dMY Squared Technology (DMYY) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Financial Statements Presents unaudited condensed financial statements and notes covering organization, accounting policies, related parties, commitments, and fair value Condensed Balance Sheets Balance Sheet Data | Metric | June 30, 2024 (unaudited) ($) | December 31, 2023 ($) | |:---|:---|:---| | Assets: ||| | Cash | $405,955 | $9 | | Prepaid expenses | $94,375 | $155,625 | | Total current assets | $500,330 | $155,634 | | Investments held in Trust Account | $24,663,767 | $67,545,266 | | Total Assets | $25,164,097 | $67,700,900 | | Liabilities: ||| | Accounts payable | $322,136 | $505,955 | | Accrued expenses | $693,285 | $577,446 | | Convertible note—related parties | $341,667 | — | | Advances from related parties | $215,566 | $185,121 | | Corporate tax payable | $267,470 | $374,267 | | Income tax payable | $286,840 | $511,031 | | Total current liabilities | $2,126,964 | $2,153,820 | | Overfunding loans | $947,850 | $947,850 | | Derivative warrant liabilities | $906,630 | $906,630 | | Deferred underwriting commissions | $2,211,650 | $2,211,650 | | Total Liabilities | $6,193,094 | $6,219,950 | | Shareholders' Deficit: ||| | Class B common stock | $158 | $158 | | Accumulated deficit | $(5,038,612) | $(5,079,176) | | Total shareholders' deficit | $(5,038,454) | $(5,079,018) | | Total Liabilities and Shareholders' Deficit | $25,164,097 | $67,700,900 | Unaudited Condensed Statements of Operations Statements of Operations Data | Metric | Three Months Ended June 30, 2024 ($) | Three Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | |:---|:---|:---|:---|:---|\n| General and administrative expenses | $230,197 | $211,272 | $607,780 | $741,507 | | Corporate tax expenses | $182,903 | $40,537 | $267,211 | $120,220 | | Loss from operations | $(413,100) | $(251,809) | $(874,991) | $(861,727) | | Interest income on operating account | $156 | $8 | $247 | $43 | | Investment income from Trust Account | $323,704 | $668,589 | $669,921 | $1,352,799 | | Change in fair value of derivative warrant liabilities | — | $906,620 | — | $1,511,040 | | Total other income | $323,860 | $1,575,217 | $670,168 | $2,863,882 | | Net income (loss) before provision for income taxes | $(89,240) | $1,323,408 | $(204,823) | $2,002,155 | | Provision for income taxes | $231,821 | $132,080 | $284,692 | $283,835 | | Net income (loss) | $(321,061) | $1,191,328 | $(489,515) | $1,718,320 | | Basic and diluted net income (loss) per share, Class A common stock | $(0.08) | $0.15 | $(0.12) | $0.22 | | Basic and diluted net income (loss) per share, Class B common stock | $(0.08) | $0.15 | $(0.12) | $0.22 | Unaudited Condensed Statements of Changes in Shareholders' Deficit Shareholders' Deficit Data | Metric | December 31, 2023 ($) | March 31, 2024 (unaudited) ($) | June 30, 2024 (unaudited) ($) | |:---|:---|:---|:---|\n| Total Shareholders' Deficit | $(5,079,018) | $(4,794,640) | $(5,038,454) | | Increase in redemption value of Class A common stock due to extension | $(191,667) (Q1) | $(150,000) (Q2) | | | Remeasurement for Class A common stock subject to redemption | $644,499 (Q1) | $227,247 (Q2) | | | Net loss | $(168,454) (Q1) | $(321,061) (Q2) | | Unaudited Condensed Statements of Cash Flows Cash Flow Data | Cash Flow Activity | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | |:---|:---|:---|\n| Net cash used in operating activities | $(1,299,267) | $(600,345) | | Net cash provided by investing activities | $43,551,420 | $304,000 | | Net cash (used in) provided by financing activities | $(41,846,207) | $57,812 | | Net change in cash | $405,946 | $(238,533) | | Cash - Beginning of the period | $9 | $238,539 | | Cash - End of the period | $405,955 | $6 | | Supplemental disclosure of noncash activities: Accounts payable paid by related parties | $6,000 | $34,320 | | Supplemental cash flow information: Cash paid for income taxes | $508,883 | $109,000 | Notes to Unaudited Condensed Financial Statements Note 1—Description of Organization and Business Operations DMY Squared Technology Group, Inc. is a blank check company formed for a business combination, operating as an emerging growth company - The Company is a blank check company formed to effect a business combination, and as of June 30, 2024, had not commenced any operations, generating non-operating income from its Trust Account[12][13] - The Company's shareholders approved an amendment to extend the Business Combination period up to December 29, 2025, requiring monthly contributions from the Sponsor, which led to the redemption of 3,980,414 Public Shares (approximately $42 million) on January 4, 2024[22] - Management has determined that the Company's liquidity condition, mandatory liquidation risk if a Business Combination does not occur, and potential subsequent dissolution raise substantial doubt about its ability to continue as a going concern[27][30] Note 2—Summary of Significant Accounting Policies