FG Merger II Corp Unit(FGMCU) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements FG Merger II Corp.'s unaudited financial statements for June 30, 2025, including balance sheet, operations, equity, cash flows, and detailed accounting notes Balance Sheet Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------------- | :-------------------------- | :-------------------------- | | ASSETS | | | | Cash | $517,813 | $46,285 | | Cash held in trust account | $81,628,583 | — | | Total Assets | $82,295,308 | $169,035 | | LIABILITIES | | | | Total Liabilities | $298,486 | $171,667 | | STOCKHOLDERS' EQUITY | | | | Total Stockholders' Equity | $368,239 | $(2,632) | Statement of Operations Statement of Operations Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | General and administrative expenses | $210,395 | $2,182 | $83,539 | $885 | | Investment income on trust account | $1,402,254 | — | $842,499 | — | | Income tax expense | $294,474 | — | $176,925 | — | | Net income (loss) | $897,385 | $(2,182) | $582,035 | $(885) | | Basic income per share, redeemable shares | $0.207 | $(0.001) | $0.071 | $(0.0004) | Statement of Changes in Stockholders' Equity Stockholders' Equity Changes (December 31, 2024 to June 30, 2025) | Item | Amount (USD) | | :------------------------------------------ | :----------- | | Balance at December 31, 2024 (audited) | $(2,632) | | Sale of 8,000,000 units in IPO | $80,000,000 | | Sale of 248,300 units in private placement | $2,483,000 | | Sale of 1,000,000 $15 strike warrants | $100,000 | | Reclassification of offering costs | $(1,481,032) | | Common shares subject to possible redemption | $(80,800,000)| | Net Income (March 31, 2025) | $315,350 | | Net Income (June 30, 2025) | $582,035 | | Balance at June 30, 2025 | $368,239 | Statement of Cash Flows Cash Flow Highlights (Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :------------------------------------ | :--------------- | :--------------- | | Net cash used in operating activities | $1,006,963 | $(1,503) | | Net cash used in investing activities | $(81,628,583) | — | | Net cash provided by financing activities | $81,093,148 | — | | Net increase in cash | $471,528 | $(1,503) | | Cash at end of period | $517,813 | $54,745 | NOTES TO THE FINANCIAL STATEMENTS Detailed explanations and disclosures for the financial statements cover the company's blank check nature, accounting policies, IPO, related party transactions, and equity NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - FG Merger II Corp. is a blank check company incorporated on September 20, 2023, for the purpose of a Business Combination, primarily focusing on the financial services industry[19][20] - As of June 30, 2025, the Company had not commenced operations, with all activities related to its formation and the initial public offering (IPO)[21] - The IPO was consummated on January 30, 2025, raising $80,000,000 gross proceeds from the sale of 8,000,000 units at $10.00 per unit[22] - A simultaneous private placement generated an additional $2,483,000 from private units and $100,000 from $15 private warrants[23] - Following the IPO, $80,800,000 was placed in a trust account, to be held until a Business Combination or distribution to stockholders[27] - The Company has 24 months from the IPO closing to complete a Business Combination; otherwise, public shares will be redeemed[34] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[37][38] - Common stock subject to possible redemption is classified as temporary equity at redemption value, with changes recognized immediately[43][44] - As of June 30, 2025, the Company estimated $294,474 in income tax expense on income earned in the Trust Account[47] - The Company uses a two-class methodology for calculating earnings per share, distinguishing between redeemable and non-redeemable common shares[48] - Marketable securities held in the Trust Account are invested in a money market fund focused on U.S. Treasury obligations and are valued using Level 1 input[41][54] - The Company operates as one operating segment and adopted ASU 2023-07 (Segment Reporting) as of January 31, 2025, resulting in disclosure changes only[55][56] NOTE 3. INITIAL PUBLIC OFFERING - On January 30, 2025, the Company completed its IPO, selling 8,000,000 units at $10.00 per unit, generating gross proceeds of $80,000,000[57] NOTE 4. PRIVATE PLACEMENT - Simultaneously with the IPO, a private placement occurred where the Sponsor and Ramnaraine Jaigobind purchased private units for $2,483,000[58] - The Sponsor also purchased 1,000,000 $15 Private Warrants for an aggregate price of $100,000[58] NOTE 5. RELATED PARTY TRANSACTIONS - Initial Founder Shares of 2,156,250 were issued to the Sponsor for $25,000 on October 6, 2023, with some later transferred to management and directors[59] - A dividend on August 21, 2024, increased Founder Shares to 2,300,000, but 300,000 Founder Shares were forfeited by the Sponsor on February 5, 2025, due to