Andretti Acquisition Corp. II(POLE) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited interim financial statements and management's discussion and analysis for Andretti Acquisition Corp. II Item 1. Interim Financial Statements This section presents the unaudited condensed financial statements for Andretti Acquisition Corp. II, including the balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with detailed notes explaining the company's organization, accounting policies, IPO, private placement, related party transactions, commitments, shareholders' equity, fair value measurements, and segment reporting Condensed Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and shareholders' deficit as of specific dates | ASSETS / LIABILITIES AND SHAREHOLDERS' DEFICIT | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------------------------------------- | :------------------------ | :------------------ | | ASSETS | | | | Cash | $459,437 | $798,454 | | Prepaid expenses | $160,997 | $132,201 | | Total current assets | $620,434 | $930,655 | | Long-term prepaid insurance | $20,222 | $76,772 | | Marketable securities held in Trust Account | $239,426,072 | $234,500,051 | | TOTAL ASSETS | $240,066,728 | $235,507,478 | | LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | Accrued expenses | $81,600 | $75,556 | | Total current liabilities | $81,600 | $75,556 | | Deferred underwriting fee payable | $9,775,000 | $9,775,000 | | TOTAL LIABILITIES | $9,856,600 | $9,850,556 | | Class A ordinary shares subject to possible redemption | $239,426,072 | $234,500,051 | | Accumulated deficit | $(9,216,595) | $(8,843,780) | | TOTAL SHAREHOLDERS' DEFICIT | $(9,215,944) | $(8,843,129) | | TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT| $240,066,728 | $235,507,478 | Unaudited Condensed Statements of Operations This section details the company's financial performance, including net income or loss, interest income, and operating expenses for specified periods | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Period from May 21, 2024 (inception) through June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :----------------------------- | :--------------------------------------------------------- | | General and administrative costs | $180,616 | $372,815 | $43,692 | | Loss from operations | $(180,616) | $(372,815) | $(43,692) | | Interest earned on marketable securities held in Trust Account | $2,470,419 | $4,926,021 | — | | NET INCOME (LOSS) | $2,289,803 | $4,553,206 | $(43,692) | | Basic and diluted net income per share, Class A redeemable ordinary shares | $0.08 | $0.15 | — | | Basic and diluted net income (loss) per share, Class A and Class B non-redeemable ordinary shares | $0.08 | $0.15 | $(0.01) | Unaudited Condensed Statements of Changes in Shareholders' Deficit This section outlines changes in the company's shareholders' deficit, including accumulated deficit and total deficit over various periods | Metric | Balance – December 31, 2024 | Accretion (Q1 2025) | Net Income (Q1 2025) | Balance – March 31, 2025 | Accretion (Q2 2025) | Net Income (Q2 2025) | Balance – June 30, 2025 | | :---------------------------------------------- | :-------------------------- | :------------------ | :------------------- | :----------------------- | :------------------ | :------------------- | :---------------------- | | Accumulated Deficit | $(8,843,780) | $(2,455,602) | $2,263,403 | $(9,035,979) | $(2,470,419) | $2,289,803 | $(9,216,595) | | Total Shareholders' Deficit | $(8,843,129) | $(2,455,602) | $2,263,403 | $(9,035,328) | $(2,470,419) | $2,289,803 | $(9,215,944) | | Metric | Balance — May 21, 2024 (inception) | Issuance of Class B ordinary shares to Sponsor | Net loss | Balance – June 30, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------------------- | :------- | :---------------------- | | Class B Ordinary Shares Amount | $— | $575 | $— | $575 | | Additional Paid-in Capital | $— | $24,425 | $— | $24,425 | | Accumulated Deficit | $— | $— | $(43,692) | $(43,692) | | Total Shareholders' Deficit | $— | $25,000 | $(43,692) | $(18,692) | Unaudited Condensed Statements of Cash Flows This section presents the company's cash inflows and outflows from operating activities and the overall change in cash for the reported periods | Cash Flows from Operating Activities | Six Months Ended June 30, 2025 | Period from May 21, 2024 (inception) through June 30, 2024 | | :----------------------------------- | :----------------------------- | :--------------------------------------------------------- | | Net income (loss) | $4,553,206 | $(43,692) | | Interest earned on marketable securities held in Trust Account | $(4,926,021) | — | | Prepaid expenses | $(28,796) | $1,963 | | Prepaid insurance | $56,550 | — | | Accrued expenses | $6,044 | $5,000 | | Net cash used in operating activities| $(339,017) | — | | Net Change in Cash | $(339,017) | — | | Cash – Beginning of period | $798,454 | — | | Cash – End of period | $459,437 | $— | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed