10-Q: Mountain Crest Acquisition Corp. V Faces Delisting Despite Ongoing Merger Efforts
Quarterly Report
Mountain Crest Acquisition Corp. V reports a net loss for Q1 2025 and navigates delisting challenges while pursuing a business combination with CUBEBIO Co., Ltd.
Summary
- Mountain Crest Acquisition Corp. V reported a net loss of $181,378 for the three months ended March 31, 2025, compared to a net loss of $25,537 for the same period in 2024.
- General and administrative expenses increased to $191,225 from $83,769 year-over-year.
- The company's cash position decreased from $116,658 at the end of 2024 to $27,943 as of March 31, 2025.
- The company is pursuing a business combination with CUBEBIO Co., Ltd., with a target closing date no later than May 15, 2025.
- The company's securities were delisted from Nasdaq and are now trading on the over-the-counter market.
- The company has until November 16, 2025, to complete a business combination.
- The company has issued several promissory notes to its sponsor to fund operations.
- The company has identified material weaknesses in internal controls over financial reporting.
Sentiment
Score: 3
Explanation: The document presents a negative outlook due to the company's net loss, delisting from Nasdaq, and reliance on sponsor funding. While the company is pursuing a business combination, there are significant risks and uncertainties.
Positives
- The company is actively pursuing a business combination with CUBEBIO Co., Ltd.
- The sponsor continues to provide financial support through promissory notes.
- The company has regained compliance with Nasdaq listing rules in the past, demonstrating an ability to address deficiencies.
Negatives
- The company reported a net loss of $181,378 for Q1 2025.
- The company's cash position is low, with only $27,943 available outside the trust account.
- The company's securities were delisted from Nasdaq.
- The company has identified material weaknesses in internal controls over financial reporting.
- The company is subject to excise tax liability related to share redemptions.
Risks
- The company may not be able to complete a business combination by November 16, 2025, leading to liquidation.
- The company's low cash position may limit its ability to fund operations and pursue a business combination.
- The company's reliance on sponsor funding may not be sustainable.
- The company's material weaknesses in internal controls could lead to financial misstatements.
- The company is subject to risks associated with the COVID-19 pandemic, the conflict in Ukraine, and the conflict in Israel.
- The company is subject to excise tax liability related to share redemptions, which could reduce cash available for a business combination.
Future Outlook
The company is focused on completing its business combination with CUBEBIO Co., Ltd. by May 15, 2025, or by November 16, 2025, at the latest. If the company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Companys remaining stockholders and the Companys board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Companys obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Management Comments
- Management continues to evaluate the impact of the COVID-19 pandemic.
- Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution, raises substantial doubt about the Companys ability to continue as a going concern.
Industry Context
The report reflects the challenges faced by many SPACs in the current market, including difficulties in completing business combinations and maintaining listing requirements. The company's efforts to extend its timeline and secure funding are common strategies in the SPAC industry.
Comparison to Industry Standards
- Given the company's small size and specific circumstances, direct comparisons to industry standards are limited.
- However, the company's efforts to extend its timeline and secure funding are common strategies in the SPAC industry, as many SPACs face similar challenges in completing business combinations.
- The company's delisting from Nasdaq is a significant setback, as it reduces the company's visibility and access to capital.
- The company's material weaknesses in internal controls are a concern, as they could lead to financial misstatements and regulatory scrutiny.
Related Party Transactions
- The company has entered into several related party transactions with its sponsor, including issuing promissory notes and an administrative support agreement.
Stakeholder Impact
- Shareholders face the risk of liquidation if the company is unable to complete a business combination.
- Employees may be impacted by the company's financial difficulties and potential liquidation.
- The company's suppliers and creditors face the risk of non-payment if the company is unable to complete a business combination.
Next Steps
- The company needs to complete its business combination with CUBEBIO Co., Ltd. by May 15, 2025, or by November 16, 2025, at the latest.
- The company needs to address its material weaknesses in internal controls over financial reporting.
- The company needs to secure additional funding to support its operations and complete its business combination.
