FACT

FACT II Acquisition Corp. 10-K Summary

Business Context and Reporting Period

Company: FACT II Acquisition Corp. (a Cayman Islands exempted company and Special Purpose Acquisition Company or "SPAC").
Reporting Period: Fiscal year ended December 31, 2024 (Inception: June 19, 2024).
Business Purpose: To effect a merger, share exchange, asset acquisition, or similar business combination with one or more target businesses. The Company has no operating history and has not selected a specific target.
Listing: Units (FACTU), Class A ordinary shares (FACT), and Warrants (FACTW) are listed on the Nasdaq Global Market.
Deadline: The Company has 18 months from its November 27, 2024 IPO (or 24 months if a definitive agreement is executed within 18 months) to consummate an initial business combination.

Key Financial Metrics

Material Changes and IPO Details

• Initial Public Offering (IPO): Consummated on November 27, 2024. Sold 17,500,000 Units at $10.00 per unit, generating gross proceeds of $175,000,000.
• Private Placement: Simultaneously sold 663,125 Private Placement Units at $10.00 per unit, generating $6,631,250 in gross proceeds.
• Trust Account Funding: $175,875,000 ($10.05 per unit) was deposited into the Trust Account.
• Transaction Costs: Total transaction costs were $11,028,226, comprising a $3,500,000 cash underwriting fee, a $7,000,000 deferred underwriting fee, and $528,226 in other offering costs.
• Over-Allotment: The underwriters' 45-day over-allotment option expired unexercised on January 10, 2025, resulting in the forfeiture of 875,000 founder shares.

Guidance, Outlook, and Risks

Outlook: The Company expects to incur significant costs in pursuing acquisition plans. It does not anticipate generating operating revenues until after the completion of an initial business combination. The Company relies on interest income from the Trust Account and potential working capital loans from the Sponsor to fund operations.

Management Commentary: Management intends to leverage their experience in financial services and complex operations to identify targets with strong revenue growth potential and scalable operations. The Company is an "emerging growth company" and a "smaller reporting company."

Key Risks:

• Liquidity: The Company has a working capital deficiency and relies on the Sponsor or affiliates to provide loans to fund working capital deficiencies.
• Business Combination Failure: If the Company fails to complete a business combination within the required timeframe, it will liquidate and redeem public shares. Shareholders may receive less than $10.05 per share if claims against the Trust Account arise.
• Geopolitical Risks: Ongoing conflicts (Russia-Ukraine, Israel-Hamas) and global market volatility could impact the ability to find or finance a target.
• Conflicts of Interest: Sponsor and management hold founder shares purchased at a nominal price ($0.0037/share), creating potential misalignment with public shareholders if a business combination is consummated at a price below the IPO price.
• Regulatory: New SEC rules adopted in January 2024 regarding SPACs may increase costs and time required to complete a business combination.

Investor Verification Checklist

• Trust Account Balance: Verify the current balance and interest accrual in the Trust Account to ensure the redemption value remains near $10.05 per share.
• Working Capital Sufficiency: Confirm the Company has sufficient cash outside the Trust Account or access to Sponsor loans to operate until the 18-month deadline.
• Target Selection Criteria: Review the specific criteria management uses to evaluate targets, noting the lack of a specific industry focus.
• Founder Share Forfeiture: Note that 875,000 founder shares were forfeited due to the unexercised over-allotment option, adjusting the total share count.
• Related Party Transactions: Review the promissory note issued by a Sponsor member to the Executive Chairman and the terms of potential working capital loans.