10-Q: Concord II Faces Liquidity Crisis, Events.com Merger Uncertain

Concord Acquisition Corp II reported a net income for Q3 2025 but faces significant liquidity challenges, a substantial excise tax liability, and uncertainty regarding its proposed merger with Events.com.

Summary

• Reported net income of $1,296,701 for the three months ended September 30, 2025, and $1,758,744 for the nine months ended September 30, 2025, primarily due to non-cash fair value adjustments of financial instruments.
• Cash outside the Trust Account is critically low at $82,338 as of September 30, 2025.
• The company has an excise tax liability of $2,749,620, including $299,244 in interest and penalties, with approximately $2,300,000 due on April 30, 2025, for which it currently has insufficient funds.
• The proposed merger with Events.com, Inc. is past its 'Outside Date' of May 31, 2025, and the company is in negotiations to amend the Merger Agreement, with no assurance of an extension.
• The company was delisted from NYSE American on September 3, 2024, and its securities now trade on OTC Markets (OTCIDTM Basic Market and OTCQB Venture Market).
• Management has identified substantial doubt about the company's ability to continue as a going concern due to mandatory liquidation if a Business Combination is not completed by December 31, 2025, and insufficient operating funds.
• A material weakness in internal control over financial reporting related to complex financial instruments was identified, and disclosure controls were deemed ineffective.
• Significant redemptions of Class A common stock have occurred, leaving only 8,550 shares subject to possible redemption as of September 30, 2025, and reducing the Trust Account balance to $98,684.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, a significant overdue tax liability, delisting, and substantial doubt about its ability to continue as a going concern. The proposed merger is at risk of termination due to being past its deadline. While there was a net income, it was driven by non-cash adjustments, and operational challenges are paramount.

Positives

• Reported net income of $1,296,701 for the three months ended September 30, 2025, and $1,758,744 for the nine months ended September 30, 2025, a reversal from losses in the prior year, though largely driven by non-cash fair value adjustments.
• Two underwriters waived their right to $9,460,293 in deferred underwriters commission, reducing a significant contingent liability.
• The company has access to an unsecured promissory note of up to $650,000 from the Sponsor, though no amount has been drawn as of September 30, 2025.
• Received $1,100,000 from Events.com through Interim Financing to cover transaction expenses.

Negatives

• Critically low cash balance of $82,338 outside the Trust Account as of September 30, 2025.
• Significant excise tax liability of $2,749,620, including $299,244 in interest and penalties, with insufficient funds to pay the approximately $2,300,000 that was due on April 30, 2025.
• The proposed merger with Events.com is past its 'Outside Date' of May 31, 2025, and an extension is not assured, raising the risk of termination.
• Delisted from NYSE American on September 3, 2024, and now trades on less liquid OTC Markets.
• Management has identified substantial doubt about the company's ability to continue as a going concern.
• A material weakness in internal control over financial reporting over the accounting for complex financial instruments was identified, and disclosure controls and procedures were deemed ineffective.
• Massive redemptions of Class A common stock have reduced the Trust Account balance to $98,684 and left only 8,550 shares subject to possible redemption.
• Total current liabilities increased to $5,827,529 as of September 30, 2025, from $5,211,001 at December 31, 2024.

Risks

• Inability to complete the initial Business Combination by December 31, 2025, or any extended period, which would lead to mandatory liquidation and dissolution.
• Uncertainty regarding the extension of the Merger Agreement with Events.com, as the company is past the 'Outside Date' of May 31, 2025, and negotiations are ongoing without assurance of agreement.
• Insufficient funds to pay the excise tax liability of approximately $2,300,000 that was due on April 30, 2025, leading to ongoing interest and penalties.
• Substantial doubt about the company's ability to continue as a going concern due to mandatory liquidation risk and insufficient operating funds.
• Material weakness in internal control over financial reporting over the accounting for complex financial instruments and ineffective disclosure controls and procedures.
• The proceeds deposited in the Trust Account could become subject to claims of creditors, which could have priority over public stockholders' claims.
• The Sponsor may not have sufficient funds to satisfy its indemnity obligations for claims reducing the Trust Account below $10.00 per public share.
• The continuing military conflict between the Russian Federation and Ukraine, military actions between Hamas and Israel, and changes in international trade policies and macroeconomic conditions could have an undetermined impact on the company's financial condition and ability to complete a Business Combination.
• The company may need to obtain additional financing to complete a Business Combination or meet obligations if cash on hand is insufficient after a Business Combination.
• Warrants will expire worthless if the company fails to complete the initial Business Combination within the Combination Period.
• The excise tax on stock repurchases (redemptions) under the Inflation Reduction Act of 2022 could reduce cash available to complete a Business Combination.
• The fair value of the Capital Contribution Note and warrant liability are subject to significant estimates and assumptions, and deviations could materially impact financial results.

Future Outlook

The company intends to consummate a Business Combination with Events.com on or before December 31, 2025, but acknowledges substantial uncertainty due to being past the Merger Agreement's 'Outside Date' and ongoing negotiations for an extension. The completion of the merger is contingent on several factors, including stockholder approvals, achieving at least $30 million in 'Available Closing Cash,' and NYSE listing approval for the combined entity. If the Business Combination is not completed by the deadline, the company faces mandatory liquidation. The company may also need additional financing to cover operational costs and the excise tax liability.