the underwriters' over-allotment option termination, leaving 2,000,000 outstanding as of June 30, 2025[60][61] - Two promissory notes from the Sponsor, totaling $125,000 and $417,000, were fully repaid by April 1, 2025[63][64] - The Company has an administrative services agreement with the Sponsor for a monthly fee of $15,000, with $90,000 paid as of June 30, 2025[65] NOTE 6. COMMITMENTS AND CONTINGENCIES - Holders of Founder Shares, Private Units, and $15 Private Warrants are entitled to registration rights, with the Company bearing filing expenses[67] - The underwriters' over-allotment option for 1,200,000 units was terminated on February 5, 2025, leading to the Sponsor forfeiting 300,000 Founder Shares[68] - Underwriters received a $750,000 discount at IPO closing and 40,000 private units for $100, with deferred underwriting commissions of 3.5% of gross IPO proceeds payable upon Business Combination[69][70] - The financial advisor was paid $250,000 and issued 25,000 Advisor Units at IPO closing[71] NOTE 7. STOCKHOLDERS' EQUITY - As of June 30, 2025, there were 2,295,800 common shares outstanding (excluding 8,000,000 shares subject to possible redemption) and 829,580 total rights outstanding, with each Public Right entitling the holder to one-tenth common share[73] - The Company has 1,000,000 $15 Private Warrants outstanding, exercisable at $15.00 per share for 10 years from the Business Combination date, which are non-redeemable and may be exercised on a cashless basis[74] - These warrants will expire worthless if a Business Combination is not completed within the Combination Period[75] NOTE 8. SUBSEQUENT EVENTS - On July 21, 2025, the Company withdrew $626,329 from the Trust Account income for working capital, bringing the total aggregate withdrawal for this purpose to $1,200,000, which is the final withdrawal[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operations, covering its blank check status, IPO, operating results, liquidity, and critical accounting policies Overview - FG Merger II Corp. is a blank check company formed on September 20, 2023, to effect a Business Combination, with an intended focus on the financial services industry[79][80] - As of June 30, 2025, the Company had not commenced operations, with activities limited to formation and its IPO, and expects to generate non-operating income from interest on IPO proceeds[81] Recent Developments - The Company's registration statement became effective on January 28, 2025, and its IPO was consummated on January 30, 2025, raising $80,000,000 gross proceeds from 8,000,000 units at $10.00 per unit[82] - A private placement closed simultaneously with the IPO, generating $2,483,000 from private units and $100,000 from $15 private warrants[83][84] - Following the IPO, $80,800,000 was placed in a trust account, and the Company has 24 months from the IPO closing to complete a Business Combination[88][94] - The Sponsor has agreed to be liable for claims that reduce the Trust Account below $10.10 per share, with certain exceptions[95] Results of Operations - The Company has not generated operating revenues to date, with activities focused on organizational efforts, the IPO, and identifying a Business Combination target[96] - Non-operating income is generated from interest on marketable securities held in the Trust Account[96] Net Income (Loss) Comparison | Period | Net Income (Loss) 2025 | Net Income (Loss) 2024 | | :----------------------------- | :--------------------- | :--------------------- | | Three Months Ended June 30 | $582,035 | $(885) | | Six Months Ended June 30 | $897,385 | $(2,182) | - The significant increase in net income for 2025 is primarily due to investment income earned in the Trust Account ($1,402,254 for six months, $842,499 for three months), offset by general and administrative expenses and income tax expense[97] Liquidity and Capital Resources - As of June 30, 2025, the Company held a cash balance of $517,813[100] - Liquidity prior to the IPO was met through $25,000 from Founder Shares and a $125,000 promissory note from the Sponsor, which was fully repaid by April 1, 2025[100][101] - The IPO generated $80,000,000 gross proceeds, and private placements added $2,483,000 and $100,000[102] - $80,800,000 was placed in the Trust Account, with approximately $2,200,000 retained for working capital and IPO expenses[103] - The Company withdrew $573,671 from Trust Account interest for working capital as of June 2025, with a total withdrawal limit of $1,200,000[104] - Management believes current funds are sufficient for operations but acknowledges potential for insufficient funds if Business Combination costs exceed estimates[106] Off-Balance Sheet Arrangement - The Company has no off-balance sheet obligations, assets, or liabilities as of June 30, 2025[106] Contractual Obligations - The Company is obligated to bear expenses for registration statements for holders of Founder Shares, Private Units, and $15 