Athena Technology Acquisition II(ATEK) - 2025 Q2 - Quarterly Report

PART 1 – FINANCIAL INFORMATION Item 1. Interim Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining the company's organization, accounting policies, related party transactions, commitments, and fair value measurements Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets ($) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | ASSETS | | | | Cash | $280,063 | $142,260 | | Total current assets | $981,875 | $800,703 | | Investments held in Trust Account | $3,585,115 | $3,666,439 | | TOTAL ASSETS | $4,566,990 | $4,467,142 | | LIABILITIES & EQUITY | | | | Total current liabilities | $11,562,439 | $10,085,562 | | Deferred underwriting fee payable | $8,956,250 | $8,956,250 | | TOTAL LIABILITIES | $20,518,689 | $19,041,812 | | Class A Common stock subject to possible redemption | $4,215,219 | $4,285,713 | | TOTAL STOCKHOLDERS' DEFICIT | $(20,166,918) | $(18,860,383) | - Total assets increased by $99,848 (2.24%) from December 31, 2024, to June 30, 2025[7] - Total current liabilities increased by $1,476,877 (14.64%) over the same period, primarily due to increases in accounts payable and accrued expenses and note payable - related party[8] - Total stockholders' deficit worsened by $1,306,535 (6.93%) from December 31, 2024, to June 30, 2025[9] Unaudited Condensed Consolidated Statements of Operations Unaudited Condensed Consolidated Statements of Operations ($) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $634,894 | $382,269 | $1,360,614 | $1,158,045 | | Franchise tax | $4,800 | $5,300 | $10,000 | $30,796 | | Total operating expenses | $639,694 | $387,569 | $1,370,614 | $1,188,841 | | Interest income on investments held in Trust Account | $38,380 | $194,074 | $76,895 | $512,940 | | Finance costs – discount on debt issuance | $(96,472) | — | $(171,316) | $(59,940) | | Total other (expense) income, net | $(58,092) | $194,074 | $(94,421) | $453,000 | | LOSS BEFORE PROVISION FOR INCOME TAXES | $(697,786) | $(193,495) | $(1,465,035) | $(735,841) | | Provision for income taxes | $(1,420) | $(41,923) | $(2,829) | $(101,104) | | NET LOSS | $(699,206) | $(235,418) | $(1,467,864) | $(836,945) | | Basic and diluted net loss per share, Class A common stock | $(0.07) | $(0.02) | $(0.14) | $(0.07) | - Net loss for the three months ended June 30, 2025, increased to $(699,206) from $(235,418) in the prior year, primarily due to higher operating expenses and finance costs[10] - For the six months ended June 30, 2025, net loss was $(1,467,864), a significant increase from $(836,945) in the same period of 2024[10] - Interest income from investments in the Trust Account decreased substantially, from $194,074 to $38,380 for the three-month period and from $512,940 to $76,895 for the six-month period, year-over-year[10] Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit ($) | Change Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance, December 31 | $(18,860,383) | $(15,031,287) | | Remeasurement of common stock subject to redemption | $70,494 | $(555,040) | | Class A common stock to be transferred to fund promissory note | $90,835 | — | | Excise tax payable attributable to redemption | — | $(101,797) | | Net loss | $(1,467,864) | $(836,945) | | Balance, June 30 | $(20,166,918) | $(16,525,069) | - The accumulated deficit increased from $(18,861,366) at December 31, 2024, to $(20,211,428) at June 30, 2025, primarily due to net losses[11] - Remeasurement of common stock subject to redemption resulted in a net increase in stockholders' deficit of $70,494 for the six months ended June 30, 2025[11] Unaudited Condensed Consolidated Statements of Cash Flows Unaudited Condensed Consolidated Statements of Cash Flows ($) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(520,416) | $(1,785,421) | | Net cash provided by investing activities | $158,219 | $10,208,748 | | Net cash provided by (used in) financing activities | $500,000 | $(9,423,977) | | NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $137,803 | $(1,000,650) | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $280,063 | $824,243 | - Net cash used in operating activities decreased significantly from $(1,785,421) in 2024 to $(520,416) in 2025[16] - Net cash provided by investing activities decreased substantially from $10,208,748 in 2024 to $158,219 in 2025, primarily due to lower cash withdrawals from the Trust Account for redemptions[16] - Financing activities shifted from using $(9,423,977) cash in 2024 to providing $500,000 cash in 2025, mainly from proceeds of promissory notes[16] Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 — Organization and Business Operations - Athena Technology Acquisition Corp. II is a blank check company formed on May 20, 2021, for the purpose of a Business Combination[18] - The Company consummated its IPO on December 14, 2021, selling 25,000,000 units at $10.00 per unit, generating $250,000,000 gross proceeds[21] - On December 4, 2024, the Company entered into a Business Combination Agreement with Ace Green Recycling, Inc. for a merger[47] - As of June 30, 2025, the Company's aggregate excise tax payable, including interests and penalties, amounted to $3,688,337, with significant unpaid amounts from 2023 and 2024[62][63][64] - Management has determined that the Company's liquidity position and mandatory liquidation date of