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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-13 · 48 added, 24 removed, 69 unchanged (51% of the section changed)

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Klein and Company, 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.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed consolidated 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

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.

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All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Quarterly Report under “Item 1.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report under “Item 1.

Financial Statements.”

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We cannot assure our shareholders that our plans to complete a Business Combination will be successful.

In 2024, the SEC adopted additional rules and regulations relating to special purpose acquisition companies (“SPAC”)s, which became effective on July 1, 2024 (“2024 SPAC Rules”).

The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC sponsors and related persons;

(ii) additional disclosures relating to SPAC Business Combination transactions;

(iii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in connection with proposed Business Combination transactions;

(iv) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions;

and (v) the requirement that both the SPAC and its target company be co-registrants in connection with registration statements relating to proposed Business Combination transactions.

In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team.

The 2024 SPAC Rules may materially affect our ability to negotiate and complete our Initial Business Combination and may increase the costs and time related thereto.

We may seek to extend the Combination Period consistent with applicable laws, regulations and stock exchange rules by amending our amended and restated memorandum and articles of association.

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Such redemptions will decrease the amount held in our Trust Account and our capitalization, and may affect our ability to maintain our listing on Nasdaq.

In addition, the Nasdaq rules currently require SPACs (such as us) to complete our initial Business Combination within 36 months following the effective date of our IPO Registration Statement.

In addition, the Nasdaq rules currently require special purpose acquisition companies (such as us) to complete our initial Business Combination within 36 months following the effective date of our IPO Registration Statement.

If we do not meet such 36-month requirement, our securities will likely be subject to a suspension of trading and delisting from Nasdaq.

Recent Developments

On April 18, 2025, the Company’s board of directors appointed Paul Lapping as a director and as a member of the audit committee and the compensation committee of the Board, effective as of April 18, 2025.

On July 1, 2025, the Company withdrew $1,000,000 from the Trust Account for working capital purposes.

On July 30, 2025, the Company entered into a Director Agreement with each of the three independent directors of the Company, pursuant to which, in connection with each director’s continuing service as a director of the Company, the Company agreed to pay each director a cash compensation of $75,000 per annum, beginning on the later of their date of appointment and April 1, 2025.

PlusAI Business Combination

On June 5, 2025, the Company entered into the Merger Agreement with Merger Sub I, Merger Sub II and Plus.

Pursuant to the Merger Agreement, and on the terms and subject to the satisfaction or waiver of the conditions set forth therein, the parties thereto intend to effect a business combination transaction by which Merger Sub I will merge with and into Plus, with Plus continuing as the surviving corporation and a wholly-owned subsidiary of the Company in the First Merger, and immediately following the First Merger, the surviving corporation of the First Merger will merge with and into Merger Sub II, with Merger Sub II continuing as the surviving entity in the Second Merger.

The proposed Mergers are expected to be consummated following the receipt of the required approval by the shareholders of the Company and PlusAI and the satisfaction or waiver of certain other closing conditions set forth in the Merger Agreement.

Concurrently with the execution of the Merger Agreement, certain stockholders of Plus entered into Voting and Support Agreements (each, a “Plus Voting and Support Agreement”) with the Company and Plus.

Under the terms of the Plus Voting and Support Agreements, such Plus stockholders have agreed, among other things, to deliver written consents to adopt the Merger Agreement and approve and the transactions contemplated by the Merger Agreement (the “Transactions”), and to vote or consent in opposition to alternative transactions and other matters that could reasonably be expected to materially delay or impair the ability of Plus to consummate the Transactions.

In addition, each Plus stockholder party to a Plus Voting and Support Agreement has agreed to refrain from exercising any dissenters’ rights under applicable law.

The Plus Voting and Support Agreements also contain certain restrictions on the transfer of the shares of stock of Plus held by such stockholders prior to the closing of the Transactions, subject to certain exceptions.

