Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to Breeze Acquisition Corp. II References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to Breeze Sponsor II. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's final prospectus for its Initial Public Offering (as defined below) filed with the U.S. Securities and Exchange Commission (the "SEC"). The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company incorporated in Cayman Islands on August 20, 2025 formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have not selected any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.

Our IPO registration statement became effective on May 12, 2026. On May 14, 2026, we consummated our Initial Public Offering of 12,500,000 units generating gross proceeds of $125,000,000.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of an aggregate of 447,500 Private Units at a price of $10.00 per Private Unit, generating gross proceeds of $4,475,000.

On May 15, 2026, the Underwriter partially exercised its over-allotment option for an additional 1,500,000 Public Units at a price of $10.00 per Unit or $15,000,000. In conjunction with the Underwriter's partial exercise of the over-allotment option, the Sponsor purchased an additional 22,500 Private Placement Units for $225,000.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities for the three and six months ended June 30, 2026, were organizational activities, those necessary to prepare for our Initial Public Offering. We do not expect to generate any operating revenues until after the completion of our initial business combination. We will generate non-operating income in the form of interest income on investments held in our trust account after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three and six months ended June 30, 2026, we had net income of $398,121 and $259,915, respectively, which resulted from operating and formation costs offset by interest earned on cash held in the trust account and change in fair value of over-allotment liability.

Through June 30, 2026, our efforts have been limited to organizational activities, activities relating to the Initial Public Offering and activities relating to general corporate matters.

Liquidity and Capital Resources

Following the closing of the Initial Public Offering, including the partial exercise of the over-allotment option, and the private placement, a total of $140,350,000 was placed in the Trust Account. We incurred transaction costs related to the issuances described above amounting to $2,698,154, consisting of $1,750,000 of cash underwriting fees, $472,654 of other offering costs, $325,500 of Representative Shares and $150,000 of Underwriters' reimbursement.

For the six months ended June 30, 2026, net cash used in operating activities was $656,165, which was due to our net income of $259,915, partially offset by $624,649 of interest earned on cash held by trust account and changes in working capital accounts of $270,431.

For the six months ended June 30, 2026, net cash used in investing activities was $140,350,000, which was due to cash deposited into the trust account.

For the six months ended June 30, 2026, net cash provided by financing activities was $141,137,128, which was primarily due to $138,100,000 proceeds from the sale of units, net of underwriting fees, $4,700,000 proceeds from private placement units and $3,500 proceeds from the issuance of the representative shares; partially offset by $1,150,000 due from sponsor arising from the private placements issued that the Company has not received consideration, $353,722 payment of deferred offering costs, and $162,650 payment of related party promissory note.

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the funds held in the trust account and not previously released to us to pay our taxes (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our taxes. We expect the only taxes payable by us out of the funds in the trust account will be income and franchise taxes, if any. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our initial 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.

There is no assurance that the Company's plans to raise capital or to consummate a Business Combination will be successful within the completion window. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. Therefore, in connection with the Company's assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements - Going Concern, these conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of time within one year after the date that these financial statements were issued. The financial statements do not include any adjustments that might result from the Company's inability to continue as a going concern.

The Company will have until the end of the Completion Period to consummate a Business Combination. If a Business Combination is not consummated by the end of the Completion Period, there will be a mandatory liquidation and subsequent dissolution of the Company. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 14, 2027. The Company intends to complete the initial Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any Business Combination by May 14, 2027.

Off-Balance Sheet Arrangements

As of June 30, 2026, we did not have any off-balance sheet arrangements.

Contractual Obligations

Registration and Shareholder Rights Agreement

In connection with the closing of the Initial Public Offering, the Company entered into a registration and shareholder rights agreement pursuant to which the holders of the Founder Shares, Private Units and the securities comprising the Private Units, and any Private Units that may be issued upon conversion of Working Capital Loans are entitled to certain registration rights with respect to such securities and certain other securities acquired prior to the consummation of the Company's initial Business Combination.

