ARC Group Securities Acquisition I: Aug. 5, 2027 deal deadline
A compliance plan addressing FJDI's warrant status is due December 4, 2026; Nasdaq may extend the deadline through April 18, 2027 if it accepts the plan.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
ARC Group Securities Acquisition I (FJDI) reported net income of $464,138 for the quarter and $412,609 for the nine months ended September 30, 2026. The quarter’s result included $566,852 of trust-account investment income and a $97,020 gain from the over-allotment liability fair-value change, less $199,734 of formation and operating costs; the company had no operating revenue.
At September 30, 2026, cash was $684,320 and cash and marketable securities in trust were valued at $105,567,810. The balance sheet showed 10,500,000 Class A ordinary shares subject to redemption at $10.05 per share. Management said failure to complete a business combination by the initial August 5, 2027 deadline would trigger liquidation and identified substantial doubt about continued operations; a three-month extension may apply if a definitive agreement is executed within 12 months after the IPO closing.
Nasdaq said the warrants no longer complied with its listing standard because their aggregate market value was below $1 million; the notice has no current effect on listing or trading.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Management cited substantial doubt if no combination occurs by August 5, 2027, subject to extension.
Filing Explained
Founder shares carry a stated dilution effect, while each right may add one-quarter of a share only if a combination closes.
The unaudited quarterly report says ARC Group Securities Acquisition I closed its IPO on
As of
Each public and private right entitles its holder to one-quarter of a Class A share when a combination closes, even if a public holder redeemed all its public shares.
For certain additional shares or equity-linked securities issued in connection with a combination, founder conversion can be adjusted so converted founder shares equal 30% of a specified share base, less specified redemptions; the formula includes exclusions and cannot result in conversion below one-for-one.
Key Figures
Key Terms
Business Combination financial
Trust Account financial
temporary equity financial
cashless basis financial
Combination Period financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much net income did FJDI report for the third quarter of 2026?
What is FJDI's deadline to address Nasdaq's warrant notice?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from ______ to _______
Commission
File No.
(Exact name of registrant as specified in its charter)
| N/A | ||
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The | ||||
| The | ||||
| The | ||||
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large-accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
Applicable Only to Corporate Registrants
As
of November 6, 2026, there were
| PART I - FINANCIAL INFORMATION | ||
| Item 1 | Financial Statements | F-1 |
| Condensed Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025 | F-1 | |
| Condensed Statements of Operations for the three and nine months ended September 30, 2026 (Unaudited) | F-2 | |
| Condensed Statements of Changes in Shareholders’ Deficit for the three and nine months ended September 30, 2026 (Unaudited) | F-3 | |
| Condensed Statement of Cash Flows for the nine months ended September 30, 2026 (Unaudited) | F-4 | |
| Notes to Financial Statements (Unaudited) | F-5 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 3 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 5 |
| Item 4 | Controls and Procedures | 5 |
| PART II - OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 6 |
| Item 1A | Risk Factors | 6 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 6 |
| Item 3 | Defaults Upon Senior Securities | 6 |
| Item 4 | Mine Safety Disclosures | 6 |
| Item 5 | Other Information | 6 |
| Item 6 | Exhibits | 7 |
| Signatures | 8 | |
| 2 |
ITEM 1. FINANCIAL STATEMENTS
ARC GROUP SECURITIES ACQUISITION I
CONDENSED BALANCE SHEETS
December 31, 2025 (Audited) | September 30, 2026 (Unaudited) | |||||||
| ASSETS | ||||||||
| Cash | $ | - | $ | |||||
| Prepaid expenses | - | |||||||
| Deferred offering costs | - | |||||||
| Total Current Assets | ||||||||
| Cash and Marketable Securities held in Trust Account | - | |||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES, ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accrued offering costs | $ | $ | - | |||||
| Accrued expenses | ||||||||
| Promissory note – related party | - | |||||||
| Due to sponsor | - | |||||||
| Total Current Liabilities | ||||||||
| Deferred underwriting fee | - | |||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | - | - | ||||||
| Class A ordinary shares subject to possible redemption, $ | - | |||||||
| Shareholders’ Deficit | ||||||||
| Preferred shares, $ | - | - | ||||||
| Class A ordinary shares, $ | - | |||||||
| Class B ordinary shares, $ | ||||||||
| Ordinary shares value | ||||||||
| Additional paid-in capital | - | |||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Subscription receivable | ( | ) | - | |||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Ordinary Shares Subject to Possible Redemptions and Shareholders’ Deficit | $ | $ | ||||||
| (1) | |
| (2) |
The accompanying notes are an integral part of these financial statements.
