UNITED STATES
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Washington, D.C. 20549
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Indicate by check mark whether the registrant
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As of August 14, 2025, there were
KOCHAV DEFENSE ACQUISITION CORP.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025
TABLE OF CONTENTS
i
Unless otherwise stated in this Report (as defined below), or the context otherwise requires, references to:
| ● | “Administrative Services Agreement” are to the Administrative Services Agreement, dated May 27, 2025, which we entered into with our Sponsor (as defined below); |
| ● | “Amended and Restated Articles” are to our Amended and Restated Memorandum and Articles of Association, as currently in effect ; |
| ● | “Board of Directors” or “Board” are to our board of directors; |
| ● | “Business Combination” are to a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses; |
| ● | “Certifying Officers” are to our Chief Executive Officer and Chief Financial Officer, together; |
| ● | “Class A Ordinary Shares” are to our Class A ordinary shares, par value $0.0001 per share; |
| ● | “Class B Ordinary Shares” are to our Class B ordinary shares, par value $0.0001 per share; |
| ● | “Combination Period” are to the (i) 18-month period, from the closing of the Initial Public Offering (as defined below) to November 29, 2026 or (ii) up to 24-month period from the closing of the Initial Public Offering to May 29, 2027 if we extend the Combination Period as fully described herein, or such earlier date as determined by the Board, that we have to consummate an initial Business Combination; provided that the Combination Period may be further extended pursuant to an amendment to the Amended and Restated Articles and consistent with applicable laws, regulations and stock exchange rules; |
| ● | “Company,” “our,” “we” or “us” are to Kochav Defense Acquisition Corp., a Cayman Islands exempted company; |
| ● | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our Trust Account (as defined below) and rights agent of our Public Rights (as defined below); |
| ● | “Deferred Fee” are to the additional fee of $6,957,500 to which the underwriters to the Initial Public Offering are entitled that is payable only upon our completion of the initial Business Combination; |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| ● | “Founder Shares” are to the (i) Class B Ordinary Shares initially purchased by our Sponsor prior to the Initial Public Offering and (ii) Class A Ordinary Shares that will be issued upon the automatic conversion of the Class B Ordinary Shares (x) at the time of our Business Combination as described in the IPO Registration Statement (as defined below) or (y) earlier at the option of the holders thereof, as described in the IPO Registration Statement; for the avoidance of doubt, such Class A Ordinary Shares will not be “Public Shares” (as defined below); |
| ● | “GAAP” are to the accounting principles generally accepted in the United States of America; |
| ● | “Initial Public Offering” or “IPO” are to the initial public offering that we consummated on May 29, 2025; |
ii
| ● | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
| ● | “IPO Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $300,000 issued to our Sponsor on January 23, 2025; |
| ● | “IPO Registration Statement” are to the Registration Statement on Form S-1 initially filed with the SEC (as defined below) on April 25, 2025, as amended, and declared effective on May 27, 2025 (File No. 333-286759); |
| ● | “Letter Agreement” are to the Letter Agreement, dated May 27, 2025, which we entered into with our Sponsor and our directors and officers; |
| ● | “Management” or our “Management Team” are to our executive officers and directors; |
| ● | “Nasdaq” are to the Nasdaq Stock Market LLC; |
| ● | “Nasdaq 36-Month Requirement” are to the requirement pursuant to the Nasdaq Rules (as defined below) that a SPAC must complete one or more Business Combinations within 36 months following the effectiveness of its initial public offering registration statement; |
| ● | “Nasdaq Rules” are to the continued listing rules of Nasdaq, as they exist as of the date of this Report; |
| ● | “Ordinary Shares” are to the Class A Ordinary Shares and the Class B Ordinary Shares, together, our ordinary shares, par value $0.0001 per share; |
| ● | “Option Units” are to the 3,300,000 units that were purchased by the underwriters of the Initial Public Offering pursuant to the full exercise of the Over-Allotment Option (as defined below); |
| ● | “Over-Allotment Option” are to the 45-day option that the underwriters of the Initial Public Offering had to purchase up to an additional 3,300,000 Option Units to cover over-allotments, if any, pursuant to the Underwriting Agreement (as defined below), which was fully exercised; |
| ● | “Private Placement” are to the private placement of Private Placement Units (as defined below) that occurred simultaneously with the closing of our Initial Public Offering; |
| ● | “Private Placement Rights” are to the rights included within the Private Placement Units (as defined below) purchased by our Sponsor in the Private Placement; |
| ● | “Private Placement Shares” are to the Class A Ordinary Shares included within the Private Placement Units purchased by our Sponsor in the Private Placement; |
| ● | “Private Placement Units” are to the units issued to our Sponsor in the Private Placement; |
| ● | “Private Placement Units Purchase Agreement” are to the Private Placement Units Purchase Agreement, dated May 27, 2025, which we entered into with our Sponsor; |
| ● | “Public Rights” are to the rights sold as part of the Public Units (as defined below), which grant the holder the right to receive one-seventh (1/7) of one Class A Ordinary Share upon the consummation of the Business Combination; |
iii
| ● | “Public Shareholders” are to the holders of our Public Shares, including our Sponsor and Management Team to the extent our Sponsor and/or the members of our Management Team purchase Public Shares, provided that our Sponsor’s and each member of our Management Team’s status as a “Public Shareholder” will only exist with respect to such Public Shares; |
| ● | “Public Shares” are to the Class A Ordinary Shares sold as part of the Public Units in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market); |
| ● | “Public Units” are to the units sold in our Initial Public Offering, which consist of one Public Share and one Public Right; |
| ● | “Registration Rights Agreement” are to the Registration Rights Agreement, dated May 27, 2025, which we entered into with the Sponsor and the holders party thereto; |
| ● | “Report” are to this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025; |
| ● | “SAP” are to SPAC Advisory Partners, LLC, a division of Kingswood Capital Partners, LLC, the representative of the underwriters in our Initial Public Offering; |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended; |
| ● | “SPAC” are to a special purpose acquisition company; |
| ● | “Sponsor” are to Kochav Sponsor LLC , a Delaware limited liability company; |
| ● | “Trust Account” are to the U.S.-based trust account in which an amount of $253,000,000 from the net proceeds of the sale of the Public Units in the Initial Public Offering and the Private Placement Units in the Private Placement was placed following the closing of the Initial Public Offering; |
| ● | “Underwriting Agreement” are to the Underwriting Agreement, dated May 27, 2025, which we entered into with SAP, as the representative of the underwriters in the Initial Public Offering; |
| ● | “Units” are to the Private Placement Units and the Public Units, together; and |
| ● | “Working Capital Loans” are to funds that, in order to provide working capital or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of our directors and officers may, but are not obligated to, loan us . |
iv
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
KOCHAV DEFENSE ACQUISITION CORP.
