10-K: Cartesian Growth Corporation II Files 10-K, Citing Going Concern Uncertainty Amid Business Combination Search

Cartesian Growth Corporation II files its annual report on Form 10-K, highlighting its ongoing search for a business combination and expressing substantial doubt about its ability to continue as a going concern.

Summary

• Cartesian Growth Corporation II, a blank check company, filed its annual report on Form 10-K for the year ended December 31, 2024.
• The company is focused on finding a high-growth business with transnational operations for a potential merger, share exchange, asset acquisition, or reorganization.
• As of March 31, 2025, the company had 21,620,559 Class A ordinary shares and two Class B ordinary shares issued and outstanding.
• The company's auditor, Marcum LLP, expressed substantial doubt about the company's ability to continue as a going concern due to the approaching deadline for completing a business combination.
• Shareholders approved two extensions to the business combination deadline, with the current deadline set for November 5, 2025.
• These extensions required the sponsor to deposit funds into the trust account, leading to the issuance of promissory notes.
• In connection with the extension approvals, shareholders redeemed a significant number of Class A ordinary shares, reducing the funds in the trust account.
• The company's strategy involves identifying and combining with an established high-growth company that can benefit from its management team's expertise.
• The company has identified general criteria for evaluating prospective target businesses, including high-growth potential, proven business models, and transnational operations.
• The company's management team has extensive experience in providing growth capital to companies around the world.
• The company is subject to various risks and uncertainties, including its early stage of development, lack of operating history, and competition for business combination opportunities.
• The company's ability to complete a business combination may be affected by global economic conditions and geopolitical events.
• The company may be required to take write-downs or restructuring charges after completing a business combination, which could negatively affect its financial condition.
• The company's independent registered public accounting firm's report contains an explanatory paragraph that expresses substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The document presents a mixed picture, with positive aspects such as the management team's experience and the extension of the business combination deadline, but the auditor's going concern warning and the company's financial challenges weigh heavily on the overall sentiment.

Positives

• The company's management team has extensive experience in providing growth capital to companies around the world.
• The company has identified general criteria for evaluating prospective target businesses.
• Shareholders approved extensions to the business combination deadline, providing more time to find a suitable target.
• The sponsor is committed to supporting the company through deposits into the trust account.
• The company has the ability to pursue an initial business combination in any business industry or sector.

Negatives

• The auditor, Marcum LLP, expressed substantial doubt about the company's ability to continue as a going concern.
• The company is an early stage company with no operating history and no revenues.
• The company faces intense competition from other entities seeking business combination opportunities.
• The company may not be able to complete its initial business combination within the prescribed time frame.
• The company may be forced to take write-downs or restructuring charges after completing a business combination.
• The company is dependent on its executive officers and directors, and their departure could adversely affect its ability to operate.
• The company may be deemed to be an investment company, which would require burdensome compliance requirements and severely restrict its activities.

Risks

• The company's ability to complete a business combination may be affected by global economic conditions and geopolitical events.
• The company may not be able to find a suitable target business and complete its initial business combination within the required time period.
• The company may be required to seek additional financing to complete its initial business combination or to fund the operations and growth of a target business.
• The company's sponsor and affiliated entities control a substantial interest in the company and thus may exert a substantial influence on actions requiring shareholder vote.
• The company's outstanding warrants may have an adverse effect on the market price of its Class A ordinary shares and make it more difficult to effect a business combination.
• The company may be a passive foreign investment company, or PFIC, which could result in adverse U.S. federal income tax consequences to U.S. investors.
• Cyber incidents or attacks directed at the company could result in information theft, data corruption, operational disruption and/or financial loss.

Future Outlook

The company has until November 5, 2025, to consummate an initial business combination. The company expects to incur significant costs in the pursuit of its acquisition plans.

Industry Context

The document reflects the challenges faced by SPACs in the current market, including the need to extend deadlines, manage redemptions, and maintain sufficient capital to complete a business combination. The increasing number of SPACs seeking targets has intensified competition, potentially driving up acquisition costs and making it more difficult to find suitable targets.

Comparison to Industry Standards

• The report mentions Cartesian Growth Corporation, which is a similar entity in the SPAC market.
• The report mentions Burger King China, Tim Hortons China, Alvarium Tiedemann Holdings, Inc., PolyNatura Corp., Cartesian Royalty Holdings Pte. Ltd., ASO 2020 Maritime, Flybondi, and Simba Sleep Ltd. as companies Peter Yu serves on the boards of directors of, which are examples of investments in the industry.
• The report mentions Safeguard Scientifics (NASDAQ:SFE) as a company Beth Michelson previously served on the board of directors of, which is an example of investments in the industry.
• The report mentions Biogen Inc. and Pfizer Inc. as companies Daniel Karp held positions of increasing responsibility at, which are examples of investments in the industry.
• The report mentions Element Materials Technology, Allbright, Northern Bloc, Simba Sleep, C&A AG, Pizza Express, and BrewDog as companies Allan Leighton currently serves on the board of directors of, which are examples of investments in the industry.
• The report mentions GAIA REIT as a company Sheryl Schwartz is an independent board member of, which is an example of investments in the industry.

Related Party Transactions

• The company has entered into various related party transactions with its sponsor, including the issuance of founder shares, private placement warrants, and promissory notes.
• The company pays an affiliate of its sponsor a monthly fee for office space, utilities, secretarial support, and administrative services.

Stakeholder Impact

• Shareholders face the risk of their investment being negatively impacted if the company is unable to complete a business combination or if the post-combination company performs poorly.
• The company's employees and directors may be affected by the company's financial condition and ability to continue operations.
• The company's potential target businesses may be affected by the company's financial condition and ability to complete a business combination.

Next Steps

• The company will continue to seek a suitable target business for a potential merger, share exchange, asset acquisition, or reorganization.
• The company will need to manage its cash flow and working capital to ensure it can continue operations until a business combination is completed.
• The company will need to comply with various SEC and other legal requirements.
• The company will need to address the auditor's going concern warning.

Key Dates

Keywords

business combination, SPAC, blank check company, merger, acquisition, transnational operations, growth capital, trust account, redemption, warrants, sponsor, going concern, extension, promissory note, financial statements