10-Q: FG Merger II Reports Q3 Net Income, Extends Boxabl Merger Deadline

FG Merger II Corp. reported a net income of $77,269 for Q3 2025 and extended its merger agreement with Boxabl Inc. to March 31, 2026.

Summary

• Reported a net income of $77,269 for the three months ended September 30, 2025, and $974,654 for the nine months ended September 30, 2025.
• Investment income from the trust account was $847,927 for the three months and $2,250,181 for the nine months ended September 30, 2025.
• General and administrative expenses totaled $592,593 for the three months and $802,988 for the nine months ended September 30, 2025, including $425,000 for Business Combination expenses.
• The company entered into an Agreement and Plan of Merger with Boxabl Inc. on August 4, 2025, with an aggregate merger consideration of $3,500,000,000 in preferred and common shares.
• The Agreement End Date for the Boxabl merger was extended from December 31, 2025, to March 31, 2026, via an amendment on November 3, 2025.
• Cash held in the trust account was $81,850,181 as of September 30, 2025.
• Total assets were $82,549,358 as of September 30, 2025.
• The company is a blank check company focused on the financial services industry and has not yet commenced any operations, generating non-operating income from trust account investments.

Sentiment

Score: 6

Explanation: The company reported net income due to trust account interest and has a definitive merger agreement in place, which are positive steps for a SPAC. However, the operating losses and the extension of the merger deadline introduce some uncertainty and indicate the transaction is not proceeding as quickly as initially planned. The overall sentiment is cautiously positive, reflecting progress towards a business combination despite minor delays and inherent SPAC risks.

Positives

• Reported net income of $77,269 for the three months ended September 30, 2025, and $974,654 for the nine months ended September 30, 2025, primarily from investment income on the trust account.
• Maintained a significant cash balance of $81,850,181 in the trust account as of September 30, 2025.
• Successfully entered into a definitive merger agreement with Boxabl Inc. on August 4, 2025, a crucial step towards completing a Business Combination.
• The Boards of Directors of BOXABL, FG Merger II Corp., and Merger Sub have unanimously approved the Merger Agreement.

Negatives

• Operating expenses led to a loss from operations of $592,593 for the three months and $802,988 for the nine months ended September 30, 2025.
• The company has not commenced any operations and will not generate operating revenues until after the completion of its initial Business Combination.
• The merger agreement with Boxabl Inc. required an extension of the Agreement End Date from December 31, 2025, to March 31, 2026, indicating potential delays or complexities.
• Public stockholders are restricted from seeking redemption rights with respect to 15% or more of the Public Shares without prior written consent in certain scenarios.
• Warrants will expire worthless if a Business Combination is not completed within the Combination Period.

Risks

• The company is an early-stage and emerging growth company, subject to all associated risks.
• There is no assurance that the company will be able to successfully effect a Business Combination.
• Failure to complete a Business Combination within 24 months from the IPO closing (January 30, 2027) will result in liquidation, extinguishing public stockholders' rights and rendering warrants worthless.
• The Sponsor's liability for claims reducing the Trust Account below $10.10 per share has exceptions, meaning the Trust Account is not fully protected against all claims.
• The closing of the Boxabl merger is subject to customary conditions, including stockholder approvals and regulatory clearances, which may not be satisfied.
• The company depends on the digital technologies of third parties and lacks significant investments in data security protection, making it vulnerable to cybersecurity threats and potential financial loss.
• There is a risk of insufficient funds to operate the business prior to an initial Business Combination if estimates of costs are less than actual amounts.

Future Outlook

The company intends to focus on businesses in the financial services industry for its Business Combination. It will not generate operating revenues until after the completion of its initial Business Combination. The merger with Boxabl Inc. is a key strategic focus, with the closing conditions including stockholder approvals and regulatory clearances. The deadline for this merger has been extended to March 31, 2026. The company has until January 30, 2027 (24 months from IPO) to complete a Business Combination, or it will liquidate.

Management Comments

• Management has broad discretion with respect to the specific application of the net proceeds of the IPO and sale of the $15 Private Warrants and Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
• We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business.
• However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination.