September 14, 2025, raise substantial doubt about its ability to continue as a going concern[73] Note 2 — Summary of Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP and SEC rules for interim reporting[76] - The Company is an emerging growth company and has elected not to opt out of the extended transition period for new accounting standards[79] - Class A common stock subject to possible redemption is classified as temporary equity, with changes in redemption value recognized immediately[92][94] - Warrants are accounted for as equity-classified instruments based on specific terms and authoritative guidance[99] - The Company adopted ASU 2023-07, 'Segment Reporting,' effective December 31, 2024[100] Note 3 — Initial Public Offering and Over-Allotment - The Company sold 25,375,000 units in its IPO and over-allotment at $10.00 per unit[102] - Each unit consists of one Public Share and one-half of a Public Warrant[102] Note 4 — Private Placement - The Company consummated the private placement of 953,750 Private Placement Units to the Sponsor at $10.00 per unit, generating gross proceeds of $9,537,500[103] - Proceeds from the Private Placement Units are held in the Trust Account and will be used to fund redemption of Public Shares if a Business Combination is not completed[103] Note 5 — Related Party Transactions - The Sponsor purchased 10,062,500 Founder Shares, which are subject to transfer restrictions and convert into Class A common stock[104][106] - Due to related party amounted to $211,029 as of June 30, 2025, for expenses paid by the Sponsor and administrative support services fees[107] - An unsecured, non-interest bearing convertible promissory note of $422,182 was issued to the Sponsor on July 26, 2024[108] - Total borrowings under Working Capital Loans were $1,735,686 (net of discount) as of June 30, 2025, including notes from the Sponsor and third-party investors for extensions and working capital[109][115] - The Company pays the Sponsor $10,000 per month for office space, utilities, and administrative services[116] Note 6 — Commitments and Contingencies - Holders of Founder Shares, Private Placement Units, and Working Capital Loans have registration rights for their securities[117] - Deferred underwriting commissions of $8,956,250 were formally waived by Citigroup, contingent upon a successful Business Combination with Ace Green Recycling[120] - The Business Combination Agreement with Ace Green Recycling, entered on December 4, 2024, includes the issuance of up to 10,500,000 Earnout Shares to Ace Green Recycling shareholders and 1,500,000 to the Sponsor[121][123] - Voting and Support Agreements and Lock-Up Agreements are in place with the Sponsor and certain Ace Green Recycling shareholders, restricting share transfers post-merger[124][126] Note 7 — Stockholders' Deficit - The Company is authorized to issue 1,000,000 shares of preferred stock, with none issued or outstanding as of June 30, 2025[129] - As of June 30, 2025, there were 9,835,000 shares of Class A common stock classified as permanent equity and 310,156 shares subject to possible redemption classified as temporary equity[130] - No Class B common stock was outstanding as of June 30, 2025, due to conversion into Class A common stock[131] - The Company has 12,687,500 Public Warrants and 953,750 Private Placement Warrants outstanding, exercisable 30 days after a Business Combination[135] Note 8 — Fair Value Measurements - Investments held in the Trust Account, totaling $3,585,115 as of June 30, 2025, are classified as Level 1 fair value measurements (money market funds)[146][148] - Subscription shares are valued using the market approach and classified as Level 3, incorporating discounts for lack of marketability, probability of liquidation, and expected forfeiture[148][149] Note 9 — Segment Information - The Company operates as a single reportable segment, with the Chief Executive Officer identified as the Chief Operating Decision Maker (CODM)[151] - The CODM reviews key metrics such as investments held in Trust Account, cash, general and administrative expenses, and interest income to assess performance and allocate resources[152][153][154] Note 10 — Subsequent Events - The Company deposited $6,203 into the Trust Account on July 8, 2025, and August 11, 2025, extending the Business Combination period to September 14, 2025[157] - A preliminary proxy statement was filed on August 13, 2025, for a special meeting on September 10, 2025, to vote on extending the mandatory liquidation date to June 14, 2026[158] - On August 11, 2025, Polar contributed an additional $400,000 to the Sponsor, which was loaned to the Company for working capital, bringing the total Polar Capital Investment to $900,000[159] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and future outlook. It reiterates the company's SPAC nature, details the proposed business combination with Ace Green Recycling, discusses liquidity challenges, and addresses the going concern issue, highlighting the need for additional funding and the impact of excise taxes - Athena Technology Acquisition Corp. II is a blank check company focused on completing a Business Combination, with a proposed merger with Ace Green Recycling, Inc. under a Business Combination Agreement dated December 4, 2024[163][165] Key Financial Performance (Six Months Ended June 