Archimedes Tech SPAC Partners II Co. Annual Report: A Year in Review (Fiscal Year Ended December 31, 2024)

This report provides a clear, concise overview of Archimedes Tech SPAC Partners II Co.'s activities and financial position for the fiscal year ended December 31, 2024. We aim to help you understand this unique investment vehicle and our progress.

Business Overview: What is Archimedes Tech SPAC Partners II Co.?

Archimedes Tech SPAC Partners II Co. is a Special Purpose Acquisition Company (SPAC), often called a "blank check company." Unlike traditional operating businesses, we do not sell products or services. Instead, our experienced sponsor team formed us with a single mission: to identify, acquire, and merge with a promising private company, thereby bringing it to the public stock market. Our sponsor specializes in disruptive technology companies, particularly within the software, artificial intelligence, and cybersecurity sectors.

Our Public Launch and Capital Raised

Archimedes Tech SPAC Partners II Co. successfully launched its Initial Public Offering (IPO) on February 12, 2024.

• Public Offering: We sold 23,000,000 "units" at $10.00 each, raising $230,000,000. Each unit included one share of Class A common stock and one-half of a redeemable warrant. Each whole warrant allows the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, becoming exercisable 30 days after completing a business combination.
• Private Placement: Concurrently, our sponsor and the underwriters purchased 840,000 "private placement units" for $8,400,000. These units contain similar components, but their warrants are non-redeemable and exercisable on a cashless basis. The shares and warrants in these units are subject to specific lock-up periods, aligning the sponsor's long-term interests with public shareholders.

The Trust Account: Safeguarding Investor Capital

The trust account forms a critical part of the SPAC structure, designed to protect investor funds. We initially deposited $231,150,000 from the IPO proceeds into this account.

• Current Value: As of December 31, 2024, the trust account held approximately $234,500,000, including interest earned from investments in U.S. government securities.
• Purpose: These funds are strictly reserved for two purposes:
  1. To finance the acquisition of a target company.
  2. To return to public shareholders if we do not complete a business combination or if shareholders choose to redeem their shares in connection with a proposed merger.
• Investor Protection: This mechanism ensures that if we do not find a suitable merger, or if you do not approve of a proposed deal, you generally receive your initial investment back, plus a pro-rata share of the interest earned, less any applicable taxes and expenses.

Financial Performance for the Year Ended December 31, 2024

As a non-operating company, Archimedes Tech SPAC Partners II Co. generated no revenue. Our financial activity primarily involved general and administrative expenses related to our search for a target company.

• Operating Expenses: For the fiscal year ended December 31, 2024, we incurred approximately $1,850,000 in general and administrative expenses, primarily covering legal, accounting, D&O insurance, and due diligence activities.
• Net Loss: Our net loss for the year was approximately $1,500,000, after accounting for interest income from the trust account and other non-operating items.
• Year-over-Year Changes: Since the company completed its initial public offering in February 2024, the fiscal year ended December 31, 2024, represents its first full year of operations. Therefore, year-over-year comparisons for revenue, profit, and operating expenses are not applicable.

Management Discussion: The Search for a Target and Strategy

Since our IPO, our dedicated management team has intensely focused on identifying and evaluating potential business combination targets.

• Target Criteria: We specifically seek established, high-growth disruptive technology companies with an enterprise value typically ranging from $750 million to $2 billion. These companies must have strong management teams and clear paths to profitability or significant market disruption. Our focus remains on software, AI, and cybersecurity.
• Search Status: During 2024, we engaged with over 50 potential target companies. We conducted preliminary due diligence on 15 and entered into non-disclosure agreements with 5. We are currently in advanced discussions with a select few, though we have not yet reached a definitive agreement.
• The Deadline: We must complete a business combination by November 12, 2025 (21 months from our IPO). If we fail to do so, the company will liquidate, and we will return the trust funds to public shareholders.
• Sponsor's Commitment: Our sponsor, Archimedes Tech Partners II LLC, purchased 5,750,000 "founder shares" for a nominal price of $0.004 per share in June 2023 (prior to the IPO). This significant stake strongly aligns their interests with shareholders, as their investment's value depends entirely on a successful and value-creating merger.

Financial Health: Debt, Cash, and Liquidity

• Cash Outside Trust: As of December 31, 2024, we held approximately $1,200,000 in cash and cash equivalents outside the trust account, which we use for working capital and operating expenses.
• Trust Account Balance: The trust account held approximately $234,500,000 as of December 31, 2024. This represents the primary source of funds for a business combination or shareholder redemptions.
• Debt: As a Special Purpose Acquisition Company, Archimedes Tech SPAC Partners II Co. operates with minimal debt. As of December 31, 2024, the company had no long-term debt. Current liabilities primarily consisted of accrued expenses related to general and administrative activities, which were manageable given the cash held outside the trust account.
• Liquidity: The cash held outside the trust account provides sufficient liquidity to cover ongoing operating expenses and due diligence costs associated with identifying a target. The substantial funds in the trust account ensure we have the capital required for a business combination or for returning funds to shareholders upon liquidation.

Future Outlook

Our primary objective for 2025 is to finalize a definitive agreement for a business combination and present it to our shareholders for approval. We remain confident that our sponsor team's extensive network and expertise will help us identify a compelling target capable of delivering long-term value. Investors should continue to monitor our progress as we approach our business combination deadline.

Competitive Position

In the highly competitive landscape for attractive acquisition targets, Archimedes Tech SPAC Partners II Co. leverages several key advantages:

• Sponsor Expertise and Network: Our sponsor, Archimedes Tech Partners II LLC, consists of seasoned professionals with deep operational and investment experience in disruptive technology sectors (software, AI, cybersecurity). This expertise allows us to efficiently identify and rigorously vet potential targets. Their extensive industry network provides proprietary deal flow and access to high-quality companies often unavailable through traditional channels.
• Targeted Industry Focus: By concentrating on specific, high-growth technology verticals, we offer target companies a partner with specialized knowledge and a clear understanding of their market dynamics and growth potential. This focused approach often appeals to founders and management teams seeking a strategic partner, not just capital.
• Value-Add Beyond Capital: Our management team intends to provide significant operational and strategic support to the acquired company post-merger. We leverage our experience in scaling technology businesses, optimizing operations, and navigating public markets. This value-add proposition differentiates us from other SPACs or private equity firms that primarily offer financial investment.
• Efficient Transaction Execution: Our experienced team adeptly navigates the complexities of public market transactions, aiming for an efficient and streamlined business combination process. This is often a critical factor for target companies considering a public listing.

Risk Factors for Investors

While we diligently work towards a business combination, investors should be aware of the inherent risks associated with SPACs:

• Failure to Complete a Business Combination: We cannot guarantee that we will identify a suitable target or successfully complete a merger within the allotted timeframe.
• Shareholder Redemptions: A significant number of public shareholders may choose to redeem their shares, which could reduce the capital available for a business combination and impact the post-merger company's liquidity.
• Dilution: Potential dilution from the exercise of warrants and the conversion of founder shares could impact the value of public shares post-merger.
• Competition: We face intense competition from other SPACs and traditional private equity firms for attractive acquisition targets.
• Regulatory Changes: The SPAC market faces evolving regulatory scrutiny, which could impact our operations or the viability of potential transactions.