CONDENSED BALANCE SHEET
JUNE 30, 2025
(UNAUDITED)
| Assets: | ||||
| Current Assets | ||||
| Cash | $ |
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| Due from Sponsor |
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| Prepaid expenses |
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| Total current assets |
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| Long-term prepaid insurance |
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| Investments held in Trust Account |
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| Total Assets | $ |
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| Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: | ||||
| Current liabilities | ||||
| Accrued offering costs | $ |
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| Total current liabilities |
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| Deferred underwriting fee payable |
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| Total Liabilities |
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| Commitments and Contingencies (Note 6) | ||||
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Class A Ordinary Shares subject to possible redemption,
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| Shareholders’ Deficit | ||||
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Preference shares, $
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Class A Ordinary Shares, $
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Class B Ordinary Shares, $
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| Additional paid-in capital | ||||
| Accumulated deficit |
(
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| Total Shareholders’ Deficit |
(
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| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ |
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| (1) |
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| (2) |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
1
KOCHAV DEFENSE ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the
Three Months Ended June 30, 2025 |
For the
Period from January 7, 2025 (Inception) Through June 30, 2025 |
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| General and administrative costs | $ |
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$ |
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| Loss from Operations |
(
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(
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| Other income: | ||||||||
| Interest earned in operating account |
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| Dividends earned on investments held in Trust Account |
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| Total other income |
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| Net income | $ |
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$ |
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| Weighted average Redeemable Class A Ordinary Shares outstanding – Basic and Diluted |
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| Basic net income per Redeemable Class A Ordinary Share | $ |
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$ |
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| Weighted average Non-redeemable Class A and Class B Ordinary Shares outstanding – Basic |
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| Basic net income per Non-redeemable Class A and Class B Ordinary Shares | $ |
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$ |
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| Weighted average Non-redeemable Class A and Class B Ordinary Shares outstanding – Diluted |
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| Diluted net income per Non-redeemable Class A and Class B Ordinary Shares | $ |
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$ |
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| (1) | Includes up to 1,100,000 Class B Ordinary Shares that were subject to forfeiture if the Over-Allotment Option was not exercised in full or in part by the underwriters (see Note 5). On May 29, 2025, the Company consummated the Initial Public Offering of 25,300,000 Public Units at $10.00 per Public Unit, which included the full exercise of the Over-Allotment Option; consequently, such 1,100,000 Founder Shares are no longer subject to forfeiture. |
| (2) | On April 3, 2025, the Company issued an additional 4,598,333 Founder Shares to the Sponsor in a share capitalization, resulting in the Sponsor holding an aggregate of 8,433,333 Founder Shares. |
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
KOCHAV DEFENSE ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND FOR THE PERIOD
FROM JANUARY 7, 2025 (INCEPTION) THROUGH JUNE 30, 2025
(UNAUDITED)
|
Class A
Ordinary Shares |
Class B
Ordinary Shares |
Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – January 7, 2025 (inception) | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Issuance of Class B Ordinary Shares to Sponsor (1) (2) |
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| Net loss | — | — |
(
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(
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| Balance – March 31, 2025 |
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(
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| Accretion of Class A Ordinary Shares to redemption amount | — | — |
(
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(
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(
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| Sale of Private Placement Units |
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— |
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| Fair value of Public Rights | — | — |
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| Allocated value of transaction costs to Class A Ordinary Shares | — | — |
(
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(
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| Net income | — | — |
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| Balance – June 30, 2025 |
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$ |
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$ |
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$ | $ |
(
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) | $ |
(
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| (1) |
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| (2) |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
3
KOCHAV DEFENSE ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 7, 2025 (INCEPTION) THROUGH JUNE 30, 2025
(UNAUDITED)
| Cash Flows from Operating Activities: | ||||
| Net income | $ |
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| Adjustments to reconcile net income to net cash used in operating activities: | ||||
| Operating costs paid through IPO Promissory Note– related party |
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| Dividends earned on investments held in Trust Account |
(
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| Changes in operating assets and liabilities: | ||||
| Prepaid expenses |
(
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| Net cash used in operating activities |
(
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| Cash Flows from Investing Activities: | ||||
| Investment of cash into Trust Account |
(
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| Net cash used in investing activities |
(
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| Cash Flows from Financing Activities: | ||||
| Proceeds from sale of Public Units, net of underwriting discounts paid |
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| Proceeds from sale of Private Placement Units |
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| Proceeds from IPO Promissory Note |
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| Repayment of IPO Promissory Note |
(
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| Payment of offering costs |
(
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| Net cash provided by financing activities |
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| Net Change in Cash |
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| Cash – Beginning of period | ||||
| Cash – End of period | $ |
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| Noncash investing and financing activities: | ||||
| Deferred offering costs included in accrued offering costs | $ |
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| Deferred offering costs paid through IPO Promissory Note - related party | $ |
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| Prepaid expenses paid in exchange for the issuance of Class B Ordinary Shares | $ |
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| Prepaid expenses paid through IPO Promissory Note – related party | $ |
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| Deferred offering costs charged to additional paid-in capital | $ |
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| Netting of amount due to and due from Sponsor | $ |
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| Deferred underwriting fee payable | $ |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
4
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Kochav Defense Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted corporation
on
As of June 30, 2025, the Company had not commenced any operations. All activity for the period from January 7, 2025 (inception) through June 30, 2025, relates to the Company’s formation and the Initial Public Offering (as defined below) and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31, as its fiscal year end.
