10-Q: Cantor Equity Partners II Q3: Securitize Merger Advances

Cantor Equity Partners II, Inc. reports Q3 2025 net income of $2.4 million, driven by trust account interest, and announces a definitive business combination agreement with Securitize.

Summary

• Net income for the three months ended September 30, 2025, was $2,407,169, a significant increase from a net loss of $50,150 for the same period in 2024.
• For the nine months ended September 30, 2025, net income reached $3,773,699, compared to a net loss of $52,101 in the prior year period.
• Interest income from investments held in the Trust Account was the primary driver of profitability, totaling $2,561,575 for Q3 2025 and $4,092,952 for the nine months ended September 30, 2025.
• General and administrative costs were $124,406 for Q3 2025 and $269,576 for the nine months ended September 30, 2025.
• The company entered into a definitive Business Combination Agreement with Securitize, Inc. and Securitize Holdings, Inc. (Pubco) on October 27, 2025.
• A Private Investment in Public Equity (PIPE) of $225,000,000 was secured concurrently with the Business Combination Agreement, with investors agreeing to purchase 22,500,000 Class A ordinary shares at $10.00 per share.
• The Sponsor agreed to surrender up to 30% of its Class B ordinary shares and subject 30% of its Pubco Common Stock to forfeiture and vesting based on an earn-out during a five-year period post-closing.
• Cash in the operating account increased to $25,000 as of September 30, 2025, from $0 at December 31, 2024.
• Working capital improved from a deficit of approximately $174,000 at December 31, 2024, to a positive $25,000 at September 30, 2025.
• Total assets grew substantially to $244,407,081 at September 30, 2025, from $106,544 at December 31, 2024, primarily due to the funds held in the Trust Account.

Sentiment

Score: 7

Explanation: The company, a SPAC, has successfully achieved a critical milestone by entering into a definitive business combination agreement with Securitize, backed by a substantial PIPE investment. This significantly de-risks the SPAC's primary objective. Financial performance is positive due to expected interest income from the Trust Account. While execution risks for the merger and future performance of the combined entity remain, the current progress is highly favorable for a SPAC at this stage.

Positives

• Achieved significant net income of $2,407,169 for Q3 2025 and $3,773,699 for the nine months ended September 30, 2025, primarily from interest income on Trust Account investments.
• Successfully completed the Initial Public Offering and Private Placement, raising substantial capital for the Trust Account.
• Entered into a definitive Business Combination Agreement with Securitize, Inc., marking a critical step towards completing the company's primary objective.
• Secured a $225,000,000 PIPE Investment, indicating strong investor confidence in the proposed merger and providing significant capital for the combined entity.
• Improved working capital position from a deficit to a positive balance, enhancing operational liquidity.
• The Sponsor has committed to loan up to $1,750,000 for transaction costs and working capital, and up to $3,600,000 via a Sponsor Note for redemption events, providing financial flexibility.
• The Sponsor's agreement to surrender up to 30% of Class B ordinary shares and subject 30% of Pubco Common Stock to an earn-out aligns sponsor incentives with public shareholders.

Negatives

• The company has not yet commenced operations and does not generate any operating revenues, relying solely on non-operating income.
• Incurring increased expenses associated with being a public company, including legal, financial reporting, accounting, and auditing compliance costs.
• Accumulated deficit increased from $(92,942) at December 31, 2024, to $(3,527,522) at September 30, 2025, largely due to the accretion of redeemable Class A ordinary shares.
• Continued reliance on Sponsor loans for working capital needs prior to the consummation of the Business Combination.

Risks

• The ability to successfully complete the Business Combination is not assured.
• Economic uncertainty and volatility in financial markets, including downturns, interest rate fluctuations, and geopolitical instability (such as military conflicts in Ukraine and the Middle East), may adversely affect operations and the ability to complete the Business Combination.
• The 2024 SPAC Rules adopted by the SEC may materially affect the ability to negotiate and complete the Business Combination and may increase related costs and time.
• If climate-related disclosure rules are implemented following judicial review, they may significantly increase the complexity of periodic reporting as a U.S. public company.
• There is a risk that the per share value of residual assets remaining available for distribution (including Trust Account assets) will be less than $10.15 per share if the Business Combination is not completed.
• Reliance on the Sponsor to indemnify the Trust Account for claims by vendors or prospective target businesses if funds fall below $10.15 per share, with limitations on this liability.
• The company is an early stage and emerging growth company, subject to all associated risks.

Future Outlook

The company expects to incur increased expenses as a public company for legal, financial reporting, accounting, and auditing compliance, as well as for due diligence. Management believes it will have sufficient working capital and borrowing capacity from the Sponsor to meet its needs through the earlier of the consummation of the Business Combination or one year from the filing date. The Business Combination with Securitize is expected to be consummated prior to the May 5, 2027 deadline, and the net proceeds from the PIPE Investment will be used by Pubco for transaction expenses, working capital, and general corporate purposes.

