10-Q: Chain Bridge I Faces Delisting, Liquidation Risk After Deal Collapse

Chain Bridge I, a SPAC, reported a significant net loss, a worsening accumulated deficit, and faces delisting from OTCQB, raising substantial doubt about its ability to continue as a going concern after its business combination agreement with Phytanix Bio was terminated.

Summary

• Chain Bridge I reported a net loss of approximately $1.3 million for the three months ended September 30, 2025, compared to a net income of $326,000 for the same period in 2024.
• For the nine months ended September 30, 2025, the company incurred a net loss of approximately $1.7 million, an increase from the $1.4 million net loss in the prior year period.
• The accumulated deficit significantly worsened to $(4,168,034) as of September 30, 2025, from $(2,367,244) at December 31, 2024.
• The company's total liabilities increased substantially to $5,209,350 as of September 30, 2025, from $2,494,770 at December 31, 2024.
• Cash on hand increased to $1,001,325 as of September 30, 2025, from $129,598 at December 31, 2024, primarily due to new financing activities.
• Investments held in the Trust Account slightly increased to $5,494,086 as of September 30, 2025, from $5,285,060 at December 31, 2024.
• The business combination agreement with Phytanix Bio, announced on July 22, 2024, was mutually terminated on April 7, 2025.
• Shareholders approved an extension of the business combination deadline from November 15, 2025, to November 15, 2026, and removed the $5,000,001 net tangible assets limitation for a business combination.
• The company received a notice from OTC Markets Group on November 12, 2025, indicating non-compliance with the OTCQB Minimum Public Float Requirement (less than 10% public float) and has 90 days to regain compliance.
• Management identified a material weakness in internal control over financial reporting related to the adequate review and reconciliation of liabilities and prepaid expenses, leading to a restatement of prior period financials.
• The company issued a new Senior Note for $1,000,000 (purchase price) with a principal amount of $1,250,000 on September 30, 2025, due June 30, 2026.
• Public shareholders redeemed 393,146 shares for approximately $4,721,683 in cash from the Trust Account in connection with the October 2025 meeting.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the termination of the business combination, significant financial losses, worsening accumulated deficit, ongoing delisting issues (from Nasdaq and now facing OTCQB non-compliance), and a material weakness in internal controls. While the extension of the deadline provides a sliver of hope, the overall situation points to severe operational and financial distress for a SPAC that has failed to execute its primary objective.

Positives

• Shareholders approved an extension of the business combination deadline to November 15, 2026, providing more time to find a target.
• The removal of the $5,000,001 net tangible assets limitation for a business combination offers greater flexibility.
• Cash balance in the operating account increased significantly to $1,001,325 as of September 30, 2025, from $129,598 at December 31, 2024.
• Fulton AC agreed to reimburse the Trust Account up to $100,000 for dissolution expenses if the company is dissolved.

Negatives

• The company reported a substantial net loss of $1,304,431 for the three months ended September 30, 2025, a significant decline from net income in the prior year period.
• The accumulated deficit worsened to $(4,168,034) as of September 30, 2025, indicating continued operational losses.
• Total liabilities more than doubled from $2,494,770 at December 31, 2024, to $5,209,350 at September 30, 2025.
• The business combination agreement with Phytanix Bio was terminated, requiring the company to restart its search for a target.
• The company received a notice of non-compliance with OTCQB's Minimum Public Float Requirement, risking further delisting.
• A material weakness in internal control over financial reporting was identified, leading to a restatement of prior financial statements.
• The company has a working capital deficit of $357,128 as of September 30, 2025.
• Derivative liabilities increased significantly to $1,102,500 as of September 30, 2025, from $88,200 at December 31, 2024, contributing to losses.
• Public shareholders continue to redeem shares, reducing the funds available in the Trust Account for a business combination.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to its liquidity condition and the mandatory liquidation date of November 15, 2026.
• Failure to consummate an initial Business Combination by November 15, 2026, will result in liquidation, and warrants will expire worthless.
• The company risks delisting from the OTCQB Venture Market if it fails to regain compliance with the Minimum Public Float Requirement by February 10, 2026.
• There is a risk that the company may be deemed an unregistered investment company under the Investment Company Act, which could force liquidation and prevent the completion of a business combination.
• Geopolitical events, adverse economic developments, inflation, and rising interest rates could negatively affect the company's financial position and search for a target company.
• The identified material weakness in internal control over financial reporting could adversely affect the company's ability to record, process, summarize, and report financial information accurately.
• If the company is required to liquidate, shareholders would not realize the benefits of owning stock in a successor operating business, including potential appreciation in stock and warrant value.

Future Outlook

The company has extended its deadline to consummate an initial Business Combination to November 15, 2026, and removed the net tangible assets limitation, aiming to facilitate a future transaction. However, the termination of the Phytanix Bio deal means the company must now seek a new target. Management is actively working to regain compliance with OTCQB listing standards by February 10, 2026, to avoid further delisting. The company continues to evaluate the impact of global economic and geopolitical events on its operations and search for a target.

