dMY Squared Technology (DMYY) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited condensed financial statements and management's analysis of financial condition Item 1. Unaudited Condensed Financial Statements This section presents DMY Squared Technology Group's unaudited condensed financial statements and comprehensive notes Condensed Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and shareholders' deficit Balance Sheet Summary (March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total Assets | $26,610,324 | $26,030,408 | | Total Liabilities | $12,525,447 | $7,389,300 | | Shareholders' Deficit | $(12,077,608) | $(6,846,879) | | Cash | $528 | $309,399 | | Cash and investments held in Trust Account | $26,262,484 | $25,587,986 | | Derivative warrant liabilities | $5,741,960 | $1,450,600 | Unaudited Condensed Statements of Operations This section details the company's financial performance, including revenues, expenses, and net loss Statements of Operations Summary (Three Months Ended March 31) | Metric | 2025 | 2024 | | :------------------------------------------ | :------------- | :------------- | | General and administrative expenses | $521,402 | $377,583 | | Corporate tax expenses | $0 | $84,308 | | Loss from operations | $(521,402) | $(461,891) | | Investment income from Trust Account | $264,427 | $346,217 | | Change in fair value of derivative warrant liabilities | $(4,291,360) | $0 | | Net loss | $(4,556,231) | $(168,454) | | Basic and diluted net loss per share, Class A common stock | $(1.16) | $(0.04) | Unaudited Condensed Statements of Changes in Shareholders' Deficit This section outlines changes in the company's shareholders' deficit, including net loss and redemption impacts Shareholders' Deficit Changes (Three Months Ended March 31, 2025) | Item | Amount | | :---------------------------------------------------------------- | :------------- | | Balance - December 31, 2024 | $(6,846,879) | | Increase in redemption value of Class A common stock due to extension | $(150,000) | | Remeasurement for Class A common stock subject to redemption | $(524,498) | | Net loss | $(4,556,231) | | Balance - March 31, 2025 (unaudited) | $(12,077,608) | Shareholders' Deficit Changes (Three Months Ended March 31, 2024) | Item | Amount | | :---------------------------------------------------------------- | :------------- | | Balance - December 31, 2023 | $(5,079,018) | | Increase in redemption value of Class A common stock due to extension | $(191,667) | | Remeasurement for Class A common stock subject to redemption | $(209,038) | | Net loss | $(168,454) | | Balance - March 31, 2024 (unaudited) | $(5,648,335) | Unaudited Condensed Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Three Months Ended March 31) | Metric | 2025 | 2024 | | :------------------------------------------ | :------------- | :------------- | | Net cash used in operating activities | $(773,621) | $(59,968) | | Net cash (used in) provided by investing activities | $(410,070) | $42,682,302 | | Net cash provided by (used in) financing activities | $874,820 | $(41,996,207) | | Net change in cash | $(308,871) | $626,127 | | Cash - End of the period | $528 | $626,136 | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed financial statements, including accounting policies, IPO, and related party transactions Note 1—Description of Organization and Business Operations This note describes the company's nature as a blank check company, its IPO, and key operational events - DMY Squared Technology Group, Inc. is a blank check company formed for a business combination, operating as an emerging growth company. It has not commenced operations and generates non-operating income from trust account proceeds[20][21] - The Company's Initial Public Offering (IPO) on October 4, 2022, raised $60.0 million gross proceeds from 6,000,000 units, with an additional $3.2 million from 319,000 over-allotment units. Total offering costs were approximately $3.7 million plus $156,000 for the over-allotment[22] - The Company's shareholders approved an extension of the business combination deadline from January 4, 2024, to January 29, 2024, with monthly extensions up to December 29, 2025, contingent on Sponsor contributions. In connection with this, 3,980,414 Public Shares were redeemed for approximately $42.0 million on January 4, 2024[38] - A convertible promissory note for up to $1.75 million was issued to an affiliate of the Sponsor. As of March 31, 2025, $791,667 was outstanding, increasing to $841,667 post-March 31, 2025, with proceeds contributed to the Trust Account for extensions[41][50][96] - Management determined that approximately $0.69 million of funds withdrawn from the Trust Account for taxes were improperly used for operating expenses. The Sponsor advanced $0.73 million to cover these funds plus interest, and the Company re-contributed $0.22 million plus interest to the Trust Account in March 2025[46] - The Company's management has determined that the liquidity condition, mandatory liquidation if a Business Combination does not occur, and potential subsequent dissolution raise substantial doubt about its ability to continue as a going concern[47][51] Note 2—Summary of Significant Accounting Policies This note outlines the company's key accounting policies, including its emerging growth company status and financial instrument treatment - 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[57][58] - The Trust Account investments were transferred from U.S. government