Andretti Acquisition Corp. II 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Note Regarding Forward-Looking Statements All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026 (this “Quarterly Report”), including, without limitation, statements under this Item regarding our financial position, possible Business Combinations and the financing thereof, and related matters, and the plans and objectives of Management for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in the Report, words such as “may,” “should,” “could,” “would,” “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our Management, identify forward-looking statements. We have based these forward-looking statements on our Management’s current expectations and projections about future events, as well as assumptions made by, and information currently available to our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. 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 the Report under Item 1. “Financial Statements”. Overview We are a blank check company incorporated in the Cayman Islands on May 21, 2024 for the purpose of effecting a Business Combination. Our Sponsor is Andretti Sponsor II LLC. We are an early stage and emerging growth company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies. We expect to continue to incur significant costs in the pursuit of our acquisition plans. There can be no assurance that our plans to complete a Business Combination will be successful. The Registration Statement on Form S-1 initially filed with the SEC on June 28, 2024, as amended, (File No. 333-280552) (the “IPO Registration Statement”) became effective on September 5, 2024. On September 9, 2024, we consummated our Initial Public Offering of 23,000,000 Public Units, including 3,000,000 Units issued pursuant to the full exercise of the over-allotment option. Each Public Unit consists of one Public Share and one-half of one Public Warrant. The Public Units were sold at a price of $10.00 per Public Unit, generating gross proceeds to us of $230,000,000. Simultaneously with the closing of the Initial Public Offering, we completed the sale of an aggregate of 760,000 Private Placement Units to the Sponsor and BTIG in the Private Placement at a purchase price of $10.00 per Private Placement Unit, generating gross proceeds to us of $7,600,000. Of those 760,000 Private Placement Units, the Sponsor purchased 450,000 Private Placement Units and BTIG purchased 310,000 Private Placement Units. The Private Placement Units (and underlying securities) are identical to the Public Units (and underlying securities), except as otherwise disclosed in the IPO Registration Statement. Following the closing of the Initial Public Offering and Private Placement, an amount of $231,150,000 from the net proceeds of the Initial Public Offering and the Private Placement was initially placed in the Trust Account located in the United States with Continental acting as trustee. Pursuant to the Trust Agreement, the Trust Account may be invested only (i) in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act with a maturity of 185 days or less, (ii) in any open-ended investment company that holds itself out as a money market fund selected by us meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, (iii) as uninvested cash or (iv) in interest or non-interest bearing demand deposit accounts at a U.S. chartered commercial bank with consolidated assets of $100 billion or more selected by the Trustee that is reasonably satisfactory to us, until the earlier of: (x) the completion of the Business Combination and (y) the distribution of the Trust Account, as described below. 18 We have until September 9, 2026 (24 months from the closing of the Initial Public Offering), or until such (x) earlier date as our board of directors may approve or (y) later date as our shareholders may approve, pursuant to the amended and restated memorandum and articles of association , to consummate the Business Combination. If we are unable to complete the Business Combination by the end of the Combination Period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay taxes, if any, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject, in each case, to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. 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. Any such amendment would require the approval of our shareholders, and our public shareholders will be provided the opportunity to redeem all or a portion of their Public Shares in connection with the vote on such approval. Such redemptions will decrease the amount held in our Trust Account and our capitalization, and may affect our ability to maintain our listing on The Nasdaq Stock Market LLC (“Nasdaq”). In addition, the continued listing rules of Nasdaq currently require special purpose acquisition companies (such as us) to complete their initial business combination within 36 months following of the effectiveness of its registration statement for the initial public offering (the “Nasdaq 36-Month Requirement”). If we do not meet the Nasdaq 36-Month Requirement, our securities will likely be subject to suspension of trading and delisting from Nasdaq. Our Sponsor may also, in its discretion, consider selling its interest in us to another sponsor entity, which may result in a change to our management team. Recent Developments On April 27, 2026, we amended the WCL Promissory Notes to each of William J. Sandbrook, Michael Andretti and William M. Brown, to increase the total principal amounts to $2,100,000, $875,000 and $1,400,000, respectively. On April 30, 2026, we drew $180,000 from the WCL Promissory Notes, which consisted of $144,000 from William J. Sandbrook and $36,000 from Michael Andretti. After April 30, 2026, a drawdown of $3,135,000 remains available for withdrawal. StoreDot Business Combination On December 3, 2025, we entered into the StoreDot BCA with (i) StoreDot, (ii) Pubco, (iii) Company Merger Sub and (iv) SPAC Merger Sub for the StoreDot Business Combination. On February 17, 2026, we, StoreDot, Pubco, SPAC Merger Sub and Company Merger Sub entered into the StoreDot Termination Agreement pursuant to which the parties mutually agreed to terminate the StoreDot BCA in its entirety pursuant to Section 8.1(a) thereof. Concurrently with the termination of the StoreDot BCA, each of the related agreements (including, but not limited to, the voting agreements, the insider letter amendment and the sponsor letter agreement) were automatically terminated. As a result, the StoreDot BCA and related agreements are of no further force and effect. