10-Q: Mountain Crest V Faces Liquidation Risk Amid SPAC Delisting

Mountain Crest Acquisition Corp. V, a delisted SPAC, reported increased net losses and significant related-party debt while pursuing a business combination with CUBEBIO by November 2025, raising substantial doubt about its going concern.

Summary

• Reported a net loss of $110,574 for the three months ended June 30, 2025, compared to $64,591 for the same period in 2024.
• Net loss for the six months ended June 30, 2025, was $291,952, significantly higher than $90,128 for the six months ended June 30, 2024.
• Cash held outside the Trust Account decreased to $25,321 as of June 30, 2025, from $116,658 at December 31, 2024.
• Total liabilities increased to $3,838,304 as of June 30, 2025, from $3,590,579 at December 31, 2024.
• Promissory notes from related parties (Sponsor) increased to $920,000 as of June 30, 2025, from $690,000 at December 31, 2024.
• The company was delisted from Nasdaq on November 21, 2024, for failing to complete a business combination within 36 months of its IPO and now trades on the OTC Pink Marketplace.
• A Business Combination Agreement with CUBEBIO Co., Ltd. was entered into on August 29, 2024, with an expected closing by November 16, 2025.
• Management has identified substantial doubt about the company's ability to continue as a going concern if the Business Combination is not consummated by November 16, 2025.
• Accrued excise tax liability of $212,457 as of June 30, 2025, including $14,765 in interest and penalties for the six months ended June 30, 2025, for which no return has been filed nor payment made for 2023 and 2024.

Sentiment

Score: 2

Explanation: The company faces severe existential threats, including substantial doubt about its going concern, delisting from Nasdaq, and a rapidly approaching deadline for a business combination that is not assured. Financial performance shows increasing losses and dwindling cash outside the trust account, coupled with significant related-party debt and unaddressed tax liabilities. The material weaknesses in internal controls further compound the risks. The overall financial health and operational stability are very poor.

Positives

• Entered into a Business Combination Agreement with CUBEBIO Co., Ltd. on August 29, 2024, providing a potential path to completing its SPAC mandate.
• Regained compliance with Nasdaq's MVLS rule on June 5, 2024, and with the Listing Rule for timely filings on October 30, 2024, prior to its eventual delisting.
• The Sponsor continues to provide working capital loans, demonstrating ongoing support for the company's operations and pursuit of a business combination.

Negatives

• Increased net loss for both the three and six months ended June 30, 2025, compared to the prior year periods, indicating deteriorating financial performance.
• Delisted from Nasdaq on November 21, 2024, due to failure to complete a business combination within the required timeframe, resulting in trading on the less liquid OTC Pink Marketplace.
• Significant decrease in cash held outside the Trust Account, from $116,658 at December 31, 2024, to $25,321 at June 30, 2025, highlighting liquidity challenges.
• Accumulated deficit grew to $5,957,702 as of June 30, 2025, from $5,666,069 at December 31, 2024.
• Outstanding promissory notes to related parties (Sponsor) increased to $920,000, indicating reliance on insider financing.
• Failure to file excise tax returns for 2023 and 2024 and non-payment of the accrued excise tax liability of $212,457, which is incurring additional interest and penalties.
• Identified material weaknesses in internal controls over financial reporting, including issues with financial statement classification and timely filing of reports.

Risks

• **Going Concern Uncertainty**: Substantial doubt exists about the company's ability to continue as a going concern if it fails to consummate the proposed Business Combination by November 16, 2025.
• **Business Combination Risk**: No assurance that the company will successfully effect a Business Combination with CUBEBIO, which could lead to mandatory liquidation.
• **Liquidation Risk**: If a Business Combination is not completed by November 16, 2025, the company will cease operations, redeem public shares, and dissolve, potentially resulting in a per-share value less than the IPO price.
• **Delisting Impact**: Trading on the OTC Pink Marketplace may result in reduced liquidity and investor interest compared to Nasdaq.
• **Excise Tax Liability**: The company has an outstanding 1% excise tax liability on stock redemptions, which is accruing interest and penalties, and has not yet been paid or filed for 2023 and 2024.
• **Internal Control Weaknesses**: Material weaknesses in internal controls over financial reporting could lead to further financial misstatements or reporting delays.
• **Reliance on Sponsor Financing**: Continued reliance on the Sponsor for working capital loans, which may not always be available on commercially acceptable terms.
• **Geopolitical Risks**: Global conflicts (Russia-Ukraine, Israel-Palestine) and related sanctions could negatively impact the world economy and the company's operations, though specific impact is not yet determinable.
• **COVID-19 Impact**: The pandemic could still negatively affect the company's financial position, results of operations, and search for a target company.