The Company’s sponsor is Kochav Sponsor LLC (the “Sponsor”).
The Registration Statement on Form S-1 for the
Company’s Initial Public Offering, initially filed with the U.S. Securities and Exchange Commission (the “SEC”) on April
25, 2025, as amended (File No. 333-286759) was declared effective on May 27, 2025 (the “IPO Registration Statement”). On May
29, 2025, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of
Transaction costs amounted to $
The Business Combination must be with one or more
target businesses that together have a fair market value equal to at least
5
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Upon the closing of the Initial Public Offering,
on May 29, 2025, an amount of $
The Company will provide the Public Shareholders
with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either
(i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means
of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their
Public Shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as
of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the
Trust Account (less taxes, if any, payable and up to $
The Ordinary Shares (as defined in Note 2) subject to redemption are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
The Company will have only the duration of the
Combination Period to complete the initial Business Combination. However, if the Company is unable to complete its initial Business Combination
within the Combination Period, the Company will as promptly as reasonably possible, but not more than ten business days thereafter, redeem
the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account (less taxes payable, if any, and up to $
6
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
The
Sponsor, and the Company’s officers and directors have entered into a letter agreement with the Company, dated May 27, 2025 (the
“Letter Agreement”),
p
ursuant
to which they have agreed to (i) waive their redemption rights with respect to their Founder Shares (as defined in Note 5), Private Placement
Shares and Public Shares in connection with (x) the completion of the initial Business Combination or an earlier redemption in connection
with the commencement of the procedures to consummate the initial Business Combination if the Company determines it is desirable to facilitate
the completion of the initial Business Combination and (y) a shareholder vote to approve an amendment to the Amended and Restated Articles
to modify (1) the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination
or to redeem
The Sponsor has agreed that it will be liable
to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business
Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $
Liquidity and Capital Resources
The Company’s liquidity needs up to June
30, 2025 had been satisfied through the loan under the IPO Promissory Note (as defined in Note 5) from the Sponsor of up to $
In order to fund working capital deficiencies
or finance transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any
of their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If
the Company completes a Business Combination, the Company would repay such Working Capital Loans at that time. Up to $
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” the Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the initial Business Combination. Management has determined that post closing of the Initial Public Offering and Private Placement, the Company has sufficient funds to finance the working capital needs of the Company within one year from the date of issuance of the accompanying unaudited condensed financial statements.
7
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in the accompanying unaudited condensed financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of Management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the IPO Registration Statement, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on May 14, 2025. The interim results for the three months ended June 30, 2025, and for the period from January 7, 2025 (inception) through June 30, 2025, are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, 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 (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the accompanying unaudited condensed financial statements with another public company that is neither an (i) emerging growth company nor (ii) an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the accompanying unaudited condensed financial statements in conformity with 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 accompanying unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Making estimates requires Management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the accompanying unaudited condensed financial statements, which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $
8
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Deferred Offering Costs
The Company complies with the requirements of FASB ASC Topic 340-10-S99 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering.” Deferred offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC Topic 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applied this guidance to allocate Initial Public Offering proceeds from the Units between Public Shares and Public Rights, using the residual method by allocating Initial Public Offering proceeds first to assigned value of the Public Rights and then to the Public Shares. Offering costs allocated to the Public Shares were charged to temporary equity. Offering costs allocated to the Public Rights were charged to shareholders’ deficit. After Management’s evaluation, the Public Rights included in the Public Units were accounted for under equity treatment.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying unaudited condensed balance sheet, primarily due to its short-term nature.
Investments Held in Trust Account
At June 30, 2025, investments held in the Trust Account were held in mutual funds that are invested primarily in money market funds. Investments held in the Trust Account are classified as trading securities. Trading securities are presented on the accompanying unaudited condensed balance sheet at fair value at the end of the reporting period. The estimated fair values of investments held in Trust Account are determined using available market information. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
Income Taxes
The Company accounts for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. Management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of June 30, 2025, there were unrecognized tax benefits and amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was
Netting of Financial Instruments
The Company’s policy is to offset financial assets and financial liabilities in accordance with FASB ASC Topic 210, “Balance Sheet Offsetting” which permits offsetting when the following condition exist, 1) each of two parties owes the other determinable amounts, 2) the reporting party has the right to set off the amount owed with the amount owed by the other party, 3) the reporting party intends to set off, and 4) the right of setoff is enforceable at law. As such, the Company reports amount Due to Sponsor and Due from Sponsor as a net amount on the accompanying unaudited condensed balance sheet.
9
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Net Income per Ordinary Share
Net income per Ordinary Share is computed by dividing
net loss by the weighted average number of Ordinary Shares outstanding during the period, excluding Ordinary Shares subject to forfeiture.
