10-Q: Churchill Capital X Q3: ColdQuanta Merger Progress

Churchill Capital Corp X reports a significant net loss in Q3 2025, primarily due to a change in fair value of subscription agreement liability, while progressing towards its business combination with ColdQuanta, Inc.

Summary

• Churchill Capital Corp X (CCCX), a SPAC incorporated on January 4, 2024, consummated its Initial Public Offering (IPO) on May 15, 2025, selling 41.4 million Public Units at $10.00 per unit, raising $414,000,000.
• Simultaneously with the IPO, 300,000 Private Placement Units were sold to the Sponsor for $3,000,000.
• An aggregate of $414,000,000 from the IPO and Private Placement proceeds was placed in a Trust Account.
• On September 8, 2025, the company entered into a definitive Merger Agreement with ColdQuanta, Inc., with the transaction expected to close immediately following a PIPE Investment.
• The company reported a net loss of $33,384,811 for the three months ended September 30, 2025, and $31,429,725 for the nine months ended September 30, 2025.
• The primary driver of the net loss was a $30,499,229 change in the fair value of the subscription agreement liability.
• Cash and marketable securities held in the Trust Account totaled $419,552,466 as of September 30, 2025.
• The company had $1,135,562 in cash outside the Trust Account and a working capital deficit of $35,167,969 as of September 30, 2025.
• The Sponsor holds an aggregate of 10,350,000 Founder Shares.
• The company has until May 15, 2027 (or August 15, 2027, if an LOI/definitive agreement is signed by May 15, 2027) to complete a business combination.

Sentiment

Score: 6

Explanation: While the company reported a significant net loss, it's primarily a non-cash accounting adjustment common for SPACs. The key positive is the successful IPO and, more importantly, the definitive merger agreement with ColdQuanta, Inc. and the secured PIPE investment, indicating progress towards its core mission. However, the working capital deficit and reliance on potential future loans, along with general SPAC risks, temper the sentiment.

Positives

• Successful completion of the Initial Public Offering on May 15, 2025, raising $414,000,000.
• Full exercise of the underwriters' over-allotment option, indicating strong initial demand.
• Entry into a definitive Merger Agreement with ColdQuanta, Inc. on September 8, 2025, providing a clear path for the business combination.
• The Trust Account holds $419,552,466, including interest earned, providing substantial capital for the merger.
• Sufficient funds for working capital needs for at least one year from the issuance date of the financial statements.
• A PIPE Investment of $126,547,600 of Domesticated SPAC Common Stock at $10.00 per share has been secured.

Negatives

• Significant net loss of $33,384,811 for the three months ended September 30, 2025, and $31,429,725 for the nine months ended September 30, 2025.
• A large change in fair value of subscription agreement liability resulted in a non-cash loss of $30,499,229.
• The company reported a working capital deficit of $35,167,969 as of September 30, 2025.
• Limited permitted withdrawals from the Trust Account for working capital ($1,000,000 annual limit, already withdrawn for the current year until May 15, 2026).
• Reliance on the Sponsor or affiliates for potential Working Capital Loans, which are not obligated.
• Risk of not completing the initial Business Combination within the Combination Period (May 15, 2027, or August 15, 2027).

Risks

• The ability to complete an initial Business Combination may be adversely affected by various factors beyond the company's control, including changes in laws or regulations, economic downturns, inflation, interest rate fluctuations, tariffs, supply chain disruptions, public health considerations, and geopolitical instability (e.g., military conflicts in Ukraine and the Middle East).
• There is no assurance that the company will be able to successfully effect an initial Business Combination.
• Proceeds deposited in the Trust Account could become subject to the claims of the company's creditors, which could have priority over public shareholders.
• If the initial Business Combination is not completed, significant management time and resources will have been expended, and substantial expenses incurred, without realizing benefits.
• Negative reactions from financial markets, employees, customers, or vendors may occur if the initial Business Combination is not completed.
• Restrictions in the Merger Agreement impede the company's ability to make other acquisitions or business combinations during its pendency.
• The issuance of Class A common stock upon closing of the initial Business Combination will dilute existing holders.
• Substantial future sales of Class A common stock by existing stockholders could cause the market price to decline.
• Delays in the government budget process or a government shutdown (affecting SEC operations) may materially adversely affect the ability to complete the initial Business Combination or the post-closing company's operations.
• There is a potential for insufficient funds to operate the business prior to the initial Business Combination if costs exceed estimates.
• The company may need to obtain additional financing either to complete the initial Business Combination or because it becomes obligated to redeem a significant number of its Public Shares, with no assurance of availability on acceptable terms.

Future Outlook

The company intends to use substantially all funds in the Trust Account to complete its Business Combination with ColdQuanta, Inc. It expects to incur increased expenses as a public company and for due diligence. Management believes it has sufficient funds for working capital for at least one year but acknowledges the potential need for additional financing if redemptions are high or costs exceed estimates. The Business Combination with ColdQuanta, Inc. is expected to be consummated immediately following the closing of the PIPE Investment, subject to customary conditions.

