10-Q: dMY Squared Faces Delisting, Reports Deep Loss Amid Merger Push

dMY Squared Technology Group, Inc. reported a significant net loss and delisting from NYSE American, while pursuing a business combination with Horizon Quantum Computing.

Summary

• dMY Squared Technology Group, Inc. (dMY) is a blank check company formed for a business combination, which has not yet commenced operations.
• The company reported a net loss of $11,862,301 for the nine months ended September 30, 2025, a substantial increase from a $344,035 net loss in the prior year period.
• General and administrative expenses increased to $3,232,917 for the nine months ended September 30, 2025, up from $792,683 in the same period of 2024, largely due to merger expenses.
• A significant loss of $9,247,570 was recorded from the change in fair value of derivative warrant liabilities for the nine months ended September 30, 2025.
• Cash balance plummeted to $349 as of September 30, 2025, from $309,399 at December 31, 2024.
• Total liabilities surged to $20,826,215 as of September 30, 2025, from $7,389,300 at December 31, 2024.
• The company's securities were delisted from the NYSE American on September 29, 2025, and now trade on the OTCQB Market (Class A common stock, Public Warrants) and OTCID Market (Units).
• dMY entered into a Business Combination Agreement with Horizon Quantum Computing Pte. Ltd. on September 9, 2025, aiming to create Horizon Quantum Holdings Ltd. as a public company.
• The proposed business combination is subject to shareholder approvals and a minimum cash condition of $45 million plus transaction expenses.
• The company's liquidation date has been extended to November 29, 2025, through contributions from a convertible promissory note issued to an affiliate of the Sponsor.
• Two material weaknesses in internal control over financial reporting were identified, one related to Class A share redemption value and another to excise tax recognition, leading to a restatement of prior financial statements.
• An excise tax expense of approximately $420,000 related to January 2024 redemptions was recorded, with $126,000 in penalties and late fees accrued.
• Management has determined that its liquidity condition and mandatory liquidation if a business combination does not occur raise substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 2

Explanation: The company faces severe challenges, including significant net losses, minimal cash, rapidly increasing liabilities, delisting from a major exchange, and identified material weaknesses in internal controls. The 'going concern' warning and the extended deadline for a business combination highlight extreme operational and financial distress, despite the proposed merger with Horizon Quantum Computing. The overall situation is highly negative and precarious.

Positives

• The company has entered into a Business Combination Agreement with Horizon Quantum Computing Pte. Ltd., providing a path towards completing its initial business combination.
• The Sponsor and its affiliates continue to provide financial support through advances and a convertible note to fund extensions of the combination period and working capital.

Negatives

• Reported a significant net loss of $11,862,301 for the nine months ended September 30, 2025, compared to a net loss of $344,035 for the same period in 2024.
• Cash balance has drastically reduced to $349 as of September 30, 2025, from $309,399 at December 31, 2024.
• Total liabilities increased substantially to $20,826,215 as of September 30, 2025, from $7,389,300 at December 31, 2024.
• Accumulated deficit worsened significantly to $(20,650,174) as of September 30, 2025, from $(6,847,037) at December 31, 2024.
• The company was delisted from the NYSE American exchange on September 29, 2025, and now trades on the OTC Markets, potentially limiting liquidity and investor access.
• Two material weaknesses in internal control over financial reporting were identified, leading to a restatement of prior financial statements and raising concerns about financial reporting accuracy.
• Accrued $126,000 in penalties and late fees for excise tax, indicating compliance issues and additional costs.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to liquidity issues and the mandatory liquidation if a business combination is not completed.

Risks

• The company's ability to complete the proposed Business Combination with Horizon Quantum Computing Pte. Ltd. is uncertain and subject to shareholder approvals and a minimum cash condition of $45 million plus transaction expenses.
• Failure to complete a Business Combination by November 29, 2025, will result in mandatory liquidation, leading to the redemption of public shares and potential loss for warrant holders.
• The delisting from NYSE American and subsequent trading on the OTC Markets could limit investors' ability to transact in the company's securities, adversely affect trading price, and make it difficult to raise additional capital.
• Material weaknesses in internal control over financial reporting could continue to adversely affect the ability to report financial results accurately and timely, potentially leading to further restatements, loss of investor confidence, and litigation.
• The 1% U.S. federal excise tax on stock repurchases (including redemptions) is expected to apply, reducing cash available for a business combination or redemptions, and the final regulations are still uncertain.
• Macroeconomic, geopolitical, and regulatory uncertainties (e.g., inflation, interest rates, international conflicts, trade policies) could negatively impact economic growth and financial markets, affecting the search for a business combination target.
• The company has a significant working capital deficit of approximately $6.9 million as of September 30, 2025, and minimal cash, raising substantial doubt about its ability to continue as a going concern.

Future Outlook

The company's future is highly dependent on the successful consummation of the proposed Business Combination with Horizon Quantum Computing Pte. Ltd. by the extended liquidation date of November 29, 2025. Failure to meet the minimum cash condition of $45 million plus transaction expenses or secure shareholder approvals would lead to mandatory liquidation. The company also faces ongoing challenges in remediating identified material weaknesses in internal controls and managing the impact of the U.S. federal excise tax on redemptions.