30) ($) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :----------- | :----------- | :------- | | Net Loss | $(1,467,864) | $(836,945) | $(630,919) | | Operating Expenses | $1,360,614 | $1,158,045 | $202,569 | | Interest Income (Trust Account) | $76,895 | $512,940 | $(436,045) | | Finance Costs | $171,316 | $59,940 | $111,376 | - As of June 30, 2025, the Company had operating cash of $280,063 and a working capital deficit of $10,580,564[215] - Management has determined that the Company's liquidity position and the mandatory liquidation date of September 14, 2025, raise substantial doubt about its ability to continue as a going concern[222] - The aggregate excise tax payable, including interest and penalties, amounted to $3,688,337 as of June 30, 2025, with the Company evaluating options for payment of overdue 2023 and 2024 liabilities[210][211][212] - The Company has secured funding through promissory notes from the Sponsor and contributions from investors (Polar, Kevin Wright and Jeanine Percival Wright Revocable Trust) for extensions and working capital, totaling $1,735,686 (net) in Working Capital Loans as of June 30, 2025[217][218][219][220][221] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Athena Technology Acquisition Corp. II is not required to provide quantitative and qualitative disclosures about market risk - The Company is a 'smaller reporting company' and is exempt from providing quantitative and qualitative disclosures about market risk[236] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness related to the misallocation of restricted funds. Remediation efforts are ongoing, including enhanced controls, improved communications, and audit committee oversight - Disclosure controls and procedures were not effective as of June 30, 2025[238] - A material weakness was identified due to the misallocation of $669,440 in restricted funds from the Trust Account for general operating expenses, which was not in accordance with the Charter and Trust Agreement[240][241] - Remediation efforts include enhanced controls, improved internal communications, oversight of cash availability, additional review of payments, remedial training, and requiring audit committee approval for Trust Account withdrawals[244] - The material weaknesses are not yet considered remediated until the applicable controls operate effectively for a sufficient period[245] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings as of the filing date - The Company has no legal proceedings to report[249] Item 1A. Risk Factors The company refers to the risk factors disclosed in its Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, stating that there have been no material changes to these risks as of the current report date - Risk factors are detailed in the Company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q[250] - No material changes to the disclosed risk factors have occurred as of the date of this Quarterly Report[250] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the initial public offering (IPO) and private placement of units, including the gross proceeds generated and the allocation of funds to the Trust Account. It also mentions the deferred underwriting commissions - The Company consummated its IPO on December 14, 2021, selling 25,000,000 units at $10.00 per unit, generating $250,000,000 gross proceeds[251] - A private placement of 950,000 Private Placement Units to the Sponsor at $10.00 per unit generated $9,500,000 gross proceeds[252] - An additional 375,000 Over-allotment Units were sold for $3,750,000, along with 3,750 private placement units to the Sponsor for $37,500[253] - Following the IPO and over-allotment, $256,287,500 of net proceeds were placed in a Trust Account[255] - Deferred underwriting commissions of $8,956,250 are contingent upon the consummation of a Business Combination[254][256] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities as of the filing date - The Company has no defaults upon senior securities to report[258] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[259] Item 5. Other Information This section discloses a subsequent event where Polar Multi-Strategy Master Fund contributed an additional $400,000 to the Sponsor, which was then loaned to the Company for working capital, bringing the total Polar Capital Investment to $900,000 - On August 11, 2025, Polar Multi-Strategy Master Fund contributed an additional $400,000 to the Sponsor, which was loaned to the Company for working capital expenses[260] - This brings the aggregate Polar Capital Investment to $900,000[260] - The August Subscription Agreement provides for repayment of the investment upon Business Combination closing and the transfer/issuance of an additional 400,000 Class A common shares to Polar (totaling 900,000 shares)[261] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including a subscription agreement and various certifications - Exhibits include a Subscription Agreement (10.1), Certifications of Principal Executive Officer (31.1, 32.1), Certifications of Principal Financial Officer (31.2, 32.2), and Inline XBRL documents[263] SIGNATURE SIGNATURE The report is signed by Jennifer Calabrese, Chief Financial Officer, on behalf of Athena Technology Acquisition Corp. II, dated August 19, 2025 - The report was signed by Jennifer Calabrese, Chief Financial Officer, on August 19, 2025[267]