Weighted average shares were reduced for the effect of an aggregate of
Share-Based Compensation
The Company records share-based compensation in accordance with FASB ASC Topic 718, “Compensation-Share Compensation” (“ASC 718”), guidance to account for its share-based compensation. It defines a fair value-based method of accounting for an employee share option or similar equity instrument. The Company recognizes all forms of share-based payments at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments are valued by multiplying the marketable value per Founder Share by the probability of successfully closing an initial Business Combination. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services provided in the accompanying unaudited condensed statements of operations.
Class A Ordinary Shares Subject to Possible Redemption
The Public Shares contain a redemption feature
that allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder
vote or tender offer in connection with the initial Business Combination. In accordance with FASB ASC Topic 480-10-S99, “Distinguishing
Liabilities from Equity,” the Company classifies Public Shares subject to possible redemption outside of permanent equity as the
redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately
as it occurs and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period.
Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption
amount value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the
extent available) and accumulated deficit. Accordingly, at June 30, 2025, Class A Ordinary Shares subject to possible redemption is presented
at redemption value as temporary equity, outside of the shareholders’ deficit section of the accompanying unaudited condensed balance
sheet.
| Shares | Amount | |||||||
| Gross proceeds |
|
$ |
|
|||||
| Less: | ||||||||
| Proceeds allocated to Rights |
(
|
) | ||||||
| Class A Ordinary Shares issuance costs |
(
|
) | ||||||
| Plus: | ||||||||
| Accretion of Class A Ordinary Shares to redemption amount |
|
|||||||
| Class A Ordinary Shares subject to possible redemption, June 30, 2025 |
|
$ |
|
|||||
Public Rights
The Company accounted for the Rights issued in
connection with the Initial Public Offering and the Private Placement in accordance with the guidance contained in FASB ASC Topic 815,
“Derivatives and Hedging”. Accordingly, the Company evaluated and classified the Public Rights under equity treatment at their
assigned values. There are
10
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Net Income Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of Ordinary Shares, Class A Ordinary Shares and Class B Ordinary Shares. Income and losses are shared pro rata between the two classes of Ordinary Shares. This presentation assumes an initial Business Combination as the most likely outcome. Net income per Ordinary Share is calculated by dividing the net income by the weighted average Ordinary Shares outstanding for the respective period.
At June 30, 2025, the calculation of diluted net income does not consider the effect of the Rights in the calculation of diluted income per Ordinary Share because their exercise is contingent upon future events. Accretion associated with the redeemable Class A Ordinary Shares is excluded from earnings per share as the redemption value approximates fair value. At June 30, 2025, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into Ordinary Shares and then share in the earnings of the Company.
The following tables present a reconciliation of the numerator and denominator used to compute basic and diluted net income per Ordinary Share for each class of Ordinary Share:
|
For the Three Months Ended
June 30, 2025 |
For the Period from January 7,
2025 (Inception) Through June 30, 2025 |
|||||||||||||||
| Redeemable Class A | Non-redeemable Class A and Class B | Redeemable Class A | Non-redeemable Class A and Class B | |||||||||||||
| Basic net income per Ordinary Share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Denominator: | ||||||||||||||||
| Basic weighted average Ordinary Shares outstanding |
|
|
|
|
||||||||||||
| Basic net income per Ordinary Share | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
For the Three Months Ended
June 30, 2025 |
For the Period from January 7,
2025 (Inception) Through June 30, 2025 |
|||||||||||||||
| Redeemable Class A | Non-redeemable Class A and Class B | Redeemable Class A | Non-redeemable Class A and Class B | |||||||||||||
| Diluted net income per Ordinary Share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Allocation of net income | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Denominator: | ||||||||||||||||
| Diluted weighted average Ordinary Shares outstanding |
|
|
|
|
||||||||||||
| Diluted net income per Ordinary Share | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
11
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) Topic 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). The amendments in ASU 2023-07 require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by FASB ASC Topic 280, “Segment Reporting,” (“ASC 280”) in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in ASU 2023-07 and existing segment disclosures in ASC 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on January 7, 2025 (inception).
Management does not believe that any other issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On May 29, 2025, the Company sold
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of
If the initial Business Combination is not completed within the Combination Period, the proceeds from the Private Placement held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On January 7, 2025, the Sponsor made a capital
contribution of $
On May 6, 2025, the Sponsor granted membership
interests equivalent to an aggregate of
12
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
The Founder Shares are designated as Class B Ordinary Shares and, except as described below, are identical to the Class A Ordinary Shares included in the Public Units, and holders of Founder Shares have the same shareholder rights as Public Shareholders, except that (i) the Founder Shares are subject to certain transfer restrictions, as described in more detail below, (ii) the Founder Shares are entitled to registration rights; (iii) the Sponsor, officers and directors have agreed to certain restrictions on any Founder Shares they hold pursuant to the Letter Agreement (see Note 1), (iv) the Founder Shares are automatically convertible into Class A Ordinary Shares in connection with the consummation of the initial Business Combination or earlier at the option of the holder on a one-for-one basis, subject to adjustment as described herein and in the Amended and Restated Articles, and (v) prior to the closing of the initial Business Combination, only holders of the Class B Ordinary Shares are entitled to vote on the appointment and removal of directors or continuing the company in a jurisdiction outside the Cayman Islands (including any special resolution required to amend the constitutional documents or to adopt new constitutional documents, in each case, as a result of the Company approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands).
