Vine Hill Capital Investment Corp.(VCICU) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with comprehensive notes detailing the company's organization, accounting policies, and financial activities for the periods ended June 30, 2025 Condensed Balance Sheets The balance sheet shows an increase in total assets primarily due to growth in investments held in the Trust Account, while current assets decreased. Total liabilities also increased, driven by deferred compensation and legal fees. Shareholders' deficit widened Total Assets | Metric | June 30, 2025 | December 31, 2024 | | :----------------------- | :-------------- | :---------------- | | Total assets | $229,887,000 | $225,645,000 | | Investments held in Trust Account | $229,052,000 | $224,294,000 | | Cash | $606,000 | $1,088,000 | | Total current assets | $835,000 | $1,351,000 | Total Liabilities & Shareholders' Deficit | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total current liabilities | $770,000 | $386,000 | | Deferred compensation - related parties | $649,000 | $253,000 | | Deferred legal fees | $702,000 | $521,000 | | Total liabilities | $9,172,000 | $8,607,000 | | Total Shareholders' deficit | $(8,337,000) | $(7,256,000) | Condensed Statements of Operations The company reported net income for the three and six months ended June 30, 2025, primarily driven by significant interest income from the Trust Account, offsetting operating losses. In the prior period (inception to June 30, 2024), the company incurred a net loss Financial Performance (3 Months Ended June 30, 2025) | Metric | Amount | | :------------------------------------------------ | :----------- | | General and administrative expenses | $575,000 | | Loss from operations | $(575,000) | | Interest income on Trust Account | $2,392,000 | | Net income | $1,824,000 | | Net income per Class A ordinary shares – basic and diluted | $0.06 | Financial Performance (6 Months Ended June 30, 2025) | Metric | Amount | | :------------------------------------------------ | :----------- | | General and administrative expenses | $1,097,000 | | Loss from operations | $(1,097,000) | | Interest income on Trust Account | $4,758,000 | | Net income | $3,677,000 | | Net income per Class A ordinary shares – basic and diluted | $0.13 | Financial Performance (Inception to June 30, 2024) | Metric | Amount | | :------------------------------------------------ | :----------- | | General and administrative expenses | $41,000 | | Loss from operations | $(41,000) | | Net loss | $(41,000) | | Net income per Class A ordinary shares – basic and diluted | $- | Condensed Statements of Changes in Shareholders' Deficit The company's shareholders' deficit increased during the three and six months ended June 30, 2025, primarily due to accretion in the value of Class A ordinary shares subject to redemption, partially offset by net income Shareholders' Deficit Changes (6 Months Ended June 30, 2025) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :-------------- | | Balance of Accumulated Deficit | $(7,257,000) | $(8,338,000) | | Accretion in value of Class A ordinary shares | - | $(4,758,000) | | Net income | - | $3,677,000 | | Total Shareholders' Deficit | $(7,256,000) | $(8,337,000) | Shareholders' Deficit Changes (Inception to June 30, 2024) | Metric | Inception (May 24, 2024) | June 30, 2024 | | :-------------------------------- | :----------------------- | :-------------- | | Issuance of ordinary shares to Sponsor | - | $25,000 | | Net loss | - | $(41,000) | | Total Shareholders' Deficit | $- | $(16,000) | Condensed Statements of Cash Flows For the six months ended June 30, 2025, the company experienced net cash used in operating activities, primarily due to income earned on investments in the Trust Account being a non-cash item, offset by net income and increases in deferred compensation and legal fees Cash Flow from Operating Activities (6 Months Ended June 30, 2025) | Metric | Amount | | :------------------------------------------------ | :----------- | | Net income | $3,677,000 | | Income earned on investments held in Trust Account | $(4,758,000) | | Increase in deferred legal fees | $181,000 | | Increase in deferred compensation – related parties | $396,000 | | Net cash used in operating activities | $(482,000) | | Cash – end of period | $606,000 | Cash Flow from Operating Activities (Inception to June 30, 2024) | Metric | Amount | | :------------------------------------------------ | :----------- | | Net loss | $(41,000) | | Formation expenses paid directly by Founders | $16,000 | | Increase in accrued liabilities | $25,000 | | Net cash used in operating activities | $- | | Cash – end of period | $- | Notes to Condensed Financial Statements The notes provide detailed information on the company's organization, significant accounting policies, and specific financial instruments and transactions, including the IPO, private placement, related party dealings, and the management of the Trust Account Note 1 — Description of Organization and Business Operations Vine Hill Capital Investment Corp. is a Cayman Islands exempted company formed on May 24, 2024, operating as a SPAC to effect a business combination. It has not commenced operations and generates non-operating income from its Trust Account. The company faces liquidity concerns and a going concern doubt if a business combination is not completed by June 9, 2026 - The Company was incorporated on May 24, 2024, as a Cayman Islands exempted company, for the purpose of effecting a business combination[21] - As of June 30, 2025, the Company had not yet commenced operations, with all activity related to its formation, initial public offering, and identifying a suitable business combination[22] - The Company's IPO in September 2024 raised $220,000,000 from 22,000,000 Units and $5,500,000 from 5,500,000 Private Placement Warrants, with $221,100,000 placed in a trust account[24][25] - The Company has