Quarterly Report for Quarter Ending August 31, 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 Iron Horse Acquisition II Corp. References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to IRHO SPAC Sponsor LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited consolidated 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" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act 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 Form 10-Q including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" 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, including that the conditions of the Proposed Business Combination are not satisfied. 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 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 initially incorporated as a Delaware corporation on November 26, 2024, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses. On July 25, 2025, we transferred, by way of continuation, to the Cayman Islands. On September 12, 2025, Iron Horse Acquisition II Corp. was incorporated in the Cayman Islands. On September 30, 2025, Iron Horse Acquisitions Corp. II merged with Iron Horse Acquisition II Corp., which is the surviving entity, and we are now incorporated as a Cayman Islands exempted company. We intend to effectuate our business combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Units, our shares, debt or a combination of cash, shares and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.

Although we initially intended to focus on target companies within the media and entertainment industry, on April 21, 2026, we entered into the Business Combination Agreement with Electra Vehicles, Inc., as described below.

Proposed Transactions

On April 21, 2026, we entered into a merger agreement (as amended, the "Business Combination Agreement"), by and among us, IRHO Merger Sub Inc., a Delaware corporation and our direct, wholly owned subsidiary ("Merger Sub"), and Electra Vehicles, Inc., a Delaware corporation ("Electra"). Electra is dedicated to enhancing battery performance through AI-powered battery intelligence, providing solutions for electric vehicles, battery energy storage systems (BESS) and fleet operators. The Business Combination Agreement was amended on May 14, 2026 to revise certain defined terms, the calculation of the aggregate merger consideration and the conversion ratio, the treatment of Electra's convertible notes, the minimum ownership threshold provisions and the earnout share provisions.

Capitalized terms used but not defined in this section have the meanings given to them in the Business Combination Agreement.

Pursuant to the Business Combination Agreement, we will domesticate from the Cayman Islands to the State of Delaware (the "Domestication") and, at least one business day following the Domestication, Merger Sub will merge with and into Electra (the "Merger"), with Electra surviving the Merger as our wholly owned subsidiary, and we will change our name to "Electra AI, Inc." The Domestication, the Merger and the other transactions contemplated by the Business Combination Agreement are referred to as the "Proposed Business Combination."

We have agreed to acquire all of the equity interests of Electra for $250,000,000 plus the Aggregate Exercise Price, as adjusted pursuant to the terms of the Business Combination Agreement, payable in shares of our post-Domestication common stock (the "IRHO Common Shares") valued at $10.00 per share, subject to automatic upward adjustment until the Aggregate Merger Consideration represents at least 50.1% of the Aggregate Company Fully Diluted Shares. As additional consideration, the Electra Earnout Holders may earn up to an aggregate of 15,000,000 IRHO Common Shares in three equal tranches during the five-year period following the Closing Date, upon achievement of share price milestones of $14.00, $16.00 and $18.00 per share or annual run rate milestones of $45 million, $55 million and $65 million, respectively.

In connection with the execution of the Business Combination Agreement, we entered into the Company Support Agreement with our Sponsor and Electra, and the Electra Support Agreement with Electra and certain of its stockholders, in each case providing for voting and transfer restrictions in support of the Proposed Business Combination. The Business Combination Agreement further contemplates that we will enter into a lock-up agreement with our Sponsor and certain Electra stockholders on or before the Closing Date, and an amended and restated registration rights agreement with the Holders at the Closing.

The Closing remains subject to the satisfaction or waiver of customary closing conditions, including approval by our shareholders and by Electra's stockholders, effectiveness of the Registration Statement, conditional approval of our initial listing application on NASDAQ or another national securities exchange, our accrued but unpaid fees, costs and expenses (excluding the deferred underwriting commission) not exceeding $2,000,000 without Electra's prior written consent, and our closing cash equaling or exceeding $30,000,000. There can be no assurance that the Proposed Business Combination will be completed. For additional information regarding the Business Combination Agreement and the related agreements, see Note 1 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from November 26, 2024 (inception) through August 31, 2026 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on cash and investments held in the Trust Account. 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 months ended August 31, 2026, we had a net income of $1,875,969, which consists of interest earned on cash and investments held in the Trust Account of $2,109,367, offset by general, formation and operational costs of $233,398.

For the nine months ended August 31, 2026, we had a net income of $4,535,965, which consists of interest earned on cash and investments held in the Trust Account of $5,820,815, offset by general, formation and operational costs of $1,284,850.