financial statements NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Andretti Acquisition Corp. II is a blank check company formed on May 21, 2024, for the purpose of a Business Combination. It completed its Initial Public Offering (IPO) on September 9, 2024, raising $230 million, and a private placement of $7.6 million. The company has not commenced operations and generates non-operating income from interest on its Trust Account, which holds $231.15 million from the IPO and private placement. The company faces a going concern risk due to its limited operating history and dependence on completing a Business Combination within the Combination Period - The Company is a blank check company incorporated on May 21, 2024, for the purpose of effecting a Business Combination, and as of June 30, 2025, had not selected a specific target[21] - The Initial Public Offering (IPO) was consummated on September 9, 2024, selling 23,000,000 units at $10.00 per unit, generating gross proceeds of $230,000,000[23] - Simultaneously with the IPO, 760,000 private placement units were sold at $10.00 per unit, generating gross proceeds of $7,600,000[24] - Transaction costs related to the IPO amounted to $15,014,904, including $4,600,000 in cash underwriting fees and $9,775,000 in deferred underwriting fees[25] - A total of $231,150,000 ($10.05 per Unit) from the IPO and private placement proceeds was placed in a Trust Account, to be invested in U.S. government treasury obligations or money market funds[27] - As of June 30, 2025, the amount in the Trust Account was $10.41 per Public Share[30] - The Company's liquidity condition raises substantial doubt about its ability to continue as a going concern, with management planning to address this through a Business Combination[38] NOTE 2. SIGNIFICANT ACCOUNTING POLICIES This section outlines the significant accounting policies, including the basis of presentation in accordance with GAAP for interim financial information, the company's status as an emerging growth company, and its election to use the extended transition period for new accounting standards. It also details policies for cash and cash equivalents, marketable securities in the Trust Account, offering costs, concentration of credit risk, fair value of financial instruments, income taxes, warrant instruments, and the classification and accounting for Class A ordinary shares subject to possible redemption - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[41][42] | Asset Category | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Cash | $459,437 | $798,454 | | Marketable securities held in Trust Account | $239,426,072 | $234,500,051 | - Offering costs allocated to Public Shares were charged to temporary equity, while those allocated to Public Warrants and Private Placement Units were charged to shareholders' deficit[48] - The Company accounts for warrant instruments under equity treatment, with 11,880,000 warrants outstanding as of June 30, 2025, and December 31, 2024[54] - Class A ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value, with changes in redemption value recognized immediately[55] | Class A Ordinary Shares Subject to Possible Redemption | Amount | | :----------------------------------------------------- | :----- | | Gross proceeds | $230,000,000 | | Less: Proceeds allocated to Public Warrants | $(1,656,000) | | Less: Issuance costs allocated to Public Shares | $(14,886,476) | | Plus: Accretion of carrying value to redemption value (through Dec 31, 2024) | $21,042,527 | | Class A ordinary shares subject to possible redemption, December 31, 2024 | $234,500,051 | | Plus: Accretion of carrying value to redemption value (Q1 2025) | $2,455,602 | | Class A ordinary shares subject to possible redemption, March 31, 2025 | $236,955,653 | | Plus: Accretion of carrying value to redemption value (Q2 2025) | $2,470,419 | | Class A ordinary shares subject to possible redemption, June 30, 2025 | $239,426,072 | - Basic and diluted net income (loss) per ordinary share are the same for the periods presented because warrants are contingent upon a future event not considered probable[57] NOTE 3. INITIAL PUBLIC OFFERING This note details the Initial Public Offering (IPO) completed on September 9, 2024, where 23,000,000 units were sold at $10.00 each, including the full exercise of the over-allotment option. Each unit consists of one Class A ordinary share and one-half of one redeemable Public Warrant. The note specifies the exercise price ($11.50), exercisability conditions (30 days post-Business Combination), and expiration (five years post-Business Combination). It also outlines the Company's obligations regarding registration of shares underlying warrants and conditions for cashless exercise or redemption of warrants - On September 9, 2024, the Company sold 23,000,000 Units in its IPO at $10.00 per Unit, including the full exercise of the over-allotment option[60] - Each Unit consists of one Class A ordinary share and one-half of one redeemable Public