10-Q: DT Cloud Acquisition Faces Delisting, Liquidity Crisis

DT Cloud Acquisition Corporation reports a significant decline in trust account assets and faces Nasdaq delisting warnings while pursuing a business combination with Maius Pharmaceutical.

Summary

• The Company reported a net income of $444,595 for the nine months ended September 30, 2025, a decrease from $1,633,003 for the same period in 2024.
• A net loss of $(242,147) was recorded for the three months ended September 30, 2025, compared to a net income of $760,262 in the prior year's comparable quarter.
• Cash and investments held in the trust account significantly decreased to $1,598,106 as of September 30, 2025, from $72,345,071 as of December 31, 2024, primarily due to substantial shareholder redemptions.
• Shareholder redemptions totaled $72,759,547 during the nine months ended September 30, 2025, reducing the number of ordinary shares subject to possible redemption from 6,900,000 to 143,382.
• The Company received multiple Nasdaq deficiency letters for failing to meet minimum listing requirements, including Market Value of Listed Securities ($50 million), Publicly Held Shares (1.1 million), and Market Value of Publicly Held Shares ($15 million).
• A definitive business combination agreement was entered into with Maius Pharmaceutical Co., Ltd. on October 22, 2024, for an aggregate consideration of $250,000,000 in Pubco ordinary shares.
• The deadline to consummate a business combination has been extended multiple times, now until February 23, 2027, with monthly extension fees waived from August 23, 2025.
• The Company had $0 cash held outside the trust account as of September 30, 2025, and has issued promissory notes to Maius totaling $715,325 by that date, with an additional $70,287 issued on November 19, 2025.
• Management identified material weaknesses in internal control over financial reporting related to inadequate segregation of duties and insufficient written policies.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, significant shareholder redemptions, multiple Nasdaq delisting warnings, and material weaknesses in internal controls. While a business combination agreement is in place, its completion is highly uncertain, and the 'Outside Date' for termination has passed. The going concern warning further underscores the precarious financial position.

Positives

• A definitive business combination agreement with Maius Pharmaceutical Co., Ltd. was executed on October 22, 2024, providing a path for the Company's strategic objective.
• The business combination period has been successfully extended multiple times, now providing until February 23, 2027, to complete the transaction.
• Monthly extension fees payable by the Sponsor into the Trust Account have been waived starting August 23, 2025, reducing ongoing financial burden.
• The Company reported a net income of $444,595 for the nine months ended September 30, 2025.

Negatives

• Cash and investments held in the trust account plummeted from $72,345,071 to $1,598,106, reflecting massive shareholder redemptions and a significant loss of capital.
• The Company incurred a net loss of $(242,147) for the three months ended September 30, 2025, a sharp decline from net income in the prior year.
• Multiple Nasdaq deficiency letters indicate a failure to meet critical listing standards, posing a significant risk of delisting.
• The Company reported $0 cash held outside the trust account as of September 30, 2025, highlighting severe liquidity constraints for operational expenses.
• The accumulated deficit increased substantially to $(3,259,139) as of September 30, 2025, from $(1,854,174) at year-end 2024.
• Material weaknesses in internal control over financial reporting were identified, specifically inadequate segregation of duties and insufficient written policies.
• The 'Outside Date' for the Business Combination Agreement was June 30, 2025, which has passed without explicit mention of an extension for the termination clause, creating significant uncertainty regarding the agreement's status.
• There is no assurance that the contemplated PIPE financing of at least $10,000,000 can be completed, which is crucial for the business combination.

Risks

• Failure to meet Nasdaq's continued listing requirements could lead to delisting, severely impacting the liquidity and market price of the Company's securities.
• Delisting could subject the Company's securities to 'penny stock' regulations, further limiting market liquidity and shareholders' ability to trade.
• Potential conflicts of interest exist for the Sponsor, directors, and officers, whose financial interests are tied to the completion of the Business Combination, potentially diverging from public shareholders' interests.
• The completion of the Business Combination is subject to numerous conditions, including shareholder and regulatory approvals (e.g., CSRC), which may not be satisfied or obtained in a timely manner, or at all.
• Uncertainty surrounds the approval process by the China Securities Regulatory Commission (CSRC) for the Business Combination, with potential for delays, denial, or rescission of approval, which could hinder the transaction.
• There is no assurance that the required PIPE financing of at least $10,000,000 will be secured, which could make the Business Combination less attractive or impossible to complete.
• The Business Combination may not qualify as an 'Exchange' for U.S. federal income tax purposes, potentially making the transaction taxable to U.S. holders.
• The Company may not have sufficient funds to consummate the Business Combination, potentially requiring additional borrowing or leading to forced liquidation.
• Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern if the Business Combination is not completed by February 23, 2027.
• The Company is exposed to credit risk from its reliance on U.S. and multi-national financial institutions, with potential adverse effects on liquidity if these institutions fail.
• Geopolitical instability (Russia-Ukraine, Israel-Hamas conflicts) and economic uncertainties could adversely affect the global economy, capital markets, and the target business.
• Political and economic tensions between the United States and China may negatively impact the target business, Maius Pharmaceutical.
• Material weaknesses in internal control over financial reporting, specifically inadequate segregation of duties and insufficient written policies, could adversely affect the Company's ability to record, process, summarize, and report financial information.

Future Outlook

The Company intends to complete its business combination with Maius Pharmaceutical Co., Ltd. by the extended deadline of February 23, 2027. Management plans to address liquidity needs through the initial business combination and potential loans from the Sponsor or its affiliates. Efforts will continue to regain compliance with Nasdaq listing requirements and to secure the contemplated PIPE financing of at least $10,000,000. Maius is expected to fulfill filing procedures with the China Securities Regulatory Commission (CSRC) in connection with the transaction.

