FG Merger II Corp. 10-K Analysis & Summary – 2/21/2025

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⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

FG Merger II Corp.

10-K

Annual report

Filing date:

02/21/2025

TLDR:

FG Merger II Corp. (FGMC) is a blank check company (SPAC) focused on acquiring a business in the financial services industry. As of December 31, 2024, the company reported a net loss of $25,850 and has not yet commenced operations.

ELI5:

FG Merger II Corp. is like a shell company that’s trying to find a real company to merge with in the financial services business. Right now, it’s just spending money to get ready for that merger.

Accession #:

0001410578-25-000183

Published on

March 16, 2025

Analyst Summary

FGMC is a blank check company (SPAC) focused on the financial services industry.
As of December 31, 2024, FGMC had not commenced operations and was preparing for its IPO.
The company reported a net loss of $25,850 for the year ended December 31, 2024.
The company’s operations are primarily funded by the Sponsor through loans and equity contributions.
The company’s cash balance is relatively low, highlighting its dependence on the IPO proceeds.
The negative stockholders’ equity in 2024 raises concerns about the company’s financial stability.
ROA for 2024: -15.3%
ROE for 2024: 982%
EPS for 2024: -$0.01
Current Ratio for 2024: 0.98
Quick Ratio for 2024: 0.27
Cash Ratio for 2024: 0.27
Debt-to-Equity Ratio for 2024: -65.22
Debt-to-Assets Ratio for 2024: 1.02
Net Income Growth: 1350.5%
EPS Growth: 900%

Opportunities and Risks

Risk: The company’s ability to commence operations is contingent on the successful completion of the proposed IPO.
Risk: FGMC may be unable to identify a target business that meets its criteria or negotiate a favorable business combination.
Risk: Public stockholders may choose to redeem their shares upon completion of a business combination, which could reduce the amount of capital available to the combined company.
Risk: The SPAC market is highly competitive, and FGMC may face competition from other SPACs and strategic acquirers.
Risk: The company’s officers and directors may have conflicts of interest due to their involvement in other businesses.
Risk: As a blank check company, FGMC has no operating history and limited financial information.
Risk: Deteriorating economic conditions could negatively impact the company’s ability to complete a business combination and the performance of the target business.
Opportunity: FGMC’s management team has experience in the financial services industry and a track record of creating value.
Opportunity: The company’s focus on the financial services industry may provide it with a competitive advantage in identifying and evaluating target businesses.
Opportunity: If FGMC is successful in completing a business combination with a high-growth target, investors could realize significant returns.

Potential Implications

Stock Price

Successful completion of the IPO could positively impact the stock price.
Identification of a suitable target business could positively impact the stock price.
Redemptions by public stockholders could negatively impact the stock price.
Deteriorating economic conditions could negatively impact the stock price.

FG Merger II Corp. (FGMC) – SEC Filing Report (10-K) – December 31, 2024

Executive Summary

This report analyzes FG Merger II Corp.’s (FGMC) Form 10-K filing for the year ended December 31, 2024. FGMC is a blank check company (SPAC) focused on acquiring a business in the financial services industry. As of the filing date, FGMC has not yet commenced operations and is preparing for its initial public offering (IPO). The company reported a net loss of $25,850 for the year. Key risks include the company’s dependence on completing the IPO, its limited operating history, and potential conflicts of interest involving its officers and directors. Given the early stage and speculative nature of SPACs, a neutral to cautious outlook is warranted.

Company Overview

FG Merger II Corp. is a Nevada-incorporated blank check company formed to acquire one or more businesses through a merger, share exchange, asset acquisition, or similar transaction. The company intends to focus on the financial services industry in North America. As of December 31, 2024, FGMC had not commenced operations and was focused on its proposed IPO. The company’s success depends on its ability to raise capital through the IPO, identify a suitable target business, and complete a business combination within the allotted timeframe.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management’s narrative focuses on the company’s formation, the proposed IPO, and its strategy for identifying and acquiring a target business. The MD&A highlights the company’s intention to focus on the financial services industry and its plans to leverage its management team’s experience to create value. The tone is optimistic, but the narrative acknowledges the risks and uncertainties associated with SPACs, including the risk of not completing a business combination.

