8-K: Mountain Crest Acquisition Corp. V Secures $500,000 Unsecured Promissory Note from Sponsor

Mountain Crest Acquisition Corp. V obtained a $500,000 unsecured promissory note from its sponsor, Mountain Crest Global Holdings LLC, for working capital purposes.

Summary

• Mountain Crest Acquisition Corp. V (the Company) has secured an unsecured promissory note for up to $500,000 from its sponsor, Mountain Crest Global Holdings LLC.
• The note, issued on April 25, 2025, allows the Company to draw down funds as needed with written notice to the sponsor.
• The principal amount is due upon the earlier of the completion of an initial business combination or the liquidation of the Company.
• The note does not bear interest.
• Repayment is contingent on funds available outside of the Company's trust account if a business combination is not completed.
• The funds will be used for working capital purposes.
• The sponsor waives any claim to the trust account.
• The note will be forgiven if the Maker is unable to consummate an initial business combination, except to the extent of any funds held outside of the trust account.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The company has secured funding, but the terms are contingent on future events.

Positives

• The $500,000 unsecured promissory note provides Mountain Crest Acquisition Corp. V with additional working capital.
• The interest-free nature of the note reduces the financial burden on the company.
• The repayment terms are flexible, contingent on the success of a business combination or the availability of funds outside the trust account.
• The sponsor's waiver of claims to the trust account protects the funds intended for a business combination.

Negatives

• The note is unsecured, meaning the sponsor has no specific collateral to claim in case of default.
• Repayment is contingent on the availability of funds outside the trust account if a business combination is not consummated, which introduces uncertainty.

Risks

• The Company's ability to repay the note depends on the successful completion of a business combination or the availability of funds outside the trust account.
• If a business combination is not completed and funds outside the trust account are insufficient, the note may be forgiven, potentially impacting the sponsor's investment.
• Failure to make required payments within five business days from the Maturity Date constitutes an event of default.

Future Outlook

The Company intends to use the proceeds from the note for working capital purposes as it continues to pursue an initial business combination.

Management Comments

• Suying Liu, Chief Executive Officer, signed the report on behalf of Mountain Crest Acquisition Corp. V.

Industry Context

This type of financing is common for SPACs (Special Purpose Acquisition Companies) like Mountain Crest Acquisition Corp. V, as they often require bridge financing to cover operational expenses while seeking a merger target.

Comparison to Industry Standards

• Similar to other SPACs, Mountain Crest Acquisition Corp. V relies on its sponsor for financial support during the search for a target company.
• The terms of the promissory note, such as the interest-free nature and contingent repayment, are typical in the SPAC industry.
• Comparable companies often utilize similar financing structures to maintain operations while pursuing a business combination.

Related Party Transactions

• The issuance of the promissory note to Mountain Crest Global Holdings LLC, the Company's sponsor, constitutes a related party transaction.

Stakeholder Impact

• Shareholders: The financing provides the company with resources to continue operations and pursue a business combination.
• Sponsor: The sponsor provides financial support, demonstrating commitment to the company's success.
• Employees: The financing helps ensure the company can continue to operate and compensate its employees.

Next Steps

• Mountain Crest Acquisition Corp. V will continue to seek an initial business combination.
• The Company may draw down funds from the promissory note as needed for working capital.

Key Dates

Keywords

promissory note, business combination, working capital, sponsor, liquidation, unsecured, Mountain Crest Acquisition Corp. V, financing