Item 7. Management’s Discussion and Analysis
Item 7.
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 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 this 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 financial
statements and the notes thereto included elsewhere in this Report.
Overview
We
are a blank check company incorporated in the Cayman Islands on July 8, 2024 for the purpose of effecting a Business Combination. Our
Sponsor is VO Sponsor II, LLC.
Although
we are not limited in our search for target businesses to a particular industry or sector for the purpose of consummating the Business
Combination, we are focusing our search on the areas and sectors of business in which our Management Team and our Board of Directors have
experience, including, without limitation, the industries of restaurant, hospitality, food and beverage, retail, consumer, food and food
related technology, real estate industries such as “proptech”, mining, professional sports teams, airlines and technology,
including sectors that service or are connected to these industries in the United States and other developed countries. 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.
Our IPO Registration Statement
became effective on April 1, 2025. On April 3, 2025, we consummated our Initial Public Offering of 23,000,000 Public Units, including
3,000,000 Option Units issued pursuant to the full exercise of the Over-Allotment Option. Each Public Unit consists of one Public Share
and one Public Right. 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 and pursuant to the Private Placement Units Purchase Agreements, we completed the sale
of an aggregate of 600,000 Private Placement Units to the Sponsor and Cantor in the Private Placement at a purchase price of $10.00 per
Private Placement Unit, generating gross proceeds to us of $6,000,000. Of those 600,000 Private Placement Units, the Sponsor purchased
400,000 Private Placement Units and Cantor purchased 200,000 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 $230,000,000 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 Continental 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.
We
have until April 3, 2027 (24 months from the closing of the Initial Public Offering), or until such (x) earlier date as our Board may
approve or (y) later date as our shareholders may approve, pursuant to the Amended and Restated Articles, 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, 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.
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We
may seek to extend the Combination Period consistent with applicable laws, regulations and stock exchange rules by amending our Amended
and Restated Articles. Any such amendment would require the approval of our Public Shareholders, who 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 Nasdaq. In addition, the Nasdaq
Rules currently require SPACs (such as us) to complete their initial Business Combination in accordance with 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 our Company to another sponsor entity, which may result
in a change to our Management Team.
Results of Operations
We
have neither engaged in any operations nor generated any revenues to date. Our only activities since July 8, 2024 (inception) through
December 31, 2025 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 year ended December
31, 2025, we had net income of $6,469,756, which consists of interest income earned on marketable securities held in the Trust Account
of $7,007,209, partially offset by operating costs of $537,453.
For the period from July 8,
2024 (inception) through December 31, 2024, we had a net loss of $67,330, which consists of operating costs.
Liquidity and Capital Resources
Following the Initial Public
Offering, including the full exercise of the Over-Allotment Option, and the Private Placement, a total of $230,000,000 was placed in the
Trust Account. We incurred fees of $15,554,267 in the Initial Public Offering, consisting of $4,000,000 of cash underwriting fee, the
Deferred Fee of $10,950,000 and $604,267 of other offering costs.
As of December 31, 2025 and
the period from July 8, 2024 (inception) through December 31, 2024, we had $805,124 and $0, respectively of cash in our operating account.
As of December 31, 2025 and the period from July 8, 2024 (inception) through December 31, 2024, we had a working capital of $792,589 and
a working capital deficit of $191,790, respectively. As of December 31, 2025 and the period from July 8, 2024 (inception) through December
31, 2024, $7,007,209 and approximately $0, respectively, of the amount earned on funds held in the Trust Account was available to pay
taxes, if any.
As of December 31, 2025 and
the period from July 8, 2024 (inception) through December 31, 2024, we had marketable securities held in the Trust Account of $237,007,209
and $0, respectively (including approximately $7,007,209 and $0, 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 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 December 31, 2025 and
the period from July 8, 2024 (inception) through December 31, 2024, we had cash held outside of the Trust Account of approximately $805,124
and $0, 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
December 31, 2025 have been satisfied through (i) a contribution of $25,000 from the Sponsor in exchange for the issuance of our Founder
Shares, (ii) a loan pursuant to the IPO Promissory Note, and (iii) the net proceeds from the consummation of the Initial Public Offering
and the Private Placement held outside the Trust Account.
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IPO Promissory Note
Prior to the closing of our
Initial Public Offering, our Sponsor agreed to loan us an aggregate of up to $500,000 under the IPO Promissory Note to cover expenses
related to the Initial Public Offering. 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 $306,752 was fully repaid upon the consummation of our Initial Public Offering
on April 3, 2025. No additional borrowing is available under the IPO Promissory Note.
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 will repay such Working Capital Loans. 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 Working Capital Loans, but no proceeds from our Trust Account would be used for such
repayment. Up to $1,500,000 of such Working Capital Loans may be converted into units of the post-Business Combination entity at a price
of $10.00 per unit. The units (and underlying securities) would be identical to the Private Placement Units (and underlying securities).
Other than as set forth above, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist
with respect to such Working Capital Loans. As of December 31, 2025 and 2024, we did not have any borrowings under any Working Capital
Loans.
We do not believe we will
need to raise additional funds to meet the expenditures required for operating our business. However, if our 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, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may
need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant
number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt
in connection with such Business Combination.
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
Commencing
on April 3, 2025, and until the completion of our Business Combination or liquidation, we reimburse the Sponsor Managing Member $15,000
per month for office space, utilities, and secretarial and administrative support pursuant to the Administrative Services Agreement. For
the year ended December 31, 2025 and the period from July 8, 2024 (inception) through December 31, 2024, we incurred and $133,000 and
$0, respectively, in fees for these services.
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 Option Units to cover over-allotments,
if any. On April 3, 2025, the Underwriters fully exercised their Over-Allotment Option.
We paid an underwriting discount
of $4,000,000 (2.0% of the gross proceeds of the Public Units offered in the Initial Public Offering, excluding any proceeds from the
Option Units sold pursuant to the Over-Allotment Option), which was paid at the closing of the Initial Public Offering. Additionally,
the Underwriters are entitled to the Deferred Fee of (i) 4.5% of the gross proceeds of the Initial Public Offering held in the Trust Account,
other than those sold pursuant to the Over-Allotment Option, and (ii) 6.5% of the gross proceeds sold pursuant to the Over-Allotment Option,
or $10,950,000 in the aggregate, payable upon the completion of the initial Business Combination subject to the terms of the Underwriting
Agreement.
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. Cantor 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, Cantor 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.
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Letter Agreement
Our
Sponsor, directors and officers have entered into the 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 Articles
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 financial statements and notes thereto included elsewhere in this 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 Report could be materially affected. We believe that the following accounting policies involve a higher
degree of judgment and complexity. As of December 31, 2025, 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 financial statements and notes thereto included elsewhere in this Report.
Item 7A.
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.
Item 8.
Financial Statements and Supplementary Data.
Reference is made to pages
F-1 through F-18 comprising a portion of this Report, which are incorporated herein by reference.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
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