10-Q: Dune Acquisition II Q3 2025: SPAC Reports Net Income, Seeks Merger

Dune Acquisition Corporation II, a blank check company, reported a net income of $1.3 million for Q3 2025, primarily from trust account interest, as it continues its search for a business combination.

Summary

• Reported net income of $1,335,424 for the three months ended September 30, 2025, and $2,048,349 for the nine months ended September 30, 2025.
• Operating cash and cash equivalents stood at $401,902 with a working capital surplus of $401,633 as of September 30, 2025.
• Marketable securities held in the Trust Account totaled $146,497,545 as of September 30, 2025.
• The company is a blank check company formed to effect a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination.
• The Initial Public Offering (IPO) of 14,375,000 units closed on May 8, 2025, generating gross proceeds of $143,750,000.
• Simultaneously with the IPO, 2,000,000 Private Placement Warrants were sold to the Sponsor for $2,000,000.
• A total of $144,109,375 was placed in the Trust Account following the IPO and private placement.
• Transaction costs amounted to $6,637,469, including $5,750,000 in deferred underwriting fees.
• The company has not yet selected a specific Business Combination target or engaged in substantive discussions.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to its liquidity condition, which it plans to address through a Business Combination.

Sentiment

Score: 4

Explanation: While the company successfully completed its IPO and is generating interest income, the primary objective of a SPAC (completing a business combination) remains unfulfilled, and there's explicit mention of "substantial doubt about the Company's ability to continue as a going concern." The ongoing litigation involving the CEO, though unrelated to the company's business, adds a layer of reputational risk.

Positives

• Generated significant interest income on marketable securities held in the Trust Account: $1,514,706 for the three months ended September 30, 2025, and $2,388,170 for the nine months ended September 30, 2025.
• Successfully completed its Initial Public Offering on May 8, 2025, raising $143,750,000, including the full exercise of the over-allotment option.
• Maintained a working capital surplus of $401,633 as of September 30, 2025.

Negatives

• Reported a net loss of $16,230 for the period from inception (September 13, 2024) through September 30, 2024.
• Accumulated deficit of $5,348,953 as of September 30, 2025.
• The company's liquidity condition raises substantial doubt about its ability to continue as a going concern for a period of time within one year after the financial statements are issued.
• Incurred $179,282 in formation and general and administrative costs for the three months ended September 30, 2025, and $339,821 for the nine months ended September 30, 2025.
• The company has not yet identified a specific Business Combination target or engaged in substantive discussions.

Risks

• The company may not be able to successfully effect a Business Combination.
• Proceeds deposited in the Trust Account could become subject to claims of the company's creditors, which could have priority over the claims of public shareholders.
• The Sponsor's ability to satisfy indemnification obligations is not assured, as its only assets are believed to be securities of the company.
• The company may need to raise additional capital through loans or investments from its Sponsor, shareholders, officers, directors, or third parties, and there is no assurance new financing will be available on commercially acceptable terms, if at all.
• Geopolitical instability from the ongoing Russia-Ukraine conflict and the Israel-Hamas conflict could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, supply chain interruptions, and increased cyber-attacks, adversely affecting the search for an initial Business Combination.
• The 2024 SEC SPAC Rules may materially affect the company's ability to negotiate and complete its Initial Business Combination and may increase the costs and time related thereto.
• Failure to complete an initial Business Combination within 36 months (as per Nasdaq rules) could lead to a suspension of trading and delisting from Nasdaq.
• Litigation involving members of management (specifically CEO Carter Glatt) unrelated to the company's business affairs could be detrimental to its reputation and indirectly negatively affect its business.

Future Outlook

The company intends to use funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence, and structure, negotiate, and complete a Business Combination. It expects to continue incurring significant costs in pursuit of its acquisition plans and cannot assure success. The 2024 SEC SPAC Rules may materially affect its ability to complete an Initial Business Combination and increase related costs and time. The company may seek to extend the Combination Period, which would require shareholder approval and could lead to redemptions, impacting its capitalization and Nasdaq listing.

Management Comments

• "We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud."
• "Management plans to address this uncertainty [going concern doubt] through a Business Combination."

Industry Context

Dune Acquisition Corporation II operates as a Special Purpose Acquisition Company (SPAC), a blank check company formed to effect a business combination. The industry is currently navigating new regulatory landscapes with the 2024 SEC SPAC Rules, which impose additional disclosure requirements and may increase the complexity, cost, and time associated with completing business combinations. The company's status as an emerging growth company allows it to take advantage of certain exemptions from reporting requirements, potentially differentiating its compliance burden from larger, non-emerging growth SPACs. The geopolitical risks mentioned (Russia-Ukraine, Israel-Hamas conflicts) highlight broader macroeconomic and political factors that can impact the global economy and financial markets, potentially affecting the viability and valuation of target businesses for SPACs.