concluded that conditions raise substantial doubt about its ability to continue as a going concern for a period within one year after the financial statements are issued, primarily due to the need for additional working capital and the deadline to complete a business combination by June 9, 2026[34] Note 2 — Summary of Significant Accounting Policies The financial statements are prepared in accordance with U.S. GAAP for interim reporting, with certain disclosures condensed. The company is an "emerging growth company" and has elected to use the extended transition period for new accounting standards. Key policies include fair value measurement for investments in the Trust Account and specific accounting for redeemable Class A ordinary shares and warrants - The unaudited condensed financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC rules, with certain information condensed or omitted[36] - As an emerging growth company, the Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[39] - Investments held in the Trust Account are in money market funds investing solely in U.S. government treasury obligations and are presented at fair value[41] - Class A ordinary shares subject to possible redemption are classified outside of permanent equity due to redemption provisions not solely within the Company's control, with their carrying value adjusted at each reporting period[55][56] Note 3 — Offering In September 2024, the Company completed its IPO, selling 22,000,000 Units at $10.00 each, including a partial exercise of the underwriters' over-allotment option. Each unit includes one Public Share and one-half of one Public Warrant. The over-allotment option was treated as a derivative liability and extinguished upon partial exercise and forfeiture - The Company sold 22,000,000 Units at $10.00 per Unit, totaling $220,000,000, including 2,000,000 Units from the underwriters' partial exercise of their over-allotment option[63] - Each Unit consists of one Public Share and one-half of one Public Warrant, with each whole Public Warrant entitling the holder to purchase one Class A ordinary share at $11.50[63] - The underwriters forfeited the option to purchase the remaining 1,000,000 Units, and the over-allotment liability of $408,000 was extinguished[63] Note 4 — Private Placement Simultaneously with the IPO, the Sponsor purchased 5,500,000 Private Placement Warrants at $1.00 each. These warrants are exercisable 30 days after a business combination and expire after five years. Proceeds from these warrants held in the trust account will fund public share redemption if a business combination is not completed within 21 months - The Sponsor purchased 5,500,000 Private Placement Warrants at $1.00 per warrant[64] - Each Private Placement Warrant allows the holder to purchase one Class A ordinary share at $11.50, exercisable 30 days after the initial business combination and expiring after five years[64] - Proceeds from these warrants held in the trust account will be used to fund the redemption of Public Shares if an initial business combination is not completed within 21 months[64] Note 5 — Related Party Transactions The Sponsor received 7,666,667 Founder Shares for $25,000, with 333,333 shares forfeited due to the partial exercise of the over-allotment option, leaving 7,333,334 outstanding. The Company has administrative support and executive compensation agreements with related parties, with some compensation deferred until a business combination - The Company issued 7,666,667 Class B ordinary shares (Founder Shares) to the Sponsor in May 2024 for $25,000[65] - 333,333 Founder Shares were forfeited due to the underwriters' partial exercise of the over-allotment option, resulting in 7,333,334 Founder Shares outstanding at June 30, 2025[65] - The Company reimburses the Sponsor $10,000 per month for administrative support and compensates its CEO, CFO, and Executive Director, with a portion of executive compensation deferred until the initial business combination[68][69] - Total accrued deferred compensation, including amounts from 2024, aggregated approximately $649,000 at June 30, 2025[69] Note 6 — Trust Account and Fair Value Measurement The Trust Account, holding $221,100,000 from the IPO and private placement, is invested in money market funds that solely invest in U.S. government treasury obligations. These investments are measured at fair value using Level 1 inputs - A total of $221,100,000 was deposited into the Trust Account from the IPO and Private Placement[73] - Funds in the Trust Account are invested in money market funds meeting Rule 2a-7 conditions, investing solely in U.S. government treasury obligations[73][74] - The fair value of these investments is determined using Level 1 inputs (quoted prices in active markets for identical assets)[76] Trust Account Balance | Date | Money Market Funds | | :---------------- | :---------------- | | June 30, 2025 | $229,052,000 | | December 31, 2024 | $224,294,000 | Note 7 — Commitments and Contingencies The Company incurred a $4,000,000 upfront underwriting fee and has a deferred underwriting fee of up to 2.5% of gross offering proceeds, payable only upon completion of an initial business combination - The Company incurred an upfront underwriting fee of $4,000,000 at the IPO closing[77] - An additional deferred underwriting fee of up to 2.5% of gross offering proceeds is payable only upon the completion of the initial business combination[77] Note 8 — Shareholders' Deficit The Company is authorized to issue preference shares (none outstanding) and ordinary shares (Class A and Class B). 