Management Comments

• "Management has determined that the mandatory liquidation, should a Business Combination not occur and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate its business prior to completing a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern."
• "The Company does not provide any assurance that both parties will ultimately agree to an extension, which could result in termination of the Merger Agreement."
• "Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures... were not effective as of September 30, 2025."

Industry Context

Concord Acquisition Corp II is a Special Purpose Acquisition Company (SPAC) operating in a challenging environment for SPACs, characterized by increased redemptions, regulatory scrutiny, and difficulty in completing de-SPAC transactions. The delisting from NYSE American and subsequent move to OTC Markets reflects a common trajectory for SPACs that fail to complete a merger within their initial timeframe. The high redemption rate (leaving only 8,550 public shares) is indicative of investor skepticism and a lack of confidence in the proposed merger or the SPAC structure itself. The ongoing negotiations with Events.com past the 'Outside Date' highlight the difficulties in finalizing deals in this sector.

Comparison to Industry Standards

• The company's delisting from NYSE American and subsequent move to OTC Markets is a significant deviation from the standard for publicly traded SPACs, which typically aim for major exchange listings. This indicates a failure to meet listing requirements and a loss of investor confidence compared to peers that successfully complete mergers and maintain exchange listings.
• The extremely high redemption rate, leaving only 8,550 Class A shares, is far worse than industry averages for successful SPACs, which typically aim to minimize redemptions to ensure sufficient cash for the target business. This suggests a strong lack of investor support for the proposed merger or the SPAC's overall strategy.
• The 'substantial doubt about the Company's ability to continue as a going concern' is a critical indicator of financial distress, placing it significantly below the financial stability standards expected of most public companies, including other SPACs actively pursuing mergers.
• The failure to pay a significant excise tax liability of approximately $2.3 million by its due date, coupled with critically low cash reserves, indicates severe liquidity issues that are not typical for well-managed SPACs, even those facing challenges.

Corporate Governance

Related Party Transactions

• Sponsors (Concord Sponsor Group II LLC and CA2 Co-Investment LLC) initially paid $25,000 for Class B common stock and transferred Founder Shares to directors.
• Sponsor provided an unsecured promissory note of up to $650,000 to the company (none drawn as of September 30, 2025).
• Sponsors, affiliates, or officers/directors may provide Working Capital Loans (none outstanding as of September 30, 2025).
• Company pays an affiliate of its Sponsor $20,000 per month for administrative services, with $420,000 owed as of September 30, 2025.
• An outstanding balance of $424,730 is due to an affiliate of the Sponsor, including administrative service fees and other expenses.
• The Capital Contribution Note Investor (introduced by Sponsor) agreed to provide up to $600,000, which the Sponsor loans to the company. $600,000 has been borrowed.
• Sponsor agreed to forfeit Class B common stock in connection with Non-Redemption Agreements and if transaction expenses exceed $10,000,000.
• Sponsor and CA2 agreed to vote in favor of the merger, not redeem shares, waive anti-dilution, and forfeit 1,000,000 Class B shares under the Sponsor Support Agreement.

Stakeholder Impact

• Shareholders (Public): Face significant risk of losing investment if the Business Combination fails and the company liquidates, as warrants would expire worthless and Class A shares would be redeemed at a potentially lower value. The delisting to OTC Markets reduces liquidity and transparency.
• Shareholders (Sponsors/Founders): Have significant control through Class B shares and are committed to the Business Combination, but also face forfeiture of shares and potential financial liabilities if the merger fails or transaction expenses exceed limits.
• Events.com Stockholders: Their ability to receive New CND common stock and earnout shares is contingent on the successful closing of the merger, which is currently uncertain.
• Creditors: The company's severe liquidity issues and overdue excise tax liability pose a risk to creditors, as funds outside the Trust Account are minimal.
• Capital Contribution Note Investor: Faces risk if the company liquidates without a Business Combination, as repayment would only come from remaining cash outside the Trust Account.
• Underwriters: Most deferred commissions have been waived, but a small portion ($343,120) remains contingent on the Business Combination.

Next Steps

• Negotiate and secure an amendment to the Merger Agreement with Events.com to extend the 'Outside Date'.
• Complete the proposed Business Combination with Events.com by December 31, 2025.
• Address the significant excise tax liability and insufficient funds to pay it.
• Improve internal controls over financial reporting and disclosure procedures.
• Potentially seek additional financing to support operations and the Business Combination.
• Work towards obtaining NYSE listing approval for the combined entity (New CND).

Key Dates

Recommendation

The company faces an existential crisis with 'substantial doubt about its ability to continue as a going concern.' Key issues include critically low cash reserves ($82,338), a significant overdue excise tax liability ($2.3 million) with insufficient funds to pay, and the proposed merger with Events.com being past its 'Outside Date' with no assurance of extension. The delisting from NYSE American to OTC Markets further reduces liquidity and investor confidence. While a net income was reported, it was driven by non-cash fair value adjustments and does not reflect operational health. The combination of severe liquidity constraints, regulatory non-compliance (unpaid taxes), and high uncertainty regarding its core purpose (Business Combination) makes the stock a strong sell.

Keywords

SPAC, blank check company, merger, acquisition, Events.com, CNDA, 10-Q, SEC filing, financial results, liquidity, going concern, excise tax, delisting, OTC Markets, corporate governance, risk factors, capital raise, warrant liability, Capital Contribution Note