References in this report (the "Quarterly Report") to "we," "us," "our" or the "Company" refer to Parabellum Acquisition Corp. References to our "management" or our "management team" refer to our officers and directors, and references to the "Founder" or "Sponsor" refer to Parabellum Acquisition Partners, LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek," "may," "might," "plan," "possible," "potential," "should", "would" and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's final prospectus for our initial public offering filed with the U.S. Securities and Exchange Commission (the "SEC"). The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company, incorporated in the State of Delaware on February 5, 2021 and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We have identified EnOcean as our initial business combination target, and expect to schedule a special meeting of stockholders to approve the business combination later this year. Upon consummation of the business combination with EnOcean, we expect that Holdco will become a public company and will change its name to EnOcean Holdings, N.V.

On November 13, 2022, the Company and EnOcean entered into the Business Combination Agreement pursuant to which the Company consummates a merger with a Merger Sub with the Company surviving such Merger, and such Surviving Corporation will become a wholly-owned subsidiary of Holdco. Each Company Shareholder as of immediately prior to the Closing, will contribute each Company Ordinary Share held to Holdco, in exchange for the Company Per Share Consideration (as defined in the Business Combination Agreement) As a result of the transaction, the post-combination company is expected to receive up to $40,000,000 in gross proceeds from a fully committed PIPE consisting of units of shares and half a warrant for one share being sold at $10.00 per unit. For more information regarding the Business Combination Agreement and related transactions, see Note 1 to the Condensed Consolidated Financial Statements and the Form 8-K filed by the Company with the SEC on November 14, 2022.

The completion of the proposed Business Combination with EnOcean is subject to the satisfaction of the conditions set forth in the Business Combination Agreement, including (i) completion of any required stock exchange and regulatory review, (ii) approval of the transaction by the Company's and EnOcean's stockholders and (iii) receipt by EnOcean of any required third-party approvals. Accordingly, no assurances can be made that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all.

If we are unable to consummate the Business Combination within the Combination Window, we will (i) cease all operations except for the purposes of winding up; (ii) 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 any interest earned on the Trust Account not previously released to us to pay its tax obligations and up to $100,000 of interest to pay dissolution expenses, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and; (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of



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directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire if we fail to complete a Business Combination within the Combination Window.

We intend to effectuate our initial Business Combination using cash from the proceeds from the sale of Public Units in our Offering, the sale of the Private Placement Warrants to our Sponsor, our common equity or any preferred equity that we may create in accordance with the terms of our charter documents, debt, or a combination of cash, common or preferred equity and debt. The Public Units sold in the Offering each consisted of one share of Class A common stock, and three-quarters (3/4) of one redeemable warrant to purchase one share of Class A common stock (no fractional shares will be issued upon exercise of the warrants). The Private Placement Warrants were substantially similar to the Public Units sold in the Offering, but for certain differences in the warrants included in each of them. For clarity, the warrants included in the Public Units are referred to herein as the "public warrants," and the warrants included in the Private Placement Warrants are referred to herein as the "private warrants."

The issuance of additional shares of any class of common stock or the creation of one or more classes of preferred stock during our initial Business Combination:

? may significantly dilute the equity interest of investors in the Offering who

would not have pre-emption rights in respect of any such issue;

may subordinate the rights of holders of any class of common stock if the

? rights, preferences, designations and limitations attaching to the preferred

shares are senior to those afforded our shares of Class A common stock;

could cause a change in control if a substantial number of shares of common

? stock are issued, which may affect, among other things, our ability to use our

net operating loss carry forwards, if any, and could result in the resignation

or removal of our present officers and directors;

may have the effect of delaying or preventing a change of control of us by

? diluting the share ownership or voting rights of a person seeking to obtain

control of us; and

? may adversely affect prevailing market prices for our shares of Class A common

stock.

Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:

? default and foreclosure on our assets if our operating revenues after our

initial Business Combination are insufficient to repay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we make all

? principal and interest payments when due if we breach certain covenants that

require the maintenance of certain financial ratios or reserves without a

waiver or renegotiation of that covenant;

? our immediate payment of all principal and accrued interest, if any, if the

debt is payable on demand;

our inability to obtain necessary additional financing if any document

? governing such debt contains covenants restricting our ability to obtain such

financing while the debt security is outstanding;

? our inability to pay dividends on our shares of common stock;

using a substantial portion of our cash flow to pay principal and interest on

? our debt, which will reduce the funds available for dividends on our common

stock if declared, expenses, capital expenditures, acquisitions and other

general corporate purposes;

? limitations on our flexibility in planning for and reacting to changes in our

business and in the industry in which we operate;

? increased vulnerability to adverse changes in general economic, industry and

competitive conditions and adverse changes in government regulation; and




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limitations on our ability to borrow additional amounts for expenses, capital

? expenditures, acquisitions, debt service requirements, execution of our

strategy and other purposes and other disadvantages compared to our competitors

who have less debt.

We expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.

Recent Developments

Special Stockholder Meeting

In November 2022, our board of directors approved, among other things, an amendment to our amended and restated certificate of incorporation (the "Charter Amendment"). Adoption of the Charter Amendment will require the affirmative vote of at least 65% of our outstanding shares of common stock as of the close of business on November 28, 2022 (the "record date").

We filed a preliminary proxy statement with the SEC on November 18, 2022 to solicit the approval of our stockholders at a special meeting of stockholders (the "Special Meeting"), which is to be held on December 20, 2022, to approve the Charter Amendment, giving the Company the right to extend the Combination Window up to six (6) times for an additional one (1) month each time, from March 30, 2023 to September 30, 2023 (i.e., for a period of time ending 24 months from the consummation of its IPO by depositing into the Trust Account for each one-month extension $185,000 on or prior to the date of the applicable deadline.

We expect our Sponsor to vote any common stock owned by it in favor of the Charter Amendment. If the Charter Amendment is not approved or implemented and we are unable to complete a Business Combination on or before the Original Termination Date, we expect to liquidate and dissolve in accordance with our certificate of incorporation.

Notice of Delisting of Company's Warrants

On November 1, 2022, the New York Stock Exchange (the "NYSE") notified us, and publicly announced, that the NYSE determined to commence proceedings to delist the Company's warrants, each whole warrant exercisable to purchase one share of the Company's Class A common stock, at a price of $11.50 per share, and listed to trade on NYSE under the symbol "PRBM.WS" (the "Public Warrants"), from the NYSE and that trading in the Public Warrants would be suspended immediately, due to "abnormally low" trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. We filed Form 8-K on November 1, 2022 announcing the NYSE's determination and that we intend to appeal such determination.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any revenues to date. From February 5, 2021 (inception) through September 30, 2022, our only activities have been organizational activities, those necessary to prepare for the Public Offering and to identify a target business for the Business Combination. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account at JP Morgan Chase Bank, N.A. in New York, New York with Continental Stock Transfer & Trust Company acting as trustee, which was funded after the Public Offering to hold an amount of cash and marketable securities equal to the redemption amount of the Public Units sold in the Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2022, we had net income of $1,845,721, which included $1,633,838 of other income related to the change in the fair value of the warrant liability and $659,891of dividend and interest income earned in the trust account, offset by $523,816 in general and administrative expenses.

For the nine months ended September 30, 2022, we had net income of $6,998,606, which included $7,195,839 of other income related to the change in the fair value of the warrant liability and $906,427 of dividend and interest income earned in the trust account, offset by $1,103,660 in general and administrative expenses.

Liquidity and Capital Resources

As of September 30, 2022, we had cash of $419,160, and negative working capital of $114,959. Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our Sponsor.



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On September 30, 2021, we consummated the Initial Public Offering of 12,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $125,000,000. On October 15, 2021, the underwriter exercised in full its over-allotment option to purchase additional 1,875,000 Units at a price of $10.00 per Unit. Simultaneously with the closing of the Initial Public Offering and the exercise of the over-allotment option by the underwriter, we consummated the sale of 6,600,000 Private Placement Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant generating gross proceeds of $6,600,000.

