10-K: Cartesian Growth II Faces Delisting, Liquidity Concerns

Cartesian Growth Corporation II filed its annual 10-K report, revealing a Nasdaq delisting, significant shareholder redemptions, and substantial doubt about its ability to continue as a going concern as it approaches its final business combination deadline.

Summary

• Cartesian Growth Corporation II, a blank check company, was incorporated on October 13, 2021, for the purpose of effecting a business combination.
• The company consummated its Initial Public Offering (IPO) on May 10, 2022, raising $230,000,000 by selling 23,000,000 units at $10.00 per unit.
• Simultaneously with the IPO, the company sold 8,900,000 private placement warrants for $8,900,000 and received a $4,600,000 loan from its sponsor.
• A total of $236,900,000 was initially placed in the trust account, with transaction costs amounting to $16,804,728.
• The company was delisted from Nasdaq on May 13, 2025, due to its failure to complete an initial business combination within 36 months of its IPO registration statement's effectiveness, and its securities are now quoted on the OTC Pink Limited Market.
• Shareholders approved three extensions, moving the business combination deadline from November 10, 2023, to November 10, 2024 (First Extension), then to November 5, 2025 (Second Extension), and finally to August 5, 2026 (Third Extension).
• These extensions were accompanied by significant shareholder redemptions: approximately $77.4 million (November 2023), $99,613,642 (November 2024), and $51,219,981.36 (November 2025).
• As of December 31, 2025, the trust account held $37,914,438, a substantial reduction from its initial balance.
• The company reported a net loss of $1,512,540 for the year ended December 31, 2025, a decline from a net income of $8,205,527 in 2024.
• Management has determined that the company's liquidity condition and mandatory liquidation date raise substantial doubt about its ability to continue as a going concern.
• In October 2024, the company amended its trust agreement to hold funds in an interest-bearing bank demand deposit account instead of U.S. government treasury obligations to mitigate the risk of being deemed an investment company.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as highly negative due to the Nasdaq delisting, significant shareholder redemptions, a net loss, and the explicit "going concern" warning from auditors, indicating severe operational and financial distress for a SPAC nearing its final liquidation deadline.

Positives

• The management team, affiliated with Cartesian Capital Group, LLC, possesses extensive experience (over 300 years collectively) in international private equity, having executed more than 55 market-leading investments across 30 countries.
• The sponsor, Cartesian Capital Group, LLC, has managed over $3 billion in committed capital since its inception in 2006.
• The company's internal control over financial reporting was assessed as effective as of December 31, 2025.

Negatives

• The company was delisted from The Nasdaq Stock Market on May 13, 2025, due to its failure to complete a business combination within the required 36-month period, and its securities now trade on the less liquid OTC Pink Limited Market.
• Significant shareholder redemptions occurred in connection with extension votes, reducing the trust account balance from an initial $236.9 million to approximately $37.75 million as of December 31, 2025.
• The company reported a net loss of $1,512,540 for the year ended December 31, 2025, a reversal from the net income of $8,205,527 in the prior year.
• The independent registered public accounting firm's report contains an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.
• As of December 31, 2025, the company had a working capital deficit of $5,369,032.
• Moving trust account funds from U.S. government treasury obligations to an interest-bearing demand deposit account may result in less interest earned, potentially reducing the per-share redemption amount for public shareholders.
• The warrants are accounted for as derivative liabilities, and changes in their fair value can cause significant fluctuations in financial results.