Future Outlook

The company intends to complete the proposed Business Combination with CUBEBIO Co., Ltd. before the mandatory liquidation date of November 16, 2025. PubCo Ordinary Shares are expected to be listed and traded on The Nasdaq Stock Market following the closing of the Business Combination. However, there is no assurance that the Business Combination will be consummated by this deadline.

Management Comments

• 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.
• The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any Business Combination by November 16, 2025.
• We plan to continue to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications.

Industry Context

The filing highlights the inherent risks and challenges faced by Special Purpose Acquisition Companies (SPACs), particularly the pressure to complete a business combination within a strict timeframe. The company's delisting from Nasdaq and subsequent trading on the OTC Pink Market is a common outcome for SPACs that fail to merge within the regulatory window, reflecting a broader trend of increased scrutiny and difficulty for SPACs in the current market environment. The repeated extensions and redemptions also illustrate the challenges in securing and maintaining investor confidence in SPACs.

Comparison to Industry Standards

• The company's delisting from Nasdaq due to failure to complete a business combination within 36 months (IM-5101-2) is a direct consequence of not meeting a fundamental SPAC industry standard for timely deal completion.
• The repeated extensions of the business combination deadline and significant share redemptions (e.g., 4,965,892 shares in Dec 2022, 1,405,134 in May 2023, 418,217 in Nov 2024) indicate a struggle to find and close a suitable target, which is a common challenge for many SPACs, especially in a more competitive and regulated market.
• The reliance on promissory notes from the Sponsor for working capital is typical for SPACs that have exhausted their initial capital outside the trust account while searching for a target.
• The proposed business combination with CUBEBIO Co., Ltd., a Korea-based company, aligns with the SPAC's stated intention to focus its search on private companies in North America and Asia Pacific regions.
• The identified material weaknesses in internal controls and delayed filings, while remediated, reflect operational challenges that can be more pronounced in smaller, early-stage public companies like SPACs.

Corporate Governance

Related Party Transactions

• Promissory notes from the Sponsor (Mountain Crest Global Holdings LLC) for working capital, totaling $920,000 outstanding as of June 30, 2025. These notes are non-interest bearing and due upon business combination or liquidation (repaid only from funds outside trust account).
• Administrative support agreement to pay the Sponsor, affiliates, or advisors up to $10,000 per month for office space, utilities, and administrative support.
• Conversion of a $300,000 promissory note from the Sponsor into 75,000 shares of Common Stock on September 13, 2023.
• Conversion of $600,000 from 2023 and 2024 promissory notes from the Sponsor into 150,000 shares of Common Stock on April 19, 2024.

Stakeholder Impact

• **Shareholders**: Public shareholders have experienced significant redemptions, delisting from Nasdaq, and a move to the less liquid OTC Pink Market. There is substantial doubt about the company's going concern, and the per-share value upon liquidation could be less than the IPO price.
• **Sponsor**: The Sponsor continues to provide financial support through promissory notes, indicating a vested interest in completing the business combination, but also bears the risk of these loans being repaid only from funds outside the trust account if a combination fails.
• **CUBEBIO Co., Ltd.**: The target company is awaiting the completion of the business combination, which is subject to the SPAC's ability to meet its deadline and resolve its financial and operational uncertainties.
• **Creditors**: The company has outstanding liabilities, including deferred underwriting fees and excise taxes, which could be impacted by the company's ability to complete a business combination or its eventual liquidation.

Next Steps

• Consummate the Business Combination with CUBEBIO Co., Ltd. by November 16, 2025.
• Address the material weaknesses in internal controls over financial reporting.
• File and pay the outstanding excise tax liability for 2023 and 2024, including accrued interest and penalties.
• Potentially raise additional capital to fund operations and transaction costs.
• Work towards listing PubCo Ordinary Shares on The Nasdaq Stock Market after the Business Combination.

Key Dates

Recommendation

The company faces severe existential threats, including substantial doubt about its going concern, delisting from Nasdaq, and a rapidly approaching deadline for a business combination that is not assured. Financial performance shows increasing losses and dwindling cash outside the trust account, coupled with significant related-party debt and unaddressed tax liabilities. The material weaknesses in internal controls further compound the risks. Given these factors, the likelihood of a positive outcome for public shareholders is extremely low, making it a strong sell.

Keywords

SPAC, blank check company, CUBEBIO, business combination, delisting, OTC Pink Market, financial results, liquidation risk, going concern, promissory notes, related party transactions, SEC filing, 10-Q, Mountain Crest Acquisition Corp. V, MCAG, excise tax