Management Comments

• Management determined that the use of funds from the Trust Account for general operating expenses was not in accordance with the Trust Agreement.
• Management concluded that recognition of the excise tax obligation was appropriate in 2025 based on additional guidance and analysis.
• Management has determined that the liquidity condition, mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about its ability to continue as a going concern.
• Management intends to enhance documentation of processes, expand internal review procedures for non-routine transactions, increase scrutiny over Trust Account balances, and strengthen oversight from the audit committee and Board to remediate the first material weakness.
• Management intends to implement enhanced monitoring of new tax guidance, expand internal review procedures for non-routine and tax-sensitive transactions, and reinforce communication protocols between management and advisors to remediate the second material weakness.

Industry Context

dMY Squared Technology Group operates as a Special Purpose Acquisition Company (SPAC), a sector that has seen increased scrutiny and regulatory changes, including the introduction of the U.S. federal excise tax on stock repurchases. The proposed target, Horizon Quantum Computing Pte. Ltd., is in the quantum computing industry, a nascent but high-potential technology sector focused on developing operating systems software and software development tools. The delisting from a major exchange (NYSE American) to the OTC Markets reflects broader challenges faced by SPACs in completing business combinations within mandated timelines and maintaining listing standards. The significant increase in derivative warrant liabilities and general and administrative expenses are common for SPACs nearing their liquidation deadline or actively pursuing a complex merger, especially when dealing with fair value adjustments and merger-related costs.

Comparison to Industry Standards

• The company's delisting from NYSE American due to failure to complete a business combination within 36 months is a negative indicator compared to successful SPACs that complete mergers and uplist the combined entity.
• The identification of two material weaknesses in internal control over financial reporting, leading to a restatement, falls below industry best practices for financial governance and transparency, contrasting with well-managed public companies.
• The substantial net loss and significant increase in liabilities, particularly derivative warrant liabilities, reflect the volatile nature of SPAC financial instruments and the costs associated with prolonged search and merger efforts, which can be higher than for SPACs that execute combinations more swiftly.
• The reliance on related party loans and advances for working capital and extension contributions, while common in SPACs, highlights the company's limited independent liquidity, a less favorable position compared to SPACs with stronger cash reserves outside the trust account.

Corporate Governance

Legal Proceedings

• No legal proceedings were reported in the filing.

Related Party Transactions

• The Sponsor purchased 2,875,000 Founder Shares for $25,000, later forfeiting 718,750 and 431,250 shares, and an additional 145,250 shares, resulting in 1,579,750 Founder Shares outstanding.
• The Sponsor purchased 2,840,000 Initial Private Placement Warrants for $2.8 million and 44,660 Additional Private Placement Warrants for $45,000.
• The Sponsor extended an Initial Overfunding Loan of $900,000 and an Additional Overfunding Loan of $47,850, totaling $947,850, deposited into the Trust Account.
• The company issued a convertible promissory note to Harry L. You (Chairman, CEO, CFO, and an affiliate of the Sponsor) for up to $1.75 million, with $1,091,667 outstanding as of September 30, 2025, and $1,141,667 post-period, used for Trust Account extensions.
• Advances from related parties totaled approximately $1.5 million outstanding as of September 30, 2025, for liquidity needs.
• The company pays the Sponsor $10,000 per month for office space, administrative and support services, totaling $30,000 for the three months and $90,000 for the nine months ended September 30, 2025.

Stakeholder Impact

• Shareholders face significant uncertainty regarding the completion of the business combination and the company's ability to continue as a going concern, with potential for further share price volatility and dilution.
• Public shareholders who did not redeem their shares face the risk of liquidation if the business combination fails, potentially receiving only a pro rata distribution from the Trust Account.
• Warrant holders face the risk of their warrants becoming worthless if a business combination is not completed, as they will not receive any funds from the Trust Account.
• The delisting from NYSE American to OTC Markets may reduce liquidity and make it more difficult for investors to trade the company's securities.
• The identified material weaknesses in internal controls and the restatement of financial statements could erode investor confidence and potentially lead to litigation.

Next Steps

• Complete the proposed Business Combination with Horizon Quantum Computing Pte. Ltd. by November 29, 2025.
• Obtain required approvals from dMY's and Horizon's shareholders for the Business Combination.
• Satisfy the minimum cash condition of $45 million plus transaction expenses for the Business Combination.
• Remediate the identified material weaknesses in internal control over financial reporting, including enhancing documentation, expanding review procedures, and strengthening oversight.
• Address the processing and payment of the accrued excise tax liability with the IRS.

Key Dates

Recommendation

The company is in a highly precarious financial and operational state. It reported a substantial net loss, minimal cash, and a significant increase in liabilities, leading to a 'going concern' warning. The delisting from NYSE American to the OTC Markets severely impacts liquidity and investor access. Furthermore, the identification of two material weaknesses in internal controls and a restatement of prior financials indicate severe governance and reporting issues. While a business combination with Horizon Quantum Computing is proposed, its completion is uncertain and subject to significant conditions, including a $45 million minimum cash requirement. The extended liquidation deadline and ongoing reliance on related party funding underscore the company's distress. Given these compounding negative factors and high execution risk, a strong sell recommendation is warranted for any existing holders, and new investment should be avoided.

Keywords

SPAC, blank check company, Horizon Quantum Computing, business combination, quantum computing, delisting, NYSE American, OTCQB, 10-Q, SEC filing, financial reporting, internal controls, excise tax, going concern, warrants, related party transactions