Warrant, with each whole warrant exercisable for one Class A ordinary share at $11.50[60] - Warrants become exercisable 30 days after the completion of the initial Business Combination and expire five years thereafter, or earlier upon redemption or liquidation[61] - The Company may redeem outstanding warrants if the Class A ordinary share closing price equals or exceeds $18.00 for 20 trading days within a 30-trading day period, commencing at least 30 days after the Business Combination[67] NOTE 4. PRIVATE PLACEMENT This note describes the private placement of 760,000 Private Placement Units at $10.00 each to the Sponsor and BTIG, occurring simultaneously with the IPO. Each unit includes one Class A ordinary share and one-half of one Private Placement Warrant. These warrants are similar to Public Warrants but have transfer restrictions, registration rights, and a specific expiration for BTIG's holdings. The Sponsor, officers, and directors have agreed to waive certain redemption and liquidation rights related to their shares - 760,000 Private Placement Units were purchased by the Sponsor and BTIG at $10.00 per unit, generating $7,600,000[71] - Private Placement Warrants are identical to Public Warrants but have transfer restrictions, registration rights, and a five-year exercise limit for BTIG's holdings[72] - The Sponsor, officers, and directors have waived redemption rights for their founder shares, private placement shares, and Public Shares in connection with a Business Combination or certain amendments[72] NOTE 5. RELATED PARTY TRANSACTIONS This note details transactions with related parties, including the issuance of 5,750,000 Class B ordinary shares (founder shares) to the Sponsor for $25,000. It also covers a promissory note from the Sponsor for IPO expenses, which was repaid, and an administrative services agreement where the Company pays the Sponsor $2,500 per month and the CEO $12,500 per month for services. Additionally, it mentions potential Working Capital Loans from related parties to finance Business Combination costs - On May 24, 2024, the Sponsor received 5,750,000 Class B ordinary shares (founder shares) for a capital contribution of $25,000[73] - The Sponsor loaned the Company up to $400,000 for IPO expenses, which was non-interest bearing and repaid in full ($312,130) at the IPO closing on September 9, 2024[76] - The Company pays the Sponsor $2,500 per month for office space and administrative support, and the CEO $12,500 per month for services, totaling $45,000 for three months and $90,000 for six months ended June 30, 2025[77][78] - The Sponsor or affiliates may provide Working Capital Loans up to $1,500,000 to finance Business Combination transaction costs, convertible into private placement units[79] NOTE 6. COMMITMENTS AND CONTINGENCIES This note addresses various commitments and contingencies, including risks and uncertainties from economic and geopolitical factors that could impact the Company's operations and ability to complete a Business Combination. It also details registration rights granted to holders of founder shares and private placement units, the underwriters' over-allotment option (fully exercised), and the deferred underwriting discount of $9,775,000 payable upon Business Combination completion. A Capital Markets Advisory Agreement with a contingent fee of $4,250,000 (plus potential additional $750,000) is also disclosed, with no expense recorded as the Business Combination is not yet probable - The Company's operations and ability to complete a Business Combination may be adversely affected by economic uncertainty, market volatility, and geopolitical instability[82] - Holders of founder shares, Private Placement Units, and certain other securities are entitled to registration rights[83] - The underwriters fully exercised their over-allotment option for 3,000,000 Units on September 9, 2024[84] - A deferred underwriting discount of $9,775,000 is payable upon the completion of the initial Business Combination[85] - The Company entered into a Capital Markets Advisory Agreement with a contingent cash fee of $4,250,000 (plus potential $750,000) payable upon closing of a Business Combination, with no expense recorded as of June 30, 2025, due to the contingency[86] NOTE 7. SHAREHOLDERS' DEFICIT This note details the Company's authorized and outstanding share capital. It specifies 5,000,000 authorized preference shares (none issued), 500,000,000 authorized Class A ordinary shares (760,000 outstanding, excluding 23,000,000 subject to redemption), and 50,000,000 authorized Class B ordinary shares (5,750,000 issued to the Sponsor). It also outlines the automatic conversion of Class B shares to Class A shares upon Business Combination, subject to adjustment, and describes the voting rights for both share classes, including special voting rights for Class B holders on director appointments and jurisdiction changes prior to a Business Combination - The Company is authorized to issue 5,000,000 preference shares (none issued) and 