An aggregate of nine Anchor Investors were allocated and purchased a total of 11,137,500 Units or 77.5% of the outstanding Units following the Initial Public Offering and exercise of the over-allotment option by the underwriter, for gross proceeds of approximately $111.4 million.

In addition, subject to each Anchor Investor purchasing 100% of the Units allocated to it, in connection with the closing of the Initial Public Offering, the Sponsor sold a portion of Founder Shares to each Anchor Investor, or an aggregate of 495,000 Founders Shares to all Anchor Investors. The Company estimated the aggregate fair value of these Founder Shares attributable to Anchor Investors to be approximately $2.93 million, or $5.93 per share. Simultaneously with the exercise of the over-allotment option by the underwriter, the Company sold the additional total of 112,500 Founder Shares to the Anchor Investors. The Company estimated the aggregate fair value of these Founder Shares to be approximately $667,125, or $5.93 per share.

Following the closing of the Initial Public Offering on September 30, 2021 and the exercise of the over-allotment option by the underwriter on October 15, 2021, an amount of $145,187,500 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed the Trust Account.

As of the IPO Date, transaction costs amounted to $10,343,978, consisting of $2,500,000 of underwriting fees, $4,375,000 of deferred underwriting fees, $2,930,399 representing the aggregate fair value of Founder Shares sold to Anchor Investors and $538,579 of other offering costs. The Company's remaining cash after payment of the Initial Public Offering costs is held outside the Trust Account for working capital purposes. Of the total transaction costs of $10,343,978 as of the IPO Date, $9,809,375 was allocated to the Class A common stock and $534,603 was allocated to the Public Warrants.

As of October 15, 2021, transaction costs related to the exercise of the over-allotment option amounted to $1,941,520, consisting of $375,000 of underwriting fees, $656,250 of deferred underwriting fees, $667,125 representing the aggregate fair value of Founder Shares sold to Anchor Investors, and $243,145 of other offering costs. Of the total transaction costs of $1,941,520 related to the exercise of the over-allotment option, $1,865,801 was allocated to the Class A common stock and $75,719 was allocated to the Public Warrants.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions and income taxes payable), to complete our business combination. To the extent that our capital stock 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.

In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.

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 estimates of the costs of undertaking in-depth due diligence and negotiating our initial 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 initial Business Combination. Moreover, we may need to obtain additional financing either to consummate our initial Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.



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As described more fully in Note 1 to the Financial Statements if the Company is unable to obtain approval for an extension of the deadline or complete a Business Combination by March 30, 2023, then the Company will cease all operations except for the purpose of liquidating. The Company has until March 30, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by the specified period. If a Business Combination is not consummated by March 30, 2023, there will be a mandatory liquidation and subsequent dissolution. The date for mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern for one year from the date that these financial statements are issued. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Critical Accounting Policies and Estimates

The Company prepares its financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect reported amounts. Estimations are considered critical accounting estimates based on, among other things, its impact on the portrayal of the Company's financial condition, results of operations, or liquidity, as well as the degree of difficulty, subjectivity, and complexity in its deployment. Critical accounting estimates address accounting matters that are inherently uncertain due to unknown future resolution of such matters. Management routinely discusses the development, selection, and disclosure of each critical accounting estimates. There have been no significant changes to the Company's policies, estimates and assumptions during the nine-months ended September 30, 2022, except as noted below. Reference should be made to the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for a full description of other significant accounting policies.

Recent Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, which establishes new accounting and disclosure requirements for leases. ASU No. 2016-02 requires lessees to classify most leases as either finance or operating leases and to initially recognize a lease liability and right-of-use asset. The Company adopted ASU No. 2016-02 on January 1, 2022 using the effective date approach to recognize and measure leases as of the adoption date. The Company has elected to utilize the available practical expedient to not separate lease components from non-lease components as well as the package of practical expedients that allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. As a result of the adoption of this guidance, the Company recorded a non-cash transaction to recognize on January 1, 2022 lease liabilities totaling $76,141 and right-of-use-assets totaling $72,007, which will be amortized over the remaining terms of the lease.

Management does not believe that other any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

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