Series A Common Stock within 60 days of the Closing Date. The warrants contain an issuance limitation that prohibits the holder from exercising the warrants to the extent that after giving effect to such issuance after the exercise, the holder (together with the holder’s affiliates and any other person acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of 4.9% of the outstanding shares of PubCo Series A Common Stock immediately after giving effect to the issuance of the shares issuable upon exercise of the warrants. Pangaea is the sole member of Sponsor and is controlled by Peter Yu. Mr. Yu disclaims beneficial ownership of the securities held by Sponsor, DirectorCo and Pangaea, except to the extent of his pecuniary interest therein. The address of each of Sponsor, DirectorCo and Pangaea is 505 Fifth Avenue, 15th Floor, New York, NY 10017. |
Directors and Executive Officers
The directors and executive officers of PubCo after the consummation of the Business Combination are described in the Proxy Statement/Prospectus in the section titled “Management of PubCo Following the Business Combination,” which is incorporated herein by reference.
Committees of the Board of Directors
Information with respect to the committees of the PubCo Board is set forth in the Proxy Statement/Prospectus in the section titled “Management of PubCo Following the Business Combination - Board Committees,” which is incorporated herein by reference.
Executive Compensation
A description of the compensation of the named executive officers of PubCo is set forth in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Factorial,” which is incorporated herein by reference.
Reference is made to the disclosure set forth above in Item 1.01 of this Current Report under the headings “Factorial Energy Inc. 2026 Equity Incentive Plan” and “Factorial Energy Inc. 2026 Employee Stock Purchase Plan,” which is incorporated herein by reference.
Director Compensation
A description of the compensation of the directors of PubCo is set forth in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Factorial - Non-Employee Director Compensation Policy,” which is incorporated herein by reference.
Certain Relationships and Related Party Transactions, and Director Independence
Certain relationships and related party transactions are described in the Proxy Statement/Prospectus in the section titled “Certain Relationships and Related Persons Transactions,” which is incorporated herein by reference.
Reference is also made to the disclosure regarding the independence of the directors of PubCo in the section of the Proxy Statement/Prospectus titled “Management of PubCo Following the Business Combination - Director Independence” and the description of the indemnification agreements under Item 1.01 of this Current Report, both of which are incorporated herein by reference.
Legal Proceedings
Reference is made to the disclosure regarding legal proceedings in the sections of the Proxy Statement/Prospectus titled “Information about CGC - Legal Proceedings” and “Information about Factorial - Legal Proceedings,” which are incorporated herein by reference.
Market Price and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Market Information and Holders
CGC Class A Shares historically traded on the Nasdaq under the symbol “CGCT”. On June 4, 2026, each CGC Class A Share was reclassified into PubCo Series A Common Stock, which began trading on the Nasdaq under the new trading symbol “FAC”.
As of the Closing Date and following the completion of the Business Combination, PubCo had 91,510,501 shares of PubCo Series A Common Stock and 15,512,744 shares of PubCo Series B Common Stock issued and outstanding.
Dividends
Under the PubCo Certificate of Incorporation (the “PubCo Charter”), holders of PubCo Common Stock are entitled to receive ratable dividends, if any, as may be declared from time-to-time by the PubCo Board out of legally available assets or funds. Any payment of cash dividends in the future will be dependent upon PubCo’s revenues and earnings, if any, capital requirements and general financial conditions. In no event will any stock dividends or stock splits or combinations of stock be declared or made on PubCo Common Stock unless the shares of PubCo Common Stock at the time outstanding are treated equally and identically.
Recent Sales of Unregistered Securities
Reference is made to the disclosure set forth below under Item 3.02 of this Current Report concerning the issuance and sale by PubCo of certain unregistered securities, which is incorporated herein by reference.
Description of Registrant’s Securities to be Registered
The description of the securities of PubCo is included in the Proxy Statement/Prospectus in the section titled “Description of PubCo Securities,” which is incorporated herein by reference.
Indemnification of Directors and Officers
The disclosure set forth in Item 1.01 of this Current Report under the section titled “Indemnification Agreements” is incorporated herein by reference.
Additional information regarding indemnification and limitation of liability of the directors and officers of PubCo is set forth in the Proxy Statement/Prospectus in the section titled “Comparison of Governance and Shareholder Rights - Indemnification of Directors and Officers and - Limited Liability of Directors,” which are incorporated herein by reference.
Financial Statements and Supplementary Data
The information set forth under Item 9.01 of this Current Report is incorporated herein by reference.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The information set forth under Item 4.01 of this Current Report is incorporated herein by reference.
Financial Statements and Exhibits
The information set forth under Item 9.01 of this Current Report is incorporated herein by reference.
Item 3.02. Unregistered Sale of Equity Securities
PubCo issued certain securities described in the Introductory Note under Section 4(a)(2) of the Securities Act, in transactions by an issuer not involving a public offering.
Item 3.03. Material Modification to Rights of Security Holders
In connection with the consummation of the Business Combination, CGC migrated and domesticated as a Delaware corporation, changed its name to “Factorial Energy Inc.” and adopted the PubCo Charter and new bylaws (the “PubCo Bylaws”). Reference is made to the disclosure in the Proxy Statement/Prospectus in the sections titled “Proposal No. 2 - The Domestication Proposal,” “Proposal No. 4 - Organizational Documents Proposal,” and “Comparison of Corporate Governance and Shareholder Rights,” which are incorporated herein by reference, and the disclosure set forth below in Item 5.03 of this Current Report, which is incorporated herein by reference. This summary is qualified in its entirety by reference to the full text of the PubCo Charter and PubCo Bylaws, copies of which are attached as Exhibits 3.1 and 3.2 hereto, respectively, and are incorporated herein by reference.
As disclosed below in Item 8.01, in accordance with Rule 12g-3(a) under the Exchange Act, PubCo is the successor issuer to CGC and has succeeded to the attributes of CGC as the registrant. In addition, the shares of PubCo Series A Common Stock, as the successor to CGC, are deemed to be registered under Section 12(b) of the Exchange Act.
Item 4.01. Change in Registrant’s Certifying Accountant
| (a) | Dismissal of independent registered public accounting firm. |
On June 5, 2026, PubCo Board dismissed CBIZ CPAs P.C. (“CBIZ”), the independent registered public accounting firm of CGC prior to the Business Combination, as the independent registered public accounting firm of PubCo.
The report of CBIZ on the financial statements of CGC as of December 31, 2025 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainties, audit scope or accounting principles except for the explanatory paragraph describing an uncertainty about CGC’s ability to continue as a going concern.
During the period from October 29, 2024 (inception) through March 31, 2026 and the subsequent interim period preceding CBIZ’s dismissal, there were no (i) disagreements with CBIZ on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedures, which if not resolved to CBIZ’s satisfaction, would have caused CBIZ to make reference to the subject matter of the disagreement in connection with its report or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.
PubCo has provided CBIZ with a copy of the foregoing disclosures and has requested that CBIZ furnish PubCo with a letter addressed to the Commission stating whether it agrees with the statements made by PubCo set forth above. A copy of the letter from CBIZ, dated June 10, 2026, is filed as Exhibit 16.1 to this Current Report.
| (b) | Disclosures regarding the new independent auditor. |
On June 5, 2026, the PubCo Board approved the engagement of RSM US LLP (“RSM”) as the independent registered public accounting firm of PubCo to audit the consolidated financial statements of PubCo as of and for the year ending December 31, 2026. RSM served as the independent registered public accounting firm of Factorial prior to the Business Combination. During the period from October 29, 2024 (inception) to December 31, 2025 and the subsequent interim period through June 5, 2026, PubCo did not consult with RSM with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered on the financial statements of PubCo, and neither a written report nor oral advice was provided to PubCo that RSM concluded was an important factor considered by PubCo in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any other matter that was the subject of a disagreement or a reportable event (as defined above).
Item 5.01. Changes in Control of Registrant
Reference is made to the disclosure in the Proxy Statement/Prospectus in the section titled “Proposal No. 1 - The Business Combination Proposal,” which is incorporated herein by reference. The information set forth in the section titled “Introductory Note” and in the section titled “Security Ownership of Certain Beneficial Owners and Management” in Item 2.01 of this Current Report is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
The information set forth in sections titled “Directors and Executive Officers” and “Certain Relationships and Related Party Transactions, and Director Independence” in Item 2.01 of this Current Report is incorporated herein by reference.
Effective immediately following the Merger Effective Time, Siyu Huang, Alex Yu, Joseph Taylor, Uwe Keller, Liad Meidar, Dieter Zetsche and Jon Nelson were appointed to constitute members of the PubCo Board, and the PubCo Board was divided into classes of directors serving three-year staggered terms as follows:
| · | Liad Meidar and Jon Nelson were designated as the Class I directors, with terms expiring at the first annual meeting of stockholders to be held after the consummation of the Business Combination and until their successors are duly elected and qualified; |
| · | Uwe Keller, Alex Yu and Dieter Zetsche were designated as the Class II directors, with terms expiring at the second annual meeting of stockholders to be held after the consummation of the Business Combination and until their successors are duly elected and qualified; and |
| · | Siyu Huang and Joseph Taylor were designated as the Class III directors, with terms expiring at the third annual meeting of stockholders to be held after the consummation of the Business Combination and until their successors are duly elected and qualified. |
Effective immediately following the Merger Effective Time, Siyu Huang was appointed as PubCo’s Chief Executive Officer (serving as principal executive officer), Richard Wei was appointed as PubCo’s Chief Financial Officer (serving as principal financial officer), Alex Yu was appointed as PubCo’s Chief Technology Officer and Jason Duva was appointed as PubCo’s General Counsel and Secretary.
Reference is made to the disclosure in the Proxy Statement/Prospectus titled “Management of PubCo Following the Business Combination” for biographical information about each of the directors and officers, which is incorporated herein by reference.
Effective as of the Merger Effective Time, Factorial entered into employment agreements with each of Drs. Huang and Yu and Messrs. Duva and Wei (the “New Employment Agreements”), which replace and supersede any existing service agreements and offer letters, as applicable, entered into with each such officer and Factorial. Under the New Employment Agreements, Drs. Huang and Yu and Messrs. Duva and Wei are entitled to receive an annual base salary equal to $550,000, $385,000, $375,000 and $435,000, respectively, and an initial target long-term incentive award with a grant date value of approximately $5,320,000, $2,710,000, $1,780,000 and $2,275,000, respectively, in each case as determined in accordance with the Company’s equity valuation practices and subject to the approval of the PubCo Board, the compensation committee of the PubCo Board or its delegate. Each officer is eligible to receive future equity awards and to participate in the PubCo employee benefit plans, subject to the terms of such plans. Each officer is eligible for severance benefits under the Executive Change of Control Severance Plan, which is described in further detail below. Drs. Huang and Yu and Messrs. Duva and Wei will continue to be subject to their existing proprietary information and inventions agreements. The descriptions of each of the New Employment Agreements is qualified in its entirety by reference to the full text of each of the New Employment Agreements, copies of which are filed as Exhibits 10.8 through 10.11, respectively, to this Current Report and incorporated herein by reference. In addition, effective as of the Merger Effective Time, Factorial entered into an employment agreement with Joe Taylor (the “Taylor Employment Agreement”), a director on the PubCo Board, which replaces and supersedes the existing agreement entered into with Mr. Taylor and Factorial. Under the Taylor Employment Agreement, Mr. Taylor is entitled to receive an annual base salary equal to $360,000 and an initial target long-term incentive award with a grant date value of approximately $540,000, as determined in accordance with the Company’s equity valuation practices and subject to the approval of the PubCo Board, the compensation committee of the PubCo Board or its delegate. Mr. Taylor is eligible to receive future equity awards and to participate in the PubCo employee benefit plans, subject to the terms of such plans. Mr. Taylor will continue to be subject to his existing proprietary information and inventions agreement. The description of the Taylor Employment Agreement is qualified in its entirety by reference to the full text of the Taylor Employment Agreement, a copy of which is filed as Exhibit 10.12 to this Current Report and incorporated herein by reference.
Effective as of the Merger Effective Time, in connection with the Closing, PubCo has adopted the Executive Change in Control Severance Plan, the Senior Executive Cash Incentive Bonus Plan and the Non-Employee Director Compensation Policy. Reference is made to the disclosure in the Proxy Statement/Prospectus in the section titled “Executive and Director Compensation of Factorial - Executive Change of Control Severance Plan,” “- Senior Executive Cash Incentive Bonus Plan,” and “Non-Employee Director Compensation Policy” for the terms of each of the Executive Change in Control Severance Plan, the Senior Executive Cash Incentive Bonus Plan and the Non-Employee Director Compensation Policy, respectively. Additionally, the descriptions of each of the Executive Change in Control Severance Plan, the Senior Executive Cash Incentive Bonus Plan and the Non-Employee Director Compensation Policy are qualified in their entirety by reference to the full text of the Executive Change in Control Severance Plan, the Senior Executive Cash Incentive Bonus Plan and the Non-Employee Director Compensation Policy, copies of which are filed as Exhibits 10.19 through 10.21, respectively, to this Current Report and incorporated herein by reference.
The information set forth under Item 1.01, “Indemnification Agreements,” “- Factorial Energy Inc. 2026 Equity Incentive Plan” and “- Factorial Energy Inc. 2026 Employee Stock Purchase Plan” of this Current Report is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or By-laws; Change in Fiscal Year.
At the EGM, CGC shareholders considered and approved Proposal No. 2 - The Domestication Proposal (the “Domestication Proposal”), Proposal No. 4 - Organizational Documents Proposal (the “Organizational Documents Proposal”) and Proposal No. 5 - the Advisory Organizational Documents Proposals (the “Advisory Organizational Documents Proposals”), which are described in the Proxy Statement/Prospectus. The PubCo Charter, which became effective upon filing with the Secretary of State of the State of Delaware on June 4, 2026, includes the amendments proposed by the Domestication Proposal, the Organizational Documents Proposal and the Advisory Organizational Documents Proposals and approved at the EGM.
On June 5, 2026, the PubCo Board approved and adopted the PubCo Bylaws containing the amendments proposed by the Organizational Documents Proposal and Advisory Organizational Documents Proposal and approved at the EGM, which became effective as of the Merger Effective Time.
The PubCo Bylaws provide that the Sponsor and certain Factorial stockholders will be prohibited from transferring (except for certain permitted transfers) any shares of PubCo Series A Common Stock held by such holder (beginning on the Closing Date and ending (i) with respect to 25% of the Lock-Up Shares, on the date 180 days after the Closing Date, (ii) with respect to 25% of the Lock-Up Shares (as defined in the PubCo Bylaws), on the date 270 days after the Closing Date and (iii) with respect to 50% of the Lock-Up Shares, on the first anniversary of the Closing Date; provided, however, that, early release of the Lock-Up Shares would be permitted upon achievement of specified share price thresholds, as measured by the 20-day VWAP (as defined in the PubCo Bylaws). One-third of the remaining Lock-Up Shares would be released if the VWAP reaches $12.00 per share, an additional one-third would be released if the VWAP reaches $14.00 per share, and the final one-third would be released upon the VWAP reaching $16.00 per share. Such transfer restrictions will terminate with respect to one-third of the Lock-Up Shares, with such Early Release Lock-Up Shares (as defined in the PubCo Bylaws) allocated first among the Lock-Up Shares with the earliest Lock-Up Termination Date (as defined in the PubCo Bylaws) that has not yet occurred and successively to each remaining tranche of Lock-Up Shares in chronological order. The foregoing transfer restrictions will not apply to, with respect to each Lock-Up Holder (as defined in the PubCo Bylaws), 750 of the shares of PubCo Series A Common Stock held by such Lock-Up Holder (or such lesser number as applicable) and such specified shares are not Lock-Up Shares. For more information, see “Proposal No. 1 - The Business Combination Proposal - Ancillary Agreements - Lock-Up Provisions of PubCo Bylaws” in the Proxy Statement/Prospectus.
Description of various provisions of the PubCo Charter and PubCo Bylaws and their general effect on the rights of stockholders of PubCo are included in the Proxy Statement/Prospectus under the section titled “Comparison of Corporate Governance and Shareholder Rights,” which is incorporated herein by reference.
The foregoing descriptions of the PubCo Charter and PubCo Bylaws do not purport to be complete and are qualified in its entirety by reference to the full text of the PubCo Charter and PubCo Bylaws, copies of which are attached as Exhibit 3.1 and Exhibit 3.2 hereto, respectively, and are incorporated herein by reference.
Item 5.05. Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics
In connection with the closing of the Business Combination, the PubCo Board approved and adopted a new Code of Business Conduct and Ethics, which is applicable to all of PubCo’s employees, officers (including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions), agents and representatives, including directors and consultants, and will be available on PubCo’s website at https://www. factorialenergy.com. The information on PubCo’s website does not constitute part of this Current Report and is not incorporated by reference herein.
Item 5.06. Change in Shell Company Status
Upon the closing of the Business Combination, CGC ceased to be a shell company. The material terms of the Business Combination are described in the Proxy Statement/Prospectus under the sections titled “Proposal No. 1 - The Business Combination Proposal” and “Proposal No. 2 - The Domestication Proposal,” which is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On June 8, 2026, PubCo issued a press release announcing the completion of the Business Combination and the first day of trading on Nasdaq, a copy of which is furnished as Exhibit 99.4 hereto.
The information in this Item 7.01, including Exhibit 99.4, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of PubCo under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report will not be deemed an admission as to the materiality of any information of the information in this Item 7.01, including Exhibit 99.4.
Item 8.01 Other Information
By operation of Rule 12g-3(a) under the Exchange Act, PubCo is the successor issuer to CGC and has succeeded to the attributes of CGC as the registrant, including CGC’s Commission file number (001-42629) and CIK Code (0002049662). The PubCo Series A Common Stock is deemed to be registered under Section 12(b) of the Exchange Act, and PubCo will file reports and other information with the Commission using CGC’s Commission file number.
The PubCo Series A Common Stock and PubCo Public Warrants are listed for trading on the Nasdaq under the symbols “FAC” and “FACWW” and the CUSIP numbers relating to PubCo Series A Common Stock and PubCo Public Warrants are 30347G103 and 30347G111, respectively.
Holders of CGC’s shares who have filed reports under the Exchange Act with respect to those shares should indicate in their next filing, or any amendment to a prior filing, filed on or after the Closing Date that PubCo is the successor to CGC.
Item 9.01. Financial Statements and Exhibits
| (a) | Financial statements of businesses acquired. |
The financial statements of Factorial as of and for the years ended December 31, 2025 and 2024, and the related notes thereto included in the Proxy Statement/Prospectus are incorporated herein by reference.
The unaudited condensed financial statements of Factorial as of and for the three months ended March 31, 2026 and 2025, and the related notes thereto, are set forth in Exhibit 99.1 and are incorporated herein by reference.