| F-1 |
ARC GROUP SECURITIES ACQUISITION I
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three months ended September 30, 2026 | For the nine months ended September 30, 2026 | |||||||
| Formation and operating costs | $ | ( | ) | $ | ( | ) | ||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Change in fair value of over-allotment liability | ||||||||
| Investment income on cash and marketable securities held in trust account | ||||||||
| Net income | $ | $ | ||||||
| Weighted average shares of redeemable ordinary shares outstanding, basic and diluted | ||||||||
| Basic and diluted net income per ordinary share | $ | $ | ||||||
| Weighted average shares of non-redeemable ordinary shares outstanding, basic and diluted (1) (2) | ||||||||
| Basic and diluted net loss per ordinary share | $ | ( | ) | $ | ( | ) | ||
| (1) | |
| (2) |
The accompanying notes are an integral part of these financial statements.
| F-2 |
ARC GROUP SECURITIES ACQUISITION I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026
(UNAUDITED)
| Shares | Amount | Shares | Amounts | Capital | Deficit | Receivable | Deficit | |||||||||||||||||||||||||
Class A Ordinary Shares | Class B Ordinary Share | Additional Paid-In | Accumulated | Subscription | Total Shareholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amounts | Capital | Deficit | Receivable | Deficit | |||||||||||||||||||||||||
| Balance – January 1, 2026(1) (2) | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Balance – March 31, 2026(1) (2) | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Subscription fee received for ordinary shares issued to Sponsor | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Balance – June 30, 2026 (2) | - | - | $ | $ | ( | ) | $ | - | $ | ( | ) | |||||||||||||||||||||
| Issuance of Public Warrants and Public Rights | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of Private Units | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of representative shares | - | - | - | - | ||||||||||||||||||||||||||||
| Share-based compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Forfeiture of Founder Shares | - | - | ( | ) | ( | ) | - | - | - | |||||||||||||||||||||||
| Allocation of transaction costs to Private Units and Public Warrants and Public Rights | - | - | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||||||||
| Accretion of carrying value to redemption value | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||
| Net income | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Balance – September 30, 2026(1) (2) | $ | $ | $ | - | $ | ( | ) | $ | - | $ | ( | ) | ||||||||||||||||||||
| (1) | |
| (2) |
The accompanying notes are an integral part of these financial statements.
| F-3 |
ARC GROUP SECURITIES ACQUISITION I
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the nine months ended September 30, 2026 | ||||
| Cash flows from Operating Activities: | ||||
| Net income | $ | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||
| Investment income on trust account | ( | ) | ||
| Share-based compensation expense | ||||
| Change in fair value of over-allotment liability | ( | ) | ||
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses | ( | ) | ||
| Accrued expenses | ||||
| Due to sponsor | ||||
| Net cash used in operating activities | ( | ) | ||
| Cash flows from Investing Activities: | ||||
| Investment of cash in Trust Account | ( | ) | ||
| Net cash used in investing activities | ( | ) | ||
| Cash flows from Financing Activities: | ||||
| Proceeds from issuance of ordinary shares to Sponsor | ||||
| Proceeds from sale of public units | ||||
| Proceeds from sale of private placement units | ||||
| Proceeds from promissory note – related party | ||||
| Repayment of promissory note | ( | ) | ||
| Payment of offering costs | ( | ) | ||
| Net cash provided by financing activities | ||||
| Net Change in Cash | ||||
| Cash – Beginning of period | - | |||
| Cash – End of period | $ | |||
| Supplemental Disclosures of Noncash Financing Activities | ||||
| Deferred offering costs charged to Additional paid-in capital and Class A ordinary shares subject to possible redemption | $ | |||
| Accretion of carrying value to redemption value | $ | |||
| Forfeiture of Founder Shares | $ | |||
| Issuance of representative shares | $ | |||
| Investment income before IPO payable to sponsor | $ | |||
The accompanying notes are an integral part of these financial statements.
| F-4 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN
ARC Group Securities Acquisition I (the “Company”) is a blank check company incorporated in the Cayman Islands on October 9, 2025. The Company was formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). While the Company may pursue an acquisition opportunity in any business, industry, sector or geographical location, the Company intends to identify and acquire a business where the Company believes its management team’s and its affiliates’ expertise will provide them with a competitive advantage, including technology, healthcare and logistics industries.
As of September 30, 2026, the Company had not yet commenced any operations. All activity for the period from October 9, 2025 through September 30, 2026 related to the Company’s Initial Public Offering (as defined below) and pursuit of the consummation of an initial business combination. The Company will not generate any operating revenue until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The
Company’s sponsor is FDB I (the “Sponsor”). The registration statement for the Company’s Initial Public Offering
was declared effective on August 3, 2026. On August 5, 2026, the Company consummated its Initial Public Offering of
Simultaneously
with the consummation of the closing of the Initial Public Offering, the Company consummated the private placement of an aggregate
of
Transaction
costs amounted to $
In
conjunction with the initial public offering (the “IPO”), the Company issued to the underwriter
Following
the closing of the Initial Public Offering on August 5, 2026, an amount of $
The Company will provide its public shareholders, other than its initial shareholders and directors and officers, with the opportunity to redeem all or a portion of their Public Shares upon the completion of the Company’s initial Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) without a shareholder vote by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they abstain, vote for, or vote against, the Business Combination.