Private Warrants[107] - The underwriters' over-allotment option was terminated, leading to the Sponsor forfeiting 300,000 Founder Shares[108] - Underwriters received a $750,000 discount at IPO closing and 40,000 private units, with deferred underwriting commissions of 3.5% of gross IPO proceeds payable upon Business Combination[109][110] - The financial advisor was paid $250,000 and issued 25,000 Advisor Units at IPO closing[111] Related Party Transactions - Founder Shares were initially issued to the Sponsor and subsequently adjusted due to a dividend and forfeiture following the termination of the underwriters' over-allotment option, resulting in 2,000,000 Founder Shares outstanding as of June 30, 2025, subject to transfer restrictions[112][113][114][115] - Two promissory notes from the Sponsor, totaling $125,000 and $417,000, were fully repaid by April 1, 2025[116][117] - The Company pays the Sponsor a monthly fee of $15,000 for administrative services, with $90,000 paid as of June 30, 2025[118] Critical Accounting Policies - The financial statements are prepared in conformity with GAAP and SEC rules, and the Company, as an 'emerging growth company,' has elected the extended transition period for new accounting standards[121][122][123] - Management's preparation of financial statements involves significant judgments and estimates, which could differ from actual results[124][125] - Deferred offering costs are charged to stockholders' equity upon IPO completion, and marketable securities in the Trust Account are primarily invested in U.S. Treasury obligation money market funds, valued using Level 1 input[127][128][139] - Common stock subject to possible redemption is classified as temporary equity at redemption value, with changes recognized immediately, and the Company uses a two-class methodology for EPS calculation[129][130][134] - The Company follows ASC Topic 740 for income taxes, estimating $294,474 in income tax expense on Trust Account income as of June 30, 2025[131][133] - The Company operates as one operating segment, with fair values of financial instruments approximating carrying amounts due to their short-term nature[135][140] Recently issued accounting standard - The Company adopted ASU 2023-07, 'Segment Reporting,' as of January 31, 2025, which resulted in disclosure changes only, primarily for entities with a single reportable segment[141] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, FG Merger II Corp. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[142] Item 4. Controls and Procedures This section details the company's disclosure controls and procedures, confirming their effectiveness as of June 30, 2025, and reporting no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures - The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective[144] Changes in Internal Control Over Financial Reporting - There were no material changes in the Company's internal control over financial reporting during the three months ended June 30, 2025[145] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - The Company is not involved in any legal proceedings[147] Item 1A. Risk Factors As a smaller reporting company, FG Merger II Corp. is not required to provide risk factor disclosures under this item - As a smaller reporting company, the Company is not required to provide risk factor information[148] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details on unregistered equity sales, including Founder Shares, IPO, private placement, and the use of proceeds are provided - Founder Shares were issued to the Sponsor on October 6, 2023, and subsequently adjusted due to a dividend and forfeiture, resulting in 2,000,000 Founder Shares outstanding as of June 30, 2025[149][150][151] - The IPO, consummated on January 30, 2025, generated $80,000,000 gross proceeds from the sale of 8,000,000 units[152] - A private placement simultaneously with the IPO generated $2,483,000 from private units and $100,000 from $15 private warrants[153] - $80,800,000 from the IPO and private placement proceeds were placed in the Trust Account[155] - The Company paid $750,000 in underwriting fees, $250,000 in advisor fees, and approximately $482,000 for other IPO-related costs[156] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[157] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the Company[158] Item 5. Other Information The company reported no other information - No other information was reported[159] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including certifications, XBRL documents, and interactive data files - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1*, 32.2*), various XBRL Taxonomy Extension Documents, and the Cover Page Interactive Data File[161] SIGNATURES The report is duly signed on behalf of FG MERGER II CORP. by Hassan R. Baqar, Chief Financial Officer, on July 25, 2025 - The report was signed by Hassan R. Baqar, Chief Financial Officer, on July 25, 2025[164]