Management Comments

• Management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain of the Companys officers and directors, to meet its needs through the earlier of the consummation of the Business Combination or one year from this filing.
• Management continues to evaluate the impact of economic uncertainty and geopolitical instability and has concluded that while it is reasonably possible that these factors could have an effect on the Companys financial position, results of its operations and completion of the Business Combination, the specific impact is not readily determinable as of the date of the unaudited condensed financial statements.

Industry Context

The company operates as a Special Purpose Acquisition Company (SPAC), a vehicle designed to merge with or acquire a private company. The SPAC industry is subject to evolving regulatory scrutiny, including the 2024 SPAC Rules, which may increase the complexity and costs of business combinations. The proposed merger with Securitize, Inc. indicates a strategic focus on the financial services and technology sectors, particularly in the digital asset and tokenization space, which is a rapidly developing and innovative area within the broader financial industry.

Comparison to Industry Standards

• The $10.00 per share IPO price and the initial $10.00 per Public Share placed in the Trust Account are standard for SPACs, with an additional $0.15 per redeemed share to be funded by the Sponsor Note, bringing the initial redemption value to $10.15 per share.
• The requirement for the Business Combination to have an aggregate fair market value of at least 80% of the assets held in the Trust Account is a common threshold for SPACs.
• The 24-month timeline (until May 5, 2027) to consummate a Business Combination is a typical duration for SPACs to complete their acquisition mandate.
• The PIPE investment of $225,000,000 and the Sponsor's earn-out and share surrender provisions are common mechanisms in SPAC de-SPAC transactions, designed to provide additional capital and align the interests of the sponsor with public shareholders, reflecting current industry best practices for SPAC mergers.

Corporate Governance

Legal Proceedings

• No material litigation is currently pending or contemplated against the company, any of its officers or directors in their capacity as such, or against any of its property.

Related Party Transactions

• The Sponsor (Cantor EP Holdings II, LLC) initially purchased Founder Shares and Private Placement Shares.
• The Sponsor provided a Pre-IPO Note (loan) of approximately $160,000, which was fully repaid upon completion of the Initial Public Offering.
• The Sponsor committed to loan the company up to $1,750,000 (Sponsor Loan) for transaction costs and working capital, with approximately $78,000 drawn as of September 30, 2025.
• The Sponsor has agreed to lend the company up to $3,600,000 pursuant to a promissory note (Sponsor Note) in connection with a Redemption Event.
• The Sponsor or an affiliate of the Sponsor, or certain officers and directors, may provide additional Working Capital Loans if the Sponsor Loan is insufficient.
• The company pays $10,000 per month to the Sponsor for office space, administrative, and shared personnel support services, commencing May 2, 2025.
• Cantor Fitzgerald & Co. (CF&Co.), an affiliate of the Sponsor, was the lead underwriter for the Initial Public Offering and will receive an $8,400,000 cash fee for Business Combination marketing services upon consummation.
• Investments in U.S. government treasury bills held in the Trust Account are custodied by CF Secured, LLC, an affiliate of the Sponsor.

Stakeholder Impact

• **Shareholders (Public)**: Will have the opportunity to redeem their shares upon completion of the Business Combination or receive Pubco Common Stock in exchange for their Class A ordinary shares, potentially benefiting from the value creation of the combined Securitize entity.
• **Shareholders (Sponsor)**: Their interests are aligned with public shareholders through the agreement to surrender Class B shares and subject Pubco Common Stock to an earn-out, incentivizing successful post-merger performance.
• **PIPE Investors**: Will acquire Class A ordinary shares at a fixed price, providing crucial capital for the combined entity's operations and growth.
• **Creditors**: The Sponsor has agreed to be liable for certain claims against the company to protect the Trust Account, offering a layer of security for creditors related to Trust Account funds.
• **Management/Employees**: The successful completion of the Business Combination provides clarity and a path forward for the company's leadership and future operational team within Pubco/Securitize.

Next Steps

• Consummation of the Business Combination with Securitize, Inc. and Securitize Holdings, Inc. (Pubco).
• Pubco will become a publicly traded company following the mergers.
• Net proceeds from the PIPE Investment will be used by Pubco for transaction expenses, working capital, and general corporate purposes.
• The company and Pubco will make additional filings with the SEC from time to time regarding the Transactions.
• Management will continue to monitor developments pertaining to the SEC's climate-related disclosure rules and their potential impact.

Key Dates

Recommendation

The company has achieved a critical milestone by entering into a definitive business combination agreement with Securitize, backed by a significant PIPE investment. This de-risks the SPAC's primary objective. However, as a SPAC, its value is largely tied to the successful consummation of the merger and the future performance of the combined entity, Securitize. While the agreement is a positive step, the inherent risks of a business combination, market volatility, and the performance of the target company post-merger warrant a 'Hold' recommendation until further details on Securitize's standalone financials and the combined entity's prospects are fully assessed. The Sponsor's earn-out and share surrender provisions are positive for alignment but the overall success hinges on execution and market acceptance of the combined entity.

Keywords

SPAC, Business Combination, Securitize, PIPE Investment, 10-Q, Quarterly Report, Financial Services, Technology, Software, Real Estate Services, Healthcare, Trust Account, Redemption, Cantor Equity Partners II, CEPT, Mergers & Acquisitions, Corporate Governance, Financial Reporting