KDK

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2025, for Ares Acquisition Corporation II (AACT), a Cayman Islands exempted company and special purpose acquisition company (SPAC). The filing text references a proposed business combination with Kodiak Robotics Inc. (Kodiak), entered into on April 14, 2025. The company is an emerging growth company with no operating revenues; income is derived solely from interest on Trust Account investments.

Key Financial Metrics

Material Changes vs. Prior Period

• Significant Increase in Expenses: General and administrative expenses surged to $8.2 million for the six months ended June 30, 2025, compared to $0.8 million in the same period in 2024. This increase is attributed to costs associated with the proposed business combination and extension activities.
• Share Redemptions: In connection with an extension of the combination period, 640,288 Class A ordinary shares were redeemed for approximately $7.1 million.
• Capital Structure Changes: The Sponsor converted 12,500,000 Class B ordinary shares into Class A ordinary shares. Consequently, there are no Class B shares outstanding as of June 30, 2025.
• Debt and Liabilities: Current liabilities increased significantly to $12.2 million from $0.7 million, driven by accrued expenses ($9.4 million), a new Extension Note ($1.5 million), and a Working Capital Loan ($1.2 million).
• Deferred Fees Adjustment: Deferred underwriting and advisory fees were reduced from $17.5 million to $8.4 million following an agreement with underwriters and the Sponsor.

Outlook, Risks, and Management Commentary

• Business Combination Status: AACT has entered into a definitive agreement to merge with Kodiak Robotics Inc. The transaction is subject to shareholder approval and regulatory conditions. The combination period has been extended to January 26, 2026.
• Pipeline Financing (PIPE): The company has secured subscription agreements for $60.0 million in PIPE investments, contingent on the closing of the business combination.
• Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern if a business combination is not completed by the extended deadline. Liquidity outside the Trust Account is limited ($137,896), and the company relies on Sponsor loans and the successful closing of the merger.
• Extension Funding: To extend the deadline, the Sponsor is making monthly deposits to the Trust Account ($0.02 per share). 50% of these deposits are funded by the Company via an Extension Note, and 50% are reimbursed by Kodiak.
• Risks: Key risks include the failure to consummate the business combination, potential conflicts of interest regarding the Sponsor's support of the transaction, and the expiration of warrants if the deal fails.

Investor Verification Checklist

• Verify the status of the Form S-4 registration statement filed May 14, 2025, and any subsequent amendments regarding the Kodiak merger.
• Confirm the final terms of the $60 million PIPE investment and whether all conditions precedent have been met.
• Monitor the monthly Trust Account contributions required for the extension and the Company's ability to service the Extension Note.
• Review the Shareholder Meeting results and proxy statement for the proposed business combination to assess redemption levels and voting outcomes.
• Assess the accrued expenses of $9.4 million to understand the specific nature of costs incurred in the quarter and their impact on post-merger capitalization.