IPO Promissory Note — Related Party
The Sponsor agreed to loan the Company an
aggregate of up to $
Administrative Services Agreement
Commencing on the date the securities of the Company
were first listed, May 28, 2025, the Company entered into an agreement with the Sponsor to pay an aggregate of $
Working Capital Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company Working Capital Loans as may be required. If the Company completes a Business Combination,
the Company would repay the Working Capital Loans. In the event that a Business Combination does not close, the Company may use a portion
of the working capital held outside the Trust Account to repay the Working Capital Loans, but no proceeds from the Trust Account would
be used to repay the Working Capital Loans. Up to $
NOTE 6. COMMITMENTS AND CONTINGENCIES RISKS AND UNCERTAINTIES
Risks and Uncertainties
The Company’s ability to complete an initial Business Combination may be adversely affected by various factors, many of which are beyond the Company’s control. The Company’s ability to consummate an initial Business Combination could be impacted by, among other things, changes in laws or regulations, downturns in the financial markets or in economic conditions, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. The Company cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact the Company’s ability to complete an initial Business Combination.
Registration Rights
The holders of Founder Shares, Private Placement Units (and their underlying securities) and units (and their underlying securities) that may be issued upon conversion of Working Capital Loans, if any, and any Class A Ordinary Shares issuable upon conversion of the Founder Shares and any Class A Ordinary Shares held by the Company’s initial shareholders at the completion of the Initial Public Offering or acquired prior to or in connection with the initial Business Combination, are entitled to registration rights. These holders are entitled to make up to three demands, excluding short form demands, and have piggyback registration rights. SPAC Advisory Partners LLC, a division of Kingswood Capital Partners, LLC, the representative of the underwriters (“SAP”), may only make a demand on one occasion and only during the five-year period beginning on May 27, 2025. In addition, SAP may participate in a piggyback registration only during the seven-year period beginning on May 27, 2025. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
13
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Underwriting Agreement
The underwriters had a
The underwriters were entitled to a cash underwriting
discount of
Additionally, the underwriters are entitled to
a deferred underwriting discount of
NOTE 7. SHAREHOLDER’S DEFICIT
Preference Shares
The Company is authorized to issue a total of
Class A Ordinary Shares
The Company is authorized to issue a total of
Class B Ordinary Shares
The Company is authorized to issue a total of
The Founder Shares will automatically convert
into Class A Ordinary Shares concurrently with or immediately following the consummation of the initial Business Combination or earlier
at the option of the holder on a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations,
recapitalizations and the like. In the case that additional Class A Ordinary Shares, or any other equity-linked securities, are issued
or deemed issued in excess of the amounts sold in the Initial Public Offering and related to or in connection with the closing of the
initial Business Combination, the ratio at which Class B Ordinary Shares convert into Class A Ordinary Shares will be adjusted
(unless the holders of a majority of the outstanding Class B Ordinary Shares agree to waive such adjustment with respect to any such
issuance or deemed issuance) so that the number of Class A Ordinary Shares issuable upon conversion of all Class B Ordinary
Shares will equal, in the aggregate,
14
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
Holders of record of the Ordinary Shares are entitled
to
Rights
Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Right will automatically receive one seventh (1/7) of one Class A Ordinary Share upon consummation of the initial Business Combination. In the event the Company is not the surviving Company upon completion of the initial Business Combination, each holder of a Right will be required to affirmatively convert its Rights in order to receive the one seventh (1/7) of one Class A Ordinary Share underlying each Right upon consummation of the Business Combination. The Company will not issue fractional shares in connection with an exchange of Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of Cayman Islands law. As a result, holders of Rights must hold Rights in multiples of seven in order to receive shares for all of the Rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company redeems the Public Shares for the funds held in the Trust Account, holders of Rights will not receive any of such funds for their Rights and the Rights will expire worthless.
Note 8 — Fair Value Measurements
“Fair value” is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | “Level 1”, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | “Level 2”, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | “Level 3”, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. |
15
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
At June 30, 2025, investments held in the Trust Account were held in mutual funds that are invested primarily in money market funds. Investments held in the Trust Account are classified as trading securities. Trading securities are presented on the accompanying unaudited condensed balance sheets at fair value at the end of the reporting period. The estimated fair values of investments held in Trust Account are determined using available market information. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets.
The following table presents information about the Company’s assets that are measured at fair value as of June 30, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Level |
June 30,
2025 |
|||||
| Investments held in Trust Account | 1 | $ |
|
|||
At May 29, 2025, the fair value of the Rights
was $
|
May 29,
2025 |
||||
| Trade price of Unit | $ |
|
||
| Stock price | $ |
|
||
| Market adjustment (1) |
|
% | ||
| Fair value per Right | $ |
|
||
| (1) |
|
NOTE 9. SEGMENT INFORMATION
ASC 280 establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. “Operating segments” are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by a company’s CODM, or group, in deciding how to allocate resources and assess performance.
16
KOCHAV DEFENSE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2025
The CODM assesses performance for the single segment
and decides how to allocate resources based on net income (loss) that also is reported on the accompanying unaudited condensed statements
of operations as net income or loss. The measure of segment assets is reported on the accompanying unaudited condensed balance sheet as
total assets.
|
June 30,
2025 |
||||
| Investments held in Trust Account | $ |
|
||
| Cash | $ |
|
||
|
For the
Three Months Ended June 30, 2025 |
For the
Period from January 7, 2025 (Inception) Through June 30, 2025 |
|||||||
| General and administrative costs | $ |
|
$ |
|
||||
| Dividends earned on investments held in Trust Account | $ |
|
$ |
|
||||
The key metrics included in segment profit or loss reviewed by the CODM are dividends earned on investments held in Trust Account and general and administrative costs. The CODM reviews dividends earned on investments held in Trust Account to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the Investment Management Trust Agreement, dated May 27, 2025, by and between the Company and Continental. General and administrative costs are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a Business Combination within the Combination Period. The CODM also reviews general and administrative costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the accompanying unaudited condensed balance sheet date through the date that the accompanying unaudited condensed financial statements was issued. Based upon this review, other than as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On July 16, 2025, the Company announced that, commencing on July 21, 2025, the holders of Public Units may elect to separately trade the Public Shares and the Public Rights. Any Public Units not separated will continue to trade on the Global Market tier of The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “KCHVU.” The Public Shares and the Public Rights now trade on the Global Market tier of the Nasdaq under the symbols “KCHV” and “KCHVR,” respectively.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of Management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our Management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our Management, as well as assumptions made by, and information currently available to, our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under Item 1. “Financial Statements”.