The
shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially
$
| F-5 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will:
| ● | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
| ● | file tender offer documents with the SEC prior to completing the Company’s initial business combination which contain substantially the same financial and other information about the Company’s initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
The Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive their redemption rights with respect to their Founder Shares, private shares and Public Shares in connection with the completion of the Company’s initial Business Combination; (ii) waive their redemption rights with respect to their Founder Shares, private shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial Business Combination or to redeem 100% of the Company’s Public Shares if the Company have not consummated an initial Business Combination within the completion window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity; (iii) waive their rights to liquidating distributions from the trust account with respect to their Founder Shares and private shares if the Company fail to complete the Company’s initial Business Combination within the completion window, although they will be entitled to liquidating distributions from the trust account with respect to any Public Shares they hold if the Company fail to complete the initial Business Combination within the prescribed time frame and to liquidating distributions from assets outside the trust account; and (iv) vote any Founder Shares and private shares held by them and any Public Shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of the Company’s initial Business Combination (except that any Public Shares such parties may purchase in compliance with the requirements of Rule 14e-5 under the Exchange Act would not be voted in favor of approving the Business Combination transaction).
The
Company will have until 12 months from the closing of the IPO, with one (1) three-month extension if the Company has executed, within
12 months after the closing of the initial public offering, a definitive agreement for a Business Combination, as may be further extended
by shareholder approval to amend the Company’s amended and restated memorandum and articles of association to extend the date by
which the Company must consummate the Company’s initial Business Combination) or until such earlier liquidation date as the Company’s
board of directors may approve, to consummate a Business Combination (the “Combination Period”). If the Company is unable
to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter (and subject to lawfully available
funds therefor), redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest earned on the funds held in the trust account (which interest shall be net of taxes and less up to
$
The
underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company
does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds
held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is
possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price
per Unit ($
| F-6 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
The
Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold
to us (except for the Company’s independent auditors), or a prospective target business with which the Company has entered into
a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds
in the trust account to below the lesser of (i) $
Going Concern Consideration
As
of September 30, 2026, the Company had $
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements are presented in U.S. Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results, changes in shareholders’ deficit and cash flows for the periods presented. The December 31, 2025 balance sheet was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP for annual financial statements.
Emerging growth company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
| F-7 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had $
Cash and Marketable Securities Held in Trust Account
As
of September 30, 2026, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills and U.S. Treasury
Money Market Funds. All of the Company’s investments held in the Trust Account are classified as trading securities. Trading
securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the
change in fair value of investments held in Trust Account are included in investment income earned on investments held in Trust in
the accompanying statement of operations. The estimated fair values of investments held in Trust Account are determined using
available market information. As of September 30, 2026, the estimated fair values of investments held in Trust Account amounted to
$
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution,
which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $
Offering Costs Associated with the Initial Public Offering
The
Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses
of Offering.” Deferred offering costs consist principally of professional and registration fees that are related to the Initial
Public Offering. Financial Accounting Standards Board (“FASB”) ASC 470-20, “Debt with Conversion and Other Options,”
addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this
guidance to allocate Initial Public Offering proceeds from the Public Units between Class A ordinary shares, rights and warrants, using
the residual method by allocating Initial Public Offering proceeds first to assigned value of the warrants and rights and then to the
Class A ordinary shares. Offering costs allocated to the Class A ordinary shares subject to possible redemption were charged to temporary
equity, and offering costs allocated to the warrants and rights included in the Public Units and Private Units were charged to shareholders’
equity as the warrants and rights, after management’s evaluation, were accounted for under equity treatment. As of August 5, 2026,
the Company had offering costs of $
Income taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
| F-8 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of December 31, 2025 and September 30, 2026 and no amounts accrued for interest and penalties. The Company may be subject to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This standard requires entities to provide greater disaggregation of information within the income tax reconciliation and expands disclosures around income taxes paid. As an Emerging Growth Company (“EGC”), the Company has elected to use the extended transition period, making the standard effective for the Company for fiscal years beginning after December 15, 2025.The Company will adopt ASU 2023-09 prospectively in the annual financial statements for the year ended December 31, 2026. Adoption is expected to impact financial statement disclosures of income tax expense only.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.
Derivative Financial Instruments
The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted
for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each
reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net cash settlement or conversion
of the instrument could be required within 12 months of the balance sheet date. The underwriters’ over-allotment option is deemed
to be a freestanding financial instrument indexed on the contingently redeemable shares and was accounted for as a liability pursuant
to ASC 480 since the underwriters did not exercise their overallotment option at the closing of the Initial Public Offering. On September 17, 2026, the over-allotment option to purchase up to an additional
Class A Ordinary Shares Subject to Possible Redemption
The
Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s
liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In
accordance with ASC 480-10-S99, the Company classifies Public Shares subject to redemption outside of permanent equity as the redemption
provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately as they occur
and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately
upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value.