This note outlines the company's accounting practices, including its basis of presentation under GAAP for interim financial information, its status as an emerging growth company electing to delay new accounting standards, and policies for cash, credit risk, investments in the Trust Account, fair value measurements, warrant liabilities, and the convertible note - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, allowing it to adopt standards at the same time as private companies[37][38] - Investments held in the Trust Account are comprised of U.S. government securities or money market funds, classified as trading securities or recognized at fair value, with gains/losses included in interest income[41] - Public Warrants and Private Placement Warrants are recognized as derivative liabilities at fair value, subject to re-measurement each reporting period, with changes recognized in the statements of operations[45] - Public Shares with redemption features are classified outside of permanent equity in accordance with ASC 480, with changes in carrying value impacting additional paid-in capital and accumulated deficit[49] - The Company adopted ASU 2022-03 effective January 1, 2024, which clarifies fair value measurement of equity securities subject to contractual sale restrictions, with no material impact on its financial statements[57] Note 3—Initial Public Offering This note details the Initial Public Offering (IPO) completed on October 4, 2022, including the number of units sold, gross proceeds, and associated offering costs - The Company consummated its Initial Public Offering on October 4, 2022, selling 6,000,000 units at $10.00 per unit, generating $60.0 million in gross proceeds[58] - Offering costs totaled approximately $3.7 million, including $2.1 million for deferred underwriting commissions[58] - The underwriter partially exercised its over-allotment option, purchasing an additional 319,000 units for approximately $3.2 million[58] Note 4—Related Party Transactions This note describes various transactions with related parties, including the issuance and forfeiture of Founder Shares, the sale of Private Placement Warrants to the Sponsor, and several loan arrangements - The Sponsor purchased 2,875,000 Founder Shares for $25,000, subsequently forfeiting 1,295,000 shares, resulting in 1,579,750 Founder Shares outstanding as of June 30, 2024[59] - The Company consummated the Private Placement of 2,884,660 warrants to the Sponsor at $1.00 per warrant, generating approximately $2.8 million in proceeds[61] - The Sponsor extended Overfunding Loans totaling $947,850 to be deposited in the Trust Account, repayable or convertible into Class A Shares upon Business Combination[66] - A Convertible Promissory Note for up to $1.75 million was issued to an affiliate of the Sponsor, with $341,667 borrowed from January to June 2024 and an additional $50,000 in July 2024, all contributed to the Trust Account for extensions[67][68] - The Company pays the Sponsor $10,000 per month for administrative services, with an outstanding balance of $130,000 as of June 30, 2024[69] Note 5—Commitments and Contingencies This note details the company's commitments, including registration rights granted to holders of Founder Shares, Private Placement Warrants, and other convertible securities - Holders of Founder Shares, Private Placement Warrants, and warrants from working capital loans/contributions are entitled to registration rights, with the Company bearing filing expenses[71] - The underwriter received an upfront discount of approximately $0.8 million and is entitled to an additional deferred underwriting commission of $2.1 million, payable from the Trust Account only upon completion of a Business Combination[73] Note 6—Derivative Warrant Liabilities This note provides details on the 6,044,160 outstanding Public and Private Placement Warrants, including their exercisability conditions, exercise price ($11.50 per share), and potential adjustments - As of June 30, 2024, the Company had 6,044,160 warrants outstanding, comprising 3,159,500 Public Warrants and 2,884,660 Private Placement Warrants[74] - Public Warrants become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, provided an effective registration statement is in place[74] - The Company may redeem Public Warrants for $0.01 per warrant if the Public Share closing price equals or exceeds $18.00 for 20 trading days within a 30-day period[78] - The Company may also redeem Public Warrants for $0.10 per warrant (with cashless exercise option) if the Public Share closing price equals or exceeds $10.00 for 20 trading days within a 30-day period[79] Note 7—Shareholders' Deficit This note details the company's authorized and outstanding share capital, including Preferred Stock (none issued), Class A Common Stock (2,338,586 shares outstanding and subject to redemption as of June 30, 2024), and Class B Common Stock (1,579,750 shares outstanding) - As of June 30, 