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities since May 21, 2024 (inception) through March 31, 2026 have been (i) organizational activities and (ii) activities relating to (x) the Initial Public Offering and (y) identifying and evaluating prospective acquisition candidates and activities in connection with the initial Business Combination. We will not generate any operating revenues until after completion of our initial Business Combination. We have generated non-operating income in the form of interest income on investments held in the Trust Account after the Initial Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance, among other things), as well as for due diligence expenses. For the three months ended March 31, 2026, we had net income of $1,841,144, which consisted of interest earned on marketable securities held in Trust Account of $2,147,774, partially offset by general and administrative cost of $306,630. For the three months ended March 31, 2025, we had net income of $2,263,403, which consisted of interest earned on marketable securities held in Trust Account of $2,455,602, partially offset by general and administrative cost of $192,199. Liquidity, Capital Resources and Going Concern Following the Initial Public Offering, including the full exercise of the over-allotment option, and the Private Placement, a total of $231,150,000 was initially placed in the Trust Account. We incurred fees of $15,014,904 in the Initial Public Offering, consisting of $4,600,000 of cash underwriting fee, the deferred underwriting fee of $9,775,000 and $639,904 of other offering costs. As of March 31, 2026 and December 31, 2025, we had $150,516 and $48,469, respectively of cash in our operating account. As of March 31, 2026 and December 31, 2025, we had a working capital surplus of $274,364 and working capital deficit of $29,006, respectively. As of March 31, 2026 and December 31, 2025, approximately $15,259,067 and $13,111,293 of the amount earned on funds held in the Trust Account was available to pay taxes, if any. 19 As of March 31, 2026 and December 31, 2025, we had marketable securities held in the Trust Account of $246,409,067 and $244,261,293, respectively (including approximately $15,259,067 and $13,111,293, respectively, of interest income). We may withdraw interest from the Trust Account to pay taxes, if any. 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 taxes payable, if any, and exclude the deferred underwriting fee), 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. 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. As of March 31, 2026 and December 31, 2025, we had cash held outside of the Trust Account of approximately $150,516 and $48,469, respectively. We 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. Our liquidity needs through March 31, 2026 have been satisfied through (i) a contribution of $25,000 from the Sponsor in exchange for the issuance of our founder shares, (ii) loans pursuant to the IPO Promissory Note and the WCL Promissory Notes, and (iii) the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside the Trust Account. Working Capital Loans In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us Working Capital Loans, as may be required. If we complete a Business Combination, we intend to repay such Working Capital Loans. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such Working Capital Loans, but no proceeds from our Trust Account will be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into private placement units at a price of $10.00 per unit at the option of the lender. Such units and their underlying securities would be identical to the Private Placement Units, including as to exercise price, exercisability and exercise period of the underlying warrants. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. See below for more information on the WCL Promissory Notes we issued in connection with Working Capital Loans from the WCL Payees. Promissory Notes Prior to the closing of our Initial Public Offering, on May 21, 2024, our Sponsor agreed to loan us an aggregate of up to $300,000 under the IPO Promissory Note to cover expenses related to the Initial Public Offering. On July 16, 2024, we amended the IPO Promissory Note to increase the principal amount to $400,000. Such loans and advances were non-interest bearing and payable on the earlier of December 31, 2024 or the completion of our Initial Public Offering. The loan of $312,130 was fully repaid upon the consummation of our Initial Public Offering on September 9, 2024. No additional borrowing is available under the IPO Promissory Note. On October 14, 2025, we issued the WCL Promissory Notes, three separate unsecured promissory notes to each of the WCL Payees, for an aggregate principal amount of $1,500,000. The proceeds of the WCL Promissory Notes, which may be drawn from time to time prior to the WCL Maturity Date, will be used by us for working capital purposes. The WCL Promissory Notes bear no interest and are due and payable upon the earlier of (i) the consummation of the Business Combination and (ii) the date of our liquidation. In the event that we do not consummate a Business Combination, the WCL Promissory Notes will be repaid only from amounts remaining outside of the Trust Account, if any. If, prior to the Business Combination, the principal balances of the WCL Promissory Notes have not been paid in full, then, at the WCL Payees’ option and subject to certain conditions, up to the total principal amounts of the WCL Promissory Notes may be converted into WCL Conversion Units, each consisting of one Class A ordinary share and one-half of one warrant, at a conversion price of $10.00 per WCL Conversion Unit, on the date of the Business Combination. The WCL Conversion Units and their underlying securities shall be identical to the Private Placement Units and their underlying securities. WCL Conversion Units and their underlying securities are entitled to the registration rights set forth in that certain registration rights agreement. A failure to pay the principal outstanding amount of the WCL Promissory Notes within one business day of the WCL Maturity Date shall be deemed an event of default, in which case the WCL Payees may declare the WCL Promissory Notes due and payable immediately. The issuance of the WCL Promissory Notes was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. As of March 31, 2026, we had borrowed $1,060,000 from the WCL Promissory Notes which consisted of $508,800 from William J. Sandbrook, $212,000 from Michael Andretti and $339,200 from William M. Brown against the WCL Promissory Notes and had $440,000 available for withdrawal. 