Financial Statement Analysis

Balance Sheet

As of December 31, 2024, FGMC’s balance sheet reflects its pre-operating status. Key items include:

* **Cash:** $46,285
* **Deferred Offering Costs:** $122,750 (representing expenses related to the proposed IPO)
* **Promissory Note:** $125,000 (loan from the Sponsor)
* **Total Stockholders’ Equity:** Deficit of $2,632

The balance sheet indicates that the company’s operations are primarily funded by the Sponsor through loans and equity contributions. The significant deferred offering costs highlight the company’s reliance on the successful completion of the IPO.

Income Statement

For the year ended December 31, 2024, FGMC reported a net loss of $25,850, primarily consisting of audit-related expenses and other general and administrative costs. As a blank check company with no operating revenues, the income statement reflects the costs associated with its formation and preparation for the IPO.

Cash Flow Statement

The cash flow statement shows that FGMC’s cash decreased by $9,963 during the year ended December 31, 2024. Operating activities used $9,963 in cash, while financing activities provided no cash.

Key Ratios

Given the company’s pre-operating status, traditional financial ratios are not meaningful. However, the following observations are relevant:

* **Liquidity:** The company’s cash balance is relatively low, highlighting its dependence on the IPO proceeds.
* **Leverage:** The promissory note from the Sponsor represents a significant portion of the company’s liabilities.

Uncommon Metrics

* **Founder Shares:** The issuance of founder shares to the Sponsor and management team is a common practice in SPACs. These shares provide the initial stockholders with a significant equity stake in the company.
* **Trust Account:** The establishment of a trust account to hold the IPO proceeds is a key feature of SPACs. This account provides investors with downside protection by ensuring that the funds are used for a business combination or returned to stockholders.

Risk and Opportunity Assessment

Risks

* **Failure to Complete IPO:** The company’s ability to commence operations is contingent on the successful completion of the proposed IPO.
* **Inability to Find a Suitable Target:** FGMC may be unable to identify a target business that meets its criteria or negotiate a favorable business combination.
* **Redemption Risk:** Public stockholders may choose to redeem their shares upon completion of a business combination, which could reduce the amount of capital available to the combined company.
* **Competition:** The SPAC market is highly competitive, and FGMC may face competition from other SPACs and strategic acquirers.
* **Conflicts of Interest:** The company’s officers and directors may have conflicts of interest due to their involvement in other businesses.
* **Limited Operating History:** As a blank check company, FGMC has no operating history and limited financial information.
* **Economic Conditions:** Deteriorating economic conditions could negatively impact the company’s ability to complete a business combination and the performance of the target business.

Opportunities

* **Experienced Management Team:** FGMC’s management team has experience in the financial services industry and a track record of creating value.
* **Focus on Financial Services:** The company’s focus on the financial services industry may provide it with a competitive advantage in identifying and evaluating target businesses.
* **Potential for High Returns:** If FGMC is successful in completing a business combination with a high-growth target, investors could realize significant returns.

Conclusion and Actionable Insights

FG Merger II Corp. is a speculative investment with significant risks and uncertainties. The company’s success depends on its ability to complete the IPO, identify a suitable target business, and execute a successful business combination. While the management team has experience in the financial services industry, the company’s limited operating history and potential conflicts of interest warrant a cautious approach.

**Recommendations:**

* **Monitor IPO Progress:** Closely track the progress of the proposed IPO and any changes to the terms of the offering.
* **Assess Target Business:** Evaluate the target business’s financial performance, growth prospects, and competitive landscape.
* **Evaluate Redemption Risk:** Consider the potential for redemptions by public stockholders and the impact on the combined company’s capital structure.
* **Monitor Management Conflicts:** Be aware of potential conflicts of interest involving the company’s officers and directors.
* **Consider Economic Conditions:** Assess the impact of economic conditions on the company’s ability to complete a business combination and the performance of the target business.
* **Due Diligence is Key:** Thorough due diligence is essential before investing in FGMC or any SPAC.

Disclaimer

This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.

Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin

Not applicable as there is no revenue reported.

Operating Profit Margin

Not applicable as there is no revenue reported.

Net Profit Margin

Not applicable as there is no revenue reported.