Overview
We are a blank check company incorporated in the Cayman Islands on January 7, 2025 formed for the purpose of effecting a Business Combination. The Company may pursue an acquisition opportunity in any business or industry. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the Private Placement, our securities, debt or a combination of cash, securities and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
We may seek to extend the Combination Period consistent with applicable laws, regulations and stock exchange rules by amending our Amended and Restated Articles. Any such amendment would require the approval of our Public Shareholders, who will be provided the opportunity to redeem all or a portion of their Public Shares in connection with the vote on such approval. Such redemptions will decrease the amount held in our Trust Account and our capitalization, and may affect our ability to maintain our listing on Nasdaq. In addition, the Nasdaq Rules currently require SPACs (such as us) to complete their initial Business Combination in accordance with the Nasdaq 36-Month Requirement. If we do not meet the Nasdaq 36-Month Requirement, our securities will likely be subject to a suspension of trading and delisting from Nasdaq. Our Sponsor may also, in its discretion, consider selling its interest in our Company to another sponsor entity, which may result in a change to our Management.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since January 7, 2025 (inception) through June 30, 2025 have been (i) organizational activities and (ii) activities relating to (x) the Initial Public Offering and (y) identifying and evaluating prospective acquisition candidates and activities in connection with the initial Business Combination. We will not generate any operating revenues until after completion of our initial Business Combination. We have generated non-operating income in the form of interest income on investments held in the Trust Account after the Initial Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance, among other things), as well as for due diligence expenses.
For the three months ended June 30, 2025, we had a net income of $798,203, which consisted of interest earned in operating account of $3,558 and dividends earned on investments held in Trust Account of $919,363, partially offset by general and administrative costs of $124,718.
18
For the period from January 7, 2025 (inception) through June 30, 2025, we had a net income of $776,441, which consisted of interest earned in operating account of $3,558 and dividends earned on investments held in Trust Account of $919,363, partially offset by general and administrative costs of $146,480.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of Class B Ordinary Shares by the Sponsor and loans from the Sponsor pursuant to the IPO Promissory Note.
On May 29, 2025, we consummated the Initial Public Offering of 25,300,000 Public Units at $10.00 per Public Unit, including the exercise in full by the underwriters of their Over-Allotment Option in the amount of 3,300,000 Option Units, at $10.00 per Public Unit, generating gross proceeds of $253,000,000. he Public Units consist of one Public Share and one Public Right. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 524,050 Private Placement Units at a price of $10.00 per Private Placement Unit, to the Sponsor, generating gross proceeds of $5,240,500. Each Private Placement Unit consist of one Private Placement Share and one Private Placement Right.
Following the Initial Public Offering, the full exercise of the Over-Allotment Option, and the Private Placement, a total of $253,000,000 was placed in the Trust Account. We incurred costs of $11,024,267, consisting of $3,415,500 of cash underwriting fee, $6,957,500 of Deferred Fee and $651,267 of other offering costs.
For the period from January 7, 2025 (inception) through June 30, 2025, cash used in operating activities was $272,975. Net income of $776,441 was effected by dividends earned on investments held in Trust Account of $919,363 and payment of operation costs through the IPO Promissory Note of $53,945. Changes in operating assets and liabilities provided $183,998 of cash for operating activities.
The Sponsor agreed to loan us an aggregate of up to $300,000 to be used for a portion of the expenses of the Initial Public Offering pursuant to the IPO Promissory Note. The loan was non-interest bearing, unsecured and due at the earlier of December 31, 2025 or the closing of the Initial Public Offering. As of June 30, 2025, we borrowed $207,494 under the IPO Promissory Note. Subsequently, we borrowed an aggregate total of $207,494 and repaid the full amount of $207,494 on June 2, 2025. Borrowings under the IPO Promissory Note are no longer available.
We intend to use substantially all of the investments held in the Trust Account, including any amounts representing dividends earned on the Trust Account (less income taxes payable, if any), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we may, at any time, (based on our Management Team’s ongoing assessment of all factors related to our potential status under the Investment Company Act) instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest-bearing demand deposit account at a bank.
We use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us Working Capital Loans as may be required. If we complete a Business Combination, we would repay such Working Capital Loans. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such Working Capital Loans, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be converted into units of the post-Business Combination entity at a price of $10.00 per unit. The units would be identical to the Private Placement Units. As of June 30, 2025, we had no borrowings under any Working Capital Loans.
19
As of June 30, 2025, the Company had $927,014 of cash and working capital surplus of $988,547. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as set forth below.
Administrative Services Agreement
Commencing on May 28, 2025, we entered into the Administrative Services Agreement with the Sponsor to pay an aggregate of $22,900 per month for office space, utilities, and secretarial and administrative support. These monthly fees will cease upon the completion of the initial Business Combination or our liquidation. For the period from January 7, 2025 (inception) through June 30, 2025, $22,900 was incurred in this service and was netted with an amount due from the Sponsor.
Underwriting Agreement
The underwriters of the Initial Public Offering had a 45-day option from the date of the Initial Public Offering to purchase up to an additional 3,300,000 Option Units to cover over-allotments, if any. On May 29, 2025, the underwriters elected to fully exercise the Over-Allotment Option to purchase an additional 3,300,000 Option Units at a price of $10.00 per Option Unit.