2024, there were 2,338,586 Class A Shares issued and outstanding, all subject to possible redemption and classified outside of permanent equity[82] - As of June 30, 2024, there were 1,579,750 Class B Shares issued and outstanding, which have the right to elect all directors prior to a Business Combination and can convert into Class A Shares on a one-for-one basis[83][84][85] Note 8—Fair Value Measurements This note provides a breakdown of the company's financial liabilities measured at fair value, categorized by the three-tier fair value hierarchy (Level 1, 2, and 3) Fair Value Measurements Summary | Description | Level 1 (June 30, 2024) ($) | Level 2 (June 30, 2024) ($) | Level 3 (June 30, 2024) ($) | |:---|:---|:---|:---|\n| Investments held in Trust Account - U.S. Treasury Securities | $24,663,767 | — | — | | Derivative warrant liabilities - Public Warrants | — | $473,930 | — | | Derivative warrant liabilities - Private Warrants | — | — | $432,700 | Fair Value Measurements Summary | Description | Level 1 (December 31, 2023) ($) | Level 2 (December 31, 2023) ($) | Level 3 (December 31, 2023) ($) | |:---|:---|:---|:---|\n| Investments held in Trust Account - U.S. Treasury Securities | $67,545,266 | — | — | | Derivative warrant liabilities - Public Warrants | — | $473,930 | — | | Derivative warrant liabilities - Private Warrants | — | — | $432,700 | - The fair value measurement for Public Warrants was transferred to Level 2 as of June 30, 2024, due to low trading volume, while Private Placement Warrants are valued using a Monte Carlo simulation method with Level 3 inputs[88][89] Level 3 Fair Value Inputs | Level 3 Fair Value Inputs | June 30, 2024 | December 31, 2023 | |:---|:---|:---|\n| Exercise price | $11.50 | $11.50 | | Stock price | $10.72 | $10.60 | | Volatility | 5.4% | 5.1% | | Risk-free rate | 4.24% | 3.77% | | Dividend yield | 0.0% | 0.0% | Note 9— Subsequent Events This note discloses events occurring after June 30, 2024, including additional borrowings from related parties and a further draw on the Convertible Note - Subsequent to June 30, 2024, the Company borrowed an additional $6,000 from related parties, increasing the total outstanding advances to approximately $221,000[92] - An additional $50,000 was borrowed in July 2024 under the Convertible Note, increasing the total outstanding to $391,667, with all proceeds contributed to the Trust Account to extend the Combination Period to August 29, 2024[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, and outlook, covering IPO, liquidity, going concern, risks, and accounting policies Cautionary Note Regarding Forward-Looking Statements - The report includes forward-looking statements based on current expectations, which are subject to known and unknown risks, uncertainties, and assumptions that may cause actual results to differ materially[93] - Readers are advised to refer to 'Item 1A. Risk Factors' in the Annual Report on Form 10-K for the year ended December 31, 2023, for important factors that could cause actual results to differ[93] Overview - The Company is a blank check company with no operations as of June 30, 2024, focused on identifying a business combination, and generates non-operating income from its Trust Account[94] - The Initial Public Offering generated $60.0 million, with approximately $64.1 million placed in the Trust Account, invested in U.S. government securities or money market funds[95][99] - Shareholders approved an extension of the Business Combination period until December 29, 2025, requiring monthly contributions from the Sponsor and resulting in approximately $42.0 million in Public Share redemptions on January 4, 2024[102] - A convertible promissory note for up to $1.75 million was issued to an affiliate of the Sponsor to fund extensions, with $391,667 drawn and deposited into the Trust Account as of July 2024[105][106] Liquidity and Capital Resources; Going Concern Consideration - As of June 30, 2024, the Company had approximately $406,000 in cash and a working capital deficit of approximately $1.6 million[108] - Liquidity needs have been met through net proceeds from the IPO and Private Placement held outside the Trust Account, and advances from related parties (approximately $216,000 outstanding as of June 30, 2024, increasing to $222,000 post-period)[109] - Management has determined that the Company's liquidity condition, mandatory liquidation risk, and potential dissolution raise substantial doubt about its ability to continue as a going concern[112] Risks and Uncertainties - United States and global markets are experiencing volatility and disruption due to geopolitical instability from the Russia-Ukraine and Israel-Hamas conflicts[113] - These factors could adversely affect the Company's search for an initial Business Combination and any target business[114] Results of Operations Statements of Operations Data | Metric | Three Months Ended June 30, 2024 ($) | Three Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | |:---|:---|:---|:---|:---|\n| Net income (loss) | $(321,000) | $1.2 million | $(490,000) | $1.7 million | | General and administrative expenses | $230,000 | $211,000 | $608,000 | $742,000 | | Tax expenses | $415,000 | $172,000 | $937,000 | $404,000 | | Interest income from operating account and Trust Account | $324,000 | $669,000 | $670,000 | $1.4 million | | Change in fair value of derivative warrant liabilities | — | $907,000 | — | $1.5 million | Contractual Obligations - The Company pays its Sponsor $10,000 per month for administrative services, with an outstanding balance of $130,000 as of June 30, 2024[120] - Deferred underwriting commissions of $2.1 million are payable to the underwriter from the Trust Account only upon completion of a Business Combination[124] - Overfunding Loans totaling $947,850 from the Sponsor are repayable or convertible into Class A Shares upon a Business Combination[125] - A Convertible Note with a principal amount up to $1.75 million was issued to an affiliate of the Sponsor, with $391,667 outstanding as of July 2024, used for Trust Account contributions to extend the Combination Period[126][127] Critical Accounting Policies - Warrant liabilities for Public and Private Placement Warrants are recognized as derivative liabilities at fair value, with changes recognized in the statements of operations[129] - Fair value is measured using models like Black-Scholes and Monte Carlo simulation, with inputs such as expected stock-price volatility, expected life, risk-free interest rate, and dividend yield[129] Off-Balance Sheet Arrangements and Contractual Obligations - As of June 30, 2024, the Company did not have any off-balance sheet arrangements or additional contractual obligations[130] JOBS Act - The Company qualifies as an 'emerging growth company' under the JOBS Act and has elected to delay the adoption of new or revised accounting standards, potentially making its financial statements not comparable to non-emerging growth companies[131] - As an emerging growth company, the Company is exempt from certain reporting requirements, including auditor's attestation reports on internal controls, full executive compensation disclosure, and PCAOB rules on audit firm rotation[132] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, DMY Squared Technology Group, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[134] Item 4. Disclosure Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2024[136] - There were no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2024[137] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no legal proceedings - There are no legal proceedings to report[138] Item 1A. Risk Factors The company refers to its Annual Report on Form 10-K for a comprehensive list of risk factors and states that there have been no material changes to these factors since December 31, 2023 - Factors that could cause actual results to differ materially are described in the Annual Report on Form 10-K filed on April 1, 2024[139] - As of the date of this report, there have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[139] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sales of Founder Shares and Private Placement Warrants, including their issuance, subsequent forfeitures, and the proceeds generated - The Company issued 2,875,000 Founder Shares to its Sponsor for $25,000, with subsequent forfeitures reducing the outstanding amount[140] - The Company completed an Initial Private Placement of 2,840,000 warrants and an Additional Private Placement of 44,660 warrants to its Sponsor, generating gross proceeds of approximately $2.88 million[143] - The Sponsor extended Overfunding Loans totaling $947,850, which were deposited into the Trust Account[143] - Approximately $64.1 million of net proceeds from the IPO, Private Placement, and Overfunding Loans were placed in the Trust Account[144] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - There are no defaults upon senior securities[144] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the Company[144] Item 5. Other Information The company reports no other information - There is no other information to report[144] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including Inline XBRL documents and certifications from the Principal Executive Officer and Principal Financial Officer - The exhibits include Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[145][146] - Certifications of the Principal Executive Officer and Principal Financial Officer are furnished pursuant to Rule 13a-14(a) and 15d-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002[145] SIGNATURES The report is duly signed on behalf of DMY Squared Technology Group, Inc. by its Chief Executive Officer, Niccolo de Masi, and Chief Financial Officer, Harry L. You, as of August 14, 2024 - The report is signed by Niccolo de Masi, Chief Executive Officer, and Harry L. You, Chief Financial Officer, on August 14, 2024[149]