FACT II Acquisition Corp. 10-Q Summary
Business Context and Reporting Period
FACT II Acquisition Corp. is a Cayman Islands exempted company and a blank check entity formed to effect a business combination. The filing covers the quarterly period ended June 30, 2026. The Company is classified as a shell company, a smaller reporting company, and an emerging growth company. As of the reporting date, the Company had not commenced any operations and generated no operating revenue.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 |
|---|---|---|
| Net Income | $1,894,060 | $3,079,421 |
| General & Administrative Expenses | $1,217,881 | $563,903 |
| Interest Income (Trust Account) | $3,108,089 | $3,604,845 |
| Cash and Cash Equivalents (Operating) | $170,477 | $1,088,465 |
| Cash Held in Trust Account | $186,893,545 | $183,785,456 |
| Total Liabilities | $9,993,908 | $9,161,472 |
| Deferred Underwriting Fee | $7,000,000 | $7,000,000 |
| Net Cash Used in Operating Activities | ($374,314) | ($359,456) |
Per Share Data: Basic and diluted net income per ordinary share was $0.08 for the six months ended June 30, 2026, compared to $0.13 for the same period in 2025.
Material Changes and Developments
- Termination of Proposed Business Combination: On July 16, 2026 (subsequent to the period end), the Company terminated the business combination agreement with Precision Aerospace & Defense Group, Inc. ("PAD"). No termination fee was payable.
- Liquidity Concerns: Operating cash decreased significantly from $544,791 at year-end 2025 to $170,477 as of June 30, 2026. Management has determined that the Company's liquidity condition and the limited time remaining to complete a new business combination raise substantial doubt about its ability to continue as a going concern.
- Expense Increase: General and administrative expenses for the six months ended June 30, 2026, increased by approximately 116% compared to the prior year period, driven by costs associated with the pursuit of the PAD transaction and ongoing public company compliance.
- Trust Account Growth: The Trust Account balance increased by approximately $3.1 million due to interest earned, raising the redemption value per share to approximately $10.68.
Outlook, Risks, and Contingencies
- Deadline: The Company must complete an initial business combination by November 27, 2026, unless extended by shareholders. This leaves approximately four months from the filing date to consummate a transaction.
- Going Concern: The filing explicitly states that the Company's cash on hand is insufficient to fund operating expenses for the next twelve months. If a business combination is not completed, the Company will liquidate and redeem public shares.
- Geopolitical Risks: The Company notes risks related to global conflicts (Russia-Ukraine, Israel-Hamas, Iran) and trade policies that could impact capital markets and the ability to consummate a transaction.
- Deferred Fees: A deferred underwriting fee of $7,000,000 is payable only upon the successful completion of a business combination. If the Company liquidates, this fee is waived.
Investor Verification Checklist
- Verify the Company's ability to identify and close a new business combination before the November 27, 2026 deadline given the recent termination of the PAD deal.
- Confirm the sufficiency of the $170,477 operating cash balance to fund operations until liquidation or a new deal is signed.
- Review the terms of any potential extension of the business combination deadline and the associated shareholder approval requirements.
- Monitor the redemption value per share in the Trust Account, which currently stands at approximately $10.68.
- Assess the impact of the "substantial doubt" regarding going concern status on the Company's ability to negotiate with potential targets.