The underwriters were entitled to a cash underwriting discount of 1.35% of the gross proceeds of the Initial Public Offering, $3,415,500 (including the underwriters’ full exercise of the Over-Allotment Option), which was paid upon the closing of the Initial Public Offering.
Additionally, the underwriters are entitled to the Deferred Fee of 2.75% of the gross proceeds of the Initial Public Offering, or $6,957,500 (including the underwriters’ full exercise of the Over-Allotment Option), payable upon the closing of an initial Business Combination. Of such Deferred Fee, 1.20% will be paid in cash calculated based on the total gross proceeds raised in the Initial Public Offering, and 1.55% will be paid in cash calculated based on the total capital remaining in the Trust Account following all properly submitted redemptions in connection with the consummation of the initial Business Combination.
Critical Accounting Estimates
The preparation of the unaudited condensed financial statements and related disclosures included in this Report under Item 1. “Financial Statements” in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires Management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements included in this Report under Item 1. “Financial Statements”, which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could materially differ from those estimates. As of June 30, 2025, we did not have any critical accounting estimates to be disclosed.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our Management, including our Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our Management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of June 30, 2025.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Not applicable.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our Management Team, there is no material litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations, other than as set forth below see the section titled “Risk Factors” contained in our IPO Registration Statement. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
We may seek to extend the Combination Period, which could reduce the amount held in our Trust Account and have adverse effects on our Company.
If we are unable to consummate our initial Business Combination on or before May 29, 2027 (if we extend the Combination Period pursuant to our Amended and Restatement Articles), we may seek shareholder approval to further extend the Combination Period by amending our Amended and Restated Articles. In such event, our Public Shareholders will be provided the opportunity to have all or a portion of their Public Shares redeemed. Any redemptions will reduce the amount held in our Trust Account, the effect of which may adversely affect our ability to consummate our initial Business Combination and may also impair our ability to maintain our Nasdaq listing.
We anticipate that our securities will be suspended from trading on Nasdaq and delisted if we do not consummate our initial Business Combination by May 27, 2028. Any trading suspension or delisting could have a material adverse effect on the trading of our securities and may adversely affect our ability to consummate an initial Business Combination.
Our IPO Registration Statement was declared effective by the SEC on May 27, 2025 and our securities are currently listed on the Global Market tier of Nasdaq. Pursuant to our Amended and Restated Articles, we have until May 29, 2027 to consummate our initial Business Combination, if we use the extension of the Combination Period available to us pursuant to our Amended and Restated Articles.
Under the Nasdaq Rules, a SPAC’s Nasdaq-listed securities will be immediately suspended from trading if the SPAC does not meet the Nasdaq 36-Month Requirement, and Nasdaq will, at such point, commence delisting procedures. Although a SPAC can request a hearing before the hearing panel of Nasdaq (the “Hearing Panel”), the scope of the Hearing Panel’s review is limited. If a SPAC completes a Business Combination after receiving a delisting determination by the staff of the Listing Qualifications Department of Nasdaq (a “Staff Delisting Determination”) and/or demonstrates compliance with all applicable initial listing requirements, the combined company can apply to list its securities on Nasdaq pursuant to the normal application review process. The Nasdaq Rules contain a list of deficiencies that would immediately result in a Staff Delisting Determination, which includes noncompliance with the Nasdaq 36-Month Requirement.
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Accordingly, were we to amend our Amended and Restated Articles to extend the date by which we are permitted to consummate our initial Business Combination, we would still need to consummate our initial Business Combination on or prior to May 27, 2028 in order to avoid a suspension of our securities from trading on and delisting from Nasdaq. If Nasdaq were to suspend our securities from trading and delist our securities, our securities could potentially be quoted on an over-the-counter market. Even if our securities are then quoted on an over-the-counter market, our Nasdaq suspension and delisting could have significant material adverse consequences, including:
| ● | making our securities appear to be less attractive to potential target companies than the securities of an exchange listed SPAC; |
| ● | limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | the possibility that our Class A Ordinary Shares would be deemed “penny stock,” which will require brokers trading in our Class A Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | limited news and analyst coverage; and |
| ● | decreased ability to issue additional securities or obtain additional financing in the future. |
In addition, if our securities are delisted from Nasdaq, trading in our securities, and offers and sales of our securities by us, may be subject to state securities regulation and additional compliance costs.
The share price of the post-Business Combination company may be less than the Redemption Price (as defined below) of our Public Shares.
Each Public Unit sold in our Initial Public Offering at an offering price of $10.00 per Public Unit consisted of one Public Share and one Public Right. Of the proceeds we received from the Initial Public Offering and the Private Placement, $253,000,000 was placed in our Trust Account. We will provide our Public Shareholders the opportunity to redeem all or a portion of their Public Shares in connection with the completion of our initial Business Combination, and potentially upon the occurrence of certain other events prior to our initial Business Combination. We expect that the pro rata redemption price in any redemption will be approximately $10.04 per Public Share as of June 30, 2024 (before taxes payable, if any, and such amount, the “Redemption Price”), representing a pro rata portion of our Trust Account without taking into account any interest or other income earned on such funds (less any withdrawals from such interest or income for taxes paid), although the Redemption Price may be less in certain circumstances. As a result, Public Shareholders who own our Public Shares on a redemption date can anticipate receiving the Redemption Price in connection with a redemption for each Public Share that they choose to redeem.