The financial statements of CGC as of and for the years ended December 31, 2025 and 2024, and the related notes thereto, included in the Proxy Statement/Prospectus are incorporated herein by reference. The financial statements of CGC as of and for the three months ended March 31, 2026 and 2025, and the related notes thereto, included in CGC’s 10-Q are incorporated herein by reference.
| (b) | Pro forma financial information. |
The unaudited pro forma condensed combined financial information of PubCo as of and for the three months ended March 31, 2026 and for the year ended December 31, 2025, is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.
| (c) | Exhibits |
| Exhibit No. | Description | |
| 2.1 † | Business Combination Agreement, by and among Cartesian Growth Corporation III, Factorial Inc. and Fenway MS, Inc., dated as of December 17, 2025 (incorporated by reference to Annex A-1 to the Registrant’s Proxy Statement/Prospectus filed on May 6, 2026). | |
| 2.2 | Amendment No. 1 to Business Combination Agreement, by and among Cartesian Growth Corporation III, Factorial Inc. and Fenway MS, Inc., dated as of March 26, 2026 (incorporated by reference to Annex A-2 to the Registrant’s Proxy Statement/Prospectus filed on May 6, 2026). | |
| 2.3 | Amendment No. 2 to Business Combination Agreement, by and among Cartesian Growth Corporation III, Factorial Inc. and Fenway MS, Inc., dated as of May 18, 2026 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 18, 2026). | |
| 3.1* | Factorial Energy Inc. Certificate of Incorporation. | |
| 3.2* | Factorial Energy Inc. Bylaws. | |
| 4.1* | Specimen PubCo Series A Common Stock Certificate of Factorial Energy Inc. | |
| 4.2* | Amended and Restated Warrant Agreement, dated June 5, 2026, between Factorial Energy Inc. and Continental Stock Transfer & Trust Company. | |
| 10.1* | Amended and Restated Registration Rights Agreement, dated as of June 5, 2026, by and between the Registrant, CGC III Sponsor LLC, CGC III Sponsor DirectorCo LLC, Cantor Fitzgerald & Co., certain former stockholders of Factorial Inc., and other persons and entities. | |
| 10.2 | Form of Investor Stock Purchase Agreement, dated December 17, 2025, by and between the Registrant and each PIPE Investor (incorporated by reference to Annex E in the Registrant’s Proxy Statement/Prospectus filed on May 6, 2026). | |
| 10.3#^ | Common Development Agreement, dated November 26, 2021, by and between Factorial Inc. and Mercedes-Benz Research & Development North America, Inc., as amended by that certain Amendment #1, dated August 1, 2025 (incorporated by reference to the exhibit 10.26 to Registrant’s Registration Statement on Form S-4/A filed on April 14, 2026). | |
| 10.4#^ | Joint Development Agreement, dated August 20, 2021, by and between Factorial Inc. and Hyundai Motor Company (incorporated by reference to the exhibit 10.27 to Registrant’s Registration Statement on Form S-4/A filed on April 14, 2026). | |
| 10.5#^ | Collaboration Agreement, dated August 1, 2025, by and between Factorial Inc. and FCA US LLC (incorporated by reference to the exhibit 10.25 to Registrant’s Registration Statement on Form S-4/A filed on April 14, 2026). | |
| 10.6#^ | Joint Development Agreement, dated February 2, 2026, by and between Factorial Inc. and PowerCo SE (incorporated by reference to the exhibit 10.24 to Registrant’s Registration Statement on Form S-4 filed on March 27, 2026). | |
| 10.7^ | Sublease, by and among 805 Middlesex Turnpike Owner LLC, ClearMotion, Inc. and Factorial Inc., dated November 11, 2022 (incorporated by reference to the exhibit 10.25 to Registrant’s Registration Statement on Form S-4 filed on March 27, 2026). | |
| 10.8*+ | Employment Agreement by and between the Registrant and Siyu Huang. | |
| 10.9*+ | Employment Agreement by and between the Registrant and Alex Yu. | |
| 10.10*+ | Employment Agreement by and between the Registrant and Jason Duva. | |
| 10.11*+ | Employment Agreement by and between the Registrant and Richard Wei. | |
| 10.12*+ | Employment Agreement by and between the Registrant and Joseph Taylor. | |
| 10.13+ | Form of Restrictive Covenant Agreement (incorporated by reference to the exhibit 10.20 to Registrant’s Registration Statement on Form S-4/A filed on April 14, 2026). | |
| 10.14*+ | Form of Director Indemnification Agreement. | |
| 10.15*+ | Form of Officer Indemnification Agreement. | |
| 10.16*+ | Factorial Inc. 2019 Stock Incentive Plan, as amended, and forms of award agreements thereunder. | |
| 10.17*+ | 2026 Equity Incentive Plan of Factorial Energy Inc., and forms of award agreements thereunder. | |
| 10.18*+ | 2026 Employee Stock Purchase Plan of Factorial Energy Inc. | |
| 10.19*+ | Executive Change in Control Severance Plan of Factorial Energy Inc. | |
| 10.20*+ | Senior Executive Cash Incentive Bonus Plan of Factorial Energy Inc. | |
| 10.21*+ | Non-Employee Director Compensation Policy of Factorial Energy Inc. | |
| 14.1* | Code of Business Conduct and Ethics. | |
| 16.1* | Letter from CBIZ CPAs P.C. dated June 10, 2026. | |
| 21.1* | Subsidiaries of the Registrant. | |
| 99.1* | The unaudited condensed financial statements of Factorial as of March 31, 2026 and for the three months ended March 31, 2026 and 2025. | |
| 99.2* | The unaudited pro forma condensed combined financial information of PubCo as of and for the three months ended March 31, 2026 and for the year ended December 31, 2025. | |
| 99.3* | Management’s discussion and analysis of the financial condition and results of operations of Factorial for the three months ended March 31, 2026 and 2025. | |
| 99.4* | Press Release, dated June 8, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
| † | Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Commission upon request. |
| # | Portions of this exhibit have been omitted because they are both (i) not material and (ii) the type of information that the registrant treats as private or confidential. |
| ^ | Certain schedules and similar attachments to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted schedules and similar attachments to the Commission upon its request. |
| + | Indicates management contract or compensatory plan. |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FACTORIAL ENERGY INC. | ||
| By: | /s/ Siyu Huang | |
| Name: | Siyu Huang | |
| Title: | Chief Executive Officer | |
Date: June 10, 2026
Exhibit 99.1
Factorial Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 25,449 | $ | 28,891 | ||||
| Receivables under collaboration agreements (includes $0 and $1,000 as related party as of March 31, 2026, and December 31, 2025, respectively) | 3,360 | 1,152 | ||||||
| Deferred transaction costs | 3,468 | 1,423 | ||||||
| Prepaid expenses and other current assets (includes $910 and $1,110 as related party as of March 31, 2026, and December 31, 2025, respectively) | 1,718 | 1,425 | ||||||
| Total current assets | 33,995 | 32,891 | ||||||
| Restricted cash | 884 | 881 | ||||||
| Property and equipment, net | 20,206 | 21,276 | ||||||
| Operating lease right-of-use assets, net | 7,266 | 7,576 | ||||||
| Other non-current assets (related party) | 40 | 160 | ||||||
| TOTAL ASSETS | $ | 62,391 | $ | 62,784 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable (includes $30 and $190 as related party, as of March 31, 2026, and December 31, 2025, respectively) | $ | 656 | $ | 741 | ||||
| Accrued expenses | 4,128 | 2,981 | ||||||
| Operating lease liabilities, current portion | 1,401 | 1,357 | ||||||
| Total current liabilities | 6,185 | 5,079 | ||||||
| Operating lease liabilities, net of current portion | 6,817 | 7,180 | ||||||
| Convertible promissory notes - related parties, at fair value | 20,296 | 18,889 | ||||||
| Convertible promissory notes, at fair value | 4,600 | - | ||||||
| Warrant liabilities for Series B-1 and Series D redeemable convertible preferred stock (includes $2,803 and $2,770 to related parties as of March 31, 2026, and December 31, 2025, respectively) | 3,484 | 3,378 | ||||||
| Total liabilities | 41,382 | 34,526 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Redeemable convertible preferred stock (Note 9): | ||||||||
| Series A-1 redeemable convertible preferred stock, $0.0001 par value; 1,234,568 shares authorized, issued and outstanding as March 31, 2026, and December 31, 2025. Liquidation preference of $3,000 as of March 31, 2026, and December 31, 2025. | 327 | 327 | ||||||
| Series A-2 redeemable convertible preferred stock, $0.0001 par value; 2,362,204 shares authorized, issued and outstanding as of March 31, 2026, and December 31, 2025. Liquidation preference of $6,000 as March 31, 2026, and December 31, 2025. | 655 | 655 | ||||||
| Series B-1 redeemable convertible preferred stock, $0.0001 par value; 2,738,469 shares authorized; 2,718,539 shares issued and outstanding as of March 31, 2026, and December 31, 2025. Liquidation preference of $22,166 as of March 31, 2026, and December 31, 2025. | 2,169 | 2,169 | ||||||
| Series C-1 redeemable convertible preferred stock, $0.0001 par value; 3,570,724 shares authorized, issued and outstanding as of March 31, 2026, and December 31, 2025. Liquidation preference of $28,423 as of March 31, 2026, and December 31, 2025. | 28,303 | 28,303 | ||||||
| Series C-2 redeemable convertible preferred stock, $0.0001 par value; 2,513,698 shares authorized, issued and outstanding as of March 31, 2026, and December 31, 2025. Liquidation preference of $26,857 as of March 31, 2026, and December 31, 2025. | 26,013 | 26,013 | ||||||
| Series D redeemable convertible preferred stock, $0.0001 par value; 7,625,734 shares authorized; 5,950,204 shares issued and outstanding as of March 31, 2026, and December 31, 2025. Liquidation preference of $202,385 as of March 31, 2026, and December 31, 2025. | 192,185 | 192,185 | ||||||
| Total redeemable convertible preferred stock | 249,652 | 249,652 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $0.0001 par value; 32,000,000 shares authorized as of March 31, 2026, and December 31, 2025. 5,068,690 and 5,039,438 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively. | - | - | ||||||
| Additional paid-in capital | 36,285 | 34,661 | ||||||
| Accumulated deficit | (264,151 | ) | (255,576 | ) | ||||
| Accumulated other comprehensive loss | (743 | ) | (445 | ) | ||||
| Treasury stock, at cost; 108,466 shares as of March 31, 2026, and December 31, 2025 | (34 | ) | (34 | ) | ||||
| Total stockholders' deficit | (228,643 | ) | (221,394 | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS' DEFICIT | $ | 62,391 | $ | 62,784 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
1
Factorial Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating expenses: | ||||||||
| Research and development,
net (includes $0 and $24 of related party research and development reimbursement, net, during the three months ended March 31, 2026, and 2025, respectively) | $ | (1,942 | ) | $ | (6,754 | ) | ||
| Selling, general and administrative (includes $88 and $44 of related party expenses, during the three months ended March 31, 2026, and 2025, respectively) | (4,549 | ) | (6,368 | ) | ||||
| Loss from operations | (6,491 | ) | (13,122 | ) | ||||
| Other (expense) income, net: | ||||||||
| Financing costs related to issuance of convertible promissory notes | (37 | ) | - | |||||
| Change in fair value of convertible promissory notes – related parties | (1,407 | ) | - | |||||
| Change in fair value of convertible promissory notes | (300 | ) | - | |||||
| Change in fair value of warrant liabilities
(includes related party loss of $33 and $0 during the three months ended March 31, 2026, and 2025, respectively) | (106 | ) | - | |||||
| Other (expenses) income, net | (234 | ) | 252 | |||||
| Total other (expenses) income, net | (2,084 | ) | 252 | |||||
| Loss before provision for income taxes | (8,575 | ) | (12,870 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Net loss attributable to common stockholders - basic and diluted (Note 12) | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Net loss per share attributable to common stockholders - basic and diluted (Note 12) | $ | (1.70 | ) | $ | (2.57 | ) | ||
| Weighted-average common stock outstanding - basic and diluted (Note 12) | 5,056,994 | 5,016,149 | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
Factorial Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Other comprehensive income (loss), net of tax | ||||||||
| Foreign currency translation adjustments | (298 | ) | 8 | |||||
| Other comprehensive income (loss), net of tax | $ | (298 | ) | $ | 8 | |||
| Comprehensive loss | $ | (8,873 | ) | $ | (12,862 | ) | ||
| Comprehensive loss attributable to stockholders | $ | (8,873 | ) | $ | (12,862 | ) | ||
See accompanying notes to unaudited condensed consolidated financial statements.
3
Factorial Inc.
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit (Unaudited)
(In thousands, except share data)
| REDEEMABLE | ||||||||||||||||||||||||||||||||||||
| CONVERTIBLE | ACCUMULATED | |||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | ADDITIONAL | OTHER | TREASURY | TOTAL | |||||||||||||||||||||||||||||||
| Three Months Ended | $0.0001 PAR VALUE | $0.0001 PAR VALUE | PAID-IN | ACCUMULATED | COMPREHENSIVE | STOCK | STOCKHOLDERS’ | |||||||||||||||||||||||||||||
March 31, 2026 | SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | DEFICIT | INCOME (LOSS) | AT COST | DEFICIT | |||||||||||||||||||||||||||
Balance as of December 31, 2025 | 18,349,937 | $ | 249,652 | 5,039,438 | $ | - | $ | 34,661 | $ | (255,576 | ) | $ | (445 | ) | $ | (34 | ) | $ | (221,394 | ) | ||||||||||||||||
| Issuance from stock option exercises | - | - | 29,252 | - | 90 | - | - | - | 90 | |||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | 1,534 | - | - | - | 1,534 | |||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | (298 | ) | - | (298 | ) | |||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (8,575 | ) | - | - | (8,575 | ) | |||||||||||||||||||||||||
Balance as of March 31, 2026 | 18,349,937 | $ | 249,652 | 5,068,690 | $ | - | $ | 36,285 | $ | (264,151 | ) | $ | (743 | ) | $ | (34 | ) | $ | (228,643 | ) | ||||||||||||||||
| REDEEMABLE | ||||||||||||||||||||||||||||||||||||
| CONVERTIBLE | ACCUMULATED | |||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | ADDITIONAL | OTHER | TREASURY | TOTAL | |||||||||||||||||||||||||||||||
| Three Months Ended | $0.0001 PAR VALUE | $0.0001 PAR VALUE | PAID-IN | ACCUMULATED | COMPREHENSIVE | STOCK | STOCKHOLDERS’ | |||||||||||||||||||||||||||||
March 31, 2025 | SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | DEFICIT | INCOME (LOSS) | AT COST | DEFICIT | |||||||||||||||||||||||||||
Balance as of December 31, 2024 | 18,349,937 | $ | 249,652 | 5,016,051 | $ | - | $ | 25,193 | $ | (181,731 | ) | $ | 76 | $ | (34 | ) | $ | (156,496 | ) | |||||||||||||||||
| Issuance from stock option exercises | - | - | 300 | - | 2 | - | - | - | 2 | |||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | 3,857 | - | - | - | 3,857 | |||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | 8 | - | 8 | |||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (12,870 | ) | - | - | (12,870 | ) | |||||||||||||||||||||||||
Balance as of March 31, 2025 | 18,349,937 | $ | 249,652 | 5,016,351 | $ | - | $ | 29,052 | $ | (194,601 | ) | $ | 84 | $ | (34 | ) | $ | (165,499 | ) | |||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
Factorial Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands, except share and per share data)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 882 | 2,191 | ||||||
| Non-cash lease expenses and amortization | 310 | 302 | ||||||
| Stock-based compensation | 1,534 | 3,857 | ||||||
| Change in fair value and financing cost of convertible promissory notes | 337 | - | ||||||
| Change in fair value of convertible promissory notes – related parties | 1,407 | - | ||||||
| Change in fair value of warrant liability | 106 | - | ||||||
| Loss on disposal of property and equipment | 9 | 7 | ||||||
| Unrealized foreign exchange loss | 487 | 51 | ||||||
| Non-cash interest | - | 39 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables under collaboration agreements | (2,208 | ) | 545 | |||||
| Prepaid expenses and other current assets | (306 | ) | 70 | |||||
| Other non-current assets | 120 | - | ||||||
| Accounts payable | (174 | ) | 5 | |||||
| Accrued expenses | 271 | (2 | ) | |||||
| Operating lease liabilities | (320 | ) | (298 | ) | ||||
| Net cash used in operating activities | (6,120 | ) | (6,103 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Property and equipment expenditures | (482 | ) | (172 | ) | ||||
| Advances on property and equipment | (5 | ) | - | |||||
| Net cash used in investing activities | (487 | ) | (172 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from stock option exercises | 90 | 2 | ||||||
| Principal paid on finance lease liability | - | (207 | ) | |||||
| Deferred transaction costs paid | (1,051 | ) | - | |||||
| Financing costs related to issuance of convertible promissory notes | (37 | ) | - | |||||
| Proceeds from convertible promissory notes | 4,300 | - | ||||||
| Net cash provided (used) in financing activities | 3,302 | (205 | ) | |||||
| Effects of exchange rate change on cash, cash equivalents and restricted cash | (134 | ) | (36 | ) | ||||
| Net change in cash, cash equivalents and restricted cash | (3,439 | ) | (6,516 | ) | ||||
| Beginning cash, cash equivalents and restricted cash | 29,772 | 51,421 | ||||||
| Ending cash, cash equivalents and restricted cash | $ | 26,333 | $ | 44,905 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid for interest | $ | - | $ | 146 | ||||
| Non-cash investing and financing activities: | ||||||||
| Deferred transaction costs included in accounts payable and accrued expenses | $ | 1,723 | $ | - | ||||
| The following table presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s Condensed Consolidated Balance Sheets: | ||||||||
| Cash and cash equivalents | $ | 25,449 | $ | 41,719 | ||||
| Restricted cash | 884 | 3,186 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 26,333 | $ | 44,905 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 1 - The Company
Nature of Operations
Factorial Inc. (“Factorial”, the “Company”, or “we”) is a developer and manufacturer of advanced battery energy storage technologies and solid-state battery (“SSB”) technology. The technologies developed are expected to create a more sustainable future with high-performance batteries for electric vehicles, homes, and critical applications.
de-SPAC Transaction
On December 17, 2025, Cartesian Growth Corporation III, a Cayman Islands exempted company (“CGC”), Fenway MS, Inc., a Delaware corporation (“Merger Sub”), and Factorial Inc., a Delaware corporation (“Factorial”), entered into a Business Combination Agreement (“BCA”). CGC, a publicly traded special purpose acquisition company (“SPAC”) was listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “CGCT”.
On June 5, 2026, the Merger Sub, a wholly-owned subsidiary of CGC, merged with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of CGC (the “Merger”). In connection with the Merger, CGC was renamed Factorial Energy, Inc. (“PubCo”). PubCo became listed on the Nasdaq under the new ticker symbol “FAC” (“de-SPAC Transaction”). PubCo received gross proceeds of approximately $112,100 in connection with the de-SPAC Transaction and the sale of a private placement of PubCo Series A Common Stock, prior to the payment of transaction expenses (“de-SPAC and PIPE Proceeds”). These unaudited condensed consolidated financial statements do not reflect the impact of the de-SPAC Transaction, since it was closed subsequent to March 31, 2026.