500,000,000 Class A ordinary shares (760,000 outstanding, excluding 23,000,000 subject to redemption)[87][88] - 5,750,000 Class B ordinary shares were issued to the Sponsor for $25,000, and these shares are automatically convertible into Class A ordinary shares upon consummation of the initial Business Combination[89][92] - Prior to the initial Business Combination, only Class B ordinary shareholders have the right to vote on the appointment and removal of directors and on continuing the Company in a jurisdiction outside the Cayman Islands[93] NOTE 8. FAIR VALUE MEASUREMENTS This note explains the fair value hierarchy (Level 1, 2, 3) used for financial instruments. It reports marketable securities held in the Trust Account as Level 1 assets. Public Warrants, classified within shareholders' deficit, were valued at $1,656,000 using a Monte Carlo Simulation Model with Level 3 inputs, including share price, term, risk-free rate, and volatility - The Company uses a fair value hierarchy (Level 1, 2, 3) to classify assets and liabilities based on observable and unobservable inputs[94] | Assets | Level | June 30, 2025 | December 31, 2024 | | :----- | :---- | :------------ | :---------------- | | Marketable securities held in Trust Account | 1 | $239,426,072 | $234,500,051 | | Equity | Level | September 9, 2024 | | :----- | :---- | :---------------- | | Fair value of Public Warrants for allocated proceeds | 3 | $1,656,000 | - The fair value of Public Warrants was determined using a Monte Carlo Simulation Model with Level 3 inputs, including a share price of $9.928, a term of 2.80 years, a risk-free rate of 3.56%, and volatility of 4.60% as of September 9, 2024[97] NOTE 9. SEGMENT REPORTING The Company operates as a single reportable segment, as its Chief Executive Officer (CODM) reviews the Company's assets, operating results, and financial metrics as a whole for resource allocation and performance assessment. Key metrics reviewed include net income or loss, total assets, interest earned on the Trust Account, and general and administrative expenses - The Company has determined that there is only one reportable segment, with the Chief Executive Officer acting as the Chief Operating Decision Maker (CODM)[100] - The CODM assesses performance and allocates resources based on net income or loss and total assets, including interest earned on the Trust Account and general and administrative costs[101][102] NOTE 10. SUBSEQUENT EVENTS The Company reviewed subsequent events up to the financial statement issuance date and identified no events requiring adjustment or disclosure - No subsequent events requiring adjustment or disclosure were identified by the Company's management[104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operational results, highlighting its status as a blank check company focused on a Business Combination. It discusses the financial performance, factors that may adversely affect operations, liquidity, capital resources, and going concern considerations, as well as contractual obligations and critical accounting policies Overview This section provides a high-level summary of the company's formation, purpose as a blank check company, and future acquisition plans - Andretti Acquisition Corp. II is a blank check company formed on May 21, 2024, to effect a Business Combination, utilizing IPO proceeds, private placement funds, and other financing methods[107] - The Company expects to incur significant costs in pursuit of acquisition plans and may need to extend the Combination Period, which requires shareholder approval and could affect Nasdaq listing[108][109] Results of Operations This section analyzes the company's financial performance, focusing on non-operating income and administrative costs - The Company has not generated operating revenues to date, with activities focused on organizational tasks, IPO preparation, and identifying a Business Combination target[110] - Non-operating income is generated from interest on marketable securities held in the Trust Account[110] | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Period from May 21, 2024 (inception) through June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :----------------------------- | :--------------------------------------------------------- | | Net Income (Loss) | $2,289,803 | $4,553,206 | $(43,692) | | Interest earned on marketable securities held in Trust Account | $2,470,419 | $4,926,021 | — | | General and administrative costs | $180,616 | $372,815 | $43,692 | Factors That May Adversly Affect our Results of Operations This section identifies external factors that may adversely affect the company's financial results and Business Combination completion - Various external factors, including economic uncertainty, financial market volatility, inflation, interest rate fluctuations, and geopolitical instability, could adversely affect the Company's results and ability to complete a Business Combination[113] Liquidity, Capital Resources and Going Concern This section examines