The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available)
and accumulated deficit. Accordingly, as of September 30, 2026, Class A ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet. As of
September 30, 2026, the
SCHEDULE OF CLASS A ORDINARY SHARES SUBJECT TO REDEMPTION
| Gross proceeds | $ | |||
| Less: | ||||
| Proceeds allocated to Over-allotment Option | ( | ) | ||
| Proceeds allocated to Public Warrants | ( | ) | ||
| Proceeds allocated to Public Rights | ( | ) | ||
| Issuance costs allocated to Class A ordinary share subject to possible redemption | ( | ) | ||
| Plus: | ||||
| Accretion of carrying value to redemption value | ||||
| Class A Ordinary Shares subject to possible redemption, September 30, 2026 | $ |
Stock-based compensation
The Company accounts for share awards in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation,” which requires that all equity awards be accounted for at their “fair value.” Fair value is measured on the grant date and is equal to the underlying value of the share.
Costs equal to these fair values are recognized ratably over the requisite service period based on the number of awards that are expected to vest, in the period of grant for awards that vest immediately and have no future service condition, or in the period the awards vest immediately after meeting a performance condition becomes probable (e.g., the occurrence of Initial Public Offering). For awards that vest over time, cumulative adjustments in later periods are recorded to the extent actual forfeitures differ from the Company’s initial estimates; previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and the award is forfeited.
| F-9 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments that are subject to the accounting guidance in ASC 480, and if not, whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and is re-evaluated as of each subsequent quarterly and annual reporting dates while the warrants are outstanding. The Company concluded that the warrants should be classified as equity.
Share Rights
The Company accounted for the Public Rights and Private Placement Rights issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated and classified the Share Rights under equity treatment at their assigned values.
Net income (loss) per share
The Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. As the economic rights of Class A non-redeemable ordinary shares and class B non-redeemable ordinary shares are identical, the resulting net income (loss) per share is the same for non-redeemable ordinary shares. Accordingly, basic and diluted net income (loss) per non-redeemable ordinary share is presented on a combined basis. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, the Company first considered the undistributed income (loss) allocable to both the redeemable shares and non-redeemable shares and the undistributed income (loss) is calculated using the total net loss less interest income on investments in trust account less any dividends paid. The Company then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable shares. Any remeasurement of the accretion to redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders. The potential ordinary shares for outstanding Public and Private Warrants to purchase the Company’s ordinary shares were excluded from diluted income (loss) per ordinary share because they are contingently exercisable, and the contingencies have not yet been met. As of September 30, 2026, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then shared in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
The net income (loss) per share presented in the statement of operations is based on the following:
SCHEDULE OF NET INCOME PER SHARE PRESENTED IN THE STATEMENT OF OPERATIONS
For the Three months ended September 30, 2026 | For the nine months ended September 30, 2026 | |||||||
| Net income | $ | $ | ||||||
| Initial accretion of carrying value to redemption value | ( | ) | ( | ) | ||||
| Subsequent accretion of carrying value to redemption value | ( | ) | ( | ) | ||||
| Net Loss including accretion of carrying value to redemption value | $ | ( | ) | $ | ( | ) | ||
SCHEDULE OF EARNING PER SHARE
| Redeemable ordinary shares | Non-redeemable Ordinary Shares | Redeemable ordinary shares | Non-redeemable Ordinary Shares | |||||||||||||
For the three months ended September 30, 2026 | For the nine months ended September 30, 2026 | |||||||||||||||
| Redeemable ordinary shares | Non-redeemable Ordinary Shares | Redeemable ordinary shares | Non-redeemable Ordinary Shares | |||||||||||||
| Basic and diluted net income (loss) per ordinary share | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | ||||||
| Initial accretion of carrying value to redemption value | - | - | ||||||||||||||
| Subsequent accretion of carrying value to redemption value | - | - | ||||||||||||||
| Allocation of net income (loss) | $ | $ | ( | ) | $ | ( | ) | |||||||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average shares outstanding | ||||||||||||||||
| Basic and diluted net income (loss) per ordinary share | $ | $ | ( | ) | $ | ( | ) | |||||||||
Fair value of financial instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
| F-10 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
Risks and Uncertainties
The United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation of the Israel-Hamas conflict. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the escalation of the Israel-Hamas conflict and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). ASC 740, “Income Taxes”, requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. The Company is currently evaluating the impact of the new law. However, none of the tax provisions are expected to have a significant impact on the Company’s financial statements.
Any of the above-mentioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the escalation of the Israel-Hamas conflict and subsequent sanctions or related actions, could adversely affect the Company’s search for an initial Business Combination and any target business with which the Company may ultimately consummate an initial Business Combination.
Segment Reporting
In November 2023, the FASB issued ASU 2023-07, “Segment reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 on October 9, 2025, the date of its incorporation.
