10-Q: Mountain Crest V Reports Q3 Loss, Extends Merger Deadline

Mountain Crest Acquisition Corp. V reported a net loss for Q3 2025, extended its business combination deadline to November 2026, and continues to address going concern issues and internal control weaknesses.

Summary

• The company reported a net loss of $66,479 for the three months ended September 30, 2025, an improvement from a net loss of $130,870 in the prior year period.
• For the nine months ended September 30, 2025, the net loss worsened to $358,431 compared to $220,998 in the same period of 2024.
• Cash held outside the Trust Account decreased significantly to $41,172 as of September 30, 2025, from $116,658 at December 31, 2024.
• Total liabilities increased to $3,907,028 as of September 30, 2025, from $3,590,579 at December 31, 2024.
• The accumulated deficit grew to $(6,024,181) as of September 30, 2025, from $(5,666,069) at December 31, 2024.
• The company entered into a Business Combination Agreement with CUBEBIO Co., Ltd. on August 29, 2024, with an expected closing no later than May 15, 2025.
• The deadline for completing an initial business combination was extended to November 16, 2026, following a stockholder vote on November 4, 2025.
• 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 Market.
• Material weaknesses in internal controls over financial reporting were identified, including improper classification of assets/liabilities and errors in earnings per share, as well as untimely filing of past reports.
• The company has not filed or paid excise taxes for 2023 and 2024, incurring $31,135 in interest and penalties through September 30, 2025.
• Promissory notes from the Sponsor totaling $1,070,000 were outstanding as of September 30, 2025.

Sentiment

Score: 2

Explanation: The overall sentiment is highly negative due to the company's delisting from Nasdaq, explicit 'going concern' warning, worsening nine-month net loss, significant accumulated deficit, and identified material weaknesses in internal controls. While a business combination is proposed and the deadline extended, these severe challenges overshadow any minor improvements in quarterly net loss or operating cash flow.

Positives

• Net loss for the three months ended September 30, 2025, improved to $66,479 from $130,870 in the prior year period.
• General and administrative expenses decreased for both the three-month ($76,525 vs $202,182) and nine-month ($388,221 vs $431,169) periods compared to the prior year.
• Net cash used in operating activities improved to $455,486 for the nine months ended September 30, 2025, from $611,362 in the prior year.
• The company successfully secured an extension for the Business Combination Period until November 16, 2026.
• A Business Combination Agreement has been entered into with CUBEBIO Co., Ltd., providing a potential path forward for the SPAC.

Negatives

• Net loss for the nine months ended September 30, 2025, worsened to $358,431 from $220,998 in the prior year period.
• Cash held outside the Trust Account significantly decreased to $41,172 from $116,658.
• Total liabilities increased to $3,907,028 from $3,590,579, and the accumulated deficit grew to $(6,024,181).
• The company was delisted from Nasdaq on November 21, 2024, due to failure to complete a business combination within 36 months.
• Material weaknesses in internal controls over financial reporting were identified, including improper classification of assets/liabilities and errors in EPS.
• The company failed to timely file its Form 10-K for 2023 and Form 10-Q for Q1 and Q2 2024, though compliance was later regained.
• The company has not filed or paid excise taxes for 2023 and 2024, incurring $31,135 in interest and penalties through September 30, 2025.
• Interest earned on investments held in the Trust Account significantly decreased for both the three-month ($12,345 vs $76,529) and nine-month ($36,656 vs $225,179) periods.
• Management explicitly stated "substantial doubt about the Company's ability to continue as a going concern."
• Significant redemptions of public shares by stockholders occurred in connection with extension votes, reducing the number of outstanding public shares.

Risks

• Uncertainty regarding the ability to consummate the proposed Business Combination with CUBEBIO Co., Ltd. by the extended deadline of November 16, 2026.
• Mandatory liquidation and subsequent dissolution of the company if a Business Combination is not completed by the deadline, which raises substantial doubt about the company's ability to continue as a going concern.
• Insufficient funds available to operate the business prior to a Business Combination if actual costs exceed estimates, necessitating additional financing.
• Potential for the 1% excise tax on stock repurchases/redemptions under the Inflation Reduction Act of 2022, which could reduce cash available to complete a Business Combination.
• Unpaid excise taxes for 2023 and 2024, subject to additional interest and penalties (currently estimated at 10% interest per annum and a 5% underpayment penalty per month up to 25%).
• The impact of global conflicts (COVID-19 pandemic, Russia/Ukraine, Israel/Palestinian conflict) on the world economy and the company's financial condition, results of operations, and cash flows is not determinable.
• Identified material weaknesses in internal controls over financial reporting could adversely affect the company's ability to accurately record, process, summarize, and report financial information.
• As an early stage and emerging growth company, the company is subject to all the risks associated with such entities.

