KTWO 10-K & 10-Q changes, risk factors and insider trading

If determined to apply to us, the excise tax could be imposed on redemptions of our Class A ordinary shares in connection with our initial business combination, an extension of the completion window, or open market repurchases by our affiliates,affiliates. orHowever, asubject to certain exceptions, the excise tax generally should not apply in the event of our complete liquidation. Under the proposedfinal regulations, the amount subject to tax may be reduced by the fair market value of any stock issued during the same taxable year, which could include shares issued in connection with a business combination or PIPE transaction. In addition,However, there is no assurance that any such offset would be available or sufficient to fully eliminate the liability.

We have not received a ruling from the IRS or a formal opinion from tax counsel on this issue, and we have not accrued for any potential excise tax liability in our financial statements as of the date of this Quarterly Report. Any excise tax would be payable by us, not by the redeeming shareholders, and would reduce the cash available for our initial business combination, working capital, or distribution to shareholders. If final regulations or other future guidance clarifies the application of the excise tax to our redemptions, our potential liability could be material.

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” regarding the completion of the Proposeda Business Combination (as defined below), 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 Proposeda 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.

We have neither engaged in any operations nor generated any revenues to date. Our only activities from August 1, 2025 (inception) through MarchJune 31,30, 2026 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and 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 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 MarchJune 31,30, 2026, we had a net income of $300,812,$985,152, which consists of interest income on investments held in the Trust Account of $779,596,$1,228,397, offset by general and administrative expenses of $478,784 which includes share-based compensation expense of $138,700.$243,245.

For the threesix months ended MarchJune 31,30, 2026, cash used in operating activities was $394,666.$561,610. Net income of $300,812$1,285,964 was affected by payment of operating costs through promissory note of $667, share-based compensation expense of $138,700 and interest earned on investments held in the Trust Account of $779,596.$2,007,993. Changes in operating assets and liabilities usedprovided $55,249$21,052 cash for operating activities.

As of MarchJune 31,30, 2026, we had marketable securities held in the Trust Account of $138,779,596$140,007,993 (including $779,596$2,007,993 of interest income). We may withdraw interest from the Trust Account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), 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 MarchJune 31,30, 2026, we had cash of $990,067. $823,123. 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 Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $2,500,000 of the Working Capital Loans may be converted upon completion of a Business Combination into private units at a price of $10.00 per unit. Such private units would be identical to the Private Placement Units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of MarchJune 31,30, 2026, there were no Working Capital Loans outstanding.

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of MarchJune 31,30, 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.

The Company entered into an agreement, commencing on January 28, 2026 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor or an affiliate thereof a monthly fee of $21,000$15,000 for office space, administrative and shared personnel support services. For the three and six months ended MarchJune 31,30, 2026, the Company incurred $30,000$45,000 and $75,000 in fees for these services, of which such amount is included in accounts payable and accrued expenses in the accompanying condensed balance sheets.

On August 19, 2025, the Company entered into an agreement with the Company’s Chief Financial Officer (“CFO”), commencing on September 1, 2025, to pay the CFO a monthly fee of $6,000 for his services as an officer of the Company. Pursuant to the general and administrative services agreement, commencing on January 28, 2026, the Sponsor will pay the CFO the monthly fee of $6,000 for his services as an officer of the Company. For the three and six months ended MarchJune 31,30, 2026, the Company incurred $18,000 and $36,000 in fees for these services, respectively, of which $6,000$12,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheets.

Additionally, on January 30, 2026, the Sponsor transferred an aggregate of 100,000 Founder Shares to the CFO subject to a performance condition (i.e., providing services through Business Combination). Share-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares. ForAs theof threeJune months30, ended2026 Marchand December 31, 2026,2025, the Company incurred $138,700determined inthat the initial Business Combination is not considered probable and therefore no compensation expense.expense has been recognized with respect to the CFO’s Founder Shares

The preparation of the financial statements and notes thereto included elsewhere in this Report in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and the disclosure of contingent assets and liabilities, in our financial statements. These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments, and we evaluate these estimates on an ongoing basis. To the extent actual experience differs from the assumptions used, our financial statements and notes thereto included elsewhere in this Report could be materially affected. We believe that the following accounting policies involve a higher degree of judgment and complexity. As of MarchJune 31,30, 2026, we did not have any critical accounting estimates to be disclosed, except as noted below.disclosed.