There can be no assurance that, after our initial Business Combination, our Public Shareholders would be able to sell their shares in the post-Business Combination company for the Redemption Price, or any higher price. We have not, as yet, identified a target and are therefore unable to provide any assurances as to its financial condition, business prospects or potential risks. It is therefore possible that the share price of the post-Business Combination company may decline below the Redemption Price. In recent years, the share prices of many post-Business Combination companies have fallen following a Business Combination. As a result, if our Public Shareholders continue to hold shares in the post-Business Combination company following our initial Business Combination, we cannot assure our shareholders that the trading price of such shares will be greater than the Redemption Price.
Certain agreements related to the Initial Public Offering may be amended, or their provisions waived, without shareholder approval.
Certain of the agreements related to the Initial Public Offering to which we are a party may be amended, or their provisions waived, without shareholder approval. Such agreements include the (i) Underwriting Agreement, (ii) the Letter Agreement, (iii) the Registration Rights Agreement, (iii) the Private Placement Units Purchase Agreement and (iv) the Administrative Services Agreement. These agreements contain various provisions that our Public Shareholders might deem to be material. For example, our Letter Agreement and the Underwriting Agreement contain certain lock-up provisions with respect to the Founder Shares and other securities held by our Sponsor, officers and directors, subject to certain exceptions. Amendments or waivers to such agreements would require the consent of the applicable parties thereto and, in certain cases, the consent of the underwriters of the Initial Public Offering. Any such modification, such as an amendment to shorten lock-up restrictions, may benefit our Sponsor, officers and/or directors. Any such amendments would not require approval from our shareholders, may result in the completion of our initial Business Combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities. For example, although we would not amend lock-up provisions to permit securities held by our Sponsor to be freely sold prior to our initial Business Combination, we may amend such provisions to permit them to be freely sold after the Business Combination earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
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Market conditions, economic uncertainty or downturns could adversely affect our business, financial condition, operating results and our ability to consummate a Business Combination.
In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including as a result of the COVID-19 pandemic, supply chain disruptions, the Ukraine-Russia conflict, conflict in the Middle East, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and high inflation and the possibility of a recession. A significant downturn in economic conditions may make it more difficult for us to consummate a Business Combination.
We cannot predict the timing, strength, or duration of any future economic slowdown or any subsequent recovery generally, or in any industry. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, operating results and our ability to consummate a Business Combination could be adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
On January 7, 2025, our Sponsor paid $25,000, or approximately $0.007 per share, to cover certain of our offering costs in exchange for 3,835,000 Founder Shares. In April 2025, we issued an additional 4,598,333 Founder Shares to our Sponsor in a share capitalization, resulting in our Sponsor holding an aggregate of 8,433,333 Founder Shares. As a result, our Sponsor paid approximately $0.003 per Founder Share. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such issuances. The Founder Shares are automatically convertible into Class A Ordinary Shares concurrently with or immediately following the consummation of our initial Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment.
Simultaneously with the closing of the Initial Public Offering and pursuant to the Private Placement Units Purchase Agreement, we completed the sale of an aggregate of 524,050 Private Placement Units to our Sponsor in the Private Placement at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds to us of $5,240,500. The Private Placement Units (and underlying securities) are identical to the Public Units (and underlying securities), except as otherwise disclosed in the IPO Registration Statement. No underwriting discounts or commissions were paid with respect to such sale. The issuance of the Private Placement Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Use of Proceeds
On May 29, 2025, we consummated our Initial Public Offering of 25,300,000 Public Units, including 3,300,000 Option Units issued pursuant to the full exercise of the Over-Allotment Option. Each Public Unit consists of one Public Share, and one Public Right, which grants each holder the right to receive one-seventh (1/7) of one Class A Ordinary Share upon the consummation of the Business Combination. The Public Units were sold at a price of $10.00 per Public Unit, generating gross proceeds to us of $ $253,000,000. SAP acted as representative of the several underwriters of the Initial Public Offering. Simultaneously with the consummation of our Initial Public Offering and pursuant to the Private Placement Units Purchase Agreement, we completed the private sale of an aggregate of 524,500 Private Placement Units at a purchase price of $10.00 per Private Placement Unit to our Sponsor generating gross proceeds of $5,240,500.
Following the closing of our Initial Public Offering and the Private Placement, a total of $253,000,000 (which amount includes the Deferred Fee of $6,957,500) was placed in a U.S.-based trust account maintained by Continental, acting as trustee. The proceeds held in the Trust Account may be invested by the trustee only in U.S. government securities with a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we may, at any time (based on the Management Team’s ongoing assessment of all factors related to the potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest-bearing demand deposit account at a bank.
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The remaining proceeds from the Initial Public Offering and the Private Placement are held outside the Trust Account. Such funds are being used primarily to enable us to identify a target and to negotiate and consummate our initial Business Combination.
There has been no material change in the planned use of the proceeds from our Initial Public Offering and the Private Placement as described in the IPO Registration Statement. The specific investments in our Trust Account may change from time to time.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Arrangements
During the quarterly period ended June 30, 2025,
none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
Additional Information
Commencing on July 21, 2025, the holders of Public Units can elect to separately trade the Public Shares and the Public Rights included in the Public Units. Any Public Units not separated will continue to trade on the Global Market tier of Nasdaq under the symbol “KCHVU.” The Public Shares and the Public Rights now trade on the Global Market tier of the Nasdaq under the symbols “KCHV” and “KCHVR,” respectively.
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Report.
| * | Filed herewith. |
| ** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Exchange Act, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing. |
| (1) | Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on May 29, 2025. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KOCHAV DEFENSE ACQUISITION CORP. | ||
| Date: August 14, 2025 | By: | /s/ Menachem Shalom |
| Name: | Menachem Shalom | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 14, 2025 | By: | /s/ Asaf Yarkoni |
| Name: | Asaf Yarkoni | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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