FACT II Acquisition Corp. (FACT) - 10-K Summary
Business Context and Reporting Period
Company: FACT II Acquisition Corp. (FACT)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Model: Cayman Islands exempted company (Special Purpose Acquisition Company or "SPAC") formed to effect a merger, share exchange, or asset acquisition with one or more target businesses.
Current Status: The Company has no operating revenues. It is in the process of consummating a proposed business combination with Precision Aerospace & Defense Group, Inc. ("PAD").
Key Financial Metrics
| Metric | Year Ended Dec 31, 2025 | Period Inception to Dec 31, 2024 |
|---|---|---|
| Net Income (Loss) | $5,017,538 | $(71,891) |
| Interest Income (Trust Account) | $7,188,186 | $722,270 |
| General & Administrative Expenses | $2,225,030 | $1,079,899 |
| Cash (Operating Account) | $544,791 | $1,447,921 |
| Cash Held in Trust Account | $183,785,456 | $176,597,270 |
| Working Capital | Deficiency of $613,884 | Not explicitly stated (Cash > Current Liabilities) |
| Deferred Underwriting Fee | $7,000,000 | $7,000,000 |
Material Changes and Developments
- Proposed Business Combination: On November 26, 2025, the Company entered into a Business Combination Agreement to merge with Precision Aerospace & Defense Group, Inc. (PAD). The transaction involves the domestication of the Company from the Cayman Islands to Delaware and a merger with PAD.
- Trust Account Growth: The Trust Account balance increased by approximately $7.2 million during 2025, primarily due to interest income earned on U.S. government securities, raising the per-share redemption value to approximately $10.50.
- Share Forfeiture: On January 10, 2025, the underwriters' over-allotment option expired unexercised, resulting in the forfeiture of 875,000 founder shares (Class B ordinary shares).
- Liquidity Position: The Company reported a working capital deficiency of $613,884 as of December 31, 2025, with only $544,791 in cash outside the Trust Account. Management has raised substantial doubt about the Company's ability to continue as a going concern if the business combination is not completed by the mandatory liquidation date of May 27, 2026.
Guidance, Outlook, and Risks
- Outlook: The Company expects to complete the business combination with PAD. If successful, the Company will be renamed "New PAD." If the combination is not completed by May 27, 2026, the Company will liquidate and redeem public shares at the pro-rata Trust Account value.
- Management Commentary: Management believes the funds outside the Trust Account are sufficient to operate for the required period, though they may seek additional financing from the Sponsor or affiliates if necessary. An Advisory Agreement was signed with the Sponsor for up to $240,000 in fees related to the PAD transaction.
- Key Risks:
- Going Concern: Substantial doubt exists regarding the ability to continue as a going concern due to the mandatory liquidation date and limited operating cash.
- Transaction Failure: If the PAD deal fails, the Company may not find an alternative target in time, leading to liquidation.
- Redemption Risk: Significant redemptions by public shareholders could reduce the cash available for the transaction below the required $75 million minimum.
- Regulatory Approval: The transaction is subject to shareholder approval and regulatory clearances, including potential CFIUS review.
Investor Verification Checklist
- Transaction Status: Verify the current status of the Business Combination Agreement with PAD and whether the Form S-4 registration statement has been declared effective.
- Redemption Levels: Monitor the percentage of public shares tendered for redemption, as this directly impacts the cash available at closing and the minimum cash requirement of $75 million.
- Liquidity Runway: Confirm the Company's ability to fund operations until May 27, 2026, given the current working capital deficiency and limited operating cash ($544,791).
- Shareholder Approval: Check for updates on the shareholder vote required to approve the domestication and merger.
- Warrant Terms: Review the warrant exercise price ($11.50) and redemption triggers ($18.00) to assess potential dilution or value of the warrant component.