Risks

• The company is an early-stage entity with no operating history or revenues, providing no basis to evaluate its ability to achieve its business objective.
• Public shareholders may not have an opportunity to vote on the proposed business combination, as the board may complete it without shareholder approval.
• Third-party claims against the company could reduce the proceeds held in the trust account, potentially leading to a per-share redemption amount less than $10.30.
• The ability of public shareholders to redeem their shares for cash may make the company's financial condition unattractive to potential business combination targets.
• The requirement to complete a business combination by August 5, 2026, may give potential target businesses leverage in negotiations.
• Global economic conditions, geopolitical conflicts (e.g., Ukraine-Russia, Israel-Hamas), and inflation may adversely affect the search for and consummation of a business combination.
• Failure to complete an initial business combination by August 5, 2026, will result in liquidation, with public shareholders receiving approximately $10.30 per share (or less in certain circumstances) and warrants expiring worthless.
• Insufficient funds outside the trust account may hinder operations until the business combination deadline, requiring reliance on sponsor loans which are not guaranteed.
• Resources may be wasted on researching acquisitions that are not completed, adversely affecting subsequent attempts.
• Limited ability to assess the management of prospective target businesses could lead to an unsuccessful post-combination entity.
• Key personnel of an acquisition candidate may resign upon completion of the business combination, negatively impacting operations.
• Potential conflicts of interest exist due to the sponsor's, officers', and directors' affiliations with other entities and their financial interest in completing a business combination.
• The company may issue notes or other debt securities to complete a business combination, adversely affecting its leverage and financial condition.
• Completing only one business combination may lead to a lack of diversification and increased exposure to risks of a single business.
• Acquiring a private company with limited available information carries the risk of the target being less profitable than anticipated.
• Pursuing complex business combination opportunities requiring significant operational improvements could delay or prevent desired results.
• Effecting a business combination with a non-U.S. business introduces additional risks, including currency fluctuations, differing legal systems, and enforcement challenges.
• Re-domiciling to another foreign jurisdiction could result in taxes imposed on shareholders.
• Unfamiliarity of new management with U.S. securities laws post-business combination could lead to regulatory issues.
• Increased competition from other SPACs may make attractive targets scarcer and increase acquisition costs.
• Management may not be able to maintain control of a target business after the initial business combination.
• Changes in the market for directors and officers liability insurance could make it more difficult and expensive to complete a business combination.
• The absence of a specified maximum redemption threshold means a business combination could be completed even if a substantial majority of shareholders disagree.
• Provisions in the company's constitutional documents may inhibit a takeover.
• A lower amendment threshold for constitutional documents and the trust agreement (65% of public warrants for warrant terms, 2/3 majority for articles) makes it easier to amend terms, potentially against shareholder interests.
• The company may be unable to obtain additional financing to complete a business combination or fund the operations and growth of a target business.
• Outstanding warrants may have an adverse effect on the market price of Class A ordinary shares and make a business combination more difficult.
• Warrants are accounted for as liabilities, and changes in their fair value could materially affect financial results.
• A specific provision in the warrant agreement may make it more difficult to complete a business combination if certain price conditions are met.
• Shareholders may not have the opportunity to appoint directors or discuss company affairs until after a business combination.
• The requirement to furnish target business financial statements may limit the pool of potential targets.
• Compliance obligations under the Sarbanes-Oxley Act may increase the time and costs of completing an acquisition.
• As a Cayman Islands exempted company, investors may face difficulties in protecting their interests and enforcing rights through U.S. federal courts.
• There is uncertainty regarding the applicability of the Investment Company Act of 1940, which could severely restrict activities or lead to liquidation.
• The company may be a passive foreign investment company (PFIC), resulting in adverse U.S. federal income tax consequences for U.S. investors.
• Cyber incidents or attacks could result in information theft, data corruption, operational disruption, and/or financial loss.

Future Outlook

The company must consummate an initial business combination by August 5, 2026. If a business combination is not completed by this date, the company will cease all operations except for winding up, redeem its public shares, and liquidate. The company anticipates incurring significant costs in its acquisition efforts and cannot guarantee success. Its ability to complete a business combination may be negatively impacted by general market conditions, capital and debt market volatility, and ongoing geopolitical conflicts.

Management Comments

• "We believe our team has the required analytic, financial, and operational expertise to complete a successful initial business combination and generate attractive risk-adjusted returns for our shareholders."
• "We believe that our management team’s cycle-tested and distinctive investment approach will contribute to a successful initial business combination and the continued development of the combined company."
• "We believe that the funds available to us outside of the trust account, together with funds available from loans from our sponsor will be sufficient to allow us to operate until at least the Extended Date; however, we cannot assure you that our estimate is accurate."

Industry Context

StockSavvy.ai notes that Cartesian Growth Corporation II's situation reflects the increasing challenges faced by many Special Purpose Acquisition Companies (SPACs) in a volatile market. The delisting from Nasdaq and subsequent trading on the OTC Pink market, coupled with significant shareholder redemptions, highlight the difficulty in identifying and closing suitable business combinations within mandated timelines, especially amidst global economic uncertainties and increased competition for attractive targets. The shift of trust account funds to a demand deposit account also indicates a broader industry response to regulatory concerns regarding SPAC investment company status.