Recent Accounting Pronouncements
In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270): Narrow Scope Improvements (“ASU 2025-11”), to improve the guidance for interim reporting and clarify when that guidance is applicable. The ASU 2025-11 provides a comprehensive list of required disclosures and also requires entities to disclose events since the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted. Management is currently evaluating ASU 2025-11 to determine its impact on the Company’s disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On
August 5, 2026, the Company consummated its Initial Public Offering of
NOTE 4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
The proceeds from the sale of the Private Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. The Placement Units are identical to the Units sold in the Initial Public Offering, except as described in Note 7. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), the Private Rights and the Private Warrants will expire worthless.
| F-11 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder shares
On
October 17, 2025, the Company issued an aggregate of
The Founder Shares are Class B ordinary shares and, except as described below, are identical to the Class A ordinary shares included in the units sold in the Initial Public Offering, and holders of Founder Shares have the same shareholder rights as public shareholders, except that (i) the Founder Shares are subject to certain transfer restrictions, as described in more detail below, (ii) the Founder Shares are entitled to registration rights; (iii) the Company’s Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (A) waive their redemption rights with respect to their Founder Shares, private shares and Public Shares in connection with the completion of the Company’s initial Business Combination, (B) waive their redemption rights with respect to their Founder Shares, private shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association (a) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of the Company’s Public Shares if the Company have not consummated an initial Business Combination within the completion window or (b) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity, (C) waive their rights to liquidating distributions from the trust account with respect to their Founder Shares and private shares if the Company fail to complete its initial Business Combination within the completion window, although they will be entitled to liquidating distributions from the trust account with respect to any Public Shares they hold if the Company fail to complete its initial Business Combination within such time period and to liquidating distributions from assets outside the trust account and (D) vote any Founder Shares held by them and any Public Shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of the Company’s initial Business Combination (except that any Public Shares such parties may purchase in compliance with the requirements of Rule 14e-5 under the Exchange Act would not be voted in favor of approving the Business Combination transaction), (iv) the Founder Shares are automatically convertible into Class A ordinary shares concurrently with or immediately following the consummation of the Company’s initial Business Combination or such earlier time at the option of the holder on a one-for-one basis, subject to adjustment as described herein and in the Company’s amended and restated memorandum and articles of association, and (v) prior to the closing of the Company’s initial business combination, only holders of the Company’s Class B ordinary shares will be entitled to vote on the appointment and removal of directors or continuing the company to a jurisdiction outside the Cayman Islands (including any special resolution required to amend the Company’s constitutional documents or to adopt new constitutional documents, in each case, as a result of the Company’s approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands).
With certain limited exceptions, the Founder Shares are not transferable, assignable or saleable (except to the Company’s officers and directors and other persons or entities affiliated with the Company’s Sponsor, each of whom will be subject to the same transfer restrictions) until the completion of the Company’s initial Business Combination.
Promissory Note — Related Party
On
October 16, 2025, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate
principal amount of $
Administrative Services Arrangement
On
August 3, 2026, the Sponsor has agreed, commencing from the date that the Company’s securities are first listed on Nasdaq, through
the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain
office space, utilities and secretarial and administrative support as may be reasonably required by the Company. The Company has agreed
to pay to the Sponsor, $
| F-12 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
Related Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Up to $
Representative Shares
On
August 5, 2026, the Company issued to ARC Group Securities LLC, the representative (and/or its designees) and Clear Street LLC, the qualified
independent underwriter, an aggregate of
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the Initial Public Offering, (ii) Private Units (including the component securities as well as any securities underlying those component securities), which were issued in a private placement simultaneously with the closing of the Initial Public Offering and (iii) Private Units (including the component securities as well as any securities underlying those component securities) that may be issued upon conversion of working capital loans will have registration rights to require us to register a sale of any of the Company’s securities held by them and any other securities of the company acquired by them prior to the consummation of the Company’s initial Business Combination pursuant to a registration rights agreement entered into on August 3,2026.
The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of the Company’s initial business combination. The registration rights granted to the underwriter are limited to one demand and unlimited “piggy-back” rights for periods of five and seven years, respectively, from the commencement of sales of the Initial Public Offering with respect to the registration under the Securities Act of the Private Units and the component securities as well as any securities underlying those component securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
Company granted the underwriters a 45-day option to purchase up to
The
underwriters were not entitled to any cash underwriting fee at closing of the Initial Public Offering. The underwriters were entitled
to
| F-13 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
NOTE 7. SHAREHOLDERS’ EQUITY
Preference
shares — The Company is authorized to issue
Class
A Ordinary shares — The Company is authorized to issue
Class
B Ordinary shares — The Company is authorized to issue
The
Class B ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the
consummation of the Company’s initial business combination, or at any time prior thereto at the option of the holder thereof,
on a one-for-one basis, subject to adjustment as provided herein. Because the Company’s Sponsor acquired the Class B ordinary
shares at a nominal price of approximately $0.
Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. However, prior to the closing of our initial business combination, only holders of Class B ordinary shares (i) will have the right to vote to appoint and remove directors prior to or in connection with the completion of the Company’s initial business combination; and (ii) will be entitled to vote on continuing the company to a jurisdiction outside the Cayman Islands (including any special resolution required to amend the Company’s constitutional documents or to adopt new constitutional documents, in each case, as a result of the Company’s approving a transfer by way of continuation to a jurisdiction outside the Cayman Islands). The provisions of the Company’s amended and restated memorandum and articles of association governing these matters prior to the Company’s initial business combination may only be amended by a special resolution passed by the affirmative vote of at least 90% (or, where such amendment is proposed in respect of the consummation of the Company’s initial business combination, two-thirds) of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company. On any other matter submitted to a vote of the Company’s shareholders prior to or in connection with the completion of the Company’s initial business combination, holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders except as required by law. Unless otherwise specified in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of at least a simple majority of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company is required to approve any such matter voted on by the Company’s shareholders. Approval of certain actions will require a special resolution under Cayman Islands law, which (except as outlined above) requires the affirmative vote of at least two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company, and pursuant to the Company’s amended and restated memorandum and articles of association; such actions include amending the Company’s amended and restated memorandum and articles of association (other than the provisions referred to above) and approving a statutory merger or consolidation with another company. The Company’s board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. There is no cumulative voting with respect to the appointment of directors, with the result that the holders of more than 50% of the shares entitled to vote and voted for the appointment of directors can appoint all of the directors. The Company’s shareholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available.
| F-14 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
Warrants
— Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Warrants.
The Warrants will become exercisable 30 days after the completion of the Company’s initial business combination, provided that
the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise
of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration
under the securities, or blue sky, laws of the state of residence of the holder (or the Company permit holders to exercise their warrants
on a cashless basis under the circumstances specified in the warrant agreement). If a registration statement covering the Class A ordinary
shares issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the Company’s initial
business combination, warrant holders may, until such time as there is an effective registration statement and during any period when
the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A
ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the
definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require
holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration
statement. The Warrants will expire
The Company may call the Warrants for redemption:
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | if, and only if, the closing
price of the Class A ordinary shares equals or exceeds $ |
The Private Warrants will be identical to the warrants sold in the Initial Public Offering except that, so long as they are held by the Sponsor or its permitted transferees, the Private Warrants (i) are locked-up until the completion of the Company’s initial business combination and (ii) will be entitled to registration rights.
The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
The
exercise price is $
Rights — Each holder of a right will receive one-fourth (1/4) of one Class A ordinary share upon consummation of an initial business combination, even if the holder of such right redeemed all Class A ordinary shares held by it in connection with the initial business combination. If the Company enters into a definitive agreement for a business combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the Class A ordinary shares will receive in the transaction on an as-converted into Class A ordinary share basis, and each holder of a right will be required to affirmatively convert its rights in order to receive the 1/4 share underlying each right (without paying any additional consideration) upon consummation of the business combination.
The Company will not issue fractional Class A ordinary shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with Cayman law. If the Company is unable to complete an initial business combination within the completion window and the Company liquidates the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from our assets held outside of the trust account with respect to such rights. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Additionally, in no event will the Company be required to cash settle the rights. Accordingly, the rights may expire worthless.
| F-15 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
NOTE 8. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about the Company’s instruments that are measured at fair value as of August 5, 2026 and September 30, 2026, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
SCHEDULE OF FAIR VALUE HIERARCHY OF THE VALUATION INPUTS
| Level | August 5, 2026 | |||||||
| Asset: | ||||||||
| Cash and marketable securities held in Trust Account | 1 | $ | ||||||
| Liability: | 3 | $ | ||||||
| Fair value of over-allotment liability | ||||||||
| Equity: | ||||||||
| Fair value of Public Warrants | 3 | $ | ||||||
| Fair value of Public Rights | 3 | $ | ||||||
| Fair value of Representative Shares | 3 | $ | ||||||
| Fair value of Founder Shares transferred to directors and officers | 3 | $ | ||||||
| Level | September 30, 2026 | |||||||
| Asset: | ||||||||
| Cash and marketable securities held in Trust Account | 1 | $ | ||||||
The
over-allotment option was accounted for as a liability in accordance with ASC 480 and was presented within liabilities on the
balance sheet. The over-allotment option liability is measured at fair value at August 5, 2026 and on a recurring basis, with
changes in fair value presented within change in fair value of over-allotment option liability in the statement of operations. On
September 17, 2026, the over-allotment option to purchase up to an additional
The Company used a Black-Scholes model to value the over-allotment option. The over-allotment option liability was classified within Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs inherent in pricing models and assumptions related to expected share-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary share based on historical volatility that matches the expected remaining life of the over-allotment option. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the over-allotment option. The expected life of the over-allotment option is assumed to be equivalent to its remaining contractual term.