Management Comments

• Our management plans to address this uncertainty [going concern] through the initial business combination as discussed above.
• We will use our reasonable best efforts to cause our board of directors to extend the date by which we must consummate a business combination to February 23, 2027.
• Management believes that the financial statements included in this Report present fairly in all material respects our financial position, results of operations and cash flows for the periods presented.
• Our management concluded that there is substantial doubt about its ability to continue as a going concern.

Industry Context

As a Special Purpose Acquisition Company (SPAC), DT Cloud Acquisition Corporation operates in a highly scrutinized market segment. The significant shareholder redemptions and subsequent decline in trust account assets reflect a broader trend of investor skepticism and high redemption rates in the SPAC market. The pursuit of a business combination with a China-based pharmaceutical technology company (Maius) places the Company within the context of increasing regulatory oversight by the PRC government (CSRC Trial Measures) on overseas listings, adding complexity and risk to the transaction. The filing also acknowledges the impact of global geopolitical instability and economic uncertainties on capital markets and potential target businesses, a common concern across industries.

Comparison to Industry Standards

• The Company's high redemption rate, leading to a drastic reduction in its trust account balance, is significantly worse than the average for successful SPACs, which typically aim to retain a substantial portion of their trust assets for the business combination.
• Receiving multiple Nasdaq deficiency letters for failing to meet minimum listing requirements (MVLS, Public Shares, MVPHS) indicates a critical underperformance compared to industry benchmarks for publicly traded companies.
• The inability to secure the contemplated $10,000,000 PIPE financing suggests a lack of investor confidence, contrasting with other SPACs that successfully raise capital to support their de-SPAC transactions.
• The 'going concern' warning and zero cash outside the trust account place the Company in a more precarious financial position than most operational or even pre-combination SPACs, which typically maintain sufficient working capital.

Corporate Governance

Related Party Transactions

• The Sponsor (DT Cloud Capital Corp.) holds 1,725,000 Founder Shares and 234,500 Private Placement Units.
• The Company owes $399,798 to the Sponsor as of September 30, 2025, for temporary advances and unpaid service fees; this balance is unsecured, interest-free, and has no fixed repayment terms.
• An affiliate of the Sponsor provides administrative services (office space, support) for $10,000 per month; unpaid fees totaled $190,000 as of September 30, 2025.
• The Sponsor or its affiliates may provide Working Capital Loans to the Company, with up to $300,000 convertible into private units upon business combination consummation.
• The Company issued unsecured promissory notes to Maius (the target company) totaling $715,325 as of September 30, 2025, and an additional $70,287 on November 19, 2025; these notes are interest-free and mature upon the closing of a business combination.
• Voting Agreements were entered into with certain shareholders (Non-Redeeming Shareholders) to forego redemption rights on a portion of their shares in exchange for 781,879 Additional SPAC Rights, valued at $163,022.

Stakeholder Impact

• **Shareholders (Public)**: Face significant dilution and potential loss of investment due to high redemptions, Nasdaq delisting risks, and uncertainty surrounding the business combination. The value of their remaining shares and rights is highly speculative.
• **Shareholders (Sponsor/Insiders)**: Risk losing their entire investment in founder shares and private placement units if the business combination fails, but stand to gain substantially if it closes, potentially even if public shareholders experience a negative return.
• **Maius Pharmaceutical Co., Ltd. (Target Company)**: The proposed business combination is critical for Maius to become a publicly listed entity. Delays, regulatory hurdles (CSRC), and the Company's financial instability pose significant risks to this objective.
• **Creditors**: The Sponsor has agreed to indemnify the Trust Account against certain claims, offering some protection. However, the 'going concern' warning indicates overall financial instability that could impact other creditors.
• **Underwriters**: The deferred underwriting commission of $1,725,000 is contingent on the closing of the business combination, placing it at risk given the current uncertainties.

Next Steps

• Complete the Business Combination with Maius Pharmaceutical Co., Ltd. by the extended deadline of February 23, 2027.
• Regain compliance with Nasdaq listing requirements for Market Value of Listed Securities (by February 18, 2026) and Market Value of Publicly Held Shares (by March 24, 2026), and await Nasdaq's decision on the plan to regain compliance for Publicly Held Shares.
• Maius to fulfill filing procedures with the China Securities Regulatory Commission (CSRC) for the Business Combination.
• Continue efforts to secure the contemplated PIPE financing of at least $10,000,000.
• Address and remediate the identified material weaknesses in internal control over financial reporting.

Key Dates

Recommendation

The Company is in a highly distressed state, evidenced by a drastic reduction in trust account assets due to massive redemptions, multiple Nasdaq delisting warnings, and a 'going concern' qualification. Liquidity outside the trust account is non-existent, and material weaknesses in internal controls have been identified. While a business combination agreement with Maius Pharmaceutical exists, its 'Outside Date' has passed, and the lack of secured PIPE financing adds significant uncertainty to its completion. The cumulative risks of delisting, further capital erosion, and potential liquidation are extremely high, making the stock an exceptionally risky investment with substantial downside potential.

Keywords

SPAC, Business Combination, Maius Pharmaceutical, Nasdaq Delisting, Liquidity Crisis, Shareholder Redemptions, Trust Account, Going Concern, Financial Reporting, Corporate Governance, CSRC Approval, PIPE Financing, Geopolitical Risk