Comparison to Industry Standards

• As a blank check company, direct operational comparisons to traditional operating companies are not applicable.
• The company's primary activity is seeking a business combination, which is standard for SPACs.
• The IPO proceeds of $143.75 million and the $10.00 per unit offering price are within typical ranges for SPACs of this size.
• The redemption value of $10.191 per share for Class A ordinary shares subject to possible redemption reflects the interest earned on the Trust Account, a common feature for SPACs.
• The 15-month completion window for a business combination is a standard timeframe, though Nasdaq rules mention a 36-month requirement for delisting.

Corporate Governance

Legal Proceedings

• Litigation involving CEO Carter Glatt and Captains Neck Holdings, LLC against dMY Technology Group, Inc., dMY Sponsor, LLC, Harry L. You, Niccolo de Masi, and Rush Street Interactive, originally filed in August 2020. Counterclaims include fraudulent misrepresentation, breach of contract, conversion, and unjust enrichment.
• A separate lawsuit filed by Captains Neck Holdings LLC on July 25, 2025, in New York State Court (Index No. 654422/2025) alleging improper fraudulent conveyance of Captains Neck's shares to 52 named defendants, including Harry L. You and Niccolo de Masi.
• Defendants Harry L. You and Niccolo de Masi submitted a Motion to Stay the fraudulent conveyance case on August 20, 2025.
• Captains Neck filed an Opposition to the Motion to Stay on November 3, 2025, arguing different claims and defendants.
• On November 5, 2025, three separate groups of named parties filed motions to dismiss the claims in the fraudulent conveyance lawsuit.

Related Party Transactions

• **Founder Shares**: On September 27, 2024, the Sponsor (Dune Acquisition Holdings II LLC) received 6,900,000 founder shares for $25,000. On April 22, 2025, the Sponsor surrendered 1,150,000 Class B ordinary shares, reducing the total to 5,750,000.
• **Private Placement Warrants**: The Sponsor purchased 2,000,000 Private Placement Warrants for $1.00 each, generating $2,000,000, simultaneously with the IPO closing on May 8, 2025.
• **Promissory Note**: The Sponsor agreed to loan the company up to $150,000 for IPO expenses. The company borrowed $150,000 by May 8, 2025, which was repaid at IPO close.
• **Administrative Services Agreement**: Commencing May 6, 2025, the company pays the Sponsor or an affiliate $15,000 per month for utilities and secretarial/administrative support. Incurred $45,000 for Q3 2025 and $75,000 for nine months ended September 30, 2025.
• **Working Capital Loans**: The Sponsor or an affiliate/officers/directors may loan funds for working capital or transaction costs, up to $1,500,000 convertible into private placement warrants. No such loans were outstanding as of September 30, 2025.

Stakeholder Impact

• **Shareholders**: Public shareholders have redemption rights if a business combination is not completed or if certain amendments are made. Their claims on the Trust Account could be subordinated to creditors. Founder shares are subject to lock-up and conversion adjustments.
• **Sponsor**: Holds founder shares and private placement warrants, has indemnification obligations, and provides administrative services and potential working capital loans.
• **Underwriters**: Received cash underwriting fees and are entitled to deferred underwriting fees payable from the Trust Account upon business combination completion.
• **Creditors**: Claims could have priority over public shareholders on Trust Account funds.

Next Steps

• Identify and evaluate target businesses for a Business Combination.
• Perform business due diligence on prospective target businesses.
• Travel to and from offices, plants, or similar locations of prospective target businesses or their representatives/owners.
• Review corporate documents and material agreements of prospective target businesses.
• Structure, negotiate, and complete a Business Combination.
• Address the uncertainty regarding its ability to continue as a going concern through a Business Combination.
• File a post-effective amendment to the IPO registration statement or a new registration statement covering Class A ordinary shares issuable upon exercise of warrants within 20 business days after closing a Business Combination.
• Maintain a current prospectus for Class A ordinary shares issuable upon warrant exercise until warrant expiration.

Key Dates

Recommendation

Dune Acquisition Corporation II is a SPAC that has successfully completed its IPO and is generating interest income from its Trust Account. However, it has not yet identified a target for a business combination, which is its core purpose. The explicit "going concern" warning and the ongoing litigation involving the CEO introduce significant uncertainties and risks. While the company has sufficient cash for current operations, the lack of a defined path to a business combination and the associated risks warrant a cautious "hold" recommendation. Investors should await concrete developments regarding a potential merger target and a clearer resolution of the going concern issue before considering further investment.

Keywords

SPAC, blank check company, business combination, IPO, warrants, trust account, SEC filing, 10-Q, financial results, corporate governance, risk factors, Dune Acquisition Corporation II, IPODU, IPOD, IPODW