Key Dates
| Date | Description |
|---|---|
| 2021-04-08 | Company incorporated in Delaware. |
| 2021-11-12 | Registration statement for Initial Public Offering declared effective. |
| 2021-11-16 | Company consummated Initial Public Offering. |
| 2021-11-18 | Underwriters fully exercised their over-allotment option. |
| 2022-10-19 | Combination Period under its Charter was extended for a period of 3 months from November 16, 2022 to February 16, 2023. |
| 2022-12-20 | Company entered into an amendment to the Investment Management Trust Agreement, extending the Combination Period from February 16, 2023 to May 16, 2023. |
| 2023-02-15 | Company deposited $300,000 into the Trust Account. |
| 2023-04-03 | Company received a notice from the Nasdaq Stock Market LLC stating that the Companys listed securities failed to satisfy the $ 50,000,000 market value of listed securities (MVLS) requirement for continued listing. |
| 2023-05-12 | Company held a special meeting of stockholders, at which the Companys stockholders approved an amendment (the Extension Amendment) to the Companys Charter, giving the Company the right to extend Combination Period from May 16, 2023 to February 16, 2024. |
| 2023-05-18 | Company received a second notice (the May 18, 2023 Notice) from Nasdaq, stating that the Company no longer satisfies the requirement to maintain a minimum of 1,100,000 publicly held shares (the PHS Requirement) for continued listing on the Global Market. |
| 2023-06-27 | Company received a third notice from Nasdaq stating that the Companys listed securities failed to maintain a minimum Market Value of Publicly Held Shares (MVPHS) of $ 15,000,000 which is a requirement for continued listing on the Global Market. |
| 2023-08-21 | Company filed the No. 3 amendment to the Charter (a) to modify the terms and extend the Combination Period to November 16, 2024. |
| 2023-10-23 | Company received approval (the Approval) from the Nasdaq Listing Qualifications Department of the Nasdaq that the Companys application to transfer the listing of its Common Stock, units and rights from the Global Market to the Capital Market has been approved. |
| 2023-10-27 | Common Stock, units and rights will be transferred to the Capital Market at the opening of business. |
| 2023-11-09 | Company received a notice from Nasdaq stating that the staff determined that the Company met all the continued listing standards to phase down, including the $ 35,000,000 MVLS standard for the Capital Market. |
| 2023-12-13 | Company received a notice from the Nasdaq Stock Market LLC (Nasdaq), stating that the Companys listed securities failed to comply with the $ 35,000,000 market value of listed securities (MVLS) requirement for continued listing on The Nasdaq Capital Market. |
| 2024-05-21 | For the last 10 consecutive business days, from May 21, 2024 to June 4, 2024, the Companys MVLS has been $ 35,000,000 or greater. |
| 2024-06-05 | Company received a notification letter from Nasdaq stating that for the last 10 consecutive business days, from May 21, 2024 to June 4, 2024, the Companys MVLS has been $ 35,000,000 or greater. |
| 2024-07-18 | Company received a notice (the Notice) from The Nasdaq Stock Market LLC (Nasdaq) notifying the Company that, because the Company is delinquent in filing its Form 10-K and Form 10-Q for the quarter ended March 31, 2024, the Company no longer complies with Nasdaq Listing Rule 5250(c)(1) (the Listing Rule). |
| 2024-08-29 | Company entered into that certain Business Combination Agreement (as may be amended, supplemented or otherwise modified from time to time, the BCA), by and between the Company and CUBEBIO Co., Ltd. |
| 2024-09-11 | Company received a letter from Nasdaq that stated based on the August 26, 2024 filing of the Companys Form 10-K for the year ended December 31, 2023, the Staff has determined the Company complies with the Listing Rule and that the matter is now closed. |
| 2024-10-04 | Company filed the June 30, 2024 10-Q with the SEC. |
| 2024-10-30 | Company received a letter from Nasdaq stating that the Company had regained compliance with the Listing Rule and that the matter is now closed. |
| 2024-11-08 | Company held an annual meeting of stockholders (the Annual Meeting), in which the stockholders approved Amendment No. 4 to the Companys Amended and Restated Certificate of Incorporation (the Charter). |
| 2024-11-14 | Company received a notice (the Notice) from the Nasdaq stating that the Company did not comply with Nasdaq Interpretive Material IM-5101-2, and that its securities are now subject to delisting. |
| 2024-11-21 | Companys securities was suspended from trading on Nasdaq at the opening of business. |
| 2025-03-31 | End of the reporting period for the financial statements. |
| 2025-04-11 | Company filed a Form 25-NSE with the Securities and Exchange Commission, which removed the Companys securities from listing and registration on the Nasdaq Stock Market. |
| 2025-05-15 | Target date for closing the business combination with CUBEBIO Co., Ltd. |
| 2025-11-16 | Deadline for the company to complete a business combination. |
Keywords
business combination, SPAC, CUBEBIO, delisting, promissory notes, liquidity, redemption, trust account, financial statements, internal controls
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