Comparison to Industry Standards

• The company's delisting from Nasdaq due to failure to complete a business combination within 36 months is a significant underperformance compared to successful SPACs that complete mergers and transition to operating companies on major exchanges.
• The substantial shareholder redemptions (over 80% of initial public shares redeemed) are significantly higher than the average redemption rates seen in successful SPAC mergers, indicating a strong lack of shareholder confidence in the company's ability to find a suitable target or the terms of proposed extensions.
• The ongoing "going concern" doubt, as highlighted by auditors, is a critical red flag, contrasting sharply with the financial stability expected of operating companies or well-capitalized SPACs nearing a definitive agreement.

Corporate Governance

Related Party Transactions

• On October 20, 2021, the sponsor and DirectorCo purchased 5,750,000 founder shares for a total subscription price of $25,000.
• The sponsor, Cantor Fitzgerald & Co., and Piper Sandler & Co. purchased an aggregate of 8,900,000 private placement warrants for $8,900,000 simultaneously with the IPO.
• The sponsor loaned the company $4,600,000 at no interest simultaneously with the IPO (Sponsor Loan), which can be repaid or converted into sponsor loan warrants.
• The company agreed to pay an affiliate of its sponsor up to $10,000 per month for office space, utilities, secretarial support, and administrative services, commencing May 5, 2022.
• The sponsor issued multiple unsecured promissory notes to the company: $500,000 (Oct 2023), $250,000 (Jan 2024), $250,000 (Jul 2024), $250,000 (Nov 2024), $250,000 (Dec 2024), $250,000 (May 2025), $250,000 (Nov 2025), and $200,000 (Dec 2025). These notes do not bear interest and are convertible into warrants at $1.00 per warrant at the sponsor's discretion upon a business combination.
• In connection with the First Extension, the company issued an unsecured promissory note (First Extension Note) for up to $1,800,000 to the sponsor, from which $1,800,000 was drawn and deposited into the trust account.
• In connection with the Second Extension, the company issued an unsecured promissory note (Second Extension Note) for up to $2,400,000 to the sponsor, from which $2,400,000 was drawn and deposited into the trust account.
• The sponsor, an affiliate of the sponsor, or certain officers and directors may provide working capital loans to finance transaction costs, up to $1,500,000 of which may be convertible into warrants.
• The sponsor, Cantor Fitzgerald & Co., Piper Sandler & Co., and their permitted transferees have registration rights for founder shares, private placement warrants, sponsor loan warrants, and Class A ordinary shares issuable upon their exercise.

Stakeholder Impact

• Shareholders face significant risk of capital loss, as the company's warrants will expire worthless if a business combination is not completed by August 5, 2026. Those who have not redeemed their shares may receive less than the initial $10.30 per share upon liquidation due to potential claims against the trust account.
• The substantial redemptions have diluted the ownership and influence of remaining public shareholders and reduced the capital available for a potential business combination.
• The sponsor and management team have a strong financial incentive to complete a business combination to avoid their founder shares and private placement warrants becoming worthless, potentially creating conflicts of interest.
• Creditors face the risk that claims against the company could reduce the funds available in the trust account, potentially impacting the per-share redemption amount for public shareholders, although the sponsor has agreed to indemnify the company for certain claims.

Next Steps

• Consummate an initial business combination by the extended deadline of August 5, 2026.
• If a business combination is not completed by August 5, 2026, the company will cease operations, redeem public shares, and liquidate.
• Continue to identify and evaluate target businesses for a potential business combination.
• Manage ongoing operating costs and seek additional financing if necessary to fund operations until a business combination is completed or liquidation occurs.

Key Dates

Recommendation

The company faces imminent liquidation if it fails to secure a business combination by August 5, 2026, a highly uncertain prospect given its Nasdaq delisting, massive shareholder redemptions, and explicit "going concern" warning. The significant depletion of the trust account and ongoing net losses further underscore the severe financial distress and lack of a viable path forward, making the stock a high-risk, low-reward investment.

Keywords

SPAC, blank check company, business combination, delisting, Nasdaq, OTC Pink, shareholder redemptions, going concern, trust account, warrants, financial reporting, SEC filing, Cayman Islands, private equity, Cartesian Growth Corporation II