Basis of Presentation
The accompanying interim condensed consolidated financial statements and notes to the condensed consolidated financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America (“U.S. GAAP”) for interim financial information as organized in the Accounting Standards Codification (“ASC”) administrated by the Financial Accounting Standards Board (“FASB”). The accompanying interim Condensed Consolidated Balance Sheet as of March 31, 2026, the interim Condensed Consolidated Statements of Operations, Comprehensive Loss, Redeemable Convertible Preferred Stock and Stockholders’ Deficit, and the interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in management’s opinion, include adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2026 and its result of operations for the three months ended March 31, 2026 and 2025 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the year ended December 31, 2025, included in the proxy statement/prospectus filed by CGC on May 6, 2026. The accounting policies applied in the preparation of these interim condensed consolidated financial statements are consistent with those disclosed in the Company’s audited consolidated financial statements and accompanying notes. The disclosures provided herein include only those policies that have been newly adopted or updated during the interim period, if any.
Prior to the receipt of the de-SPAC and PIPE Proceeds, the Company determined that its existing liquidity was not sufficient to fund operations for at least twelve months from the date of issuance of its audited annual consolidated financial statements, which raised substantial doubt about the Company’s ability to continue as a going concern. The Company has experienced net losses and negative cash flows from operations since its inception. The Company expects it will continue to incur significant costs including research and development expenses related to its ongoing operations until it successfully develops a commercial product and achieves revenues adequately to support the Company’s operations. However, Factorial believes that its cash on hand, including the net proceeds from the de-SPAC and PIPE Proceeds will be sufficient to meet its working capital and capital expenditure requirements for a period of at least twelve months from the date of this filing. Accordingly, management has concluded that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated. Factorial may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with Original Equipment Manufacturers (“OEMs“) and tier-one automotive suppliers or other suppliers, supply chain challenges, competitive pressures, and regulatory developments, among other developments. To the extent that Factorial’s current resources are insufficient to satisfy its cash requirements, Factorial may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than Factorial expects, Factorial may be forced to decrease its level of investment in product development or scale back its operations.
6
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its four wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements in accordance with the provisions under ASC Topic 810 Consolidation.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the amounts of expenses during the reporting period. On an ongoing basis, the Company’s management evaluates its estimates, judgments, and methodologies. Significant estimates and assumptions in the consolidated financial statements include those related to warrant liabilities, convertible promissory notes and stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
Collaboration Arrangements and Partnership Agreements
The Company enters into collaborative arrangements with various parties individually through joint development agreements (“JDAs”) to evaluate and test its technology. The agreements are executed in anticipation of entering into either a purchasing agreement for the Company’s sellable products or jointly developing a commercialized product. As part of the JDAs, the counterparty may either reimburse the Company for certain costs incurred through a fixed fee payment or per unit payment or share certain costs with the Company.
The Company assesses each collaborative arrangement to determine whether it is in scope for ASC Topic 808, Collaborative Arrangements (“ASC 808”). In making the determination, the Company considers whether the arrangement involves joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. All of the JDAs entered into by the Company have been concluded to be arrangements within the scope of ASC 808. As a result, payments received/paid from/to the counterparties have been netted against the research and development expenses incurred by the Company.
The Company assesses each collaborative arrangement to determine whether it is in scope for ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). In making the determination, the Company considers if some or all aspects of the arrangement represent a transaction with a customer. All of the JDAs entered into by the Company to date have been concluded to be arrangements outside the scope of ASC 606. As a result, no revenue has been recognized by the Company.
For the three months ended March 31, 2026, and 2025, the Company recognized approximately $3,410 and $34, respectively in expense reimbursements from arrangements, which are recorded net within research and development expenses on the condensed consolidated statements of operations. The Company had one partner that accounted for $3,360 in expense reimbursements for the three months ended March 31, 2026.
In February 2026, the Company entered into a new development agreement with PowerCo SE (“PowerCo”). The development agreement has various terms and conditions and has a term of fifteen months; however, PowerCo has the right to terminate under certain conditions. The Company entered into this development agreement for purposes of assessing its technology through evaluation and testing of its batteries.
In January 2026, the Company entered into a partnership agreement with a note holder as further described in Note 7. The partnership agreement includes up to $900 of consideration for the performance of research and development services to the note holder.
7
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Deferred Transaction Costs
The Company complies with the requirements of ASC 340, Other Assets and Deferred Costs, with regards to transaction costs. Prior to the completion of the transaction (potential business combination with Cartesian Growth Corporation III) as mentioned in Note 1 of the audited annual consolidated financial statements for the year ended December 31, 2025, direct transaction costs are capitalized as deferred transaction costs. If the transaction is completed, the deferred transaction costs are charged to additional paid-in capital and offset the proceeds received from the potential business combination. As of March 31, 2026, and December 31, 2025, the Company had $3,468 and $1,423 of deferred transaction costs incurred, respectively.
Convertible Promissory Notes, Fair Value
During January 2026, the Company entered into Note Purchase Agreements and a Convertible Promissory Note Agreement pursuant to which it could receive proceeds up to $5,340 (the “January 2026 Notes”) from new investors. The Company determined that it is eligible for the fair value option election in connection with the Convertible Promissory Notes. The Convertible Promissory Notes meet the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the fair value option under ASC Topic 825 Financial Instruments (“ASC 825”). At the date of issuance, the fair value of the Convertible Promissory Notes were derived using the scenario-based method (“SBM”) as further described in Note 3. The fair value option election was made to enhance the relevance and transparency of information presented related to the features embedded in the Convertible Promissory Notes.
Changes in the fair value of the Convertible Promissory Notes are recorded as gains or losses in the Company’s consolidated statements of operations in each reporting period. For the three months ended March 31, 2026, the Company recorded a loss on the change in fair value of convertible promissory notes of $300.
Recently Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. After completion of the business combination described in Note 15, the Company expects it will be considered an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “Jobs Act”). The Jobs Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period and, as a result, the Company will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides optional practical expedients intended to simplify the application of the current expected credit loss model to current trade accounts receivable and current contract assets arising from revenue transactions under Topic 606. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company adopted the guidance effective January 1, 2026. The adoption did not have a material impact on its accounting policies, financial position, results of operations, or cash flows, given the short-term nature and historically no loss experience of its trade receivables and contract assets.
New Accounting Pronouncements – Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) (“ASU 2024-03”), requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The amendment in this update applies to all public business entities and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the provisions of the amendments and the impact on its disclosures.
8
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 3 - Fair Value Measures
The Company’s financial assets subject to fair value measurements on a recurring basis. The following table presents information about the Company’s financial assets and liabilities measured at fair value and the level of input utilized to determine such fair values (in thousands):
| Fair value measurements as of March 31, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Money market (included in cash and cash equivalents) | $ | 10,245 | $ | 10,245 | $ | - | $ | - | ||||||||
| Money market (included in restricted cash) | 884 | 884 | - | - | ||||||||||||
| Total Assets | $ | 11,129 | $ | 11,129 | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Warrant liability Series B-1 | $ | 681 | $ | - | $ | - | $ | 681 | ||||||||
| Warrant liability Series D | 2,803 | - | - | 2,803 | ||||||||||||
| Convertible promissory notes – related parties | 20,296 | - | - | 20,296 | ||||||||||||
| Convertible promissory notes | 4,600 | - | - | 4,600 | ||||||||||||
| Total Liabilities | $ | 28,380 | $ | - | $ | - | $ | 28,380 | ||||||||
| Fair value measurements as of December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Money market (included in cash and cash equivalents) | $ | 14,152 | $ | 14,152 | $ | - | $ | - | ||||||||
| Money market (included in restricted cash) | 881 | 881 | - | - | ||||||||||||
| Total Assets | $ | 15,033 | $ | 15,033 | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Warrant liability Series B-1 | $ | 608 | $ | - | $ | - | $ | 608 | ||||||||
| Warrant liability Series D | 2,770 | - | - | 2,770 | ||||||||||||
| Convertible promissory notes – related parties | 18,889 | - | - | 18,889 | ||||||||||||
| Convertible promissory notes | - | - | - | - | ||||||||||||
| Total Liabilities | $ | 22,267 | $ | - | $ | - | $ | 22,267 | ||||||||
9
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
The following table presents a roll-forward of the aggregate fair values of the Company’s Warrant liabilities and the Company’s Convertible promissory notes for which fair value is determined by Level 3 inputs (in thousands):
| Convertible | ||||||||||||||||||||
| Promissory | ||||||||||||||||||||
| Warrant | Warrant | Notes | Convertible | |||||||||||||||||
| Liability | Liability | Related | Promissory | |||||||||||||||||
| Total | Series B - 1 | Series D | Parties | Notes | ||||||||||||||||
| December 31, 2024 | $ | 1,148 | $ | 114 | $ | 1,034 | $ | - | $ | - | ||||||||||
| Issuance of convertible promissory notes | - | - | - | - | - | |||||||||||||||
| Loss on issuance | - | - | - | - | - | |||||||||||||||
| Change in fair value | - | - | - | - | - | |||||||||||||||
| March 31, 2025 | $ | 1,148 | $ | 114 | $ | 1,034 | $ | - | $ | - | ||||||||||
| Issuance of convertible promissory notes | 10,000 | - | - | 10,000 | - | |||||||||||||||
| Loss on issuance | 4,500 | - | - | 4,500 | - | |||||||||||||||
| Change in fair value | 6,619 | 494 | 1,736 | 4,389 | - | |||||||||||||||
| December 31, 2025 | $ | 22,267 | $ | 608 | $ | 2,770 | $ | 18,889 | $ | - | ||||||||||
| Issuance of convertible promissory notes | 4,300 | - | - | - | 4,300 | |||||||||||||||
| Loss on issuance | - | - | - | - | - | |||||||||||||||
| Change in fair value | 1,813 | 73 | 33 | 1,407 | 300 | |||||||||||||||
| March 31, 2026 | $ | 28,380 | $ | 681 | $ | 2,803 | $ | 20,296 | $ | 4,600 | ||||||||||
Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses, and other current liabilities.
Warrant Liability Series B-1
In connection with the issuance of Series B-1 redeemable convertible preferred stock of the Company (“Series B-1”) on October 28, 2019, the Company entered into a warrant agreement with Massachusetts Development Finance Agency, or its registered assignees to purchase 19,930 Series B-1 redeemable convertible preferred stock (“Series B-1 Warrant Agreements”). The warrant was issued at a purchase price of $0.81 per share, with a maturity date of February 1, 2029, or the closing of the Company’s Initial Public Offering.
Warrant Liability Series D
In connection with the issuance of Series D redeemable convertible preferred stock of the Company (“Series D”) on November 30, 2021, the Company entered into a warrant for preferred stock with each of Mercedes-Benz Investment Company LLC and Stellantis(each a “Holder”) (“Series D Agreement”). Upon closing of the Series D Agreement, Mercedes-Benz Investment Company LLC and its affiliates (“Mercedes-Benz”) and Stellantis became related parties to the Company. During 2022, the Warrant Agreements were amended and restated with both Stellantis and Mercedes-Benz to eliminate certain milestone-based provisions. The Amended Warrants modified the original agreements by setting the number of shares issuable upon exercise at a fixed 137,814 shares per Holder at a fixed price of $27.2105 per share. The warrants have a maturity date of February 1, 2029, or the closing of the Company’s Initial Public Offering. The Amended Warrants remain consistent with the Warrant Agreements to require settlement through the issuance of the then most senior redeemable convertible preferred stock of the Company to the Holder. At inception, the monetary value of the obligation is based on a fixed monetary amount known at inception.
To estimate the fair value of the Series B-1 and D Warrant Agreements, the Company applied the Probability Weighted Equity Return Method (“PWERM”). Under this approach, the Company develops multiple scenarios and ascribes a probability weighting to each scenario and related estimated fair value. Key inputs and assumptions in the PWERM include the probability and the estimated value of the security in each liquidity scenario, in addition to scenario specific assumptions. The two scenarios used in the valuation of the Series B-1 and D Warrant Agreements are a SPAC Exit scenario and Option Pricing Method scenario. The Company applied a 90% weighting to the SPAC Exit Scenario and 10% to the Option Pricing Method (“OPM”) scenario as of March 31, 2026. The Company applied a 75% weighting to the SPAC Exit Scenario and 25% to the OPM scenario as of December 31, 2025.
10
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
The following are assumptions used in valuing the Series B-1 and D Warrant Agreements in the SPAC Exit scenario, as of March 31, 2026:
| Series B-1 | Series D | |||||||
| Discount rate | 25 | % | 25 | % | ||||
| Expected life (in years) | 0.20 | 0.20 | ||||||
| Future projected price per share | $ | 37.76 | $ | 37.76 | ||||
| Strike price | $ | 0.08 | $ | 27.21 | ||||
The following are assumptions used in valuing the Series B-1 and D Warrant Agreements in the SPAC Exit scenario, as of December 31, 2025:
| Series B-1 | Series D | |||||||
| Discount rate | 25 | % | 25 | % | ||||
| Expected life (in years) | 0.38 | 0.38 | ||||||
| Future projected price per share | $ | 37.76 | $ | 37.76 | ||||
| Strike price | $ | 0.08 | $ | 27.21 | ||||
The significant unobservable inputs used in the fair value measurement of the Series B-1 and D warrant liability in the SPAC Exit scenario are the discount rate and the expected life. The future projected price per share is estimated based on the SPAC purchase price as outlined in the Company’s Business Combination Agreement. The discount rate reflects current market assessments of the time of value of money and the risks specific to the Company given its stage of development.
The expected life is based upon the fact that the Warrant Agreements would not persist through a liquidity event, and therefore the expected life is based upon management’s estimated holding period to an exit/liquidity event.
The following are the assumptions used in valuing the Series B-1 and D Warrant Agreements in the OPM scenario, as of March 31, 2026:
| Series B-1 | Series D | |||||||
| Share value | $ | 18.16 | $ | 33.61 | ||||
| Assumed volatility | 90 | % | 37 | % | ||||
| Assumed risk-free interest rate | 3.8 | % | 3.8 | % | ||||
| Expected life (in years) | 2 | 2 | ||||||
| Expected dividends | - | - | ||||||
The following are the assumptions used in valuing the Series B-1 and D Warrant Agreements in the OPM scenario, as of December 31, 2025:
| Series B-1 | Series D | |||||||
| Share value | $ | 18.14 | $ | 33.71 | ||||
| Assumed volatility | 90 | % | 37 | % | ||||
| Assumed risk-free interest rate | 3.5 | % | 3.5 | % | ||||
| Expected life (in years) | 2 | 2 | ||||||
| Expected dividends | - | - | ||||||
The significant unobservable inputs used in the fair value measurement of the Series B-1 and D warrant liability in the OPM scenario are the equity value of the Company, the expected life and assumed volatility. The equity value of the Company is derived from a discounted cash flow analysis based on the Company’s best estimates of future cash flows. The assumptions underlying these valuations include projected future revenue and cash flows, discount rates, market adjustments and multiples, selection of comparable companies, the lack of marketability of our equity, and probability of possible future events, including the expected time to liquidity. These underlying assumptions represent our best estimates at the time they were made, which involves inherent uncertainty and the application of judgment. Changes to the key assumptions and estimates used in the valuations could result in materially different fair values of our common and preferred stock at each valuation date.
11
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
The expected life is based upon the fact that the Warrant Agreements would not persist through a liquidity event, and therefore the expected life is based upon management’s estimated holding period to an exit/liquidity event. The expected volatility is based upon observed historical volatilities of a cohort of guideline public companies. Equity allocation mechanics are based upon the distribution waterfall as outlined in the Company’s operating agreement. Significant increases (decreases) in the equity value, the expected life, or the assumed volatility, could result in significantly higher (lower) fair value measurements.
As of March 31, 2026, the Company had reserved 295,558 shares of common stock for potential conversion of Series B-1 and D Warrants.
Convertible Promissory Notes – Related Parties
To estimate the fair value of the August 2025 Notes, the Company applied the SBM method. The fair value of the August 2025 Notes includes an estimate of the value of accrued interest. The significant unobservable inputs used in the fair value measurement of the August 2025 Notes are the underlying share value, the expected life, assumed volatility, assumed discount rate, share value, and the probability of scenarios.
The assumptions used in determining the fair value of the August 2025 Notes under the SBM during the three months ended March 31, 2026, were as follows:
Series D Three
Months Ended | ||||
| SPAC Exit Scenario | 85 | % | ||
| Qualified Financing Scenario | 7.5 | % | ||
| Dissolution Scenario | 7.5 | % | ||
| Assumed volatility | 40 | % | ||
| Assumed risk-free interest rate | 3.7 | % | ||
| Expected life (in years) | .50 | |||
| Assumed discount rate | 20 | % | ||
| Share value | $ | 37.35 | ||
The assumptions used in determining the fair value of the August 2025 Notes under the SBM as of December 31, 2025, were as follows:
Series D December 31, 2025 | ||||
| SPAC Exit Scenario | 75 | % | ||
| Qualified Financing Scenario | 15 | % | ||
| Dissolution Scenario | 10 | % | ||
| Assumed volatility | 40 | % | ||
| Assumed risk-free interest rate | 3.50 | % | ||
| Expected life (in years) | .75 | |||
| Assumed discount rate | 20 | % | ||
| Share value | $ | 34.47 | ||
To estimate the share value of the Series D redeemable convertible preferred stock we used a PWERM. The two scenarios used in the estimation of the Series D redeemable convertible preferred stock are a SPAC Exit scenario and Option Pricing Method scenario. As of March 31, 2026, we applied a 85% weighting to the SPAC Exit scenario and 15% weighting to the Option Pricing Method scenario.
12
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Convertible Promissory Notes
To estimate the fair value of the January 2026 Notes, the Company applied the SBM method. The fair value of the January 2026 Notes includes an estimate of the value of accrued interest. The significant unobservable inputs used in the fair value measurement of the January 2026 Notes are the underlying share value, the expected life, assumed volatility, assumed discount rate, share value, and the probability of scenarios.
The assumptions used in determining the fair value of the January 2026 Notes under the SBM during the three months ended March 31, 2026, were as follows:
| Three Months
Ended March 31, 2026 | January 26, 2026 | |||||||
| SPAC Exit Scenario | 85 | % | 80 | % | ||||
| Qualified Financing Scenario | 7.5 | % | 10 | % | ||||
| Dissolution Scenario | 7.5 | % | 10 | % | ||||
| Expected life (in years) | .50 | .68 | ||||||
| Assumed discount rate | 20 | % | 20 | % | ||||
Note 4 - Property and Equipment
Property and equipment, net consists of the following (in thousands):
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Leasehold improvements | $ | 10,680 | $ | 10,680 | ||||
| Machinery and equipment | 16,081 | 16,315 | ||||||
| Furniture and fixtures | 414 | 419 | ||||||
| Computer and software | 211 | 216 | ||||||
| Buildings | 1,160 | 1,227 | ||||||
| Building Fixtures | 1,256 | 1,206 | ||||||
| Land | 3,196 | 3,382 | ||||||
| Advances on purchases of property and equipment | 617 | 632 | ||||||
| Total | $ | 33,615 | $ | 34,077 | ||||
| Accumulated depreciation | (13,409 | ) | (12,801 | ) | ||||
| Total | $ | 20,206 | $ | 21,276 | ||||
Advances on purchases of property and equipment are payments made before the related asset (such as machinery and equipment) are delivered and are not depreciated until the asset is placed in service.