20 Going Concern In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements—Going Concern,” management has determined that we currently lack the liquidity we need to sustain operations for a reasonable period of time, which is considered to be at least one year from the date that the financial statements and the notes thereto included elsewhere in this Quarterly Report are issued, as we expect to continue to incur significant costs in pursuit of our acquisition plans. In addition, management has determined that if we are unable to complete an initial Business Combination within the Combination Period, then we will cease all operations except for the purpose of liquidating. These conditions raise substantial doubt about our ability to continue as a going concern. Management plans to consummate an initial Business Combination prior to the end of the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after September 9, 2026. There can be no assurance that our plans to raise capital or to consummate an initial Business Combination will be successful. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as follows: Administrative Services Agreement and Chief Executive Officer Compensation Commencing on September 5, 2024, and until the completion of our Business Combination or liquidation, we reimburse an affiliate of the Sponsor $2,500 per month for office space, utilities, and secretarial and administrative support pursuant to the Administrative Services Agreement. Additionally, we agreed to pay our Chief Executive Officer $12,500 per month for his services commencing on September 5, 2024, through the earlier of consummation or the initial Business Combination or the liquidation. For the three months ended March 31, 2026 and 2025, we incurred and paid $45,000 in such fees to our Chief Executive Officer. Underwriting Agreement We granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to an additional 3,000,000 Units to cover over-allotments, if any. On September 9, 2024, the underwriters fully exercised their over-allotment option. The underwriters were paid a cash underwriting discount of $4,600,000 (2.00% of the gross proceeds of the Public Units offered in the Initial Public Offering). Additionally, the underwriters were entitled to the deferred underwriting fee of 4.25% of the gross proceeds of the base Initial Public Offering held in the Trust Account, which equated to $9,775,000 in the aggregate, following the full exercise of the over-allotment option. The deferred underwriting fee is payable to the underwriters upon the completion of the initial Business Combination, subject to the terms of the Underwriting Agreement. On December 17, 2025, we entered into the Underwriting Agreement Amendment, which is effective and conditioned upon the closing of the StoreDot Business Combination. As a result of the StoreDot Termination Agreement, the StoreDot BCA and related agreements are of no further force and effect. Capital Markets Advisory Agreement On February 13, 2025, we entered into the Capital Markets Advisory Agreement with an advisor 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 $4,250,000, payable at the closing of the Business Combination. At our discretion, 50% of the fee can be paid in the form of ordinary shares of the surviving company. Further, we, in our sole discretion, can pay up to an additional $750,000 fee in connection with the advisor’s performance. The advisor is also entitled to reimbursement of incurred expenses that shall not exceed $75,000. On October 6, 2025, we amended the Capital Markets Advisory Agreement to include an additional identified target. If a Business Combination is consummated with the additional identified target, the advisor will be entitled to a cash fee of $3,000,000. At our discretion, 50% of the fee can be paid in the form of ordinary shares of the surviving company. Additionally, the discretionary fee has been reduced from $750,000 to $500,000. On December 16, 2025, we further amended the Capital Markets Advisory Agreement and as a result, the fee as amended is contingent on the closing of the StoreDot Business Combination. As a result of the StoreDot Termination Agreement, the StoreDot BCA and related agreements are of no further force and effect. Registration Rights Agreement The holders of (i) the founder shares, (ii) the Private Placement Units and (iii) any private placement-equivalent units issued in connection with the Working Capital Loans, if any (and in each case holders of their underlying securities, as applicable) are entitled to registration rights pursuant to the registration rights agreement, requiring us to register such securities for resale (in the case of the founder shares, only after conversion to our Class A Ordinary Shares). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggyback” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. BTIG may only make a demand on one occasion and only during the five-year period beginning on the effective date of the IPO Registration Statement. In addition, BTIG may participate in a “piggyback” registration only during the seven-year period beginning on the effective date of the IPO Registration Statement. We will bear the expenses incurred in connection with the filing of any such registration statements. 21 Letter Agreement Our Sponsor, directors and officers have entered into a letter agreement with us, pursuant to which, they have waived their rights to liquidating distributions from the Trust Account with respect to any founder shares held by them if we fail to complete our initial Business Combination within the Combination Period. However, if they acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if we fail to complete our initial Business Combination within the Combination Period. Additionally, pursuant to the letter agreement, our Sponsor, directors and officers will not propose any amendment to our amended and restated memorandum and articles of association to modify (i) the substance or timing of our obligation to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Combination Period or (ii) any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity, unless we provide our public shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes, divided by the number of then outstanding Public Shares. Critical Accounting Estimates and Standards The preparation of the unaudited condensed financial statements and notes thereto included elsewhere in this Quarterly Report in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the disclosure of contingent assets and liabilities, in our financial statements. These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual experience differs from the assumptions used, our financial statements and notes thereto included elsewhere in this Quarterly Report could be materially affected. As of March 31, 2026, we did not have any critical accounting estimates to be disclosed. Recent Accounting Standards Management does not believe that there are any recently issued, but not yet effective, accounting standards, which, if currently adopted, would have a material effect on the unaudited condensed financial statements and notes thereto included elsewhere in this Quarterly Report. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.