Management Comments

• "Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an initial Business Combination."
• "We cannot assure you that our plans to complete a Business Combination will be successful."
• "We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business."
• "However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination."
• "Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination."
• "Our Certifying Officers concluded that our disclosure controls and procedures were effective as of September 30, 2025."

Industry Context

Churchill Capital Corp X operates as a Special Purpose Acquisition Company (SPAC), a vehicle designed to raise capital through an IPO to acquire an existing private company. The industry has seen increased scrutiny and challenges, including higher redemption rates and difficulty in finding suitable targets. The definitive merger agreement with ColdQuanta, Inc. positions the company to complete its primary objective, contrasting with many SPACs that struggle to identify or close a target within their mandated timeframe. The significant non-cash loss from the subscription agreement liability reflects the complex accounting and valuation challenges inherent in SPAC transactions, particularly with PIPE investments. Geopolitical instability and economic uncertainties are noted as broader industry headwinds affecting SPACs' ability to complete deals.

Comparison to Industry Standards

• The IPO terms (e.g., $10.00 per unit, one-fourth warrant) are standard for SPACs.
• The 24-month (or 27-month extension) Combination Period is typical for SPACs.
• The 80% Trust Account asset rule for target fair market value is a common SPAC requirement.
• The deferred underwriting fee of up to $3,000,000 is a standard SPAC cost structure.
• The PIPE investment of $126.5 million at $10.00 per share is a common mechanism to secure additional funding and investor confidence in SPAC mergers.
• The significant change in fair value of the subscription agreement liability, leading to a large non-cash loss, is a common accounting outcome for SPACs due to the complex valuation of such instruments under ASC 815, especially as market conditions and deal probabilities evolve. This is not necessarily a sign of poor performance but rather a reflection of accounting standards for derivative liabilities.

Corporate Governance

Legal Proceedings

• To the knowledge of management, there is no material litigation currently pending or contemplated against the company, any of its officers or directors in their capacity as such, or against any of its property.

Related Party Transactions

• Churchill Sponsor X LLC (the Sponsor) acquired 7,187,500 Founder Shares for $0.003 per share on February 15, 2024, and received additional Founder Shares through share capitalizations in April and May 2025, totaling 10,350,000 Founder Shares.
• The Sponsor purchased 300,000 Private Placement Units for $3,000,000.
• An affiliate of BTIG, LLC invested $500,000 in the Sponsor for interests corresponding to 50,000 Private Placement Units and 200,000 Founder Shares.
• The company agreed to reimburse the managing member of the Sponsor $30,000 per month for office space, utilities, and secretarial/administrative support, commencing May 14, 2025.
• The Sponsor loaned the company up to $600,000 via an IPO Promissory Note, which was repaid in full at the IPO closing.
• The Sponsor or affiliates may provide Working Capital Loans up to $1,500,000, convertible into units at $10.00 per unit.
• The Klein Group, LLC (an affiliate of M. Klein & Company, the Sponsor's affiliate) entered into an Advisory Agreement to provide financial advisory, strategy consulting, business development, and investor relations services for a fee of $250,000 per quarter, effective upon closing of the Transactions.

Stakeholder Impact

• Shareholders (Public): Potential dilution from the issuance of Class A common stock upon merger closing; redemption rights for Public Shares if the merger is not completed or if they vote against it; market price volatility due to future share sales.
• Shareholders (Sponsor/Insiders): Founder Shares subject to vesting conditions ($12.00 VWAP or change of control within five years); voting agreements in favor of the merger; restrictions on redemption of their shares.
• PIPE Investors: Committed to purchase $126,547,600 of PIPE Shares at $10.00 per share, contingent on merger closing.
• Underwriters (BTIG): Entitled to a deferred fee of $3,000,000 upon Business Combination completion; received interests in the Sponsor corresponding to Private Placement Units and Founder Shares as compensation.
• Directors: Receive cash compensation of $75,000 per annum.
• Creditors: Trust Account proceeds could be subject to claims of creditors, potentially having priority over public shareholders.

Next Steps

• Complete the business combination with ColdQuanta, Inc.
• Close the PIPE Investment.
• Seek shareholder approval for the initial Business Combination (if required).
• File a post-effective amendment to the registration statement or a new registration statement for the issuance of Public Shares upon exercise of Public Warrants.
• Maintain effectiveness of the registration statement and current prospectus for warrants until expiration.
• Potentially raise additional capital if needed for the Business Combination or due to high redemptions.

Key Dates

Recommendation

The company has achieved its primary objective of identifying a target and signing a definitive merger agreement with ColdQuanta, Inc., which is a positive step for a SPAC. The secured PIPE investment also adds confidence to the transaction. However, the significant non-cash accounting loss and the inherent risks associated with SPAC mergers, including potential redemptions and the need for additional financing, suggest a "Hold" recommendation. Investors should monitor the progress of the merger, the final redemption rates, and the post-merger performance of the combined entity. The current stage is about execution and closing, with future value dependent on ColdQuanta's business prospects.

Keywords

SPAC, Churchill Capital Corp X, ColdQuanta, Merger Agreement, Business Combination, IPO, Trust Account, PIPE Investment, Founder Shares, Warrants, SEC Filing, 10-Q, Financial Results, Liquidity, Capital Resources, Corporate Governance, Risk Factors