KTWO

Business Context and Reporting Period

K2 Capital Acquisition Corp. (KTWO) is a Cayman Islands exempted blank check company incorporated on August 1, 2025, for the purpose of effecting a business combination. This Form 10-Q covers the quarter ended June 30, 2026. The Company consummated its Initial Public Offering (IPO) on January 30, 2026, selling 13,800,000 units (including full over-allotment) at $10.00 per unit. As of the reporting date, the Company has not commenced operations and is actively searching for a target business.

Key Financial Metrics

Material Changes vs. Prior Period

• Trust Account Growth: Investments held in the Trust Account increased from $0 at December 31, 2025, to $140,007,993 at June 30, 2026, following the IPO closing in January 2026. This includes $2,007,993 in interest income earned during the six-month period.
• Equity Structure: The Company moved from a pre-IPO deficit to a positive shareholders' equity position of $708,820, driven by the IPO proceeds and net income, offset by the classification of 13,800,000 Class A shares as temporary equity subject to redemption.
• Liabilities: Current liabilities decreased from $826,736 to $314,340. This reduction was primarily due to the repayment of related-party advances and promissory notes totaling approximately $1.56 million in early 2026.
• Operating Expenses: General and administrative expenses for the six months ended June 30, 2026, were $722,029, including $138,700 in share-based compensation related to the transfer of Founder Shares to directors and officers.

Outlook, Risks, and Contingencies

• Completion Window: The Company has until July 30, 2027 (18 months from IPO) to consummate a business combination. If unsuccessful, the Company must liquidate and redeem public shares.
• Going Concern: Management has identified substantial doubt regarding the Company's ability to continue as a going concern for one year from the filing date. This is due to the mandatory liquidation date falling within the assessment period. Continuation depends on completing a business combination or obtaining an extension.
• Liquidity: The Company holds $823,123 in cash outside the Trust Account. Management believes this, combined with potential Working Capital Loans from the Sponsor (up to $2.5 million convertible to units), is sufficient to meet needs through the earlier of a business combination or one year from filing.
• Geopolitical Risks: The filing highlights significant risks from ongoing conflicts in Ukraine, the Middle East, and Southwest Asia, as well as U.S. tariff policies, which could disrupt capital markets and hinder the search for a target.
• Excise Tax: The Company notes potential exposure to a 1% U.S. federal excise tax on share repurchases (redemptions) if it domesticates prior to a business combination, though no liability has been accrued.

Investor Verification Checklist

• Verify the status of the 18-month deadline (July 30, 2027) and any potential extension mechanisms available to shareholders.
• Confirm the Sponsor's financial capacity to provide Working Capital Loans if operating cash ($823,123) is depleted before a deal is closed.
• Review the Trust Account balance ($140,007,993) to ensure it meets the $10.00 per share redemption threshold plus accrued interest.
• Monitor geopolitical developments and U.S. trade policies that could impact the valuation or availability of potential target companies.
• Check for any updates on the 1% excise tax applicability should the Company pursue a domestication strategy.