In connection with the execution of the Merger Agreement, the Company amended and restated that certain letter agreement, dated May 1, 2024, by and among the Company, the Sponsor and each of the persons undersigned thereto (the “Insiders”) (the “Amended and Restated Sponsor Agreement”), pursuant to which each of the Sponsor and the Insiders agreed to, among other things, (i) certain voting and non-redemption covenants in connection with the Transactions, (ii) certain vesting and forfeiture provisions in connection with the Sponsor’s Founder Shares and (iii) the waiver of certain anti-dilution rights with respect to the Founder Shares

The foregoing descriptions of the Merger Agreement, the Plus Voting and Support Agreement and the Amended and Restated Sponsor Agreement are not complete and are qualified in their entirety by reference to the Merger Agreement, the Plus Voting and Support Agreement and the Amended and Restated Sponsor Agreement, a copy or a form of which are filed as Exhibits 2,1, 10.1 and 10.2, respectively, to this Current Report on Form 8-K.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

Our only activities from December 18, 2023 (inception) through March 31, 2025 were organizational activities, those necessary to prepare for the Initial Public Offering, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination.

Our only activities from December 18, 2023 (inception) through June 30, 2025 were organizational activities, those necessary to prepare for the Initial Public Offering, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination and activities in connection with attempting to complete the PlusAI Business Combination.

We do not expect to generate any operating revenues until after the completion of our Business Combination.

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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 three months ended March 31, 2025, we had net income of $2,714,137, which includes $2,997,592 of interest income earned on Trust Account, offset by $283,455 of general and administrative costs.

For the three months ended March 31, 2024, we had net loss of $24,092, which primarily consisted of general and administrative costs.

For the three months ended June 30, 2025, we had net income of $842,372, which includes $3,181,033 of interest income earned on Trust Account, offset by $2,338,661 of general and administrative costs.

For the three months ended June 30, 2024, we had net income of $1,962,727, which includes $2,260,889 of interest income earned on Trust Account, offset by $298,162 of general and administrative costs.

For the six months ended June 30, 2025, we had net income of $3,556,509, which includes $6,178,625 of interest income earned on Trust Account, offset by $2,622,116 of general and administrative costs.

For the six months ended June 30, 2024, we had net income of $1,938,635, which includes $2,260,889 of interest income earned on Trust Account, offset by $322,254 of general and administrative costs.

Factors That May Adversely Affect our Results of Operations

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We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our results of operations and our ability to complete an initial Business Combination.

Liquidity and Capital Resources

Liquidity, Capital Resources and Going Concern

Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of shares of Class B ordinary shares, par value $0.0001 per share, by the Sponsor and loans from the Sponsor.

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These permitted withdrawals are limited to only the interest available that has been earned in excess of the initial deposit in the Trust Account at the Initial Public Offering.

During the year ended December 31, 2024, the Company has fully withdrawn $1,000,000 working capital and as of March 31, 2025, the Company has no further amounts available for withdrawal until the 1-year anniversary of the Initial Public Offering.

During the year ended December 31, 2024, the Company had withdrawn $1,000,000 in interest for working capital purposes, and as of June 30, 2025, the Company had no further amounts available for permitted withdrawals until May 6, 2025, which was the 1-year anniversary of the Initial Public Offering.

For the three and six months ended June 30, 2025, the Company did not withdraw any amounts from the Trust Account for working capital purposes.

As of June 30, 2025 the Company had $1,000,000 available for permitted withdraws for the period from May 6, 2025 until May 6, 2026, which is the 2-year anniversary of the Initial Public Offering.

To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we may, at any time, (based on our management team’s ongoing assessment of all factors related to our potential status under the Investment Company Act) instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest-bearing demand deposit account at a bank.

In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” as of March 31, 2025, the Company has sufficient funds for the working capital needs of the Company until a minimum of one year from the date of issuance of these condensed financial statements.

