Quarterly Report for Quarter Ending March 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 Armada Acquisition Corp. III References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to Armada Sponsor III LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the 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 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 proposed Business Combination, 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 Annual Report on Form 10-K as filed on March 20, 2026 and its final prospectus for its Initial Public Offering filed with 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 incorporated in the Cayman Islands on September 19, 2025 formed for the purpose of entering into a Business Combination. 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.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from September 19, 2025 (inception) through March 31, 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 marketable securities 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 March 31, 2026, we had a net income of $423,410, which consists of interest income on marketable securities held in the Trust Account of $796,894 offset by general and administrative costs of $290,949 and share-based compensation expense of $82,535.

Liquidity and Capital Resources

As of March 31, 2026, we had $903,352 in cash and working capital of $703,605.

On February 19, 2026, we consummated the Initial Public Offering of 24,850,000 Units at $10.00 per Unit, which includes the partial exercise of the over-allotment option of 2,350,000 Units by the Underwriters, generating gross proceeds of $248,500,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of an aggregate of 672,000 private placement units to our Sponsor and the Underwriters, at a price of $10.00 per private placement unit, generating gross proceeds of $6,720,000.

Following the Initial Public Offering, including the partial exercise by the Underwriters of the over-allotment option, and the sale of the private placement units, a total of $248,500,000 was placed in the Trust Account. We incurred total transaction costs of $15,546,740, consisting of $4,970,000 of cash underwriting fees, $9,940,000 of deferred underwriting fees, and $636,740 of other offering costs.

For the three months ended March 31, 2026, cash used in operating activities was $295,209. Net income of $423,410 was affected by interest earned on cash and marketable securities held in the Trust Account of $796,984, and offset by share-based compensation of $82,535. Changes in operating assets and liabilities used $4,260 of cash for operating activities.

As of March 31, 2026, we had marketable securities held in the Trust Account of $249,296,894 (including approximately $796,894 of interest income), consisting of U.S. Treasury Bills with a maturity of 185 days or less. 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 March 31, 2026, we had cash of $903,352. 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, structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a 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 our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into private placement units of the post initial business combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the private placement units.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. The Sponsor has agreed to defer payment of the administration fees as appropriate to ensure there is sufficient liquidity to support operations of the Company. Moreover, 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 completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 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

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor $19,000 per month for office space, administrative and support services. These monthly fees will cease upon the completion of the initial business combination or the liquidation of the Company.

Underwriting Agreement

The Company granted the Underwriters a 45-day option to purchase up to 3,375,000 additional Units to cover any over-allotments, at the Initial Public Offering price less the underwriting discounts. On February 19, 2026, the underwriters partially exercised its over-allotment option in the amount of 2,350,000 Units and forfeited the remaining unexercised balance of 1,025,000 Units.

The Company paid an underwriting discount of $0.20 per Unit sold in the Initial Public Offering, or $4,970,000 in the aggregate, upon the closing of the Initial Public Offering. Additionally, the Underwriters are entitled up to $0.40 per Unit sold in the Initial Public Offering, or $9,940,000 in the aggregate, and is payable to the Underwriters based on the percentage of funds remaining in the Trust Account after redemptions of public shares, for deferred underwriting commissions placed in a Trust Account located in the United States and released to the Underwriters only upon the completion of an initial business combination.

Service Provider Agreements

Pursuant to a financial advisory services agreement dated October 8, 2025, the Company has agreed to pay a consultant a cash transaction fee equal to 2.0% of the aggregate consideration (as defined in the agreement) in the event the consultant introduces the Company to the target with which the Company completes an initial business combination or has substantive discussions with the target on behalf of and at the specific request of the Company with which the Company completes an initial business combination, payable only upon and subject to the closing of the initial business combination. At the closing of the initial business combination, the Company shall reimburse the consultant for all reasonable out-of-pocket accountable fees and disbursements incurred by the consultant in connection with the performance of its services, provided that such amounts shall not exceed $50,000 in the aggregate without the prior written consent of the Company.

The Company has engaged Bishop as an investor relations advisor in connection with the initial business combination for the period from February 4, 2026 through February 7, 2027 with a monthly fee of $8,500, payable only upon and subject to the closing of the initial business combination. Either party can terminate the contract at any time upon thirty days prior notice to the other party. Upon the completion of an initial business combination, Bishop would be entitled to a success fee of $100,000 payable only upon and subject to the closing of the initial business combination. Bishop shall also be reimbursed for all reasonable expenses and disbursements incurred by Bishop on the Company's behalf, provided that such expenses shall not exceed $300 without the Company's prior consent. As of March 31, 2026, such arrangements had not been executed, and no expenses have been incurred under these agreements. As of December 31, 2025, such arrangements had not been executed, and no expenses have been incurred under these agreements.

Pursuant to a financial advisory services agreement dated March 20, 2026 the Company has agreed to pay Northland Securities, Inc., a consultant, a cash transaction fee equal to 2.0% of the aggregate consideration (as defined in the agreement) in the event the consultant introduces the Company to the target with which the Company completes an initial Business Combination or has substantive discussions with the target on behalf of and at the specific request of the Company with which the Company completes an initial Business Combination, payable only upon and subject to the closing of the initial Business Combination. At the closing of the initial Business Combination, the Company shall reimburse the consultant for all reasonable out-of-pocket accountable fees and disbursements incurred by the consultant in connection with the performance of its services, provided that such amounts shall not exceed $20,000 in the aggregate without the prior written consent of the Company.

The Company has engaged Xavier Casanova, advisor, to perform strategic advisory services in connection with performing due diligence of potential target companies at a rate of $5,000 per month during the term of the agreement (to be prorated for partial months of service). The Company may elect to defer payment of any or all compensation, and any such deferred compensation shall be due and payable to the advisor at the time of the initial Business Combination or, if earlier, the dissolution of the Company. As of March 31, 2026 a de minimis amount was included in accrued expenses in the accompanying condensed balance sheets.

Pursuant to a finder's agreement dated May 4, 2026 the Company has agreed to pay Brookline Capital Markets, a division of Arcadia Securities, LLC, a cash transaction fee equal to 1.0% of the aggregate consideration (as defined in the agreement) in the event the consultant introduces the Company to the target with which the Company completes an initial Business Combination, payable only upon and subject to the closing of the initial Business Combination.

Critical Accounting Estimates and Policies

The preparation of the audited financial statements and related disclosures in conformity with GAAP 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 financial statements, and expenses during the period reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates.

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 financial statements.