Depreciation expense totaled $882 and $1,984 for the three months ended March 31, 2026, and 2025, respectively, and was recorded as operating expenses in the condensed consolidated statements of operations. Depreciation expense was allocated as $850 and $1,775 to research and development expense, net and $32 and $209 to selling, general and administrative expenses for the three months ended, March 31, 2026, and 2025, respectively.
13
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 5 - Accrued Expenses
Accrued expenses consisted of the following (in thousands):
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Accrued compensation and benefits | $ | 838 | $ | 760 | ||||
| Accrued audit and tax services | 166 | 67 | ||||||
| Accrued legal and professional | 320 | 172 | ||||||
| Accrued transaction costs | 2,327 | 1,423 | ||||||
| Accrued other | 477 | 559 | ||||||
| Total accrued expenses | $ | 4,128 | $ | 2,981 | ||||
NOTE 6 – CONVERTIBLE PROMISSORY NOTES – RELATED PARTIES
The following table shows the components of the Company’s indebtedness (in thousands):
| Three Months Ended | ||||
| March 31, 2026 | ||||
| Total convertible promissory notes - related parties, at fair value as of December 31, 2025 | $ | 18,889 | ||
| Change in fair value | 1,407 | |||
| Total convertible promissory notes - related parties, at fair value | $ | 20,296 | ||
14
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
NOTE 7 – CONVERTIBLE PROMISSORY NOTES
During January 2026, the Company issued the January 2026 Notes pursuant to which it could receive proceeds up to $5,340. The January 2026 Notes bear interest of 5% per annum and mature on either August 1, 2028 or January 1, 2029. The January 2026 Notes provide the holders with certain conversion features including: a mandatory conversion upon a qualified financing event, an optional conversion upon a non-qualified financing event and an optional conversion upon an acquisition of the Company.
Concurrently with the issuance of the January 2026 Notes, the Company entered into a partnership agreement with a note holder. Pursuant to the partnership agreement, the Company may receive up to $2,240 in total consideration. The deliverables of the partnership agreement coincide with payments to the Company on the convertible note. Deliverables under the partnership agreement are aligned with, and contingent upon, funding milestones under the convertible note, which provide for up to $1,340 in aggregate principal funding to the Company of which $300 in proceeds have been received as of March 31, 2026, with an issuance cost of $37. The note holder had the option to request funding in part or in full. Subsequently, on May 18, 2026, the Company received the remaining proceeds of $1,040. In addition, the partnership agreement includes up to $900 of consideration for the performance of research and development services to the note holder.
The following table shows the components of the Company’s indebtedness (in thousands):
| Three Months Ended | ||||
| March 31, 2026 | ||||
| Convertible promissory notes principal balance | $ | 4,300 | ||
| Change in fair value | 300 | |||
| Total convertible promissory notes, at fair value | $ | 4,600 | ||
15
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 8 - Commitments and Contingencies
Leases
The Company’s leases include various operating leases for offices, laboratory space, and storage space, expiring at various dates through November 2032. Many leases include one or more options to renew. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably certain. The Company’s finance lease for the facility in Methuen, Massachusetts was terminated in October 2025. Fixed rent generally escalates each year, and the Company is responsible for a portion of the landlords’ operating expenses such as property tax, insurance, and common area maintenance.
The components of lease expenses recorded within the condensed consolidated statements of operations for the three months ended March 31, 2026, and 2025 are as follows (in thousands):
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Finance lease costs: | ||||||||
| Amortization of right-of-use assets | $ | - | $ | 207 | ||||
| Interest on financing lease liabilities | - | 185 | ||||||
| Total finance lease costs | - | 392 | ||||||
| Operating lease costs: | ||||||||
| Operating lease expenses | 480 | 497 | ||||||
| Variable lease expenses | 217 | 199 | ||||||
| Short-term lease expenses | - | 18 | ||||||
| Total operating lease costs | 697 | 714 | ||||||
| Total lease expenses | $ | 697 | $ | 1,106 | ||||
Other information related to agreements treated as finance and operating leases was as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating cash flows from operating leases | $ | (489 | ) | $ | (493 | ) | ||
| Financing cash flows from finance lease | $ | - | $ | (353 | ) | |||
| As of | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Weighted-average remaining lease term – operating leases (years) | 5.5 | 5.9 | ||||||
| Weighted-average discount rate – operating leases | 8.04 | % | 8.05 | % | ||||
| Remaining lease term – finance lease (years) | - | - | ||||||
| Discount rate – finance lease | N/A | N/A | ||||||
The remaining lease obligations are substantially unchanged from year end.
Legal Proceedings
From time to time, the Company may be subject to legal claims or be party to legal proceedings arising in the normal course of business. While the outcome of such claims or proceedings cannot be predicted with certainty, the Company’s management expects that any such liabilities, to the extent not provided for by insurance or otherwise, would not have a material effect on the Company’s financial condition, results of operations or cash flows.
The Company is party to an arbitration, initiated on March 14, 2025, before the International Centre for Dispute Resolution. A hearing was conducted in June 2026, and post-hearing submission are due in July 2026. The hearing is regarding a contractual dispute in which a vendor is seeking $4,900 in damages, interest, and other relief. The Company does not believe that such payment is owed, is defending against such claims, and it has asserted counterclaims. The Company believes that a loss is neither probable nor remote and is unable to reasonably estimate the amount or range of possible loss due to the stage of the proceedings and the uncertainty regarding the resolution of the competing claims.
16
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Note 9 - Redeemable Convertible Preferred Stock
No redeemable convertible preferred stock was issued, converted, or redeemed during the three months ended March 31, 2026. Total carrying value remains $249,652. Terms and rights are unchanged from the audited annual consolidated financial statements for the year ended December 31, 2025.
Note 10 - Common Stock
The Company was authorized to issue 32,000,000 shares of its common stock as of March 31, 2026, and December 31, 2025. The voting, dividend, and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preference of the Preferred Stockholders set forth in Note 9 - Redeemable Convertible Preferred Stock.
Each share of common stock entitles the holder to one vote, together with the Preferred Stockholders, on all matters submitted to a vote of the Company’s stockholders. Terms and rights are unchanged from the audited annual consolidated financial statements for the year ended December 31, 2025.
Total common shares issued and outstanding were 5,068,690 as of March 31, 2026.
Note 11 - Stock Based Compensation
Equity Compensation Plans
The 2019 Stock Incentive Plan (the “2019 Plan”), was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate the grants of stock options and restricted stock to employees, officers and directors, non-employee advisors and consultants in exchange for certain services. Awards granted under the 2019 Plan are issued at the discretion of the Board of Directors. Awards generally vest over four years; however, vesting terms are subject to terms set forth by the Board of Directors when the award is granted. Stock options granted under the 2019 Plan expire 10 years from the date of grant, which was subsequently amended.
Share-Based Compensation Awards
The Company estimates the fair value of stock options with service conditions and performance conditions using the Black-Scholes valuation model. The resulting fair value is recorded as compensation cost on a straight-line basis over the requisite service period. The key inputs and assumptions used to estimate the fair value of stock options include the value of the underlying stock at grant date, expected term, stock price volatility, the appropriate annual risk-free rate, and expected annual dividend yield.
Given the Company’s lack of historical data, the Company’s estimate of the expected term was calculated in accordance with the simplified method. Additionally, the Company has identified publicly traded comparable companies with similar characteristics (e.g., lithium battery manufacturing) whose historical stock price volatilities were used in the estimation of expected volatility. The risk-free interest rate is based on the U.S. Treasury zero coupon instrument with a duration/term that equals the expected term calculated by the Company.
For stock options with performance conditions, vesting is also subject to service conditions; however, the number of options that ultimately vest also depends on the attainment of certain predefined performance criteria. Note that stock options with performance conditions were issued to two strategic consultants of the Company and the performance criteria are related to the achievement of certain third-party purchase orders and contracts. No stock options with performance conditions were granted during the three months ended March 31, 2026.
17
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
The assumptions made for purposes of estimating the fair value under the Black Scholes valuation model for stock options granted during the three months ended March 31, 2026 and 2025 were as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Expected term of options (years) | 5.00 - 6.07 | 5.00 - 6.06 | ||||||
| Risk free interest rate | 3.83% - 3.98% | 4.02% – 4.43% | ||||||
| Volatility | 60.92% 65.79% | 64.37% 65.81% | ||||||
| Expected dividend yield | - | - | ||||||
| Common stock grant date fair value per share | $25.18 - $27.78 | $3.23 | ||||||
| Option grant date fair value per share | $13.89 - $17.42 | $1.87 - $2.03 | ||||||
For the three months ended March 31, 2026, and 2025, the Company recorded stock-based compensation expense of $1,534 and $3,857, respectively. The following table provides stock-based compensation expense by class reflected in the Company’s condensed consolidated statements of operations related to stock options (including stock options with performance conditions) for the three months ended March 31, 2026, and 2025 (in thousands):
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Research and development | $ | 240 | $ | 347 | ||||
| Selling, general and administrative | 1,294 | 3,510 | ||||||
| Total | $ | 1,534 | $ | 3,857 | ||||
Stock Options
The following table summarizes stock option activity for the three months ended March 31, 2026, and 2025:
| Number
of Options | Weighted -Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate (in thousands) | |||||||||||||
| Outstanding as of December 31, 2024 (1) | 5,085,269 | $ | 6.78 | 7.28 | $ | 1,172 | ||||||||||
| Granted | 594,691 | 3.23 | ||||||||||||||
| Exercised | (300 | ) | 8.21 | - | ||||||||||||
| Cancelled or forfeited | (555,215 | ) | 3.86 | |||||||||||||
| Outstanding as of March 31, 2025 | 5,124,445 | $ | 3.00 | 7.11 | $ | 1,172 | ||||||||||
| Options vested and expected to vest as of March 31, 2025 (2) | 5,004,445 | $ | 3.00 | 7.08 | ||||||||||||
| Exercisable as of March 31, 2025 | 3,696,298 | $ | 2.91 | 6.68 | $ | 1,172 | ||||||||||
18
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
| Number
of Options | Weighted- Average Exercise Price | Weighted- | Aggregate (in thousands) | |||||||||||||
| Outstanding as of December 31, 2025 (3) | 5,546,772 | $ | 3.83 | 6.94 | $ | 31,996 | ||||||||||
| Granted | 33,580 | 25.45 | ||||||||||||||
| Exercised | (29,252 | ) | 3.10 | 667 | ||||||||||||
| Cancelled or forfeited | (12,179 | ) | 5.08 | |||||||||||||
| Outstanding as of March 31, 2026 | 5,538,921 | $ | 4.03 | 6.72 | $ | 131,528 | ||||||||||
| Options vested and expected to vest as of March 31, 2026 (4) | 5,448,921 | $ | 4.05 | 6.71 | ||||||||||||
| Exercisable as of March 31, 2026 | 4,436,262 | $ | 3.06 | 6.18 | $ | 109,673 | ||||||||||
| (1) | Includes 245,628 of stock options subject to performance conditions |
| (2) | Does not include 120,000 stock options subject to performance conditions which are improbable as of March 31, 2025. |
| (3) | Includes 215,628 of stock options subject to performance conditions |
| (4) | Does not include 90,000 stock options subject to performance conditions which are improbable as of March 31, 2026. |
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of March 31, 2026 there was $6,803 of total unrecognized stock-based compensation expense to be recognized over a weighted-average period of 4 years, respectively. As of March 31, 2026, the Company had $656 of total unrecognized stock-based compensation expense included in the total above for stock options with performance conditions currently considered not probable of achievement.
Note 12 - Net Loss Per Common Share
Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period.
Basic and diluted losses per share are calculated as follows (in thousands, except share and per share data):
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Net loss attributable to common stockholders—basic and diluted | $ | (8,575 | ) | $ | (12,870 | ) | ||
| Denominator: | ||||||||
| Weighted average number of common shares outstanding | 5,056,994 | 5,016,149 | ||||||
| Net loss per share attributable to common stockholders—basic and diluted | $ | (1.70 | ) | $ | (2.57 | ) | ||
19
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
The following common stock equivalents were excluded from the calculation of diluted loss per share attributable to common stockholders because their inclusion would have been anti-dilutive:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Series A-1 redeemable convertible preferred stock | 1,234,568 | 1,234,568 | ||||||
| Series A-2 redeemable convertible preferred stock | 2,362,204 | 2,362,204 | ||||||
| Series B-1 redeemable convertible preferred stock | 2,718,539 | 2,718,539 | ||||||
| Series C-1 redeemable convertible preferred stock | 3,570,724 | 3,570,724 | ||||||
| Series C-2 redeemable convertible preferred stock | 2,513,698 | 2,513,698 | ||||||
| Series D redeemable convertible preferred stock | 5,950,204 | 5,950,204 | ||||||
| Preferred stock warrants | 295,558 | 295,558 | ||||||
| Preferred stock issued upon conversion of convertible promissory notes (1) | 560,024 | - | ||||||
| Options to purchase common stock | 5,538,921 | 5,124,445 | ||||||
| Restricted stock units | 1,394,670 | 1,414,922 | ||||||
| (1) | Due to the multiple conversion options provided for within the Company's convertible promissory notes, the Company applied the if-converted method to the calculation of the anti-dilutive shares underlying such notes to determine the estimated shares that the notes would convert into as of March 31, 2026. This assumption included consideration of the multiple conversion features and applying probability weightings to an assumed price of approximately $38 per share ($19 per share after applying the 50% discount). |
NOTE 13 – SEGMENT INFORMATION
The Company conducts business as a single operating segment. In reaching this conclusion, management considers the definition of the (“CODM”), how the business is defined by the CODM, the nature of the information provided to the CODM, and how that information is used to make operating decisions, allocate resources, and assess performance. The Company’s CODM is the chief executive officer. The results of operations provided to and analyzed by the CODM are at the consolidated level which is the level that the CODM manages the business, allocates resources, makes key resource decisions, and assesses performance.
The key measure of segment profit and loss that the CODM uses to allocate resources and assess performance is the Company’s net loss. The table below shows a reconciliation of the Company’s net loss, including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S. GAAP to the Company’s total net loss in the condensed consolidated statements of operations:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating expenses | ||||||||
| Reimbursement from JDAs and others | $ | 3,410 | $ | 34 | ||||
| Payroll expense | (5,860 | ) | (8,133 | ) | ||||
| Occupancy expense | (859 | ) | (1,497 | ) | ||||
| Professional service expense | (916 | ) | (606 | ) | ||||
| Research and development expense | (933 | ) | (537 | ) | ||||
| Depreciation expense | (882 | ) | (1,984 | ) | ||||
| Other operating expense | (451 | ) | (399 | ) | ||||
| Loss from operations | $ | (6,491 | ) | $ | (13,122 | ) | ||
| Total other income (expense), net | (2,084 | ) | 252 | |||||
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | ||
Assets provided to CODM are consistent with those reported on the condensed consolidated balance sheet with particular emphasis on the company’s available liquidity, including its cash and cash equivalents reduced by current liabilities. All long-lived assets are maintained in, and all losses are attributable to the United States of America and South Korea.
20
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
NOTE 14 - Related Party Transactions
Collaboration Arrangements
The Company has established JDAs with various partners with some of the partners also making investments in the Company through the purchase of preferred shares. In connection with the Series D Agreements, the Company entered into both Warrant and JDA agreements with Mercedes-Benz and Stellantis.
Uwe Keller, a member of the Company’s Board of Directors, represents Mercedes-Benz who is an investor in the Company’s Preferred Stock and holder of Series D Warrants. For the three months ended March 31, 2026, the Company recognized no expense reimbursements for the services provided under the JDA with Mercedes-Benz. For the three months ended March 31, 2025, the Company recognized $24 in expense reimbursements for the services provided under the JDA with Mercedes-Benz, which are recorded net within research and development expenses on the condensed consolidated statement of operations. There were no amounts due from Mercedes-Benz as of March 31, 2026, and December 31, 2025.
Michael Bly, a member of the Company’s Board of Directors, represents Stellantis who is an investor in the Company’s Preferred Stock and holder of Series D Warrants. For the three months ended March 31, 2026, and 2025, the Company recognized no expense reimbursements for the services provided under the JDA with Stellantis. There were no amounts due from Stellantis as of March 31, 2026. Amounts due from Stellantis totaled $1,000 which are included in receivables under collaboration agreements on the condensed consolidated balance sheets as of December 31, 2025.
In August 2025, the Company modified its existing JDA with Stellantis. The modified JDA required the Company to make a $2,000 payment to Stellantis for services related to the production and testing of a demo fleet. The Company and Stellantis jointly developed a production timeline as outlined in the agreement, which includes deliverables of Stellantis to the Company through June 2027 such as, module and pack safety reports, battery management system results, installation and retrofitting of test cells, and validation results of the demo fleet. In December 2025, the Company prepaid $2,000 to Stellantis for these services. As of March 31, 2026, and December 31, 2025, $40 and $160 are included in other non-current assets, respectively on the condensed consolidated balance sheets. As of March 31, 2026, and December 31, 2025, $910 and $950 are included in prepaid expenses and other current assets, respectively on the condensed consolidated balance sheets. During the three months ended March 31, 2026, $160 of expense was recognized as part of the agreement and is included in research and development expenses on the condensed consolidated statements of operations.
Consulting Arrangements
In March of 2020, the Company entered into a consulting services agreement with Joseph Taylor who also serves as Executive Chairman of the Company’s Board of Directors. For the three months ended March 31, 2026 and 2025, the Company incurred $88 and $44, respectively in expenses for consulting services provided by Joesph Taylor recorded within selling, general and administrative expenses on the condensed consolidated statements of operations. Amounts due to Joseph Taylor totaled $30 and $190 as of March 31, 2026, and December 31, 2025, respectively and are included in accounts payable.
Note 15 - Subsequent Events
The Company has evaluated subsequent events through June 10, 2026.
As discussed in Note 1, on June 5, 2026, upon the closing of the de-SPAC Transaction, the Company became a wholly-owned subsidiary of CGC. Under the BCA, each outstanding Class A ordinary share of CGC (each, a “CGC Class A Share”), each outstanding Class B ordinary share of CGC and each outstanding preference share of CGC was converted into one share of Series A Common Stock, par value $0.00001 per share, (the “PubCo Series A Common Stock”). Each share of Factorial Common Stock (excluding treasury shares, dissenting shares and shares held by the Factorial founders) issued and outstanding as of immediately prior to the Effective Time, was automatically canceled and extinguished and exchanged for a number of shares of PubCo Series A Common Stock equal to the consideration ratio of approximately 3.67 (the “Consideration Ratio”), which was based on an implied Factorial equity value of $1,100,000. Each share of Factorial Common Stock held by the Factorial Founders issued and outstanding as of immediately prior to the Effective Time, was automatically canceled and extinguished and exchanged for a number of shares of Series B Common Stock, par value $0.00001 per share (the “PubCo Series B Common Stock”) equal to the Consideration Ratio. Each share of Factorial Preferred Stock issued and outstanding as of immediately prior to the Effective Time was automatically canceled and extinguished and converted into the right to receive a number of shares of PubCo Series A Common Stock, par value $0.00001 per share, equal to the Consideration Ratio. PubCo received gross proceeds of approximately $112,100 in connection with the de-SPAC Transaction and the sale of a private placement of PubCo Series A Common Stock, prior to the payment of transaction expenses.