Management Comments

• Management continues to evaluate the current or anticipated military conflicts, including between Russia and Ukraine, and Israel and Hamas, terrorism, sanctions or other geopolitical events as well as adverse developments in the economy and capital markets, including rising energy costs, inflation and interest rates, in the United States and globally, on the industry and has concluded that while it is reasonably possible that these events could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable.
• Management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented, despite the identified material weakness in internal control over financial reporting.
• The company is committed to ensuring compliance with the Investment Company Act and the updated SEC guidance, and by adhering to safe harbor provisions, seeks to mitigate risks associated with the potential application of the Investment Company Act.

Industry Context

Chain Bridge I operates as a Special Purpose Acquisition Company (SPAC) in a challenging regulatory and market environment. The termination of its business combination agreement with Phytanix Bio highlights the inherent difficulties SPACs face in identifying and completing suitable mergers within their mandated timelines. The delisting from Nasdaq and the current non-compliance with OTCQB's public float requirement reflect broader market skepticism and increased scrutiny on SPACs that fail to de-SPAC efficiently. The ongoing redemptions by public shareholders further reduce the capital available for potential transactions, a common trend in the SPAC industry as deadlines approach and investor confidence wanes. The company's efforts to extend its life and remove the net tangible assets limitation are typical strategies employed by SPACs struggling to find a target, but these actions often come at the cost of increased shareholder dilution and reduced trust account value.

Comparison to Industry Standards

• The company's failure to complete a business combination within 36 months of its IPO led to delisting from Nasdaq, which is a significant underperformance compared to successful SPACs that complete de-SPAC transactions within typical timelines (e.g., 18-24 months for many successful SPACs like Lucid Group (LCID) or DraftKings (DKNG) which completed their mergers within standard periods).
• The repeated shareholder redemptions (e.g., $197.8M in May 2023, $34.5M in Feb 2024, $6.3M in Nov 2024, $4.7M in Oct 2025) indicate a substantial loss of investor confidence and a significant reduction in the trust account, contrasting sharply with SPACs that maintain high redemption rates or attract PIPE investments to bolster their trust accounts for a successful merger.
• The current non-compliance with OTCQB's public float requirement (less than 10% of total shares outstanding) places the company in a precarious position, unlike many other SPACs that, even after Nasdaq delisting, maintain sufficient public trading liquidity on OTC markets.
• The accumulated deficit of over $4 million and the significant increase in liabilities suggest poor financial management and high burn rates for a non-operating entity, which is worse than many peer SPACs that manage to keep their operational expenses low while searching for a target.
• The termination of the Phytanix Bio business combination agreement, after significant effort and time, is a major setback, contrasting with SPACs like Gores Holdings VI (GHVI) which successfully merged with Ardagh Metal Packaging, or Churchill Capital Corp IV (CCIV) which merged with Lucid Motors, demonstrating successful de-SPAC execution.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not aware of any legal proceedings that will have a material adverse effect on its business, financial condition, or operating results.

Related Party Transactions

• Fulton AC I LLC (Fulton AC) is a significant related party, involved in the Securities Purchase Agreement, Exchange Note, Contribution Agreement, and Administrative Services Agreement.
• Chain Bridge Group (CBG) and CB Co-Investment are related parties involved in private placement warrants and voting agreements.
• The company pays Fulton AC up to $30,000 per month for office space, administrative, and support services under the Fulton Services Agreement.
• The Exchange Note, with an outstanding balance of $627,096 as of September 30, 2025, is with Fulton AC.
• Contingently issuable private placement warrants are to be issued to Fulton AC, CBG, and CB Co-Investment upon consummation of a business combination.

Stakeholder Impact

• Shareholders face significant risk of capital loss if the company liquidates, as warrants may expire worthless and public shares would only receive a pro rata portion of the Trust Account.
• Employees (management) are subject to the uncertainty of the company's future, with compensation potentially tied to the consummation of a business combination (e.g., RSU grants).
• Creditors (e.g., C/M Capital Master Fund LP, Phytanix Bio, Fulton AC) hold various notes and loans, with repayment contingent on the company's ability to complete a business combination or have funds outside the Trust Account.
• Potential target companies may be hesitant to engage with a SPAC facing delisting and going concern issues, impacting the company's ability to find a suitable merger partner.

Next Steps

• Actively search for a new target for an initial Business Combination by November 15, 2026.
• Regain compliance with the OTCQB Minimum Public Float Requirement by February 10, 2026, potentially by submitting a plan to OTC Markets Group.
• Continue to implement remediation steps to address the material weakness in internal control over financial reporting.
• Monitor compliance with the Investment Company Act to avoid being deemed an unregistered investment company.
• Potentially issue new preferred shares as part of the Senior Note agreement by March 31, 2026.

Key Dates

Recommendation

The company is a distressed SPAC with a high probability of liquidation. The termination of its business combination agreement with Phytanix Bio, coupled with its delisting from Nasdaq and current non-compliance with OTCQB listing standards, signals severe operational and financial challenges. The significant accumulated deficit, material weakness in internal controls, and ongoing shareholder redemptions further erode investor confidence. While the extension of the business combination deadline provides a temporary reprieve, the fundamental issues of finding a viable target and maintaining listing compliance remain critical and highly uncertain. Investors face substantial risk of capital loss, making a 'strong sell' recommendation appropriate.

Keywords

SPAC, blank check company, liquidation, delisting, going concern, business combination, Phytanix Bio, warrants, SEC filing, financial reporting, OTCQB, internal controls, capital raise, redemptions