Iron Horse Acquisition II Corp. — Form 10-Q Summary
Reporting period: Quarter and nine months ended August 31, 2026. The unaudited company is a blank-check SPAC with no operating revenue or operating business to date; its activity is pursuing a business combination. It identifies Electra Vehicles, Inc. as its proposed target.
Financial position and results
- Revenue and margins: No revenue was generated. Operating margins are not meaningful for this pre-combination SPAC.
- Quarterly results: Net income was $1.876 million, versus a $71,471 net loss in the prior-year quarter. The 2026 result comprised $2.109 million of trust-account interest, offset by $233,398 of general, formation and operating costs.
- Nine-month results: Net income was $4.536 million, compared with a $167,328 net loss in 2025. Trust interest of $5.821 million more than offset $1.285 million of costs. The profit is investment income, not operating earnings.
- Liquidity and assets: At August 31, cash outside the trust was $1,522; working capital was $165,238. Trust cash and investments totaled $235.646 million, primarily money market funds invested in U.S. Treasuries. Total assets were $236.057 million.
- Liabilities and equity: Total liabilities were $11.584 million, including a $10.950 million deferred underwriting fee payable only if a business combination closes and $413,467 in deferred legal fees. The company reported an $11.174 million shareholders’ deficit. No working-capital loans were outstanding; the filing does not report conventional borrowings outstanding at period-end.
- Cash flows: Operating activities used $934,273 in the nine months. Investing activities used $230.080 million, principally for the trust account; financing activities provided $231.015 million. Ending cash was $1,522.
Material changes and unusual items
- Compared with 2025, the company moved from operating losses to net income because it completed its IPO and earned substantial interest on trust assets; operating costs also increased year over year.
- The company raised $230 million in its December 2025 IPO and $5.7 million through private-placement units. The IPO included 23 million public shares, subject to redemption, and the underwriters exercised the full 3 million-unit over-allotment option.
- At August 31, $255,000 of unsecured notes receivable from Electra were past due. The company collected $150,000 on October 2, 2026; $105,000 remained uncollected as of the filing’s subsequent-event disclosure.
- Management disclosed material weaknesses in internal control over financial reporting: insufficient segregation of duties due to limited personnel and insufficient written accounting, IT, reporting and record-keeping procedures. Disclosure controls and procedures were assessed as ineffective at period-end.
Proposed transaction, outlook and risks
- The April 21, 2026 agreement, amended May 14, provides for a Cayman-to-Delaware domestication and merger with Electra, which would become a wholly owned subsidiary; the combined company is expected to be named Electra AI, Inc. The stated base purchase price is $250 million plus the aggregate exercise price, payable in shares valued at $10 each, subject to agreement adjustments, including an upward adjustment to meet a 50.1% ownership threshold.
- Electra equityholders and optionholders may earn up to 15 million additional shares over five years in three tranches, tied to stock-price thresholds of $14, $16 and $18 or annual run-rate thresholds of $45 million, $55 million and $65 million, respectively.
- Closing remains conditional, including shareholder approvals, an effective registration statement, exchange-listing approval, fees and expenses generally not exceeding $2 million without Electra’s consent, and at least $30 million of closing cash. The filing provides no operating forecast or assurance the transaction will close.
- The company must complete a business combination within 24 months of the December 18, 2025 IPO closing or, subject to the governing documents, redeem public shares and liquidate. Management states that available liquidity is insufficient to sustain operations for at least one year and that this raises substantial doubt about the company’s ability to continue as a going concern. No assurance is given that financing or a transaction will be completed.
- Other risks include potential redemptions or need for additional financing, creditor claims against trust assets, the past-due Electra receivable, and geopolitical and market disruptions. Rights may expire worthless if no combination closes. The company reported no legal proceedings and no material changes to previously disclosed risk factors.
Investor facts to verify
- Whether the merger closes and whether all approval, listing, registration, expense and $30 million minimum-cash conditions are satisfied or waived.
- The final merger consideration, ownership and dilution calculations, including rights conversion, earnout shares, options, convertible notes and any financing or redemptions.
- Collection of the remaining $105,000 Electra note and the company’s ability to fund expenses outside the trust account.
- Progress addressing the disclosed internal-control material weaknesses and the auditor’s or management’s subsequent assessments.
- The applicable business-combination deadline, redemption value and treatment of public shares and rights if the transaction does not close.