10-Q: FutureTech II Faces Delisting, Liquidity Concerns Amid Merger Push

FutureTech II Acquisition Corp. reports significant net losses and liquidity challenges, while progressing with its proposed business combination with Longevity Biomedical, Inc. despite a Nasdaq delisting and ongoing operational hurdles.

Summary

• FutureTech II Acquisition Corp. (FTII) reported a net loss of $(80,647) for the three months ended June 30, 2025, compared to a net loss of $(44,457) for the same period in 2024.
• For the six months ended June 30, 2025, the company incurred a net loss of $(370,320), a significant decline from a net income of $85,119 in the prior year period.
• The Trust Account balance decreased substantially from $26,447,350 at December 31, 2024, to $9,133,890 at June 30, 2025, primarily due to shareholder redemptions.
• The working capital deficit worsened from $5,026,967 at December 31, 2024, to $5,484,501 at June 30, 2025.
• FTII's securities were delisted from The Nasdaq Stock Market LLC on February 26, 2025, due to failure to complete a business combination within 36 months, and now trade over-the-counter.
• The company is pursuing a proposed business combination with Longevity Biomedical, Inc., with an Amended and Restated Merger Agreement signed on August 6, 2025, which includes Longevity's acquisition of Cerevast Medical, Inc. and Aegeria Soft Tissue, LLC.
• Stockholders approved an extension of the business combination period from August 18, 2025, to August 18, 2026, through monthly extensions, with the Sponsor continuing to deposit funds into the Trust Account.
• Management identified material weaknesses in internal control over financial reporting related to the accounting of Extension Loans, redemption price calculation, and a missed entry for the clawback process of overpayments.
• The company issued Zero Interest Convertible Notes totaling $1,025,000 to several investors on April 7, 2025, and has a Subscription Agreement for a Private Placement of 1,000,000 shares contingent on the merger closing.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, a significant net loss, and has been delisted from Nasdaq. While a merger agreement is in place and extensions have been granted, the going concern doubt and internal control weaknesses present substantial challenges, indicating a highly negative outlook.

Positives

• Progress on the proposed business combination with Longevity Biomedical, Inc., including an Amended and Restated Merger Agreement signed on August 6, 2025.
• Stockholders approved an extension of the business combination period until August 18, 2026, providing more time to close the deal.
• The Sponsor continues to provide financial support through Extension Loans and Working Capital Loans, demonstrating commitment to the business combination.
• Successful recovery of $695,024 in overpayments from previous redemptions, improving the 'Due from Sponsor' balance.
• Zero Interest Convertible Notes totaling $1,025,000 were issued to investors, providing additional capital for the company.

Negatives

• Reported a significant net loss of $(370,320) for the six months ended June 30, 2025, a substantial deterioration from a net income of $85,119 in the prior year period.
• The Trust Account balance decreased significantly from $26,447,350 at December 31, 2024, to $9,133,890 at June 30, 2025, primarily due to high shareholder redemptions.
• The working capital deficit increased from $5,026,967 at December 31, 2024, to $5,484,501 at June 30, 2025, indicating worsening liquidity.
• The company's securities were delisted from Nasdaq on February 26, 2025, due to non-compliance with the 36-month business combination deadline, moving trading to the less liquid over-the-counter market.
• Management identified material weaknesses in internal control over financial reporting related to accounting for Extension Loans, redemption price calculation, and a missed entry for the clawback process.
• Management explicitly stated substantial doubt about the company's ability to continue as a going concern without raising additional capital.
• High redemption rates by public shareholders continue, with 228,287 shares tendered for redemption on August 14, 2025, further reducing the Trust Account.

Risks

• There is no assurance that the proposed business combination with Longevity Biomedical, Inc. will be successfully completed.
• The company faces significant liquidity challenges and may not have sufficient working capital to meet its needs through the consummation of the business combination, raising substantial doubt about its ability to continue as a going concern.
• Delisting from Nasdaq to the over-the-counter market may result in reduced liquidity, limited market quotations, potential classification as a 'penny stock,' decreased ability to issue additional securities or obtain financing, and make the company a less attractive merger partner.
• Redemptions occurring after December 31, 2022, may be subject to a 1% excise tax under the Inflation Reduction Act, potentially reducing cash available for a business combination.
• There is no assurance that the Sponsor has sufficient funds to satisfy its indemnity obligations for claims that could reduce the Trust Account balance.
• Global conflicts (Middle East, Ukraine) and related economic sanctions could negatively impact the company's financial position, operations, and ability to find a target company.
• Material weaknesses in internal control over financial reporting could lead to inaccurate financial results and adversely affect investor confidence.
• Public Warrants may expire worthless if the business combination is not completed within the required period.