21
Factorial Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except share and per share data)
Additionally, and in congruence with the consummation of the de-SPAC transaction, each option to purchase Factorial Common Stock (each, a “Factorial Option”), whether vested or unvested, ceased to represent the right to purchase Factorial Common Shares and was canceled in exchange for options to purchase PubCo Series A Common Stock under the equity incentive plan adopted by CGC in advance of the Closing (the “PubCo Equity Incentive Plan”), in an amount equal to the product of (x) the number shares of Factorial Common Stock subject to such Factorial Option immediately prior to the Effective Time, multiplied by (y) the Consideration Ratio, at an exercise price per share equal to the quotient of (i) the exercise price per share of such Factorial Option immediately prior to the Effective Time, divided by (ii) the Consideration Ratio, and generally subject to the same terms and conditions that applied to the corresponding Factorial Option immediately prior to the Effective Time. Each restricted stock unit award that was outstanding with respect to Factorial Common Stock (each, a “Factorial RSU Award”), whether vested or unvested, ceased to have any rights in respect of the Factorial Common Stock and was canceled in exchange for a restricted stock unit award under the PubCo Equity Incentive Plan that settled in a number of shares of PubCo Series A Common Stock in an amount and subject to such terms and conditions, in each case, as set forth on the allocation schedule, that was generally subject to the same terms and conditions that applied to the corresponding Factorial RSU Award immediately prior to the Effective Time.
On April 1, 2026, the Company modified an outstanding equity award granted to a consultant that included performance based vesting conditions. As a result of the modification, 90,000 previously granted stock options were forfeited. Pursuant to the modification, and contingent upon the closing of the Company’s pending business combination, the Company is required to grant the consultant RSUs with an aggregate grant date fair value of $250. Additionally, the modification provides for the issuance of 100,000 RSUs subject to performance conditions as defined in the amended agreement.
On April 27, 2026, the Company entered into a definitive agreement to sell its wholly-owned subsidiary Factorial Germany GmbH for a total consideration of $6. The transaction will close at a later date, subject to the satisfaction of customary closing conditions in accordance with German law and registration with the German Commercial Register.
On May 18, 2026, the Company received $1,040 of proceeds related to the January 2026 Notes.
On June 5, 2026, the Company entered into an agreement with Clear Street LLC (“Clear Street”), pursuant to which Clear Street agreed to act as capital markets advisor to the Company for a term of twelve months. As consideration for these services, the agreement provides for the issuance to Clear Street of 100,000 shares of PubCo Series A Common Stock.
22
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
(in thousands, except share and per share data, unless otherwise stated)
Capitalized terms used but not defined in this Exhibit 99.2 shall have the meanings ascribed to them in the Current Report on Form 8-K (“Form 8-K”) filed with the Securities and Exchange Commission (the “Commission”) on June 10, 2026 and, if not defined in the Form 8-K, capitalized terms used but not defined in this Exhibit 99.2 shall have the meanings ascribed to them in the definitive proxy statement/prospectus filed by Cartesian Growth Corporation III with the Commission on May 6, 2026, prior to the consummation of the business combination (the “Proxy Statement/Prospectus”).
Introduction
The following is selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination and related transactions.
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 gives pro forma effect to the Business Combination as if it was consummated on March 31, 2026. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026 and the year ended December 31, 2025 give pro forma effect to the Business Combination as if it was consummated on January 1, 2025, the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following:
| · | Factorial’s unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026, included as Exhibit 99.1 to the Form 8-K; |
| · | Factorial’s audited consolidated financial statements for the year ended December 31, 2025, included in the Proxy Statement/Prospectus; |
| · | CGC’s unaudited condensed financial statements as of and for the three months ended March 31, 2026, included in the Quarterly Report on Form 10-Q filed with the Commission on May 15, 2026; and |
| · | CGC’s audited financial statements for the year ended December 31, 2025, included in the Annual Report on Form 10-K filed with the Commission on March 23, 2026; and |
| · | Factorial Common Stock is calculated based on shares outstanding as of the Merger Effective Time, and shares underlying vested and outstanding Factorial Options as of the Merger Effective Time for purposes of determining the Consideration Ratio. |
The unaudited pro forma condensed combined financial information should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Factorial” included in Exhibit 99.3 to the Form 8-K and incorporated by reference.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and does not necessarily reflect what the actual results of operations of the combined company would have been had the Business Combination occurred on March 31, 2026 or January 1, 2025, respectively. The unaudited pro forma condensed combined financial information has been prepared, in accordance with Article 11 of Regulation S-X and is for informational purposes only. It is subject to several uncertainties and assumptions as described in the accompanying notes.
Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.
Description of the Transaction
On December 17, 2025, CGC entered into the Business Combination Agreement with Factorial and Merger Sub, pursuant to which on June 5, 2026 (the “Merger Effective Time”) Merger Sub merged with and into Factorial, with Factorial surviving the merger as a wholly-owned subsidiary of CGC.
The board of directors of CGC has approved the Business Combination and the Domestication. In connection with, and as part of, the Domestication, CGC became a Delaware corporation and changed its corporate name to Factorial Energy, Inc. (“PubCo”) and all outstanding securities of CGC converted into securities of PubCo, as described in more detail in the Proxy Statement/Prospectus.
By virtue of the Merger and without any action on the part of any Party or any other person, the Aggregate Merger Consideration, equal to the Equity Value of $1.1 billion, consisting of a number of shares of PubCo Common Stock equal to the Equity Value divided by the Redemption Price, was issued as set forth in (i)-(iv) or reserved for issuance as set forth in (v)-(vi) below:
| i. | At the Merger Effective Time, each share of Factorial Common Stock that was issued and outstanding as of immediately prior to the Merger Effective Time (excluding treasury shares, dissenting shares and shares held by the Factorial Founders) was automatically canceled and converted into the right to receive a corresponding number of shares of PubCo Series A Common Stock equal to the Consideration Ratio and each share of Factorial’s capital stock that was issued and outstanding as of immediately prior to the Merger Effective Time held by the Factorial Founders was automatically canceled and converted into the right to receive a corresponding number of shares of PubCo Series B Common Stock equal to the Consideration Ratio; |
| ii. | The number of shares of Factorial Common Stock set forth in (i) above gave effect to: |
| a. | The conversion of each outstanding convertible debt instrument including accrued interest (including the Factorial Convertible Notes) into Factorial Common Stock pursuant to its terms; |
| b. | The conversion of each issued and outstanding share of Factorial Preferred Stock into a number of shares of Factorial Common Stock in accordance with the terms of Section 5.1 of the Factorial Certificate of Incorporation in effect immediately prior to the Merger Effective Time; and |
| c. | The conversion of each issued and outstanding Factorial Warrant into a number of shares of Factorial Common Stock in accordance with the terms of the corresponding warrant agreements; |
| iii. | each share of Factorial Common Stock held immediately prior to the Merger Effective Time by Factorial as treasury stock was automatically cancelled and extinguished, and no consideration was paid with respect thereto; |
| iv. | each share of capital stock of Merger Sub issued and outstanding immediately prior to the Merger Effective Time was automatically cancelled and extinguished and converted into one share of Factorial Common Stock; |
| v. | each outstanding and unexercised vested Factorial Option to purchase shares of Factorial Common Stock became a PubCo Option containing the same terms, conditions, vesting and other provisions as were historically applicable to such Factorial Options and each resulting PubCo Option became exercisable for the number of shares of PubCo Series A Common Stock equal to the Consideration Ratio multiplied by the number of shares of Factorial common stock subject to the Factorial Option as of immediately prior to the Merger Effective Time, rounded down to the nearest whole share, at an exercise price equal to the per share exercise price of the Factorial Option divided by the Consideration Ratio, rounded up to the nearest whole cent; and |
| vi. | each Factorial RSU that was outstanding with respect to shares of Factorial Common Stock was cancelled in exchange for a PubCo RSU under the PubCo Incentive Plan containing the same terms, conditions, vesting and other provisions as were historically applicable to such Factorial RSU, and each resulting PubCo RSU will settle into a number of shares of PubCo Series A Common Stock equal to a number of shares of PubCo Series A Common Stock as set forth on an allocation schedule, rounded down to the nearest whole share. |
In addition, PubCo consummated the PIPE Financing pursuant to the PIPE Purchase Agreements. Under the Institutional Investor Stock Purchase Agreement, the Institutional Investor committed to purchase 7,500,000 shares of PubCo Series A Common Stock for an aggregate purchase price of $75.0 million at $10.00 per share. Prior to Closing, the Institutional Investor purchased 2,000,000 Class A ordinary shares of CGC in open market or privately negotiated transactions, which reduced its remaining PIPE Financing purchase commitment on a share-for-share basis. Accordingly, through the PIPE Financing, PubCo issued 5,500,000 shares of PubCo Series A Common Stock to the Institutional Investor for an aggregate purchase price of $55.0 million. Under the Sponsor Investor Stock Purchase Agreement, the Sponsor Investor committed to purchase 2,400,168 shares of PubCo Series A Common Stock (based on the Merger Effective Time Redemption Price) for an aggregate purchase price of $25.0 million. Prior to Closing, the Sponsor Investor purchased 1,470,764 Class A ordinary shares of CGC in the open market, which reduced its remaining PIPE Financing purchase commitment on a share-for-share basis. Accordingly, through the PIPE Financing, PubCo issued 929,404 shares of PubCo Series A Common Stock to the Sponsor Investor at the closing Redemption Price of $10.41593671 per share, for an aggregate purchase price of approximately $9.7 million.
In connection with the Institutional Investor’s open market purchases, and pursuant to the Letter Agreement among the Institutional Investor, Factorial and the Sponsor executed on May 18, 2026, the Sponsor transferred at Closing 90,000 shares of PubCo Series A Common Stock to the Institutional Investor, representing the $900,000 Differential Amount divided by $10.00, and Factorial reimbursed the Sponsor in cash for such Differential Amount. In addition, pursuant to the Investor Stock Purchase Agreements, the Sponsor transferred, directly or indirectly through forfeiture and reissuance, an aggregate of 750,000 shares of PubCo Series A Common Stock to the Institutional Investor and 250,000 shares of PubCo Series A Common Stock to the Sponsor Investor. After giving effect to these Sponsor share transfers , the Institutional Investor received 6,340,000 shares for $55.0 million, or an effective purchase price of approximately $8.68 per share, and the Sponsor Investor effectively received 1,179,404 shares for $9.7 million, or an effective purchase price of approximately $8.21 per share. Note that based on the nature of such Sponsor to investor transfers, no expense is recorded by PubCo as a result of the transfers.
The diagram below depicts a simplified version of the combined company’s organizational structure immediately following the consummation of the Business Combination and the PIPE Financing:
Set forth below is a calculation, on a per CGC Class A Ordinary Share basis, of the approximate net cash received by PubCo from the Trust Account and PIPE Financing. Such calculations are based upon (i) cash held in the Trust Account as of March 31, 2026 assuming the Merger Effective Time redemption price of $10.41593671 (“Redemption Price”) per Public Share and (ii) $64,681 of gross cash proceeds received from the PIPE Financing, and (iii) approximate transaction expenses of $22,057 including the estimated PIPE Financing transaction expenses of $3,750, Factorial’s approximate transaction expenses of $10,259, and CGC’s approximate transaction expenses of $8,048. Pursuant to the Investor Stock Purchase Agreements, the PIPE Investors were entitled to satisfy a portion of their respective purchase obligations through the acquisition of Public Shares and the non-redemption of such shares. In connection with the Closing, the Institutional Investor acquired 2,000,000 Public Shares and the Sponsor Investor acquired 1,470,764 Public Shares, each of which reduced such investor’s obligation to purchase shares of PubCo Common Stock at Closing on a share-for-share basis. The calculations set forth below give effect to those Public Share purchases in determining the number of shares of PubCo Common Stock issued to the PIPE Investors at Closing.
Below is a calculation, on a per CGC Class A Share basis, of the cash received by PubCo from the Trust Account and PIPE Financing, net of transaction expenses. The total number of shares outstanding in the table below gives effect to the issuance of shares of PubCo Common Stock upon consummation of the Business Combination.
| (in thousands, except share and per share amounts) | Actual Redemptions(1) | |||
| CGC Class A Ordinary Shares Not Redeemed | 4,548,687 | |||
| Gross Cash Proceeds of Trust Account | $ | 47,379 | ||
| Gross Cash Proceeds from the PIPE Financing | $ | 64,681 | ||
| Transaction Expenses(2) | $ | 21,410 | ||
| Total Shares Outstanding | 107,023,245 | |||
| Net Cash per share of CGC Class A Shares | $ | 0.85 | ||
| (1) | Reflects redemption of 23,051,313 of CGC Class A Shares out of the 27,600,000 of CGC Class A Ordinary Shares available for redemption by CGC Public Shareholders prior to the Closing. Note that the 4,548,687 shares presented herein include an aggregate of 3,470,764 CGC Class A Shares (the “NRA Shares”) that the Institutional Investor and the Sponsor Investor purchased prior to the Closing to partially satisfy their PIPE Financing obligations. |
| (2) | Includes cash transaction expenses relating to both the Business Combination and the PIPE Financing. This amount includes $1,346 of cash transaction expenses paid prior to the Closing and $20,064. However, this amount excludes $647 that was payable in Pubco Series A Common Stock for the merger underwriter fee as it’s a non-cash transaction expense. Refer to Note (c) of the unaudited condensed combined pro forma balance sheets as of March 31, 2026 for more information. |
Accounting for the Business Combination
The Business Combination will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under a reverse recapitalization, CGC will be treated as the “acquired” company for financial reporting purposes. Factorial has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:
| · | Factorial’s shareholders will have the largest voting interest in PubCo; |
| · | As a result of such voting interest, Factorial’s shareholders will have the ability to nominate a majority of the members of the PubCo Board of Directors; |
| · | Factorial’s senior management will be the senior management of PubCo; and |
| · | Factorial is the larger entity, in terms of substantive operations and employee base. |
Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Factorial issuing shares for the net assets of CGC, accompanied by a recapitalization. The net assets of CGC will be stated at fair value, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Factorial.
Basis of Pro Forma Presentation
The historical financial information has been adjusted to give pro forma effect to Factorial’s issuance of Factorial Convertible Notes in May 2026, that converted into Pubco Series A Common Stock in connection with the Business Combination. Although the Factorial Convertible Notes converted into Pubco Series A Common Stock in connection with the Business Combination, such Factorial Convertible Notes were not issued in connection with, or contingent upon, the Business Combination, as the August 2025 Factorial Convertible Notes were issued to existing investors in Factorial prior to the negotiation of the Business Combination Agreement and the January and May 2026 Factorial Convertible Notes were issued to strategic partners with whom Factorial is party to commercial arrangements and all of the shares issuable upon conversion of the Factorial Convertible Notes have been included in the Aggregate Fully Diluted Factorial Shares. For the Factorial Convertible Notes issued in May 2026, the Company estimated the pro forma effect for proceeds received under such convertible notes through the Merger Effective Time. The pro forma effect of the May 2026 Factorial Convertible Notes issuance has been assumed to have occurred as of March 31, 2026 for balance sheet purposes. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for a more accurate understanding of the combined company upon consummation of the Business Combination.
The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2026 and in the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2026 and for the year ended December 31, 2025 are based on preliminary estimates. The final amounts recorded may differ from the information presented.