| F-16 |
ARC GROUP SECURITIES ACQUISITION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2026
(UNAUDITED)
The key inputs into the Black-Scholes model were as follows at initial measurement of the over-allotment option:
SCHEDULE OF FAIR VALUE OF OVER ALLOTMENT OPTION
| August 5, 2026 | ||||
| Risk-free interest rate | % | |||
| Expected term (years) | ||||
| Expected volatility | % | |||
| Exercise price | $ | |||
| Fair value of over-allotment option | $ | |||
The fair value of Public Warrants, Public Rights, Representative Shares and Founder Shares transferred were determined using Monte Carlo Simulation Model. The Public Warrants, Public Rights and Representative Shares have been classified within shareholders’ equity and will not require remeasurement after issuance. The following table presents the quantitative information regarding market assumptions used in the valuation of the above-mentioned instruments:
SCHEDULE OF FAIR VALUE ASSUMPTION USED IN VALUATION
| August 5, 2026 | ||||
| Estimated share price | $ | |||
| Exercise price | $ | |||
| Term (years) | ||||
| Annual risk-free rate (term-matched) | % | |||
| Expected warrant implied volatility based on warrants from comparable SPAC securities | % | |||
NOTE 9. SEGMENT INFORMATION
ASC
Topic 280, “Segment Reporting,”
The
Company’s chief operating decision maker has been identified as the Chief Executive Officer (“CODM”), who reviews the
operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly,
management has determined that the Company only has
When evaluating the Company’s performance and making key decisions regarding resource allocation the CODM reviews several key metrics, which include the following:
SCHEDULE OF SEGMENT INFORMATION
For the Three months September 30, |
For the Nine months Ended September 30, 2026 | |||||||
| Professional service fees | $ | ( |
) | $ | ( | ) | ||
| Other formation and operating costs | $ | ( |
) | $ | ( | ) | ||
| Investment income on cash and marketable securities held in trust account | $ | $ | ||||||
| December 31, 2025 |
September 30, 2026 | |||||||
| Cash and marketable securities held in Trust Account | $ | - | $ | |||||
The key measures of segment profit or loss reviewed by the CODM are formation and operating costs, interest income on trust account, and cash and marketable securities held in trust account. The CODM reviews interest earned on cash and marketable securities held in Trust Account to measure and monitor shareholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the trust agreement. Within the operating expenses, the CODM specifically reviews professional service fees, which are a significant segment expense, and include legal fees and advisory fees. These expenses are monitored to manage and forecast cash available to complete a Business Combination within the required period. Other general and administrative expenses, including accounting expenses, printing expenses, and regulatory filing fees, are reviewed in the aggregate to ensure alignment with budget and contractual obligations. Funds invested in the Trust Account represent the predominant portion of the Company’s total assets and are monitored by the CODM to determine the most effective strategy of investment with the Trust Account funds, while maintaining compliance with the trust agreement.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date and through November 6, 2026, the date that unaudited condensed financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On October 20, 2026, the Company received a written
notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that, because the aggregate
market value of the Company’s outstanding warrants was less than $
| F-17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to ARC Group Securities Acquisition I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to FDB I. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Form S-1 declared effective with the SEC on August 3, 2026. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
The Company is a blank check company incorporated under the laws of the Cayman Islands on October 9, 2025 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The Company intends to effectuate its initial business combination using cash from the proceeds of our Initial Public Offering (the “IPO”) and the private placement of the private units, the proceeds of the sale of our securities in connection with our initial Business Combination, our shares, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
| 3 |
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to September 30, 2026 were organizational activities and those necessary to prepare for the Company’s IPO and pursuit of the consummation of an initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We expect to continue to generate non-operating income in the form of interest income on cash and marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
For the three months ended September 30, 2026, we had net income of $464,138, which consisted of investment income on cash and marketable securities held in the Trust Account of $566,852 and change in fair value of over-allotment liability of $97,020, partially offset by formation and operating costs of $199,734.
For the nine months ended September 30, 2026, we had net income of $412,609, which consisted of investment income on cash and marketable securities held in the Trust Account of $566,852 and change in fair value of over-allotment liability of $97,020, partially offset by formation and operating costs of $251,263.
Liquidity and Capital Resources
On August 5, 2026, we consummated our Initial Public Offering of 10,500,000 units, at $10.00 per Unit (the “Public Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), generating gross proceeds of $105,000,000. Each Public Unit contains one Class A ordinary share, one right, and one redeemable warrant.
Simultaneously with the consummation of the closing of the Offering, we consummated the private placement of an aggregate of 140,000 units to the Sponsor at a price of $10.00 per Unit (the “Private Units” and, with respect to the Class A ordinary shares included in the Private Units being offered, the “Private Shares”), generating gross proceeds of $1,400,000 (“the Private Placement”).