7,333,334 Class B Founder Shares are outstanding. There are 16,500,000 warrants outstanding (Public and Private Placement) to purchase Class A ordinary shares at $11.50 per share, exercisable after a business combination - The Company has 7,333,334 Class B ordinary shares (Founder Shares) outstanding as of June 30, 2025[80] - There are 22,000,000 Public Warrants and 5,500,000 Private Placement Warrants outstanding, totaling 16,500,000 warrants to purchase Class A ordinary shares[81] - Each whole warrant entitles the holder to purchase one Class A ordinary share at $11.50 per share, exercisable 30 days after the initial business combination and expiring five years thereafter[81] - The Company may redeem outstanding Public and Private Placement Warrants for cash at $0.01 per warrant if the Class A ordinary share price equals or exceeds $18.00 for 20 trading days within a 30-day period[83][84] Note 9 — Segment Reporting As a SPAC, the Company operates in a single segment focused on identifying and closing a business combination. The Chief Operating Decision Makers (CEO and CFO) manage costs and optimize investment income within this segment - The Company operates in one segment: seeking to identify and close a business combination[86][87] - Operating expenses for the three and six months ended June 30, 2025, were approximately $575,000 and $1,097,000, respectively[89] - Other income, primarily interest from the trust account, was approximately $2,399,000 and $4,774,000 for the three and six months ended June 30, 2025, respectively[89] - The Chief Executive and Chief Financial Officers are the Chief Operating Decision Makers (CODM), who assess performance based on net income/loss and total assets, focusing on cost maintenance and investment income optimization[89] Note 10 — Subsequent Events The Company evaluated subsequent events up to the financial statement issuance date and found no material subsequent events not already addressed - No material subsequent events occurred after June 30, 2025, up to the date the financial statements were issued[88] 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 results. As a blank check company, operations are focused on identifying a business combination. The Company reported net income due to trust account interest, but faces a going concern risk due to limited operating cash and the deadline for a business combination - The Company is a newly incorporated blank check company, formed on May 24, 2024, to effect a business combination[93] - As of June 30, 2025, the Company had cash and cash equivalents of approximately $606,000 and working capital of approximately $65,000, with significant costs expected in pursuit of acquisition plans[95] - The Company has neither engaged in operations nor generated revenues to date, with all activity related to its formation, IPO, and identifying a business combination[96] - Net income for the three and six months ended June 30, 2025, was primarily driven by interest income from the trust account ($2,399,000 and $4,774,000, respectively), offsetting operating losses[99] - The Company faces substantial doubt about its ability to continue as a going concern if a business combination is not completed by June 9, 2026, or if additional working capital is not secured[108] Operating Costs (3 & 6 Months Ended June 30, 2025) | Period | Executive & Director Compensation & Admin Fees | Professional Costs, Insurance & Other | | :----------------------------- | :--------------------------------------------- | :------------------------------------ | | 3 months ended June 30, 2025 | $327,000 | $248,000 | | 6 months ended June 30, 2025 | $654,000 | $443,000 | Projected Liquidity Requirements (Prior to Business Combination) | Expense Category | Estimated Amount | | :------------------------------------------------ | :--------------- | | Legal, accounting, due diligence, travel for business combinations | $350,000 | | Legal and accounting fees related to regulatory reporting | $100,000 | | Office space, utilities, secretarial/admin support | $120,000 | | Payments to officers | $396,000 | | Directors and officers insurance liability | $250,000 | | Working capital for other miscellaneous expenses | $284,000 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Vine Hill Capital Investment Corp. 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 information under this item[115] Item 4. Controls and Procedures The Company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2025, and concluded they were effective. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated as effective as of June 30, 2025, by the Certifying Officers[116] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[118][119] PART II - OTHER INFORMATION Item 1. Legal Proceedings To the best of management's knowledge, there is no litigation currently pending against the Company, its officers, or directors - No litigation is currently pending against the Company, its officers, or directors[121] Item 1A. Risk Factors The Company refers to the risk factors described in its Annual Report on Form 10-K filed on March 26, 2025. As of the date of this Quarterly Report, there have been no material changes to those previously disclosed risk factors - Risk factors are described in the Annual Report on Form 10-K filed on March 26, 2025[122] - No material changes to the risk factors have occurred as of the date of this Quarterly Report[122] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company reported no unregistered sales of equity securities or use of proceeds during the period - None[123] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - None[124] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[125] Item 5. Other Information The Company reported no other information required under this item - None[126] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[128] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are filed as Exhibits 101.INS through 101.PRE[128] Signatures The report is signed by Nicholas Petruska, Chief Executive Officer, and Daniel Zlotnitsky, Chief Financial Officer, on August 12, 2025 - Signed by Nicholas Petruska, Chief Executive Officer, and Daniel Zlotnitsky, Chief Financial Officer[133] - Dated: August 12, 2025[133]