Factorial and CGC did not have any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The pro forma shares of the combined common stock issued and outstanding immediately after the Business Combination are presented below:
| Pro Forma Combined | ||||
| CGC’s Public Shareholders(1) | 4,548,687 | |||
| Sponsor and DirectorCo(2) | 5,810,000 | |||
| PIPE Institutional Investor(3) | 6,340,000 | |||
| PIPE Sponsor Investor(4) | 1,179,404 | |||
| Factorial Shareholders(5) | 89,083,036 | |||
| Cantor Advisory Fee(6) | 62,118 | |||
| Total shares outstanding | 107,023,245 | |||
| (1) | Reflects redemption of 23,051,313 CGC Class A Shares out of the 27,600,000 CGC Class A Ordinary Shares available for redemption by CGC Public Shareholders prior to the Closing. Note that the 4,548,687 shares presented herein include an aggregate of 3,470,764 CGC Class A Shares (the “NRA Shares”) that the Institutional Investor and the Sponsor Investor purchased prior to the Closing to partially satisfy their PIPE Financing obligations. |
| (2) | Amount includes 5,710,000 Founder Shares held by the Sponsor and 100,000 Founder Shares held by DirectorCo (in which, each of CGC’s independent directors hold an interest in 30,000 Founder Shares). |
| (3) | Amount includes (i) the Institutional Investor’s subscription for 5,500,000 shares of PubCo Series A Common Stock at a subscription price of $10.00 per share; plus (ii) the constructive transfer at the Closing of an aggregate of 750,000 shares of PubCo Series A Common Stock from the Sponsor to the Institutional Investor; and plus (iii) an aggregate of 90,000 shares of Pubco Series A Common Stock constructively transferred to the Institutional Investor by the Sponsor as part of the Letter Agreement. The effective subscription price of the Institutional Investor is $8.68 per share, taking into account the foregoing transfers from the Sponsor. |
| (4) | Amount includes (i) the Sponsor Investor’s subscription for 929,404 shares of PubCo Series A Common Stock at a subscription price equal to the Redemption Price; plus (ii) the constructive transfer at the Closing of an aggregate of 250,000 shares of PubCo Series A Common Stock from the Sponsor to the Sponsor Investor. The effective subscription price of the Sponsor Investor is $8.21 per share, taking into account the foregoing transfer from the Sponsor. |
| (5) | Includes (i) an aggregate of 3,081,263 shares of PubCo Series A Common Stock issued to holder of Factorial Common Stock from conversion of Factorial Common Stock based upon the Consideration Ratio; (ii) an aggregate of 15,512,744 shares of PubCo Series B Common Stock issued to the Factorial Founders from the exchange of shares of Factorial Common Stock based upon the Consideration Ratio; (iii) an aggregate of 67,314,957 shares of PubCo Series A Common Stock issued to holders of Factorial Preferred Stock from the exchange of shares of Factorial Preferred Stock; (iv) an aggregate of 2,811,447 shares of PubCo Series A Common Stock issued to holders of the Factorial Convertible Notes from conversion of the Factorial Convertible Notes along with accrued interest into shares of Factorial Common Stock immediately before the Business Combination and the subsequent exchange into shares of PubCo Series A Common Stock; and (v) an aggregate of 362,625 shares of PubCo Series A Common Stock issued to holders of the Factorial Warrants from their cashless exercise of the warrants for shares of Factorial Preferred Stock and converted into shares of Factorial Common Stock immediately before the Business Combination and subsequent exchange for PubCo Series A Common Stock. |
| (6) | Amount includes 62,118 shares of PubCo Series A Common Stock issued to Cantor pursuant to the financial advisor engagement letter as outlined in the section entitled “Certain Engagements in Connection with the Business Combination” of the Proxy Statement/Prospectus. |
Unaudited Condensed Combined Pro Forma Balance
Sheets as of March 31, 2026
(in thousands, except share and per share data)
| Pro Forma | Pro Forma Combined | ||||||||||||||||||||||||
| Historical | Adjustments for Q2 2026 |
Transaction Accounting |
Pro Forma Balance | ||||||||||||||||||||||
| CGCT | Factorial | Transactions | Notes | Adjustments | Notes | Sheet | |||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 396 | $ | 25,449 | $ | 1,040 | (a) | $ | 287,480 | (b) | $ | 118,808 | |||||||||||||
| (240,101 | ) | (f) | |||||||||||||||||||||||
| (16,386 | ) | (c) | |||||||||||||||||||||||
| 60,931 | (d) | ||||||||||||||||||||||||
| Deferred offering costs | - | 3,468 | - | (3,468 | ) | (c) | - | ||||||||||||||||||
| Prepaid expenses and other current assets | 113 | 5,078 | - | - | 5,191 | ||||||||||||||||||||
| Total current assets | 509 | 33,995 | 1,040 | 88,455 | 123,999 | ||||||||||||||||||||
| Restricted cash | - | 884 | - | - | 884 | ||||||||||||||||||||
| Property and equipment, net | - | 20,206 | - | - | 20,206 | ||||||||||||||||||||
| Operating lease right-of-use assets, net | - | 7,266 | - | - | 7,266 | ||||||||||||||||||||
| Other assets | 10 | 40 | - | - | 50 | ||||||||||||||||||||
| CGC Investments held in Trust Account | 285,869 | - | - | (285,869 | ) | (b) | - | ||||||||||||||||||
| Total assets | $ | 286,388 | $ | 62,391 | $ | 1,040 | $ | (197,414 | ) | $ | 152,405 | ||||||||||||||
| Liabilities, convertible preferred stock and stockholders' equity (deficit) | |||||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||||
| Accounts payable | $ | - | $ | 656 | $ | - | $ | - | $ | 656 | |||||||||||||||
| Accrued expenses | 1,312 | 4,128 | - | (3,352 | ) | (c) | 2,088 | ||||||||||||||||||
| Accrued offering costs | 75 | - | - | - | 75 | ||||||||||||||||||||
| Operating lease liabilities, current portion | - | 1,401 | - | - | 1,401 | ||||||||||||||||||||
| Total current liabilities | 1,387 | 6,185 | - | (3,352 | ) | 4,220 | |||||||||||||||||||
| Operating lease liabilities, net of current portion | - | 6,817 | - | - | 6,817 | ||||||||||||||||||||
| Convertible notes liability | - | 24,896 | 1,040 | (a) | (25,936 | ) | (e) | - | |||||||||||||||||
| Deferred UW fee payable | 13,140 | - | - | (13,140 | ) | (c) | - | ||||||||||||||||||
| Warrant liability | - | 3,484 | - | (3,484 | ) | (e) | - | ||||||||||||||||||
| Total liabilities | 14,527 | 41,382 | 1,040 | (45,912 | ) | 11,037 | |||||||||||||||||||
| Redeemable convertible preferred stock | |||||||||||||||||||||||||
| Factorial Series A-1 redeemable convertible preferred stock | - | 327 | - | (327 | ) | (e) | - | ||||||||||||||||||
| Factorial Series A-2 redeemable convertible preferred stock | - | 655 | - | (655 | ) | (e) | - | ||||||||||||||||||
| Factorial Series B-1 redeemable convertible preferred stock | - | 2,169 | - | (2,169 | ) | (e) | - | ||||||||||||||||||
| Factorial Series C-1 redeemable convertible preferred stock | - | 28,303 | - | (28,303 | ) | (e) | - | ||||||||||||||||||
| Factorial Series C-2 redeemable convertible preferred stock | - | 26,013 | - | (26,013 | ) | (e) | - | ||||||||||||||||||
| Factorial Series D redeemable convertible preferred stock | - | 192,185 | - | (192,185 | ) | (e) | - | ||||||||||||||||||
| CGC Class A common stock subject to redemption | 285,869 | - | - | (285,869 | ) | (f) | - | ||||||||||||||||||
| Total redeemable convertible preferred stock | 285,869 | 249,652 | - | (535,521 | ) | - | |||||||||||||||||||
| Stockholders’ equity (deficit) | |||||||||||||||||||||||||
| PubCo Series A common stock | - | - | - | 8 | (e) | 9 | |||||||||||||||||||
| 1 | (f) | ||||||||||||||||||||||||
| Pubco Series B common stock | - | - | - | 2 | (e) | 2 | |||||||||||||||||||
| CGC Class B Common Stock | 1 | - | - | (1 | ) | (f) | - | ||||||||||||||||||
| Additional paid-in capital | - | 36,285 | - | (3,362 | ) | (c) | 409,374 | ||||||||||||||||||
| 268,142 | (e) | ||||||||||||||||||||||||
| 47,379 | (f) | ||||||||||||||||||||||||
| 60,931 | (d) | ||||||||||||||||||||||||
| Accumulated deficit | (14,009 | ) | (264,151 | ) | - | 10,886 | (e) | (267,274 | ) | ||||||||||||||||
| Accumulated other comprehensive income | - | (743 | ) | - | - | (743 | ) | ||||||||||||||||||
| Factorial Treasury stock | - | (34 | ) | - | 34 | (e) | - | ||||||||||||||||||
| Total stockholders' equity (deficit) | (14,008 | ) | (228,643 | ) | - | 384,020 | 141,368 | ||||||||||||||||||
| Total liabilities, convertible preferred stock and stockholders' equity (deficit) | $ | 286,388 | $ | 62,391 | $ | 1,040 | $ | (197,414 | ) | $ | 152,405 | ||||||||||||||
The pro forma adjustments to the unaudited condensed combined pro forma balance sheet as of March 31, 2026 consist of the following:
| (a) | Reflects Factorial’s issuance of additional Convertible Notes in May 2026 for an aggregate $1,040 face value, which were converted, along with accrued interest, into Factorial Common Stock immediately before the consummation of the Business Combination necessitating inclusion in these pro forma adjustments. Note that Factorial has elected the Fair Value Option for the Convertible Notes in accordance with ASC 825, Financial Instruments; however, these pro forma adjustments for the May 2026 transaction herein are not giving effect to any change in fair value of the notes on the date of issuance stemming from such election. Assumptions regarding changes in fair value, including accrued interest, of the Factorial Convertible Notes, are recorded as transaction accounting adjustments in (e). |
| (b) | Represents the interest earned, based on the Redemption Price of $10.41593671 per CGC Class A Ordinary Share, on investments held in the Trust Account held by CGC of $1,611, and the transfer of both CGC’s investments held in the Trust Account, and the interest earned to cash and cash equivalents prior to the consideration of Redemptions as outlined in (f). Refer to the below table for the pro forma entries. The interest earned is recorded as income for CGC through accumulated deficit and then reclassified into additional paid-in capital because of the Business Combination as described in (f)(i). Refer to the below table for the pro forma entries: |
| Cash and cash equivalents | CGC Investments held in Trust Account | Accumulated deficit | ||||||||||
| Transfer of CGC’s investments held in trust account | 287,480 | (287,480 | ) | |||||||||
| Interest Earned on Investments Held in Trust Account | 1,611 | (1,611 | ) | |||||||||
| Total | 287,480 | (285,869 | ) | (1,611 | ) | |||||||
| (c) | Reflects the following pro forma adjustments for transaction costs associated with the Business Combination (refer to below table for pro forma entries): |
CGC’s transaction expenses of approximately $8,048 related to the Business Combination, of which $11 had been paid as of March 31, 2026 and $8,037 was paid in cash at Closing. The transaction expenses of $8,048 includes a $4,311 underwriting fee, and other transaction costs of $3,737, including $1,147 incurred and expensed through March 31, 2026 (of which $11 had been paid as of March 31, 2026), and $2,590 incurred after March 31, 2026 through the Closing of the Business Combination. The expenses incurred after March 31, 2026, are recorded as expense for CGC through accumulated deficit and then reclassified into additional paid-in capital in consummation of the Business Combination.
The Business Combination will be accounted for as a reverse recapitalization in accordance with U.S. GAAP ASC 805. Under this method of accounting, Factorial is the accounting acquirer, and as a result, qualifying transaction costs incurred by Factorial are treated as deferred offering costs and any balance below the net proceeds from this reverse recapitalization will be charged directly to equity. This recording complies with the requirements of FASB ASC Topic 340-10-S99-1, “Other Assets and Deferred Costs — SEC Materials” (“ASC 340-10-S99”) and Commission Staff Accounting Bulletin Topic 5A, “Expenses of Offering”. Deferred offering costs consist of legal and other professional expenses incurred through the balance sheet date that are directly related to the Business Combination and are reflected in shareholders’ equity (deficit) in these pro formas of the Business Combination with any balance below the net proceeds from this Business Combination.
Factorial’s transaction expenses are approximately $10,259 for transaction expenses related to the Business Combination. The transaction expenses of $10,259 include a $5,000 merger underwriting fee paid in both cash and PubCo Series A Common Stock, $3,468 of other related transaction expenses incurred through March 31, 2026 (of which $1,263 had been paid as of March 31, 2026), and $1,791 of other related transaction expenses incurred after March 31, 2026 through the close of the Business Combination. These costs are reflected in additional paid-in capital in these pro formas.
The $5,000 merger underwriter fee was payable in $2,500 in cash and the remaining $2,500 in a combination of cash and publicly traded common equity securities of the post-combination company. The cash portion of this remaining amount equaled (a) a fraction, the numerator of which is the amount by which the total proceeds received by the combined company in connection with any equity financing consummated in connection with the Business Combination and the cash delivered from CGC’s trust account at the Closing exceed $75,000, and the denominator of which is $50,000, multiplied by (b) $2,500, with the remainder payable in shares of common equity of the post-combination company. Based on actual redemptions, $1,853 was payable in cash, and the remaining $647 was payable in Pubco Series A Common Stock. The adjustment of the $1,853 payment in PubCo Series A Common Stock is reflected in additional paid-in capital in these pro formas.
| Deferred UW Fee Payable | Accrued Expenses | Deferred Offering Costs | Cash and cash equivalents | Additional paid-in capital | ||||||||||||||||
| CGC cash payments of transaction expenses and adjustments | (13,140 | ) | (1,147 | ) | (8,037 | ) | 6,250 | |||||||||||||
| Factorial cash payments of transaction expenses | (2,205 | ) | (3,468 | ) | (8,349 | ) | (9,612 | ) | ||||||||||||
| Total | (13,140 | ) | (3,352 | ) | (3,468 | ) | (16,386 | ) | (3,362 | ) | ||||||||||
| (d) | At the Merger Effective Time, the Institutional Investor purchased from PubCo an aggregate of 6,340,000 shares of PubCo Series A Common Stock for an aggregate purchase price of $55,000, pursuant to a stock purchase agreement and the Sponsor Investor purchased from PubCo an aggregate of 1,179,404 shares of PubCo Series A Common Stock, for an aggregate purchase price of $9,681 pursuant to a stock purchase agreement. The Institutional Investor and the Sponsor Investor satisfied in part their purchase obligations under the stock purchase agreements through purchases of 3,470,764 NRA Shares in the aggregate at market prices. Such shares were subject to Non-Redemption Agreements and the proceeds from CGC’s trust account released at Closing reflect non-redemption of such shares. CGC incurred PIPE Financing transactions costs of $3,750, leading to net PIPE Financing proceeds of $60,931. |
| (e) | Reflects the following pro forma adjustments for conversion of historical Factorial instruments associated with the Business Combination and the elimination of CGC accumulated deficit: |
| i. | The assumption includes the conversion of the $15,340 face value of the Factorial Convertible Notes which converted, at fair value, in accordance with the respective agreements resulting in 766,397 shares of Factorial Common Stock. The resulting 766,397 shares of Factorial Common Stock were then exchanged into 2,811,447 shares of PubCo Series A Common Stock with a $0.0001 par value per share in accordance with the Business Combination. The Company elected the Fair Value Option for the Factorial Convertible Notes in accordance with ASC 825, Financial Instruments. The Factorial Convertible Notes issued from issuance respectively through the three months ended March 31, 2026, included an aggregate fair value adjustment of $10,596 as of March 31, 2026. The pro forma adjustments also give effect to the change in conversion value of the Factorial Convertible Notes issued in May 2026 as a result of the Business Combination representing its carrying value of May 2026 Notes plus assumed interest through June 5, 2026 for pro forma purposes. As such, the estimated carrying value of the Factorial Convertible Notes required an incremental adjustment to accumulated deficit of $3,123, which consists of incremental value inclusive of the conversion value of interest to adjust the Factorial Convertible Notes to $29,059 as of the Merger Effective Time. |
| ii. | The conversion of 18,349,937 shares of Factorial Preferred Stock into Factorial Common Stock on a one-to-one basis and then exchanged into 67,314,957 shares of PubCo Series A Common Stock with a $0.0001 par value per share. |
| iii. | The cashless exercise of 295,558 Factorial Warrants into 362,625 shares of Factorial Common Stock immediately before the consummation of the Business Combination and then exchanged into 372,907 PubCo Series A Common Stock. |
| iv. | The exchange of 839,951 shares of Factorial Common Stock into 3,081,263 shares of PubCo Series A Common Stock with a $0.0001 par value per share. |
| v. | The exchange of 4,228,739 shares of Factorial Common Stock into 15,512,744 shares of PubCo Series B Common Stock with a $0.0001 par value per share. This adjustment has no impact on additional paid-in capital. |
| vi. | The removal of Factorial Treasury Stock into additional paid-in capital immediately prior to the Merger Effective Time by the Company as treasury stock was be automatically cancelled and extinguished, and no consideration was paid with respect thereto. |
| vii. | The elimination of historical CGC accumulated deficit of $14,009, through additional paid-in capital, net of the accumulated deficit impact of the assumed $3,123 change in fair value on the Factorial Convertible Notes discussed in footnote (e)(i). The income impact of the CGC pro forma interest earned on investments held in Trust of $1,611 discussed in footnotes (b) and (f)(i) and the accumulated deficit impact of the CGC transaction costs estimated to be incurred after May 31, 2026 of $2,590 discussed in footnote (c) are reclassified into additional paid-in capital due to the effects of the Business Combination as they represent income and expenses of CGC that are eliminated. |
| (f) | Reflects the following pro forma adjustments for redemptions associated with the Business Combination (refer to below table for pro forma entries): |
| i. | 4,548,687 CGC Class A Ordinary shares previously subject to redemption for cash but not redeemed (accreted to the Redemption Price through an adjustment to accumulated deficit of $1,611 through the adjustment discussed in footnote (b)) and transferred to shareholders’ equity at $0.00001 par value. |
| ii. | The conversion of 6,900,000 CGC Class B Shares into 6,900,000 shares of PubCo Series A Common Stock, with a par value $0.00001 per share. Additionally, both the CGC Private Warrants and CGC Public Warrants survive the Business Combination and convert into PubCo Warrants and therefore result in no pro forma financial statement impact. |
| CGC Class A Common Stock Subject to Redemption | CGC Class B Common Stock | Accumulated deficit | PubCo Series A common stock | Additional paid-in capital | Cash and cash equivalents | |||||||||||||||||||
| Redemptions | (285,869 | ) | - | (1,611 | ) | - | 47,379 | (240,101 | ) | |||||||||||||||
| CGC Class B Conversion | (1 | ) | 1 | |||||||||||||||||||||
| Total | (285,869 | ) | (1 | ) | (1,611 | ) | 14 | 47,379 | (240,101 | ) | ||||||||||||||
Unaudited Condensed Combined Pro Forma Statement
of Operations
For the Three Months Ended March 31, 2026
(in thousands, except share and per share data)
| Pro Forma Combined | ||||||||||||||||||||
| Historical | Transaction Accounting | Pro Forma Statement of | ||||||||||||||||||
| CGCT | Factorial | Adjustments | Notes | Operations | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development, net | $ | - | $ | 1,942 | $ | - | $ | 1,942 | ||||||||||||
| Selling, general and administrative | 811 | 4,549 | 2,590 | (a) | 7,950 | |||||||||||||||
| Total operating expense | 811 | 6,491 | 2,590 | 9,892 | ||||||||||||||||
| Loss from operations | (811 | ) | (6,491 | ) | (2,590 | ) | (9,892 | ) | ||||||||||||
| Financing costs related to issuance of convertible promissory note | - | (37 | ) | 37 | (b) | - | ||||||||||||||
| Change in fair value of warrant liability | - | (106 | ) | 106 | (b) | - | ||||||||||||||
| Change in fair value of convertible promissory notes | - | (1,707 | ) | 1,707 | (b) | - | ||||||||||||||
| Other income (expense), net | 2,492 | (234 | ) | (2,492 | ) | (c) | (234 | ) | ||||||||||||
| Income (loss) before provision for income taxes | 1,680 | (8,575 | ) | (3,232 | ) | (10,126 | ) | |||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||||
| Net income/(loss) | $ | 1,680 | $ | (8,575 | ) | $ | (3,232 | ) | $ | (10,126 | ) | |||||||||
| Basic and diluted weighted average shares outstanding, Class A Common Stock Subject to Redemption | 27,600,000 | - | ||||||||||||||||||
| Basic and diluted net income per share, Class A Common Stock Subject to Redemption | $ | 0.06 | $ | - | ||||||||||||||||
| Basic and diluted weighted average common stock outstanding, CGC Class B Common Stock, non-redeemable | 6,900,000 | - | ||||||||||||||||||
| Basic net loss per share, CGC Class B Common Stock, non-redeemable | $ | 0.24 | $ | - | ||||||||||||||||
| Basic and diluted weighted average common stock outstanding | 5,056,994 | |||||||||||||||||||
| Basic and diluted net loss per share, common stock | $ | (1.70 | ) | |||||||||||||||||
| Basic and diluted pro forma weighted average shares outstanding | 107,023,245 | (d) | ||||||||||||||||||
| Basic and diluted pro forma net loss per share | $ | (0.09 | ) | |||||||||||||||||
The pro forma adjustments to the unaudited condensed combined pro forma statement of operations for the three months ended March 31, 2026 consist of the following:
| (a) | Reflects CGC’s transaction expenses of approximately $2,590 ($3,737 total less $1,147 expensed by CGC through March 31, 2026) related to the Business Combination, excluding the $4,311 underwriter fee. Note that this adjustment does not reflect $10,259 of transaction expenses incurred by Factorial. The $10,259 of Factorial transaction expenses are presented net within stockholders’ equity (deficit) on the unaudited combined pro forma balance sheet as of March 31, 2026 pursuant to applicable accounting principles related to reverse recapitalizations. |
| (b) | Represents an adjustment to eliminate the financing costs related to Factorial’s issuance of Factorial Convertible Notes during the three months ended March 31, 2026, the change in fair value of the Factorial Convertible Notes issued during the three months ended March 31, 2026, and change in the fair value of the Factorial Warrants during the three months ended March 31, 2026, as this pro forma financial information assumes the Business Combination occurred on January 1, 2025 and therefore, includes the exchange of the Factorial Convertible Notes and Factorial Warrants into shares of PubCo Series A Common Stock as of the earliest period presented (i.e., January 1, 2025). |
| (c) | Represents an adjustment to eliminate interest earned on marketable securities held in the Trust Account associated with the proceeds from CGC’s IPO held in Trust for the three months ended March 31, 2026. |
| (d) | The calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the Business Combination occurred as of the earliest period presented (January 1, 2025). In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period. |
Net Loss per Share
Net loss per share was calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2025.
