Item 7. Management’s Discussion and Analysis
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion
and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this
Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including
those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere
in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated
in the Cayman Islands on December 4, 2024 and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition,
share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business
Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Placement Units held in the Trust
Account, our shares, debt or a combination of cash, shares 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.
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Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities from December 4, 2024 (inception) through December 31, 2025 were organizational
activities and those necessary to prepare for the Initial Public Offering, described below, and subsequent to the Initial Public Offering,
identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion
of our Business Combination. Subsequent to the Initial Public Offering, we generate non-operating income in the form of interest income
on marketable securities held in the Trust Account. We incur 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 year ended December 31, 2025, we had net
income of $4,355,499, which consisted of interest earned on marketable securities held in Trust Account of $5,050,313, offset by general
and administrative costs of $694,814.
For the period from December 4, 2024 (inception)
through December 31, 2024, we had a net loss of $15,824, which consisted of general and administrative costs.
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, par value $0.0001 per share, by the Sponsor and
loans from the Sponsor (which were repaid subsequent to the closing of the Initial Public Offering).
On July 2, 2025, the Company consummated the Initial
Public Offering of 25,300,000 Units, which included the full exercise by the underwriters of their over-allotment option in the amount
of 3,300,000 Units, at $10.00 per Unit, generating gross proceeds of $253,000,000. Simultaneously with the closing of the Initial Public
Offering, the Company consummated the sale of 720,000 Placement Units at a price of $10.00 per Placement Unit, in a private placement
to Cohen Circle Sponsor II, LLC and Clear Street, generating gross proceeds of $7,200,000. Of those 720,000 Placement Units, Cohen Circle
Sponsor II, LLC purchased 445,000 Placement Units and Clear Street purchased 275,000 Placement Units.
Following the closing of the Initial Public
Offering and the Private Placement, a total of $253,000,000 was placed in the Trust Account. We incurred $15,752,775 of transaction costs,
consisting of $4,400,000 of cash underwriting fee, $10,780,000 of deferred underwriting fee, and $572,775 of other offering costs.
For the year ended December 31, 2025, net cash
used in operating activities was $819,729. Net income of $4,355,499 was affected by interest earned on marketable securities of $5,050,313,
payment of general and administrative costs through promissory note – related party of $54,568, and changes in operating assets
and liabilities, which used $179,483.
For the period from December 4, 2024 (inception)
through December 31, 2024, net cash used in operating activities was $0. Net loss of $15,824 was affected by changes in operating
assets and liabilities, which used $15,824.
We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of permitted
withdrawals and excluding deferred underwriting commissions), 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.
We intend to 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.
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In order to fund working capital deficiencies
or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor may, but are not obligated
to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. 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 $2,500,000 of such Working Capital Loans may be convertible
into units upon consummation of the Business Combination at a price of $10.00 per unit. The units would be identical to the Placement
Units.
Additionally, to fund working capital, the Company
has permitted withdrawals available up to an annual limit of $400,000. These permitted withdrawals are limited to only the interest available
that has been earned in excess of the initial deposit at the Initial Public Offering. For the year ended December 31, 2025, the Company
withdrew $400,000 in interest from the Trust Account for working capital purposes and has no further amounts available for permitted withdrawals
until July 2, 2026, which is the 1-year anniversary of the Initial Public Offering.
In connection with the Company’s assessment
of going concern considerations in accordance with ASC 205-40, “Going Concern,” as of December 31, 2025, 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.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 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 an agreement to pay Cohen Circle Sponsor II, LLC or its
affiliate or designee $30,000 per month for office space, utilities, and shared personnel support services, and to pay the Chief Financial
Officer up to $12,500 per month for his services as Chief Financial Officer of the Company.
The underwriters were entitled to a deferred fee
of (i) $0.40 per Unit of the gross proceeds of the initial 22,000,000 Units sold in the Initial Public Offering, or $8,800,000 and (ii)
$0.60 per Unit of the gross proceeds from the Units sold pursuant to the over-allotment option, or $1,980,000. The deferred commissions
will be released to Clear Street for its own account concurrently with completion of an initial Business Combination, but such deferred
commissions shall be due and payable, with respect to up to 75% of such deferred commissions, in the Company’s sole discretion.
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Critical Accounting Estimates
The preparation of the financial statements and
related disclosures 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 financial statements,
which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company uses a third-party valuation expert to determine the fair value of the Public and Private Placement Warrants from inception
and on a quarterly and annual basis. As of December 31, 2025, other than the Public and Private Placement Warrants, the Company did not
have any critical accounting estimates to be disclosed.
Critical Accounting Policies
Ordinary Shares Subject to Possible Redemption
We account for our Ordinary Shares subject to
possible redemption in accordance with the guidance in FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC
480”). Ordinary Shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally
redeemable Ordinary Shares (including Ordinary Shares that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At
all other times, Ordinary Shares are classified as shareholders’ equity. Our Ordinary Shares feature certain redemption rights that
are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Ordinary Shares subject
to possible redemption are presented as temporary equity, outside of the shareholders’ deficit section of our condensed balance
sheets.
Warrant Instruments
The Company accounted for the Public and Placement
Warrants 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”, whereby under that provision, the warrants that do not meet the criteria for
equity treatment must be recorded as liability. Accordingly, the Company evaluated and classified the warrant instruments under equity
treatment at their assigned value. Such guidance provides that the warrants described above will not be precluded from equity classification.
Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized
as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07,
“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in this ASU 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. The ASU 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 Topic 280 in interim periods, and entities with a single reportable segment are required to provide
all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU 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 December 4, 2024, its date of incorporation.
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
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Item 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company,
we are not required to provide the information required by this Item.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.
This information appears following
Item 15 of this Annual Report and is included herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.