securities to an interest-bearing bank deposit account in March 2025 to mitigate the risk of being deemed an unregistered investment company. As of March 31, 2025, the trust balance was held in cash, compared to U.S. Treasury Bills as of December 31, 2024[61] - Public and Private Placement Warrants are recognized as derivative liabilities at fair value, with changes in fair value recognized in the unaudited condensed statements of operations[66] - The Company's deferred tax assets of approximately $1.2 million (March 31, 2025) and $949,000 (December 31, 2024) are presented net of a full valuation allowance[78] - The Company is evaluating the impact of ASU No. 2023-09 (Improvements to Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Disaggregation of Income Statement Expenses, effective after Dec 15, 2026) on its financial statements[82][83] Note 3—Initial Public Offering This note details the company's Initial Public Offering, including gross proceeds and associated offering costs - On October 4, 2022, the Company consummated its Initial Public Offering of 6,000,000 units at $10.00 per unit, generating $60.0 million gross proceeds. An additional 319,000 units were sold on October 11, 2022, for approximately $3.2 million. Total offering costs were approximately $3.7 million plus $156,000 for the partial over-allotment[84] Note 4—Related Party Transactions This note describes transactions with related parties, including founder shares, private placement warrants, and loans - The Sponsor purchased 2,875,000 Class B Founder Shares for $25,000, with subsequent forfeitures reducing the total to 1,579,750 shares. These shares are subject to transfer restrictions[85][87] - The Company consummated a Private Placement of 2,840,000 Initial Private Placement Warrants and 44,660 Additional Private Placement Warrants to the Sponsor at $1.00 per warrant, generating approximately $2.8 million and $45,000, respectively. These warrants are non-redeemable and exercisable on a cashless basis if held by the Sponsor or permitted transferees, and are subject to transfer restrictions[88][89][90] - Advances from related parties totaled approximately $1.1 million outstanding as of March 31, 2025, increasing to approximately $1.2 million subsequent to March 31, 2025[92] - The Sponsor extended Overfunding Loans totaling $947,850, deposited into the Trust Account, which are repayable or convertible into Class A Shares upon a business combination[94] - A Convertible Promissory Note for up to $1.75 million was issued to Harry L. You, an affiliate of the Sponsor. As of March 31, 2025, $791,667 was outstanding, increasing to $841,667 post-March 31, 2025, with all proceeds contributed to the Trust Account for extensions[95][96] - The Company pays the Sponsor $10,000 per month for administrative services, with $30,000 recorded for each of the three months ended March 31, 2025 and 2024. The outstanding balance for these fees was $220,000 as of March 31, 2025[98] Note 5—Commitments and Contingencies This note details the company's commitments, including registration rights and deferred underwriting commissions - Holders of Founder Shares, Private Placement Warrants, and warrants from working capital loans/contributions are entitled to registration rights[101] - Deferred underwriting commissions of $2.1 million (from IPO) and $112,000 (from over-allotment) are payable to the underwriter from the Trust Account solely upon completion of a Business Combination[102][103] Note 6—Derivative Warrant Liabilities This note describes the company's derivative warrant liabilities, including outstanding warrants and their exercise and redemption terms - As of March 31, 2025, and December 31, 2024, the Company had an aggregate of 6,044,160 warrants outstanding, comprising 3,159,500 Public Warrants and 2,884,660 Private Placement Warrants[104] - Public Warrants become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, contingent on an effective registration statement. The exercise price is $11.50 per share, subject to adjustments[104][106] - The Company may redeem Public Warrants for $0.01 per warrant if the Public Share closing price equals or exceeds $18.00 for 20 of 30 trading days, or for $0.10 per warrant if the price equals or exceeds $10.00 for 20 of 30 trading days (with a cashless exercise option)[108] - If a Business Combination is not completed and the Company liquidates, warrant holders will not receive any funds from the Trust Account or other assets[111] Note 7—Shareholders' Deficit This note details the company's authorized and outstanding share capital, including preferred, Class A, and Class B common shares - The Company is authorized to issue 1,000,000 shares of preferred stock (none outstanding), 35,000,000 Class A Common Shares (2,338,586 outstanding, all subject to redemption), and 5,000,000 Class B Common Shares (1,579,750 outstanding)[112][113][114] - Class B Common Shares are convertible into Class A Common Shares on a one-for-one basis, subject to adjustments[116] Note 8—Fair Value Measurements This note explains the company's fair value hierarchy for financial instruments, particularly derivative warrant liabilities - The Company uses a three-tier fair value hierarchy (Level 1, 2, 3) for financial instruments. Public Warrants are measured at Level 2 due to low trading volume, while Private Placement Warrants are measured at Level 3 using a Monte Carlo simulation method[68][120][122] Level 3 Fair Value Inputs (Private Warrants) | Input | March 31, 2025 | December 31, 2024 | | :---------------- | :------------- | :---------------- | | Exercise price | $11.50 | $11.50 | | Stock price | $11.17 | $10.66 | | Volatility | 3.2% | 3.3% | | Risk-free rate | 3.9% | 4.3% | | Expected terms (years) | 5.25 | 5.25 | | Dividend yield | 0.0% | 0.0% | Change in Level 3 Fair Value of Derivative Warrant Liabilities (Private Warrants) | Item | Amount | | :------------------------------------------------ | :------------- | | Balance as of December 31, 2024 | $692,320 | | Change in fair value of derivative warrant liabilities | $2,048,110 | | Balance as of March 31, 2025 | $2,740,430 | Note 9—Segment Information This note clarifies that the company operates as a single reportable segment, with the CFO reviewing overall results - The Company operates as a single reportable segment, with the Chief Financial Officer (CODM) reviewing overall operating results to allocate resources and assess financial performance[124] - Key metrics reviewed by the CODM include investment income from the Trust Account, general and administrative expenses, tax expenses, other expenses (income), and net loss[126] Note 10—Subsequent Events This note discloses significant events occurring after the reporting period, including additional borrowings and advances - Subsequent to March 31, 2025, the Company borrowed an additional $50,000 under the Convertible Note, increasing the total outstanding to $841,667, with proceeds contributed to the Trust Account to extend the Combination Period to May 29, 2025[128] - The Sponsor advanced an additional $89,000 to the Company subsequent to March 31, 2025, increasing total advances outstanding to approximately $1.2 million[128] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial condition, operational results, liquidity, and going concern Overview This section provides an overview of the company's blank check status, IPO, and business combination efforts - DMY Squared Technology Group, Inc. is a blank check company formed for the purpose of effecting a business combination, operating as an emerging growth company. It has not commenced operations as of March 31, 2025, and generates non-operating income from Trust Account proceeds[132][133] - The Company's Initial Public Offering (IPO) on October 4, 2022, raised $60.0 million gross proceeds, supplemented by a partial over-allotment of $3.2 million. Private Placement Warrants generated approximately $2.8 million and $45,000, and Overfunding Loans from the Sponsor totaled $947,850, with approximately $64.1 million initially placed in the Trust Account[134][135][136][137] - Shareholders approved an extension of the business combination deadline to December 29, 2025, contingent on monthly Sponsor contributions. In connection with this, 3,980,414 Public Shares were redeemed for approximately $42.0 million on January 4, 2024[141] - A non-binding letter of intent (LOI) for a business combination with Horizon Quantum Computing Pte. Ltd. was announced on February 26, 2025, valuing Horizon at a pre-money equity value of approximately $500 million[148] Liquidity and Capital Resources; Going Concern Consideration This section discusses the company's liquidity, capital resources, and substantial doubt about its ability to continue as a going concern - As of March 31, 2025, the Company had minimal cash and a working capital deficit of approximately $3.3 million, raising substantial doubt about its ability to continue as a going concern[149][152] - Liquidity needs are met through net proceeds held outside the Trust Account and advances from related parties, totaling approximately $1.1 million outstanding as of March 31, 2025, and increasing to $1.2 million post-March 31, 2025[150][151] - The Convertible Note had an outstanding amount of $791,667 as of March 31, 2025, increasing to $841,667 post-March 31, 2025, with all proceeds contributed to the Trust Account for extensions[151] Results of Operations This section analyzes the company's financial performance, focusing on net loss and key expense drivers for the periods Net Loss and Key Expenses (Three Months Ended March 31) | Metric | 2025 | 2024 | | :------------------------------------------ | :------------- | :------------- | | Net loss | $(4,556,231) | $(168,454) | | General and administrative expenses | $492,000 | $377,000 | | Tax expenses | $37,000 | $137,000 | | Loss from change in fair value of derivative warrant liabilities | ~$4,300,000 | $0 | | Interest income from Trust Account | ~$264,000 | ~$346,000 | - The significant increase in net loss for the three months ended March 31, 2025, compared to the same period in 2024, was primarily driven by a $4.3 million loss from the change in fair value of derivative warrant liabilities[156] Contractual Obligations This section details the company's contractual obligations, including administrative fees, deferred underwriting commissions, and loans - The Company has an Administrative Services Agreement to pay the Sponsor $10,000 per month, with $30,000 recorded for each of the three months ended March 31, 2025 and 2024, and an outstanding balance of $220,000 as of March 31, 2025[158] - Deferred underwriting commissions of $2.1 million (IPO) and $112,000 (over-allotment) are payable to the underwriter from the Trust Account upon completion of a Business Combination[161][162] - Overfunding Loans from the Sponsor total $947,850, deposited in the Trust Account, which are repayable or convertible into Class A Shares upon a