For the three months ended August 31, 2025, we had a net loss of $71,471, which consists of general, formation and operational costs of $71,471.

For the nine months ended August 31, 2025, we had a net loss of $167,328, which consists of general, formation and operational costs of $167,328.

Liquidity and Capital Resources

On December 18, 2025, we consummated the Initial Public Offering of 23,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 570,000 Private Placement Units at a price of $10.00 per Private Placement Unit, in a private placement to the Sponsor and Cantor Fitzgerald & Co., generating gross proceeds of $5,700,000. Of those 570,000 Private Placement Units, the Sponsor purchased 370,000 Private Placement Units, Cantor Fitzgerald & Co. purchased 200,000 Private Placement Units.

Following the Initial Public Offering, the full exercise of the over-allotment option, and the sale of the Private Placement Units, a total of $230,000,000 was placed in the Trust Account. We incurred transaction costs of $15,590,100, consisting of $4,000,000 of cash underwriting fee, $10,950,000 of deferred underwriting fee, and $640,100 of other offering costs.

For the nine months ended August 31, 2026, cash used in operating activities was $934,273. Net income of $4,535,965 was affected by interest earned on cash and investments held in the Trust Account of $5,820,815. Changes in operating assets and liabilities provided $350,577 of cash for operating activities.

For the nine months ended August 31, 2025, cash used in operating activities was $115,011. Net loss of $167,328 was affected by changes in operating assets and liabilities which provided $52,317 of cash for operating activities.

As of August 31, 2026, we had cash and investments held in the Trust Account of $235,645,815 (including $5,645,815 of interest income, net of $175,000 interest withdrawn from the Trust Account for working capital purposes). 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 any permitted withdrawals and excluding deferred underwriting commissions), 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.

As of August 31, 2026, we had cash of $1,522. We intend to 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.

In order to finance transaction costs in connection with a Business Combination, the initial shareholders, the Sponsor, or our officers and directors or their affiliates may, but are not obligated to, loan us funds from time to time or at any time, as may be required ("Working Capital Loans"). Each Working Capital Loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment. These loans would be repaid at completion of the initial Business Combination. As of August 31, 2026, no Working Capital Loans were outstanding.

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. Our officers, directors and our Sponsor may, but are not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

As of August 31, 2026, we had $255,000 of notes receivable that were past due. On October 2, 2026, we subsequently collected $150,000 of such notes receivable, with the remaining $105,000 outstanding. We intend to use the proceeds from the collection to fund our working capital needs.

Going Concern

In connection with our assessment of going concern considerations in accordance with FASB ASC 205-40, "Financial Statement Presentation - Going Concern," our management has determined that we currently lack the liquidity needed to sustain operations for a reasonable period of time, which is considered to be at least one year from the date that the accompanying unaudited consolidated financial statements are issued as we expect to continue to incur significant costs in pursuit of our acquisition plans. In addition, our management has determined that if we are unable to complete an initial Business Combination within the Combination Period, then we will cease all operations except for the purpose of liquidating. These conditions raise substantial doubt about our ability to continue as a going concern. Our management plans to consummate an initial Business Combination prior to the end of the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the end of the Combination Period. There can be no assurance that our plans to raise capital or to consummate an initial Business Combination will be successful.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of August 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

Underwriting Agreement

The underwriters were entitled to a deferred underwriting discount of 4.50% of the gross proceeds of the Initial Public Offering held in the Trust Account other than those sold pursuant to the underwriters' over-allotment option and 6.50% of the gross proceeds sold pursuant to the underwriters' over-allotment option, or $10,950,000 in the aggregate. The deferred underwriting discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.

Deferred Legal Fee

On March 18, 2026, we entered into an agreement with its legal advisor in connection with services rendered associated with the Business Combination Agreement. As of August 31, 2026, we had a total of $413,467 of deferred legal fee incurred to be paid to our legal advisor upon the earlier to occur of (i) the closing of the Business Combination, (ii) the termination of the Business Combination Agreement, and (iii) our liquidation. As of November 30, 2025, there were no deferred legal fee payable. The deferred fee is classified as a non-current liability in the accompanying unaudited consolidated balance sheets.

Service Provider Agreement

On May 11, 2026, we entered into an agreement with a service provider in connection with regulatory filings associated with the Business Combination Agreement. Upon completion of a successful Business Combination, this service provider will be entitled to a success fee of $100,000.

Critical Accounting Estimates

The preparation of the unaudited consolidated financial statements and related disclosures 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 consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates as of August 31, 2026.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited consolidated financial statements.