The following unaudited pro forma condensed combined financial information has been prepared to present the actual impact of redemptions of ordinary shares by Public Shareholders at the time of the Business Combination for the three months ended March 31, 2026. Calculation of pro forma net loss per share excludes the following securities: (a) 20,600,000 shares of PubCo Series A Common Stock issuable upon the exercise of 13,800,000 CGC Public Warrants and 6,800,000 CGC Private Warrants; (b) 24,755,591 shares of PubCo Series A Common Stock that will be issuable upon the exercise or settlement of 19,639,374 Factorial Options, with a weighted average exercise price of $1.09 and of which 16,524,075 shares are exercisable based on shares outstanding as of the Merger Effective Time, and 5,116,217 Factorial RSUs, of which none are vested as of the Merger Effective Time; and (c) any shares of PubCo Series A Common Stock that will initially be available for issuance under the PubCo Incentive Plan and ESPP.
Further, under the Business Combination Agreement, the converted Factorial Options and Factorial RSUs retained substantially the same terms, including vesting conditions and other substantive provisions, as were applicable immediately prior to the Business Combination, with only equitable adjustments to the number of underlying shares and, for options, the exercise price to reflect the consideration ratio. As a result, the Business Combination did not in itself cause these awards to vest nor is it expected to result in incremental stock-based compensation expense solely from the conversion of such awards. Therefore, the impact of Factorial Options and Factorial RSUs has been excluded from these unaudited condensed pro forma financial statements as such awards remained as outstanding equity awards and not PubCo Series A Common Stock immediately following the Business Combination.
| Pro Forma Combined | ||||
| For the three months ended March 31, 2026 | ||||
| Pro forma net loss | $ | (10,126 | ) | |
| Pro forma basic and diluted net loss per share | $ | (0.09 | ) | |
| Number of shares of PubCo Common Stock | ||||
| CGC’s Public Shareholders | 4,548,687 | |||
| Sponsor and DirectorCo | 5,810,000 | |||
| PIPE Institutional Investor | 6,340,000 | |||
| PIPE Sponsor Investor | 1,179,404 | |||
| Factorial Shareholders | 89,083,036 | |||
| Cantor Advisory Fee | 62,118 | |||
| Total shares outstanding | 107,023,245 | |||
Unaudited Condensed Combined Pro Forma Statement
of Operations
For the Year Ended December 31, 2025
(in thousands, except share and per share data)
| Pro Forma Combined | ||||||||||||||||||||
| Historical | Transaction Accounting | Pro Forma Statement of | ||||||||||||||||||
| CGCT | Factorial | Adjustments | Notes | Operations | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development, net | $ | - | $ | 24,323 | $ | - | $ | 24,323 | ||||||||||||
| Selling, general and administrative | 1,158 | 22,202 | 3,061 | (a) | 26,421 | |||||||||||||||
| Loss and impairment on lease termination | - | 17,063 | - | 17,063 | ||||||||||||||||
| Total operating expense | 1,158 | 63,588 | 3,061 | 67,807 | ||||||||||||||||
| Loss from operations | (1,158 | ) | (63,588 | ) | (3,061 | ) | (67,807 | ) | ||||||||||||
| Financing costs related to issuance of convertible promissory note | - | (4,608 | ) | 4,608 | (b) | - | ||||||||||||||
| Change in fair value of warrant liability | - | (2,230 | ) | 2,230 | (b) | - | ||||||||||||||
| Change in fair value of convertible promissory notes | - | (4,389 | ) | 4,389 | (b) | - | ||||||||||||||
| Other income (expense), net | 7,377 | 970 | (7,377 | ) | (c) | 970 | ||||||||||||||
| Income (loss) before provision for income taxes | 6,219 | (73,845 | ) | 789 | (66,837 | ) | ||||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||||
| Net income/(loss) | $ | 6,219 | $ | (73,845 | ) | $ | 789 | $ | (66,837 | ) | ||||||||||
| Basic and diluted weighted average shares outstanding, Class A Common Stock Subject to Redemption | 18,197,802 | - | ||||||||||||||||||
| Basic and diluted net income per share, Class A Common Stock Subject to Redemption | $ | 0.25 | $ | - | ||||||||||||||||
| Basic weighted average common stock outstanding, CGC Class B Common Stock, non-redeemable | 6,593,407 | - | ||||||||||||||||||
| Basic net loss per share, CGC Class B Common Stock, non-redeemable | $ | 0.25 | $ | - | ||||||||||||||||
| Diluted weighted average common stock outstanding, CGC Class B Common Stock, non-redeemable | 6,900,000 | - | ||||||||||||||||||
| Diluted net loss per share, CGC Class B Common Stock, non-redeemable | $ | 0.25 | $ | - | ||||||||||||||||
| Basic and diluted weighted average common stock outstanding | 5,026,704 | |||||||||||||||||||
| Basic and diluted net loss per share, common stock | $ | (14.69 | ) | |||||||||||||||||
| Basic and diluted pro forma weighted average shares outstanding | 107,023,245 | (d) | ||||||||||||||||||
| Basic and diluted pro forma net loss per share | $ | (0.62 | ) | |||||||||||||||||
The pro forma adjustments to the unaudited condensed combined pro forma statement of operations for the year ended December 31, 2025 consist of the following:
| (a) | Reflects CGC’s transaction expenses of approximately $3,061 ($3,737 total less $676 expensed by CGC through December 31, 2025) related to the Business Combination, excluding the $4,311 underwriter fee. Note that this adjustment does not reflect $10,259 of transaction expenses incurred by Factorial. The $10,259 of Factorial transaction expenses are presented net within stockholders’ equity (deficit) on the unaudited combined pro forma balance sheet as of March 31, 2026 pursuant to applicable accounting principles related to reverse recapitalizations. |
| (b) | Represents an adjustment to eliminate the financing costs related to Factorial’s issuance of Factorial Convertible Notes during the year ended December 31, 2025, the change in fair value of the Factorial Convertible Notes issued during the year ended December 31, 2025, and change in the fair value of the Factorial Warrants during the year ended December 31, 2025, as this pro forma financial information assumes the Business Combination occurred on January 1, 2025 and therefore, includes the exchange of the Factorial Convertible Notes and Factorial Warrants into shares of PubCo Series A Common Stock as of the earliest period presented (i.e., January 1, 2025). |
| (c) | Represents an adjustment to eliminate interest earned on marketable securities held in the Trust Account associated with the proceeds from CGC’s IPO held in Trust for the year ended December 31, 2025. |
| (d) | The calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the Business Combination occurred as of the earliest period presented (January 1, 2025). In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period. |
Net Loss per Share
Net loss per share was calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2025.
The following unaudited pro forma condensed combined financial information has been prepared to present the actual impact of redemptions of ordinary shares by Public Shareholders at the time of the Business Combination for the year ended December 31, 2025. Calculation of pro forma net loss per share excludes the following securities: (a) 20,600,000 shares of PubCo Series A Common Stock issuable upon the exercise of 13,800,000 CGC Public Warrants and 6,800,000 CGC Private Warrants; (b) 24,755,591 shares of PubCo Series A Common Stock that will be issuable upon the exercise or settlement of 19,639,374 Factorial Options, with a weighted average exercise price of $1.09 and of which 16,524,075 shares are exercisable based on shares outstanding as of the Merger Effective Time, and 5,116,217 Factorial RSUs, of which none are vested as of the Merger Effective Time; and (c) any shares of PubCo Series A Common Stock that will initially be available for issuance under the PubCo Incentive Plan and ESPP.
Further, under the Business Combination Agreement, the converted Factorial Options and Factorial RSUs retained substantially the same terms, including vesting conditions and other substantive provisions, as were applicable immediately prior to the Business Combination, with only equitable adjustments to the number of underlying shares and, for options, the exercise price to reflect the consideration ratio. As a result, the Business Combination did not in itself cause these awards to vest nor is it expected to result in incremental stock-based compensation expense solely from the conversion of such awards. Therefore, the impact of Factorial Options and Factorial RSUs has been excluded from these unaudited condensed pro forma financial statements as such awards remained as outstanding equity awards and not PubCo Series A Common Stock immediately following the Business Combination.
| Pro Forma Combined | ||||
| For the three months ended March 31, 2026 | ||||
| Pro forma net loss | $ | (66,837 | ) | |
| Pro forma basic and diluted net loss per share | $ | (0.62 | ) | |
| Number of shares of PubCo Common Stock | ||||
| CGC’s Public Shareholders | 4,548,687 | |||
| Sponsor and DirectorCo | 5,810,000 | |||
| PIPE Institutional Investor | 6,340,000 | |||
| PIPE Sponsor Investor | 1,179,404 | |||
| Factorial Shareholders | 89,083,036 | |||
| Cantor Advisory Fee | 62,118 | |||
| Total shares outstanding | 107,023,245 | |||
Exhibit 99.3
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF FACTORIAL
Capitalized terms used but not defined in this Exhibit 99.3 shall have the meanings ascribed to them in the Current Report on Form 8-K (“Form 8-K”) filed with the Securities and Exchange Commission (the “SEC”) on June 10, 2026 and, if not defined in the Form 8-K, capitalized terms used but not defined in this Exhibit 99.2 shall have the meanings ascribed to them in the definitive proxy statement/prospectus filed by Cartesian Growth Corporation III with the SEC on May 6, 2026, prior to the consummation of the business combination (the “Proxy Statement/Prospectus”).
The following discussion and analysis of financial condition and results of operations of Factorial Inc. (for purposes of this section, “Factorial,” “Company,” “we,” “our” or “us”) should be read together with Factorial’s audited financial statements for the years ended December 31, 2025 and 2024 included in the Proxy Statement/Prospectus beginning on Page F-25, Factorial’s unaudited condensed financial statements for the three months ended March 31, 2026 and 2025, and related notes included in Exhibit 99.1 to this Form 8-K, as well as the unaudited pro forma condensed combined financial information included in Exhibit 99.2 to this Form 8-K. This discussion contains forward-looking statements reflecting our current expectations, estimates, and assumptions concerning events and financial trends that may affect our future operating results or financial position. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included in the Proxy Statement/Prospectus.
Overview
Factorial, a US-based leader in solid-state battery technology, develops next generation battery technology for planned use by drone, mobile robots, roadgoing vehicles, energy storage, and other demanding applications. Our FEST® cells are designed to meet the demands of the high-power market and, relative to conventional Li-ion batteries, deliver lighter weight, smaller size, longer life, and faster charging, in each case meeting or exceeding conventional batteries in each of these key parameters we believe are valued by end users.
Factorial is a development stage company with no revenue to date that has incurred a net loss of approximately $8.6 million, with cash used in operations of $6.1 million, for the three months ended March 31, 2026 and an accumulated deficit of approximately $264.2 million as of March 31, 2026.
The Business Combination
Factorial entered into the Business Combination Agreement with CGC on December 17, 2025. Pursuant to the Business Combination Agreement, and after CGC’s shareholders voted to approve it, Merger Sub, a newly formed subsidiary of CGC, merged with and into Factorial. Upon the Closing, the separate corporate existence of Merger Sub ceased to exist, and Factorial survived and became a wholly-owned subsidiary of CGC. In connection with the consummation of the Business Combination, CGC changed its corporate name to Factorial Energy Inc. The Business Combination was accounted for as a reverse recapitalization. Factorial was deemed the accounting acquirer and the combined entity is the successor SEC registrant, meaning that Factorial’s financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC. Under this method of accounting, CGC was treated as the acquired company for financial statement reporting purposes. As a result of the closing of the Business Combination, the most significant change in Factorial’s financial position and results is a $92.0 million net increase in cash and cash equivalents (as compared to Factorial’s consolidated balance sheet at March 31, 2026), which includes $112.1 million in gross proceeds from the PIPE Financing (inclusive of the proceeds from the trust account resulting from NRA Shares acquired by PIPE Investors to satisfy their obligations under the applicable Investor Stock Purchase Agreement) that was received at the Closing offset by the transaction expenses, which occurred on June 5, 2026. Transaction expenses paid at closing for the Business Combination and PIPE Financing were approximately $21.1 million. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”
As a result of the Business Combination, Factorial became the successor to an SEC-registered and Nasdaq-listed company, which will require Factorial to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Factorial expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees.
Key Trends, Opportunities and Uncertainties
Factorial is a pre-revenue company. We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those in the sections of the Proxy Statement/Prospectus titled “Business — Our Competitive Strengths”, “Business — Our Growth Strategy”, “Business — Manufacturing and Supply”, “Business — Research and Development”, “Business — Competitive Landscape”, Business — Government Regulation and Compliance” and “Risk Factors.”
We identified a material weakness in our internal control over financial reporting relating to inadequate resources to ensure proper system access and segregation of duties, timely and accurate preparation of reconciliations of accounts, and timely and accurate assessment, review and documentation of various transactions to ensure accurate recording of accounts in our financial statements in a timely manner. This material weakness led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of March 31, 2026.
Since December 2025, Factorial has added additional headcount to its finance team, including a chief financial officer, an accounting manager, and a staff accountant. The Company plans to increase staffing of its technical accounting and internal audit function during 2026 and will engage outside consultants to advise on improvements surrounding its controls over financial reporting. As of the date of this filing, management has taken remediation actions during 2026 and expects to complete the remediation actions related to Factorial’s material weakness over financial reporting during 2027 and expects to incur approximately $0.8 million in associated costs.
Basis of Presentation
Factorial currently conducts its business through one operating segment. As a pre-revenue company with no commercial operations, Factorial’s activities to date have been limited and were conducted primarily in the United States and Korea and its historical results are reported under U.S. GAAP and in U.S. dollars. Factorial’s Korean subsidiary’s functional currency is the Korean Won. Upon commencement of commercial operations, Factorial expects to expand its global operations substantially, including in the United States, Asia, and the European Union, and as a result Factorial expects its future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in its historical financial statements. As a result, Factorial expects that the financial results it reports for periods after it begins commercial operations will not be comparable to the financial results included in the Proxy Statement/Prospectus.
Components of Results of Operations
Factorial is a research and development stage company, and its historical results may not be indicative of its future results for reasons that may be difficult to anticipate. Accordingly, the drivers of Factorial’s future financial results, as well as the components of such results, may not be comparable to Factorial’s historical or projected results of operations.
Research and Development Expense
To date, Factorial’s research and development expenses have consisted primarily of personnel-related expenses for scientists, experienced engineers and technicians as well as costs associated with the expansion and ramp up of our engineering facility in the United States and Cheonan, South Korea, including the material and supplies to support the product development and process engineering efforts. As Factorial ramps up its engineering operations to complete the development of its solid-state, lithium-metal batteries and required process engineering to meet automotive cost targets, Factorial anticipates that research and development expenses will increase significantly for the foreseeable future as Factorial expands its hiring of scientists, engineers, and technicians and continues to invest in additional plant and equipment for product development (e.g. multi-layer cell stacking, packaging and engineering), building prototypes, and testing of battery cells as the team works to meet the full set of Original Equipment Manufacturers (“OEMs”) product requirements.
General and Administrative Expense
General and administrative expenses consist mainly of personnel-related expenses for Factorial’s executive, sales and marketing and other administrative functions and expenses for outside professional services, including legal, accounting and other advisory services. Factorial is expanding its headcount in anticipation of planning for and ramping up commercial manufacturing operations and to meet public company financial and compliance requirements. Accordingly, in addition to the non-recurring transaction costs discussed above, Factorial expects its general and administrative expenses to increase significantly in the near term and for the foreseeable future. Upon commencement of commercial operations, Factorial also expects general and administrative expenses to include sales, marketing and advertising costs.
Financing Costs Related to Issuance of Convertible Promissory Notes – Related Parties
Financing costs related to issuance of convertible promissory notes to related parties represents the excess of the fair value of the convertible promissory notes over the proceeds received, if any, as well as direct financing costs paid in cash at issuance.
Financing Costs Related to Issuance of Convertible Promissory Notes
Financing costs related to issuance of convertible promissory notes represents the excess of the fair value of the convertible promissory notes over the proceeds received, if any, as well as direct financing costs paid in cash at issuance.
Change in Fair Value of Convertible Promissory Notes – Related Parties
Change in fair value of convertible promissory notes to related parties represents the fair value adjustment to mark the convertible promissory note liability to fair value.
Change in Fair Value of Convertible Promissory Notes
Change in fair value of convertible promissory notes represents the fair value adjustment to mark the convertible promissory note liability to fair value.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities represents the fair value adjustment to mark the warrant liabilities to fair value based on changes in the underlying equity valuation.
Other (Expenses) Income, Net
Factorial’s other income (expense) consists of interest income from interest-bearing accounts, interest expense, and the effects of foreign currency.
Provision for Income Taxes
Factorial’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Factorial maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because Factorial believes the recoverability of the tax assets is not more likely than not.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025
The following table sets forth Factorial’s historical operating results for the periods indicated:
| Three Months Ended March 31, | $ | % | ||||||||||
| 2026 | 2025 | Change | Change | |||||||||
| (in thousands, except Share and per Share Amounts) | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | (1,942 | ) | $ | (6,754 | ) | $ | (4,812 | ) | (71.2 | )% | |
| General and administrative | (4,549 | ) | (6,368 | ) | (1,819 | ) | (28.6 | )% | ||||
| Total operating expenses | (6,491 | ) | (13,122 | ) | (6,631 | ) | (50.5 | )% | ||||
| Loss from operations | (6,491 | ) | (13,122 | ) | (6,631 | ) | (50.5 | )% | ||||
| Other income (expense): | ||||||||||||
| Financing costs related to issuance of convertible promissory notes | (37 | ) | — | 37 | N/M | 1 | ||||||
| Change in fair value of convertible promissory notes – related parties | (1,407 | ) | — | 1,407 | N/M | |||||||
| Change in fair value of convertible promissory notes | (300 | ) | — | 300 | N/M | |||||||
| Change in fair value of warrant liabilities | (106 | ) | — | 106 | N/M | |||||||
| Other income (expense), net | (234 | ) | 252 | (486 | ) | N/M | ||||||
| Total other income (expense), net | (2,084 | ) | 252 | (2,336 | ) | N/M | ||||||
| Net loss | (8,575 | ) | (12,870 | ) | (4,295 | ) | (33.4 | )% | ||||
| Net loss attributable to common stockholders | $ | (8,575 | ) | $ | (12,870 | ) | $ | (4,295 | ) | (33.4 | )% | |
| Net loss | $ | (8,575 | ) | $ | (12,870 | ) | $ | (4,295 | ) | (33.4 | )% | |
| Other comprehensive income (loss): | ||||||||||||
| Foreign currency translation adjustments and other | (298 | ) | 8 | 306 | N/M | |||||||
| Total comprehensive loss | (8,873 | ) | (12,862 | ) | (3,989 | ) | (31.0 | )% | ||||
| Comprehensive loss attributable to common stockholders | $ | (8,873 | ) | $ | (12,862 | ) | $ | (3,989 | ) | (31.0 | )% | |
| Basic and Diluted net loss per share | $ | (1.70 | ) | $ | (2.57 | ) | $ | (0.87 | ) | (33.9 | )% | |
| Basic and Diluted weighted-average common shares outstanding | 5,056,994 | 5,016,149 | 40,845 | 0.1 | % | |||||||
(1) Not Meaningful (“N/M”)
Research and Development
Research and development expenses decreased by $4.8 million, or 71.2%, from $6.7 million for the three months ended March 31, 2025 to $1.9 million for the three months ended March 31, 2026. The decline primarily resulted from receipts of $3.4 million from joint development partners for the three months ended March 31, 2026, compared to $0.03 million for the three months ended March 31, 2025, which are recorded net in research and development expenses. The decrease was further attributable to the absence of occupancy and depreciation costs that had previously been allocated to research and development, following the exit of the Methuen, Massachusetts facility in October 2025.