Future Outlook

The company expects to change its name to Longevity Biomedical, Inc. and list its common stock on Nasdaq under the ticker symbol LBIO upon the closing of the proposed business combination. Management believes the company will not have sufficient working capital and borrowing capacity to meet its needs through the consummation of the Business Combination without raising additional capital. The company intends to apply to list the securities of the post-business-combination company on The Nasdaq Capital Market and will continue to improve processes for evaluating complex accounting standards and assessing resource needs for financial reporting staff.

Management Comments

• "Management believes that the Company will not have sufficient working capital and borrowing capacity to meet its needs through the consummation of the Business Combination."
• "Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is possible that the virus could have a negative effect on the Companys financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable."
• "Our management has expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting."
• "Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Companys unaudited condensed financial statements."

Industry Context

FutureTech II Acquisition Corp. operates as a Special Purpose Acquisition Company (SPAC), a vehicle that has faced increasing scrutiny and regulatory challenges, particularly regarding deadlines for completing business combinations. The company's delisting from Nasdaq and subsequent trading on the OTC market is indicative of broader trends where SPACs struggle to meet listing requirements and execute timely mergers, often leading to reduced investor confidence and liquidity. The proposed target, Longevity Biomedical, Inc., is in the biomedical sector, an industry known for high capital demands, extensive research and development, and long product development cycles, making the successful completion of this merger critical for its public market entry and funding.

Corporate Governance

Related Party Transactions

• The Sponsor has provided Working Capital Loans up to $1,500,000, with $823,302 outstanding as of June 30, 2025, evidenced by non-interest-bearing promissory notes.
• The Sponsor (or its affiliates or permitted designees) has provided Extension Loans totaling $3,537,744 outstanding as of June 30, 2025, by depositing funds into the Trust Account for monthly extensions.
• The company has a 'Due from Sponsor' balance of $1,145,065 as of June 30, 2025, which includes overpayments to redeeming shareholders and funds withdrawn from the Trust Account but not used for taxes.
• The company pays the Sponsor $10,000 per month for administrative support under an Administrative Support Agreement, with $400,000 in administrative expenses included in accounts payable as of June 30, 2025.
• A receivable amount of $75,000 is due from a related party as of June 30, 2025.

Stakeholder Impact

• Shareholders: Face reduced liquidity due to Nasdaq delisting, potential for further capital erosion due to ongoing losses and going concern doubt, and uncertainty regarding the value of warrants if the business combination fails. Those who redeemed shares received overpayments that are now subject to claw-back.
• Sponsor: Continues to provide significant financial support through loans and deposits to extend the business combination period, demonstrating a strong commitment to the merger's success, but also bears the risk of these loans not being repaid if the merger fails.
• Longevity Biomedical, Inc. (Target Company): The proposed merger is critical for Longevity's public market entry and access to capital, but delays and financial instability of FTII could jeopardize these plans.
• Underwriters: The deferred underwriting commission payment structure has been modified, impacting their expected cash and equity compensation, contingent on the successful closing of the business combination.
• Creditors: The company's going concern doubt and liquidity challenges pose a risk to creditors, although the Trust Account is generally protected from third-party claims.

Next Steps

• Consummate the proposed business combination with Longevity Biomedical, Inc. and its target acquisitions (Cerevast Medical, Inc. and Aegeria Soft Tissue, LLC).
• Change the company's name to Longevity Biomedical, Inc. and apply to list the common stock of the combined company on The Nasdaq Capital Market under the ticker symbol LBIO.
• Remediate identified material weaknesses in internal control over financial reporting.
• Continue efforts to raise additional capital to address ongoing liquidity concerns and fund operations through the business combination.
• Continue the claw-back process for overpayments made to redeeming shareholders in previous extension periods.
• The Sponsor is expected to continue depositing funds into the Trust Account for monthly extensions until the new deadline of August 18, 2026.

Key Dates

Recommendation

The company is a SPAC that has failed to meet its initial business combination deadline, resulting in delisting from Nasdaq and trading on the less liquid OTC market. It reports significant net losses, a substantial decrease in its Trust Account balance due to high redemptions, and a worsening working capital deficit. Management explicitly raises substantial doubt about the company's ability to continue as a going concern without additional capital. Furthermore, material weaknesses in internal control over financial reporting indicate significant operational and governance issues. While a merger agreement with Longevity Biomedical is in place and extensions have been granted, the cumulative negative factors, including the high risk of failure to complete the merger and the severe financial distress, make the stock a high-risk, low-reward proposition. Investors should consider exiting their positions to avoid further capital erosion.

Keywords

SPAC, Blank Check Company, Longevity Biomedical, Business Combination, Merger Agreement, Nasdaq Delisting, OTC Market, Going Concern, Trust Account, Redemptions, Extension Loans, Working Capital, Financial Reporting, Internal Controls, Biomedical Acquisition