In connection with the Company’s assessment of going concern considerations in accordance with ASC 205-40, “Going Concern,” as of June 30, 2025, the Company has sufficient funds for the working capital needs of the Company until a minimum of one year from the date of these financial statements.

The Company cannot assure that its plans to consummate an initial Business Combination will be successful.

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Moreover, the Company may need to obtain additional financing either to complete its Business Combination or because the Company becomes obligated to redeem a significant number of Public Shares upon completion of the Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.

The Company’s mandatory liquidation and subsequent dissolution in the event the Company does not complete a Business Combination within the Combination Period raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year from the date of the accompanying unaudited condensed consolidated financial statements.

Management plans to address this uncertainty by completing a Business Combination.

If a Business Combination is not consummated by the end of the Combination Period, currently August 8, 2026, there will be a mandatory liquidation and subsequent dissolution of the Company, which raises substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period.

The Company intends to complete the initial Business Combination before the end of the Combination Period.

However, there can be no assurance that the Company will be able to consummate any Business Combination by the end of Combination Period.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2025.

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 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.

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We began incurring these fees on May 2, 2024 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

For the three and six months ended June 30, 2025, the Company incurred $52,500 in fees related to the Director Agreements, and $52,500 is included in accrued expenses within the condensed consolidated balance sheets.

For the three and six months ended June 30, 2024, the Company did not incur any fees related to the Director Agreements.

Upon the completion of our initial Business Combination, the underwriters are entitled to a deferred underwriting commission of 3.5% on the Units sold in the Initial Public Offering, or up to $10,062,500 in the aggregate, subject to the terms of the Initial Public Offering underwriting agreement.

On June 4, 2025, the Company entered into an Advisory Agreement with the underwriter to provide capital market advisory services in connection with the completion of a Business Combination with an identified target.

If a Business Combination is consummated with the identified target the advisor will be entitled to a cash fee of $7,000,000 (the “fee”), payable at the closing of the Business Combination.

At the discretion of the Company and PlusAI, the Company and PlusAI in their sole discretion can pay up to an additional $3,0000,000 fee in connection with the underwriter’s performance.

The underwriter is also entitled to reimbursement of reasonable incurred expenses that shall not exceed $500,000 without the Company’s prior written consent.

If the fee in connection with the Advisory Agreement is paid, the underwriter waives its right to its portion of the deferred underwriting fee pursuant to that certain Underwriting Agreement, dated May 1, 2024.

As the fee is contingent on the closing of a Business Combination that is not considered probable as of June 30, 2025, no expense has been recorded.

On June 5, 2025, the Company entered into the Merger Agreement, by and among the Company, Merger Sub I, Merger Sub II and PlusAI.

Pursuant to the Merger Agreement, and on the terms and subject to the satisfaction or waiver of the conditions set forth therein, the parties thereto intend to effect a business combination transaction by which Merger Sub I will merge with and into the PlusAI, with PlusAI continuing as the surviving corporation and a wholly-owned subsidiary of the Company (“First Merger”), and immediately following the First Merger, the surviving corporation of the First Merger will merge with and into Merger Sub II, with Merger Sub II continuing as the surviving entity.

Critical Accounting Estimates and Policies

The preparation of condensed financial statements 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 condensed financial statements, and income and expenses during the periods reported.

The preparation of condensed consolidated financial statements 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 condensed consolidated 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 condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

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 condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

Accordingly, actual results could materially differ from those estimates.

As of March 31, 2025 and December 31, 2024, we did not have any critical accounting estimates to be disclosed.

As of June 30, 2025 and December 31, 2024, we did not have any critical accounting estimates to be disclosed.

Recent Accounting Standards

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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.

This ASU became effective as of December 31, 2024 and our management adopted this ASU in our condensed financial statements and related disclosures.

This ASU became effective as of December 31, 2024 and our management adopted this ASU in our condensed consolidated financial statements and related disclosures.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis