10-Q: TLGY Acquisition Corp. Q2 2025: SPAC Nears StablecoinX Merger

TLGY Acquisition Corporation reports a significant net loss in Q2 2025, driven by warrant revaluation, but announces a definitive merger agreement with StablecoinX Assets Inc.

Summary

• TLGY Acquisition Corporation reported a net loss of $4,987,572 for the three months ended June 30, 2025, and $5,025,861 for the six months ended June 30, 2025.
• The primary driver of the net loss was a change in the fair value of derivative warrant liabilities, resulting in a loss of $4,779,495 for Q2 2025 and $5,232,409 for the six months ended June 30, 2025.
• Cash and investments held in the Trust Account significantly decreased from $44,332,605 as of December 31, 2024, to $6,072,600 as of June 30, 2025, primarily due to share redemptions.
• On April 15, 2025, 3,227,320 Class A ordinary shares were redeemed by Public Shareholders for approximately $12.12 per share, totaling $39,113,394.
• The Company announced a definitive Business Combination Agreement with StablecoinX Assets Inc. on July 21, 2025, which will result in StablecoinX Inc. becoming a publicly traded company.
• TLGY Acquisition Corporation was delisted from Nasdaq on December 9, 2024, due to not completing an initial business combination within 36 months of its IPO, and its securities now trade on the over-the-counter market.
• Mizuho Securities USA LLC, an underwriter from the IPO, waived $8,650,000 in deferred underwriting fees and forfeited 300,300 Class B ordinary shares on June 30, 2025.
• The Company had a working capital deficit of $5,066,605 as of June 30, 2025, and management has determined that substantial doubt exists about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The company faces severe financial distress, including a significant net loss, substantial trust account depletion due to redemptions, a working capital deficit, and delisting from Nasdaq, raising substantial doubt about its going concern ability. While a merger agreement with StablecoinX Assets Inc. has been announced, the company's precarious financial state and history of a terminated merger agreement indicate high execution risk.

Positives

• A definitive Business Combination Agreement was entered into with StablecoinX Assets Inc., providing a path for the SPAC to complete its objective.
• Mizuho Securities USA LLC waived $8,650,000 in deferred underwriting fees, reducing a significant liability upon the completion of a business combination.
• The Company recorded forgiveness of debt of $84,834 for the six months ended June 30, 2025.
• Current sponsors continue to provide financial support through working capital and time extension loans, demonstrating commitment to the Company's efforts to complete a merger.

Negatives

• The Company reported a substantial net loss of $4,987,572 for the three months and $5,025,861 for the six months ended June 30, 2025.
• Cash and investments in the Trust Account decreased significantly from $44.3 million to $6.1 million due to high shareholder redemptions.
• A working capital deficit of $5,066,605 as of June 30, 2025, indicates severe liquidity challenges.
• The Company was delisted from Nasdaq on December 9, 2024, due to its failure to complete a business combination within the required timeframe.
• Management has identified substantial doubt about the Company's ability to continue as a going concern.
• The previous merger agreement with Verde Bioresins, Inc. was terminated on March 12, 2024, indicating a prior failed attempt at a business combination.
• A significant non-cash loss of $5,232,409 was recognized from the change in fair value of derivative warrant liabilities for the six months ended June 30, 2025.

Risks

• The Company's ability to consummate the Business Combination with StablecoinX Assets Inc. by August 16, 2025 (or up to April 16, 2026 if extended) is uncertain.
• There is substantial doubt about the Company's ability to continue as a going concern if it cannot raise additional funds or complete an initial business combination.
• Global economic conditions and disruptions, including geopolitical events, international hostilities, public health crises, inflation, and central bank policies, may materially and adversely affect the ability to consummate a Business Combination.
• The ability to raise equity and debt financing may be impacted by increased market volatility or decreased market liquidity.
• The financial statements do not include any adjustments that might result from the outcome of the going concern uncertainties.
• The former sponsor's liability to indemnify the Trust Account for third-party claims may not apply if an executed waiver is deemed unenforceable against a third party.

Future Outlook

The Company intends to use substantially all funds held in the trust account to complete its initial business combination. It does not expect to generate operating revenues until after the completion of an initial business combination. Management has determined that if the Company is unable to raise additional funds or complete an initial business combination by August 16, 2025 (or up to April 16, 2026 if extended), it will cease operations and liquidate. The Company is also in the process of obtaining written confirmation from all other underwriters regarding the waiver of Deferred Underwriting Fees by Mizuho.

Management Comments

• We have neither engaged in any operations nor generated any revenues to date.
• We do not expect to generate any operating revenues until after completion of our initial business combination.
• We intend to use substantially all of the funds held in the trust account... to complete our initial business combination.
• We intend to use these funds [cash outside trust account] to primarily identify and evaluate target businesses, perform business due diligence... and structure, negotiate and complete a business combination.
• We have determined that if we are unable to raise additional funds to alleviate liquidity needs or complete an initial business combination by May 16, 2025 (or such later date as may be extended... then the Company will cease all operations, redeem the public shares and thereafter liquidate and dissolve.
• There is no assurance that our plans to consummate a Business Combination will be successful within the Combination Period.

Industry Context

TLGY Acquisition Corporation operates as a Special Purpose Acquisition Company (SPAC), a financial vehicle designed to raise capital through an IPO to acquire a private company and take it public. The termination of its previous merger agreement with Verde Bioresins and subsequent delisting from Nasdaq underscore the significant challenges and high failure rates prevalent in the SPAC market, particularly the pressure to secure and close a business combination within a strict timeframe. The recent announcement of a merger agreement with StablecoinX Assets Inc. indicates a strategic pivot towards the blockchain and stablecoin industry, aligning with a broader trend of SPACs targeting emerging technology sectors. The substantial shareholder redemptions observed in this filing are a common characteristic of the current SPAC environment, where investors frequently redeem shares if a compelling target is not identified or if market conditions are unfavorable, leading to a reduced trust size for the de-SPAC transaction.

Comparison to Industry Standards

• The high redemption rate of 3,227,320 Class A shares on April 15, 2025, significantly depleting the Trust Account, is consistent with the trend of elevated redemptions seen across many SPACs, especially those nearing their termination deadlines or after multiple extensions. This reduces the capital available for the target business, similar to other SPACs like Gores Holdings VI (GHVI) or Churchill Capital Corp IV (CCIV) which also experienced high redemptions in their de-SPAC processes.
• The delisting from Nasdaq due to the inability to complete a business combination within 36 months is a common outcome for SPACs that fail to secure or finalize a suitable target within their initial operational period, forcing them to trade on less liquid over-the-counter (OTC) markets, similar to what was observed with SPACs like Akazoo S.A. (AKAZ) or other 'fallen SPACs'.
• The Company's pivot to a new target, StablecoinX Assets Inc., after the termination of a prior merger agreement with Verde Bioresins, Inc., is a frequent occurrence in the SPAC industry as sponsors seek viable alternatives under time pressure, a strategy seen in various SPACs that have changed targets or pursued multiple LOIs before a definitive agreement.
• The reliance on sponsor loans for extensions and working capital is a standard practice for SPACs attempting to prolong their search period, reflecting a common financial strain when a business combination is delayed, comparable to how many SPACs, including those that ultimately liquidated, relied on sponsor capital to meet extension requirements.

Management Changes

Corporate Governance

Related Party Transactions

• The former sponsor received 5,750,000 Class B ordinary shares for $25,000 and transferred 30,000 Class B ordinary shares to each of three initial independent directors for an aggregate of $150.
• Current sponsors (CPC Funds) purchased 3,542,305 Founder Shares and 3,940,825 Private Placement Warrants from the former sponsor and other investors for an aggregate purchase price of $1.00.
• The administrative services agreement with the former sponsor, which entailed a $15,000 monthly fee, was terminated on June 19, 2024.
• Current sponsors (CPC Funds) have provided working capital loans and time extension funding loans to the Company, with outstanding balances of $2,405,842 and $2,468,483 respectively as of June 30, 2025.
• Young Cho, the current CEO and Executive Director of the Company, and Edward Chen, the managing member of the current sponsors, founded StablecoinX Assets Inc., the target for the business combination.
• Founder Shareholders entered into a Sponsor Support Agreement with the Company, Pubco, and SC Assets, agreeing to vote in favor of the Business Combination and to exchange certain shares and warrants for Earnout Shares contingent on post-closing performance.

Stakeholder Impact

• **Shareholders (Public):** Experienced significant dilution and reduction in their pro rata share of the Trust Account due to high redemptions. The delisting from Nasdaq impacts liquidity and market access. The proposed merger offers a potential path to a publicly traded operating company, but the Company's going concern status and the small remaining trust size present substantial risks.
• **Shareholders (Founder/Sponsors):** Have converted their Class B shares to Class A and will exchange Private Placement Warrants for Earnout Shares, aligning their long-term interests with the success of the combined entity. They have also provided critical funding to sustain the SPAC's operations and extensions.
• **Underwriters:** Mizuho Securities USA LLC, a key underwriter, waived a substantial $8.65 million in deferred underwriting fees and forfeited shares, indicating a significant concession to facilitate the Company's path forward. Confirmation from other underwriters is still pending.
• **Creditors (Lenders):** The current sponsors are significant creditors through their working capital and extension loans, the repayment of which is contingent on the successful completion of the business combination.
• **Target Company (StablecoinX Assets Inc.):** The merger provides a pathway to becoming a publicly traded company, but the limited remaining funds in the SPAC's Trust Account due to redemptions mean less cash proceeds from the SPAC for the combined entity's operations.

Next Steps

• Consummation of the Business Combination with StablecoinX Assets Inc. and its subsidiaries, resulting in StablecoinX Inc. becoming a publicly traded company.
• Obtaining written confirmation from all other underwriters regarding the waiver of Deferred Underwriting Fees by Mizuho Securities USA LLC.
• Potential further extension of the business combination period up to April 16, 2026, if necessary.
• Achievement of certain performance and price thresholds post-closing for the issuance of Earnout Shares to Founder Shareholders and Private Placement Warrant holders.

Key Dates

Recommendation

The Company is in a highly precarious financial position, evidenced by a substantial net loss, a significant working capital deficit, and an explicit 'going concern' warning from management. The massive redemptions have severely depleted the trust account, leaving minimal capital for the proposed business combination. While a merger agreement with StablecoinX Assets Inc. has been announced, the Company's delisting from Nasdaq and history of a terminated merger agreement underscore the extreme execution risk and the challenges of completing a successful de-SPAC. The stock is trading on the OTC market, implying poor liquidity and high volatility. Given the severe financial distress, high uncertainty surrounding the completion and success of the merger, and the inherent risks of a SPAC with a depleted trust, the downside risk appears to significantly outweigh any potential upside for investors.

Keywords

SPAC, Special Purpose Acquisition Company, TLGY Acquisition Corporation, StablecoinX Assets Inc., Business Combination, Merger, De-SPAC, Trust Account, Share Redemptions, Nasdaq Delisting, Financial Results, Quarterly Report, Q2 2025, SEC Filing, Corporate Governance, Risk Factors, Capital Raise, Promissory Notes, Warrants, Derivative Liabilities, Going Concern