Business Combination[163] - The Convertible Promissory Note, with an outstanding amount of $791,667 as of March 31, 2025 (increasing to $841,667 post-March 31, 2025), is repayable upon a Business Combination or liquidation, and up to $1.5 million may be converted into warrants[164][165] Critical Accounting Estimates This section identifies the determination of fair value for derivative warrant liabilities as a critical accounting estimate - The determination of the fair value of derivative warrant liabilities is identified as a critical accounting estimate, subject to change based on available information[168] Off-Balance Sheet Arrangements and Contractual Obligations This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of March 31, 2025, the Company did not have any off-balance sheet arrangements[169] JOBS Act This section highlights the company's emerging growth company status under the JOBS Act and its reporting benefits - As an "emerging growth company" under the JOBS Act, the Company benefits from relaxed reporting requirements, including delaying the adoption of new accounting standards and exemptions from certain auditor attestation and executive compensation disclosures[170][171] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, DMY Squared Technology Group, Inc. is not required to provide 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[172] Item 4. Controls and Procedures This section reports on the effectiveness of disclosure controls and internal control over financial reporting, noting a material weakness and ongoing remediation Evaluation of Disclosure Controls and Procedures This section states that disclosure controls were ineffective due to a material weakness in internal control over financial reporting - As of March 31, 2025, the Company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting, as initially disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[174] Status Update This section outlines management's remediation plan for the identified material weakness in internal control - Management is implementing a remediation plan to address the material weakness, which includes increasing scrutiny over Trust Account balances, enhancing documentation, and improving communication. The material weakness will not be considered remediated until these controls operate effectively for a sufficient period and are tested[176][177] Changes in Internal Control over Financial Reporting This section confirms no material changes in internal control over financial reporting, aside from remediation efforts - Except for the remediation efforts described, there were no other changes in internal control over financial reporting during the fiscal quarter ended March 31, 2025, that materially affected or are reasonably likely to materially affect it[178] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings The Company reported no legal proceedings as of the date of this report - The Company is not currently involved in any legal proceedings[180] Item 1A. Risk Factors This section references previously disclosed risk factors, with an added discussion on international trade policy impacts - Risk factors are primarily those described in the Annual Report on Form 10-K filed April 3, 2025. No material changes except for an additional discussion on the potential adverse effects of changes in international trade policies, tariffs, and treaties on the Company's search for an initial Business Combination target[181][182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered equity sales, including Founder Shares and Private Placement Warrants, and the use of proceeds - The Sponsor purchased 2,875,000 Founder Shares for $25,000 on March 16, 2022, with subsequent forfeitures. This issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act[183] - The Initial Public Offering on October 4, 2022, generated net proceeds of $59,135,000 from 6,000,000 units at $10.00 per unit[184] - The Company completed an Initial Private Placement of 2,840,000 warrants and an Additional Private Placement of 44,660 warrants to the Sponsor at $1.00 per warrant, generating gross proceeds of $2,840,000 and $44,660, respectively. Additionally, the Sponsor extended Overfunding Loans totaling $947,850. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act[185] - Approximately $64.1 million from the IPO, Private Placement, and Overfunding Loans was placed in the Trust Account[186] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - The Company has not defaulted upon any senior securities[187] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine safety disclosures are not applicable to the Company[187] Item 5. Other Information The Company reported no other information required under this item - No other information is reported under this item[188] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including certifications and Inline XBRL documents - The exhibits include certifications (31.1, 32.1), Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE), and the Cover Page Interactive Data File (104)[190] - Certifications under Section 906 of the Sarbanes-Oxley Act of 2002 are furnished, not filed, and are not deemed incorporated by reference unless expressly stated[191] SIGNATURE This section contains the signature of Harry L. You, certifying the report on behalf of DMY Squared Technology Group, Inc - The report is signed by Harry L. You, Chairman, Chief Executive Officer, Chief Financial Officer, and Director, on May 15, 2025[195]