Future Outlook

The company intends to complete the proposed Business Combination with CUBEBIO Co., Ltd. by the extended deadline of November 16, 2026. Following the closing, PubCo Ordinary Shares are expected to be listed and traded on The Nasdaq Stock Market. Management acknowledges substantial doubt about the company's ability to continue as a going concern if the Business Combination is not consummated by the mandatory liquidation date.

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 Company's ability to continue as a going concern."
• "We intend to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that we will be able to consummate any Business Combination by November 16, 2026."
• "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

This filing highlights the inherent challenges and risks associated with Special Purpose Acquisition Companies (SPACs), particularly the pressure to complete a business combination within a specified timeframe. The delisting from Nasdaq due to failure to meet the 36-month deadline is a common issue for SPACs that struggle to identify or close a suitable target. The ongoing reliance on sponsor loans and the significant redemptions by public shareholders underscore the difficulty in maintaining investor confidence and liquidity in a prolonged search for a target. The proposed merger with CUBEBIO, a Korean company, indicates a continued trend of SPACs seeking international targets to bring them to the U.S. public markets, despite the increased regulatory scrutiny and market skepticism surrounding 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 significant deviation from the expected timeline for SPACs, which typically aim to complete a merger within 18-24 months. Many SPACs face similar delisting pressures if they cannot secure a deal.
• The substantial shareholder redemptions (e.g., 418,217 shares on November 8, 2024, and 28,981 shares on November 4, 2025) are common in the current SPAC market, where investors often redeem shares rather than participate in extensions or uncertain business combinations, leading to reduced trust account balances.
• The identified material weaknesses in internal controls and delayed financial filings are below industry best practices for public companies, indicating governance and operational challenges that can erode investor confidence.
• The reliance on related-party promissory notes from the Sponsor for working capital is typical for SPACs that have exhausted their initial operating capital and are nearing their liquidation deadline, but it also highlights the precarious financial position.

Corporate Governance

Related Party Transactions

• Promissory notes from the Sponsor totaling $1,070,000 were outstanding as of September 30, 2025, including the April 2024 Note ($300,000), August 2024 Note ($500,000), and April 2025 Note ($270,000).
• The company pays the Sponsor, affiliates, or advisors $10,000 per month for office space, utilities, and administrative support, totaling $30,000 for the three months and $90,000 for the nine months ended September 30, 2025.
• A $300,000 promissory note from the Sponsor was converted into 75,000 shares of Common Stock on September 13, 2023.
• A $600,000 principal amount from the 2023 and 2024 Notes from the Sponsor was converted into 150,000 shares of Common Stock on April 19, 2024.

Stakeholder Impact

• Shareholders: Face significant risks including reduced liquidity due to delisting, potential loss of investment if a business combination is not completed, and dilution from potential future capital raises. Significant redemptions indicate declining confidence.
• Creditors: Increased credit risk due to the 'going concern' warning, rising liabilities, and unpaid excise taxes with penalties.
• Employees (Management/Sponsor): The Sponsor continues to provide significant financial support through loans, indicating ongoing commitment but also substantial financial exposure to the company's success or failure.
• Customers/Suppliers: Not directly impacted as the company is a blank check company with no operating revenues.

Next Steps

• Complete the proposed Business Combination with CUBEBIO Co., Ltd. by November 16, 2026.
• Address and remediate identified material weaknesses in internal controls over financial reporting.
• File and pay outstanding excise taxes for 2023 and 2024, including accrued interest and penalties.
• Potentially raise additional capital through loans or investments to fund working capital needs and transaction costs for the Business Combination.

Key Dates

Recommendation

The company faces severe existential threats, including delisting from Nasdaq, an explicit 'going concern' warning, and a history of operational and financial reporting weaknesses. While a business combination with CUBEBIO is proposed and the deadline extended, the high level of uncertainty, significant accumulated deficit, and ongoing reliance on related-party funding make the investment highly speculative. The failure to address excise tax liabilities and the associated penalties further underscore the company's precarious position. The move to the OTC Pink Market significantly diminishes liquidity and investor appeal, making it an unsuitable investment for most portfolios.

Keywords

SPAC, blank check company, CUBEBIO, business combination, delisting, Nasdaq, OTC Pink Market, 10-Q, financial results, going concern, internal controls, excise tax, redemption, promissory note, acquisition