Pursuant to the registration rights agreement and assuming the $1,500,000 of Working Capital Loans are converted into 150,000 Private Units, the Company will be obligated to register up to 6,012,919 ordinary shares and 620,000 Private Placement Rights. The number of ordinary shares includes (i) 4,918,919 outstanding ordinary shares issued as Founder Shares, (ii) 470,000 ordinary shares included in the Private Units, (iii) 94,000 ordinary shares to be issued upon conversion of Private Placement Rights included in the Private Units, (iv) 150,000 ordinary shares comprising part of the Private Units issued upon conversion of Working Capital Loans, (v) 30,000 ordinary shares to be issued upon conversion of Private Placement Rights as part of the working capital units upon conversion of Working Capital Loans and (vi) 350,000 representative shares. The number of Private Placement Rights includes 470,000 Private Placement Rights as part of the Private Units and 150,000 Private Placement Rights as part of the working capital units upon the conversion of Working Capital Loans.

The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the Company's completion of the Initial Public Offering.

Promissory Notes - Related Party

On August 20, 2025, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the "Promissory Note"). On January 25, 2026, the Company and the Sponsor amended the promissory note to increase the facility to $2,000,000. This loan is non-interest bearing and payable on the earlier of December 31, 2026 or the date on which Company consummates an initial public offering of its securities. On May 14, 2026 upon the closing of the Initial Public Offering, the Company paid the entire outstanding balance under the Promissory Note.

Underwriting Agreement

Pursuant to the underwriting agreement, the Sponsor and the executive officers and directors have agreed that, for a period of 180 days from the date of the Initial Public Offering, will not, without the prior written consent of the representative, offer, sell, contract to sell, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or share right to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any units, share rights, ordinary shares or any other securities convertible into, or exercisable or exchangeable for, any units, ordinary shares, Founder Shares or share rights, subject to certain exceptions. The representative in its discretion may release any of the securities subject to these lock-up agreements at any time without notice, other than in the case of the officers and directors, which shall be with notice. The Sponsor, officers and directors are also subject to separate transfer restrictions on their Founder Shares and private placement shares pursuant to the letter agreement described herein.

The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 1,875,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.

The underwriters were entitled to a cash underwriting discount of 1.25% of the gross proceeds of the units offered in the Initial Public Offering, or $1,562,500 in the aggregate (or $1,796,875 in the aggregate if the underwriters' over-allotment option is exercised in full), payable to the underwriters upon the closing of this offering.

Subsequent to the Initial Public Offering that occurred on May 14, 2026, the underwriter partially exercised the over-allotment option for the purchase of an additional 1,500,000 Units and the underwriter was entitled to a cash underwriting discount of $187,500. The unexercised over-allotment option for the remaining 375,000 Units was forfeited.

Advisory Services Agreement

In connection with the Company's Initial Public Offering, the Company and its Sponsor entered into an engagement with advisors (the "Advisors") to provide strategic legal and advisory services in connection with the IPO.

Pursuant to the engagement, the Advisors are entitled to receive cash fees consisting of (i) a one-time payment of $800,000 payable upon the closing of the IPO and (ii) quarterly payments of $350,000 for four consecutive quarters, totaling $1,400,000, with the first payment due at the closing of the IPO and the remaining payments due at the end of each of the three subsequent fiscal quarters.

In addition, at the closing of the IPO, the Sponsor agreed to transfer to the Advisors 100,000 Founder Shares with an aggregate target value of $1,000,000, determined based on the IPO valuation of such Founder Shares. To the extent the aggregate value of the Founder Shares transferred is less than $1,000,000, the shortfall is payable in cash or additional shares.

Critical Accounting Estimates

The preparation of unaudited financial statements in conformity with accounting principles generally accepted in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited financial statements, and income and expenses during the period reported. Making estimates requires Management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existed at the date of the unaudited financial statements, which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could materially differ from those estimates. As of June 30, 2026, we did not have any critical accounting estimates to be disclosed.