Upon the closing of the IPO and the private placement on August 5, 2026, a total of $105,000,000 from the net proceeds of the IPO and the sale of the Private Units was placed in a trust account (the “Trust Account”) maintained by Efficiency INC. as a trustee and will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and that invest only in direct U.S. government treasury obligations.
We intend to use the funds held outside of the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination. The interest income earned on the investments in the Trust Account are unavailable to fund operating expenses.
As of September 30, 2026, the Company had $684,320 cash and a working capital surplus of $668,758. The Company’s liquidity needs prior to the consummation of the IPO had been satisfied through the loan under an unsecured promissory note from the Sponsor of $360,453, which was fully repaid on August 13, 2026.
In order to meet our working capital needs following the consummation of the IPO until the completion of an initial business combination, our Sponsor, officers and directors or their affiliates may, but are not obligated to, loan us funds, from time to time, in whatever amount they deem reasonable in their sole discretion. Such loans will be repayable upon the consummation of our initial business combination, and the lender has the option to convert up to $2,500,000 of such loans into private units at a price of $10.00 per unit prior to or upon the consummation of our initial business combination. If a business combination is not consummated, the loans will not be repaid except to the extent that we have funds available outside of the trust account.
| 4 |
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor an aggregate of $20,000 per month for office space, secretarial and administrative support. We began incurring these fees on August 5, 2026, and will continue to incur these fees monthly until completion of the Company’s initial business combination or liquidation. As of September 30, 2026, $40,000 were incurred under this agreement.
The underwriters were not entitled to any cash underwriting fee at closing of the Initial Public Offering. The underwriters were entitled to 420,000 Representative Shares at closing of the Initial Public Offering, whereby 370,000 Class A ordinary shares were issued to ARC Group Securities LLC, the lead left bookrunner and representative of the underwriters and 50,000 Class A ordinary shares were issued to Clear Street LLC, as the qualified independent underwriter. The underwriters were entitled to $1,575,000 deferred underwriting fee upon closing of the Business Combination.
Critical Accounting Estimates
The preparation of unaudited financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could materially differ from those estimates. As of September 30, 2026, we did not have any critical accounting estimates to be disclosed.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter ended September 30, 2026, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 5 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the knowledge of our management, there is no litigation currently pending against us, any of our officers or directors in their capacity or against any of our property.
Item 1A. Risk Factors
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Quarterly Report on Form 10-Q. For additional risks relating to our operations, see the section titled “Risk Factors” contained in our final prospectus for the IPO filed with the SEC on August 5, 2026. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On October 17, 2025, we issued an aggregate of 7,392,857 Class B ordinary shares (“Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000 in cash. Such ordinary shares included an aggregate of up to 964,286 Class B ordinary shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor will collectively own 30% of the outstanding shares after the IPO (not including the Class A ordinary shares that are included within the Private Units). On May 6, 2026, pursuant to the downsize of the Initial Public Offering, our Sponsor surrendered 2,217,857 Class B ordinary shares for no consideration, leaving Sponsor with 5,175,000 Class B ordinary shares for an aggregate purchase price of $25,000 (up to 675,000 of which were subject to forfeiture by the holders thereof depending on the extent to which the underwriter’s over-allotment option was exercised). On August 5, 2026, the effective date of the registration statement, the Sponsor transferred an aggregate of 40,000 of its Founder Shares, or 10,000 each to its four officers and independent directors, except Ian Hanna, for their board service, for nil cash consideration. As the underwriters’ over-allotment option was not exercised, 675,000 Founder Shares were forfeited on September 17, 2026.
On August 5, 2026, we consummated our Initial Public Offering of 10,500,000 units, at $10.00 per Unit, generating gross proceeds of $105,000,000. Each Public Unit contains one Class A ordinary share, one right, and one redeemable warrant.
Simultaneously with the consummation of the closing of the Initial Public Offering, we consummated the private placement of an aggregate of 140,000 units to the Sponsor at a price of $10.00 per Private Unit, generating gross proceeds of $1,400,000. The issuance of the Private Units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to the sale of the Private Units.
The securities sold in the IPO were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-291302), which was declared effective by the SEC on August 3, 2026. ARC Group Securities LLC acted as representative of the underwriters. Of the gross proceeds from the IPO and the Private Placement, $106,400,000 was initially placed in the Trust Account, and on August 10, 2026, $1,400,000 was distributed to pay IPO expenses (including repayment of the $360,453 Sponsor promissory note) and to fund working capital, leaving $105,000,000 in the Trust Account. For a description of the use of the proceeds generated in the IPO, see Part I, Item 2 of this Quarterly Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
None.
| 6 |
Item 6. EXHIBITS
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act). | |
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act). | |
| 32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| 7 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ARC Group Securities Acquisition I | ||
| Dated: November 6, 2026 | By: | /s/ Ian Hanna |
| Ian Hanna, Chief Executive Officer and Chairman of the Board | ||
| Dated: November 6, 2026 | By: | /s/ Jake Carney |
| Jake Carney, Chief Financial Officer | ||
| 8 |