the company's cash, trust account funds, capital resources, and going concern assessment - The Company's liquidity prior to the IPO was from Sponsor's purchase of Class B shares and loans, with a $312,130 promissory note repaid at IPO closing[114][115] - Following the IPO and private placement, $231,150,000 was placed in the Trust Account, which held $239,426,072 (including $8,276,072 interest income) as of June 30, 2025[116][117][118] - As of June 30, 2025, the Company had $459,437 in cash outside the Trust Account, used for identifying and evaluating target businesses and due diligence[119] - The Company's liquidity condition raises substantial doubt about its ability to continue as a going concern, with management relying on completing a Business Combination to address this uncertainty[122] Contractual Obligations This section details the company's financial commitments, including administrative service fees and deferred underwriting obligations - The Company has no long-term debt, capital lease, or operating lease obligations[123] - The Company pays $2,500 per month to an affiliate of its Sponsor for administrative services and $12,500 per month to its CEO for services[124][125] - A deferred underwriting discount of $9,775,000 is payable upon the completion of the initial Business Combination[127] Critical Accounting Estimates and Policies This section outlines key accounting policies and estimates for redeemable ordinary shares and earnings per share - The Company classifies ordinary shares subject to possible redemption as temporary equity, measured at redemption value, with changes recognized immediately[129][130] - Net income per ordinary share is calculated by dividing net income by weighted average ordinary shares outstanding, with diluted EPS being the same as basic EPS due to warrants being contingent on a non-probable future event[131] - Management believes no recently issued, but not yet effective, accounting standards would materially affect the financial statements[132] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Andretti Acquisition Corp. II is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[133] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, based on an evaluation by management and the Certifying Officer. It also states that there have been no changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[135] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025[136] PART II - OTHER INFORMATION This section provides additional non-financial information, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings Andretti Acquisition Corp. II's management team is not aware of any material litigation currently pending or contemplated against the Company or its officers and directors - There is no material litigation currently pending or contemplated against the Company or its officers and directors[138] Item 1A. Risk Factors As a smaller reporting company, Andretti Acquisition Corp. II is not required to include risk factors in this Quarterly Report, instead referring to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, for relevant risk disclosures - As a smaller reporting company, the Company is not required to include risk factors in this Quarterly Report, referring to previous filings for such information[139] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities during the reporting period and refers to Part I, Item 2 of this Form 10-Q for a description of the use of proceeds from the Initial Public Offering - There were no unregistered sales of equity securities during the quarterly period ended June 30, 2025[140] - Information regarding the use of proceeds from the Initial Public Offering is provided in Part I, Item 2 of this Form 10-Q[141] Item 3. Defaults Upon Senior Securities Andretti Acquisition Corp. II reports no defaults upon senior securities - The Company had no defaults upon senior securities[142] Item 4. Mine Safety Disclosures This item is not applicable to Andretti Acquisition Corp. II - Mine Safety Disclosures are not applicable to the Company[143] Item 5. Other Information This section confirms that none of the Company's directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[144] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including certifications, XBRL documents, and the cover page interactive data file | No. | Description of Exhibit | | :-- | :--------------------- | | 31.1* | Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2* | Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1** | Certification of the Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS* | Inline XBRL Instance Document | | 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | | 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | SIGNATURE This section contains the official signature and date of the company's authorized officer for the quarterly report - The Quarterly Report was signed on August 7, 2025, by William M. Brown, Chief Executive Officer, Principal Financial and Accounting Officer[150]