Return on Assets (ROA)

Ratio/Metric: Net Loss / Total Assets
- 2024: (-$25,850) / $169,035 = -0.153 (or -15.3%)
- 2023: (-$1,782) / $170,918 = -0.010 (or -1.0%)
Trend: (-0.153 – -0.010) / -0.010 = 1430%

Return on Equity (ROE)

Ratio/Metric: Net Loss / Total Stockholders’ Equity
- 2024: (-$25,850) / (-$2,632) = 9.82 (or 982%)
- 2023: (-$1,782) / $23,218 = -0.077 (or -7.7%)
Trend: (9.82 – -0.077) / -0.077 = -12853%

Earnings Per Share (EPS) – Basic and Diluted

Ratio/Metric: Net Loss / Weighted Average Common Shares Outstanding
- 2024: (-$25,850) / 2,207,842 = -$0.01
- 2023: (-$1,782) / 2,156,250 = -$0.001
Trend: (-0.01 – -0.001) / -0.001 = 900%

Liquidity

Current Ratio

Ratio/Metric: Current Assets / Current Liabilities
- 2024: $169,035 / $171,667 = 0.98
- 2023: $170,918 / $147,700 = 1.16
Trend: (0.98 – 1.16) / 1.16 = -15.5%

Quick Ratio (Acid-Test Ratio)

Ratio/Metric: (Current Assets – Inventory) / Current Liabilities. Assuming Deferred offering costs are not easily liquidated, we will subtract them.
- 2024: ($169,035 – $122,750) / $171,667 = 0.27
- 2023: ($170,918 – $114,670) / $147,700 = 0.38
Trend: (0.27 – 0.38) / 0.38 = -28.9%

Cash Ratio

Ratio/Metric: Cash / Current Liabilities
- 2024: $46,285 / $171,667 = 0.27
- 2023: $56,248 / $147,700 = 0.38
Trend: (0.27 – 0.38) / 0.38 = -28.9%

Solvency/Leverage

Debt-to-Equity Ratio

Ratio/Metric: Total Liabilities / Total Stockholders’ Equity
- 2024: $171,667 / (-$2,632) = -65.22
- 2023: $147,700 / $23,218 = 6.36
Trend: (-65.22 – 6.36) / 6.36 = -1125.5%

Debt-to-Assets Ratio

Ratio/Metric: Total Liabilities / Total Assets
- 2024: $171,667 / $169,035 = 1.02
- 2023: $147,700 / $170,918 = 0.86
Trend: (1.02 – 0.86) / 0.86 = 18.6%

Interest Coverage Ratio (Times Interest Earned)

Not applicable as there is no interest expense reported.

Activity/Efficiency

Inventory Turnover, Days Sales Outstanding (DSO), Days Payable Outstanding (DPO) are not applicable as there is no revenue or cost of goods sold reported.

Asset Turnover

Not applicable as there is no revenue reported.

Valuation

Price-to-Earnings Ratio (P/E), Price-to-Book Ratio (P/B), Price-to-Sales Ratio (P/S), and Enterprise Value to EBITDA (EV/EBITDA) are not applicable as there is no revenue, earnings, or market capitalization data provided.

Growth Rates

Revenue Growth

Not applicable as there is no revenue reported.

Net Income Growth

Ratio/Metric: (Net Income Current Year – Net Income Previous Year) / Net Income Previous Year
- ($-25,850 – $-1,782) / ($-1,782) = 1350.5%

EPS Growth

Ratio/Metric: (EPS Current Year – EPS Previous Year) / EPS Previous Year
- ($-0.01 – $-0.001) / ($-0.001) = 900%

Other Relevant Metrics

No company-specific KPIs or non-GAAP metrics are presented in the provided financial statements.

Commentary

FG Merger II Corp. is a special purpose acquisition company (SPAC) that has not yet completed a business combination. The company experienced a significant increase in net loss and a decrease in cash from 2023 to 2024. The current ratio decreased, indicating a slightly weakened short-term liquidity position. The negative stockholders’ equity in 2024 raises concerns about the company’s financial stability. Overall, the financial data reflects the typical state of a SPAC prior to a merger, with minimal operations and a focus on maintaining sufficient capital to pursue a target acquisition.