General and Administrative
General and administrative expenses decreased by $1.8 million, or 28.6%, from $6.3 million for the three months ended March 31, 2025 to $4.5 million for the three months ended March 31, 2026, primarily due to a decline in stock-based compensation expense. General and administrative stock-based compensation expense decreased by $2.2 million, or 63%, from $3.5 million for the three months ended March 31, 2025, to $1.3 million for the three months ended March 31, 2026. The decrease was further attributable to the absence of occupancy and depreciation costs that had previously been allocated to general and administrative expenses, following the exit of the Methuen, Massachusetts facility in October 2025. These decreases were partially offset by increases in professional services expenses including legal, audit, and advisory fees.
Financing Costs Related to Issuance of Convertible Promissory Notes
In January 2026, we issued convertible promissory notes under which we could receive aggregate proceeds of up to $5.4 million. During the three months ended March 31, 2026, we received proceeds of $4.3 million. We incurred issuance costs of $0.04 million, which was recorded as a financing cost.
Change in Fair Value of Convertible Promissory Notes – Related Parties
The fair value of our convertible promissory notes to related parties increased by $1.4 million for the three months ended March 31, 2026. These notes were issued in 2025. Changes in fair value of convertible promissory notes to related parties are non-cash and are included in net loss.
Change in Fair Value of Convertible Promissory Notes
The fair value of our convertible promissory notes increased by $0.3 million for the three months ended March 31, 2026. These notes were issued in January 2026. Changes in fair value of convertible promissory notes are non-cash and are included in net loss.
Change in Fair Value of Warrant Liabilities
The change in fair value of our warrant liabilities increased by $0.1 million for the three months ended March 31, 2026. There was no change in fair value of our warrant liabilities for the three months ended March 31, 2025. Changes in fair value of warrant liabilities are non-cash and are included in net loss.
Other Income (Expense), Net
Other income (expense), net reflected an expense of $0.2 million for the three months ended March 31, 2026, compared to income of $0.3 million for the three months ended March 31, 2025, a change of $0.5 million. The change is due to fluctuations in the effects of foreign exchange offset by a reduction interest income.
Provision for Income Taxes
The Company did not record an income tax provision for the three months ended March 31, 2026 or 2025 due to losses incurred and the establishment of a full valuation allowance against deferred tax assets.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily from the sales of preferred and convertible preferred stock, and equity-linked securities. As of March 31, 2026, our principal sources of liquidity were our cash and cash equivalents in the amount of $25.5 million. Our cash equivalents are invested primarily in U.S. Treasury money market funds.
As of the date of this filing, Factorial has yet to generate any revenue from its business operations. To date, Factorial has funded its capital expenditure and working capital requirements through equity as further discussed below. Factorial’s ability to successfully develop its products, commence commercial operations and expand its business will depend on many factors, including its working capital needs, the availability of equity or debt financing and, over time, its ability to generate cash flows from operations.
As of March 31, 2026, Factorial’s cash and cash equivalents amounted to $25.5 million. As a result of the closing of the Business Combination, Factorial’s cash and cash equivalents have increased to approximately $116.6 million on June 10, 2026. In January 2026, Factorial entered into agreements with new investors to issue convertible notes where Factorial can receive proceeds up to $5.4 million. Upon the Closing the convertible notes were converted into shares issued by Factorial in conjunction with the Business Combination and exchanged for shares of PubCo Series A Common Stock in the Business Combination. As of June 10, 2026, Factorial has received proceeds of $5.4 million.
Factorial expects its capital expenditures and working capital requirements to increase materially in the near future, as it seeks to accelerate its research and development efforts and scale up the production operations with its OEM partners. As described in “Information about Factorial” section of the Proxy Statement/Prospectus, Factorial expects to satisfy early demand for its solid-state battery products by expanding its existing fabrication line operations in South Korea and the United States, to support initial commercial production. During the three months ended March 31, 2026, Factorial paid capital expenditures for such expansion of approximately $0.5 million and expects to incur capital expenditures of approximately $7.5 million during the remainder of 2026. The expansion is expected to be completed by the end of 2027. Beyond the initial investment to expand our existing fabrication line operations in South Korea and the United States, we do not plan to build or acquire additional manufacturing facilities or incur substantial capital expenditures for the expansion of our existing facilities. Instead, as demand grows, including incremental high spec applications and gigawatt-scale ramp-up in the automotive market, we expect to scale primarily through a partner manufacturing approach.
Factorial believes that its cash on hand, including the net proceeds from CGC’s cash in trust post redemption and the PIPE Financing, will be sufficient to meet its working capital and capital expenditure requirements for a period of at least twelve months from the date of this filing and sufficient to fund its operations until it commences commercial production of the Factorial solid-state battery, assuming Factorial is able to do so as currently contemplated. Factorial may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, competitive pressures, and regulatory developments, among other developments. To the extent that Factorial’s current resources are insufficient to satisfy its cash requirements, Factorial may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than Factorial expects, Factorial may be forced to decrease its level of investment in product development or scale back its operations, which could have an adverse impact on its business and financial prospects.
Based on its current operating plan, the Company estimates that its cash and cash equivalents as of the date of this filing will be sufficient to fund its operating expenses and capital expenditure requirements into the first quarter of 2028. The Company has based this estimate on assumptions that may prove to be wrong and could deplete its liquid resources sooner than it currently expects.
Cash Flows
The following table provides a summary of Factorial’s cash flow data for the periods indicated:
| Three Months
Ended March 31, | $ | % | |||||||||||
| 2026 | 2025 | Change | Change | ||||||||||
| Amount in thousands | |||||||||||||
| Net cash provided (used in) operating activities | $ | (6,120 | ) | $ | (6,103 | ) | $ | 17 | 0.3 | % | |||
| Net cash provided (used in) investing activities | (487 | ) | (172 | ) | $ | 315 | 183.1 | % | |||||
| Net cash provided (used in) financing activities | 3,302 | (205 | ) | $ | 3,507 | N/M | |||||||
Cash Flows from Operating Activities
Factorial’s cash flows used in operating activities to date have been primarily comprised of payroll, material and supplies, facilities expense, and professional services related to research and development and general and administrative activities. As Factorial continues to ramp up hiring for technical headcounts to accelerate its developmental efforts, Factorial expects its cash used in operating activities to increase significantly before it starts to generate any material cash flows from its business.
Net cash used in operating activities was $6.1 million for the three months ended March 31, 2026, and 2025 and primarily represents payments on employee compensation and benefits, R&D materials, facilities, and professional fees. The payments were offset by an increase in receivables under collaboration agreements of $2.2 million during the three months ended March 31, 2026. Receivables under collaboration agreements decreased by $0.5 million during the three months ended March 31, 2025.
Cash Flows from Investing Activities
Factorial’s cash flows used in investing activities, to date, have been comprised of purchases of property and equipment and purchases and disposals of equipment. Factorial expects the costs to acquire property and equipment to increase in the near future as it builds pilot and sample production lines for its FEST Silicon and Solstice programs.
Net cash used from investing activities was $0.5 million and $0.2 million for the three months ended March 31, 2026, and 2025, respectively, which was used for property and equipment purchases. The 2026 purchases were entirely to support production in Korea.
Cash Flows from Financing Activities
Through March 31, 2026, Factorial has financed its operations primarily through the sale of equity and equity-linked securities. In addition, in January 2026, Factorial entered into agreements with new investors to issue convertible notes where Factorial can receive proceeds up to $5.4 million
Net cash from financing activities was $3.3 million for the three months ended March 31, 2026, and primarily represents proceeds from issuance of convertible notes, offset by the payment of deferred transaction costs. Net cash used in financing activities was $.2 million for the three months ended March 31, 2025, and primarily represents principal payments on the Company’s former finance lease for the Methuen, Massachusetts facility.
Contractual Obligations and Commitments
Factorial leases its headquarters space in Billerica, Massachusetts (the “Billerica Sublease”) under a single sublease classified as an operating lease expiring on October 30th, 2032. The Billerica Sublease does not contain any provision for an extension. Factorial also leased laboratory and office space in Tallahassee, Florida (the “Tallahassee Lease”) under a single lease classified as an operating lease that expired at the end of its term on February 28th, 2025. Additionally, Factorial leases laboratory and storage space, which includes offices, in Woburn, Massachusetts (the “Woburn Lease”) under a single lease classified as an operating lease expiring on April 30, 2028. The Woburn Lease does not contain any provision for extension. Finally, Factorial leased laboratory and manufacturing space, which included offices, in Methuen, Massachusetts (the “Methuen Lease”) under a single lease classified as a financing lease. The Methuen Lease was terminated on October 18, 2025. Factorial has not commenced negotiations with respect to extending the Billerica Sublease or the related lease between the applicable sublessor from whom the Company subleases such property and the ultimate lessor, but intends to do so prior to the expiration thereof.
In January 2026, Factorial entered into agreements with new investors to issue convertible notes where Factorial can receive proceeds up to $5.4 million. Upon the Closing the notes were converted into shares issued by Factorial in conjunction with the Business Combination and exchanged for shares of PubCo Series A Common Stock in the Business Combination. As of June 10, 2026, Factorial has received proceeds of $5.4 million.
Off-Balance Sheet Arrangements
Factorial is not a party to any off-balance sheet arrangements, as defined under SEC rules.
Critical Accounting Policies
Factorial’s financial statements have been prepared in accordance with GAAP. In the preparation of these financial statements, Factorial is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. There have been no significant changes to our critical accounting policies in the preparation of our condensed consolidated financial statements during the three months ended March 31, 2026 compared to those disclosed in our audited annual consolidated financial statements for the year ended December 31, 2025, included in the Proxy Statement/Prospectus.
Critical Accounting Estimates
There have been no significant changes to our critical accounting estimates in the preparation of our condensed consolidated financial statements during the three months ended March 31, 2026 compared to those disclosed in our audited annual consolidated financial statements for the year ended December 31, 2025, included in the Proxy Statement/Prospectus.
Emerging Growth Company Status
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.
Each of Factorial and CGC is an “emerging growth company” as defined in Section 2(a) of the Securities Act and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. This may make it difficult or impossible to compare Factorial’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used. PubCo may continue to qualify as an “emerging growth company” after the Business Combination until the earliest of (i) such time as of which it is a “large accelerated filer”, (ii) its annual gross revenues exceed $1.235 billion, (iii) it issues more than $1 billion of non-convertible debt securities during a three-year period or (iv) the end of the fifth fiscal year after CGC’s IPO, which occurred in 2025.
Recent Accounting Pronouncements
See Note 2 to the audited consolidated financial statements included in the Proxy Statement/Prospectus for more information about recent accounting pronouncements, the timing of their adoption, and Factorial’s assessment, to the extent it has made one, of their potential impact on Factorial’s financial condition and its results of operations and cash flows.
Quantitative and Qualitative Disclosures About Market Risk
Factorial is exposed to a variety of markets and other risks including the effects of change in interest rates, inflation and foreign currency translation and transaction risks as well as risks to the availability of funding sources, hazard events and specific asset risks.
Interest Rate Risk
The market interest risk in Factorial’s financial instruments and financial positions represents the potential loss arising from adverse changes in interest rates. As of March 31, 2026, we had cash and cash equivalents of $25.4 million and restricted cash of $0.9 million, substantially all of which was held in interest-bearing accounts for which the fair market value would be affected by change in the general level of U.S. interest rates. However, due to the short-term maturities and the low-risk profile of our investments, an immediate 10% change in the interest rate would not have a material effect on the fair market value of our cash and cash equivalents.
A significant change in interest rates may also have an impact on the valuation of our equity and equity-linked instruments, as discussed in “Equity Valuations.” This could cause a material change in the carrying value of our equity and equity-linked instruments.
Foreign Currency Risk
Factorial’s U.S. entities and certain foreign subsidiaries have the U.S. dollar as their functional currency, while Factorial’s South Korea entity has the Korean Won as their functional currency. Factorial’s current and potential future subsidiaries could be expected to have other functional currencies, reflecting their principal operating markets. Once Factorial starts commercialization, it expects to be exposed to both additional currency transaction and translation risk. To date, Factorial has not hedged such exposure, although it may do so in the future.
Exhibit 99.4
Factorial Lists on Nasdaq,
Bringing Solid-State Batteries From Validation to Scale
Leading American solid-state battery innovator, backed by global automakers and rapidly expanding into defense & aerospace, robotics, and hyperscale data centers, enters public markets with $1.3 billion equity value
BOSTON. — June 08, 2026 (GLOBE NEWSWIRE) — Factorial Inc. (“Factorial”), a U.S. developer of solid-state battery technology, announced today that it has completed its previously announced business combination with Cartesian Growth Corporation III, a publicly traded special purpose acquisition company. The combined company will operate as Factorial Energy Inc., and its Series A common stock and warrants are expected to begin trading on the Nasdaq Stock Market (“Nasdaq”) under the ticker symbols “FAC” and “FACWW”, respectively, on June 8, 2026.
The transaction implies an equity value of approximately $1.3 billion and provides more than $100 million in gross proceeds to support continued commercialization of Factorial’s next generation batteries for defense & aerospace, hyperscale data centers, and e-mobility.
Factorial enters the public markets with a track record few battery companies match – support from the U.S. national security investment community, real world vehicle integrations, expansion into high-performance drones, and progress toward the first U.S. solid-state production program for passenger vehicles. Factorial’s capital-light commercialization model, built on joint manufacturing partnerships, is designed for rapid, scalable deployment.
“We built Factorial to solve one of the hardest problems in energy – making solid-state real at scale,” said Siyu Huang, CEO of Factorial. “The automotive industry is the most demanding proving ground in the world, and we’ve shown our technology can perform in real cars on real roads. That foundation positions us to scale, providing power to drones, robotics, and next generation energy systems. Listing on Nasdaq gives us the platform to accelerate that work and deliver solid-state technology where it matters most.”
“The team at Factorial is dedicated not just to powering the next generation of drones, robots, e-mobility and energy storage, but to creating long-term shareholder value,” noted Peter Yu, Chairman & CEO of Cartesian Growth Corporation III. “We are proud to anchor the common-equity PIPE and even more excited to open Factorial’s cap table to investors seeking to participate in the company’s brilliant future.”
Factorial’s continuing leadership in solid-state batteries is most recently demonstrated by:
| · | Partnerships with top drone integrators across three continents (KULR Technology Group, Inc., Tulip Tech B.V and JRES) to advance next-generation battery integration for electric aviation systems – Q2 2026 |
| · | Strategic investment from IQT supporting expansion into drones and robotics, alongside strategic supply chain partners POSCO Future M and Philenergy – Q1 2026 |
| · | Karma Automotive and Factorial Announce First Solid-State Battery Production Program in the U.S. for Passenger Vehicles – Q1 2026 |
| · | Mercedes-Benz integrated Factorial’s FEST® cells into a lightly modified EQS test vehicle and completed a 1,205 km journey from Stuttgart, Germany to Malmö, Sweden on a single charge – Q3 2025 |
| · | Key technology milestone achieved to unlock demonstration fleet with Stellantis – Q3 2025 |
| · | First to launch a 100Ah+ lithium metal solid-state battery – Q1 2023 |
Factorial’s visionary management and board have deep knowledge in battery and automotive industries, including a founding team with extensive experience in battery material manufacturing, Executive Chairman Joe Taylor, Former Chairman and CEO of Panasonic North America, and Dieter Zetsche, Former Chairman of the Board of Daimler and Head of Mercedes-Benz Cars.
To commemorate the closing, Factorial will ring the Nasdaq Opening Bell at 9:30 a.m. ET on June 17, 2026. A livestream and replay will be available at https://www.nasdaq.com/marketsite/bell-ringing-ceremony.
Demonstration vehicles and battery cells will be exhibited outside Nasdaq on June 17th from 10:00 a.m. to 11:30 a.m. ET; the vehicles are for display purposes and may not represent final Factorial equipped configurations. Members of the public are invited to attend.
Advisors
Cantor Fitzgerald & Co. served as exclusive financial advisor to Factorial and sole placement agent for the PIPE. Goodwin Procter LLP served as legal advisor to Factorial. Greenberg Traurig, LLP served as legal advisor to Cartesian Growth Corporation III. Thompson Coburn LLP served as legal advisor to Cantor Fitzgerald. The Blueshirt Group served as investor relations advisor to Factorial.
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About Factorial Energy
Factorial Energy (Nasdaq: FAC) is a leading American solid-state battery innovator backed by In-Q-Tel – the not-for-profit strategic investor for the U.S. national security community and America’s allies – and Mercedes-Benz, Stellantis, Hyundai, and Kia. Through its proprietary FEST® and Solstice™ platforms, engineered for scalable manufacturing, Factorial delivers industry-leading performance across defense, space, and energy storage applications. Mercedes-Benz’ real-world road testing in a lightly modified test vehicle achieved over 1,200 km of range on a single charge, while Stellantis-lab testing verified 77 Ah cells demonstrating high energy density, fast-charging, and robust use for energy and power performance across temperature extremes. For more information, visit www.factorialenergy.com.
Forward-Looking Statements
Certain statements in this communication may be considered “forward-looking statements.” Forward-looking statements herein generally relate to future events or the future financial or operating performance of Factorial. For example, Factorial’s expectations regarding future financial performance, manufacturing capabilities and operations, Factorial’s business plans, and other projections concerning key performance metrics or milestones are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “project,” “target,” “plan,” or “potentially” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. While Factorial may elect to update such forward-looking statements in the future, it disclaims any obligation to do so.
Factorial IR Contact: IR@factorialenergy.com
Factorial Media Contact: Factorial@antennagroup.com
Filing Exhibits & Attachments
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Financial & Certifications
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