Industry Context

FG Merger II Corp. operates as a Special Purpose Acquisition Company (SPAC), a common vehicle for private companies to go public. Its stated intention to focus on the financial services industry aligns with a sector that frequently sees M&A activity. The proposed merger with Boxabl Inc., a company in the modular housing industry, represents a 'de-SPAC' transaction, a critical phase for SPACs. The extension of the merger agreement deadline is a common occurrence in SPAC transactions, reflecting the complexities of regulatory approvals and due diligence processes.

Comparison to Industry Standards

• The company's structure as a blank check company is standard for SPACs.
• The 80% net assets rule for a Business Combination is a common Nasdaq requirement for SPACs.
• The 24-month timeline from IPO to Business Combination is a typical duration for SPACs.
• The use of a trust account to hold IPO proceeds and generate interest income is standard practice for SPACs to protect public shareholder funds.
• The extension of the merger agreement deadline is not uncommon in SPAC transactions, which often face delays due to regulatory processes or negotiation complexities.

Corporate Governance

Legal Proceedings

• No litigation is currently pending against the company, its officers, or directors.

Related Party Transactions

• **Founder Shares**: Issued 2,156,250 Founder Shares to the Sponsor for $25,000 on October 6, 2023. Sponsor transferred 465,000 Founder Shares to management/board/advisors on October 18, 2023. Sponsor forfeited 300,000 Founder Shares on February 5, 2025, due to underwriters not exercising over-allotment option, resulting in 2,000,000 Founder Shares outstanding as of September 30, 2025.
• **Promissory Notes**: Issued a promissory note to the Sponsor for up to $150,000 on October 6, 2023, with $125,000 drawn and fully paid off by April 1, 2025. Issued an unsecured promissory note of $417,000 to the Sponsor on January 30, 2025, bearing 12% interest, fully paid off by April 1, 2025.
• **Private Placement**: Sponsor and Ramnaraine Jaigobind purchased 223,300 and 25,000 Private Units, respectively, for $10.00 per unit, totaling $2,483,000. Sponsor purchased 1,000,000 $15 Private Warrants for $0.10 per warrant, totaling $100,000.
• **Administrative Services Agreement**: Entered into an agreement with the Sponsor for a monthly fee of $15,000. $135,000 paid to Sponsor as of September 30, 2025.
• **Sponsor Support Agreement**: Sponsor agreed to vote its shares in favor of the Boxabl merger.
• **Sponsor Lock-Up Agreement**: Sponsor will enter into a lock-up agreement restricting transfer of certain shares post-merger.

Stakeholder Impact

• **Shareholders**: Public shareholders have redemption rights for their Public Shares upon Business Combination completion. Founder Shares and Private Units will not participate in liquidating distributions if a Business Combination is not consummated. Warrants will expire worthless if no Business Combination. The Boxabl merger, if completed, will result in a combined company focused on modular housing.
• **Employees**: No direct impact mentioned for FG Merger II Corp. as it has no operations. Post-merger, Boxabl employees would become part of the Combined Company.
• **Creditors**: The Sponsor has agreed to be liable for certain claims that reduce the Trust Account below $10.10 per share, with exceptions, providing some protection to the Trust Account.

Next Steps

• Complete the Business Combination with Boxabl Inc. by March 31, 2026.
• File a registration statement on Form S-4 with the SEC in connection with the Boxabl transaction.
• Obtain stockholder approvals from both BOXABL and FG Merger II Corp. for the merger.
• Secure approval for listing of the Combined Company Common Stock on Nasdaq or NYSE.
• Address any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act.
• If a Business Combination is not completed by January 30, 2027, the company will cease operations and redeem public shares.

Key Dates

Recommendation

The company has made progress by securing a definitive merger agreement with Boxabl, which is a critical step for a SPAC. The extension of the merger deadline, while a delay, is not uncommon in complex transactions and provides additional time to satisfy closing conditions. The company's financial position, primarily driven by interest income from the trust account, is stable for its current stage. However, the inherent risks of a SPAC, including the possibility of the merger not closing or the company liquidating if no business combination is completed within the extended timeframe, warrant a 'hold' rather than a 'buy' or 'sell.' Investors should monitor the progress of the Boxabl merger and the satisfaction of its closing conditions.

Keywords

SPAC, FG Merger II Corp, Boxabl, Merger Agreement, 10-Q, Quarterly Report, Financial Services, Business Combination, Trust Account, SEC Filing, Special Purpose Acquisition Company, De-SPAC