dMY Squared Technology (US:DMYY)2023-03-29 16:00IPO and Fundraising - The company completed its initial public offering on October 4, 2022, selling 6,000,000 units at $10.00 per unit, generating net proceeds of $59,135,000[20]. - An additional 319,000 over-allotment units were sold on October 11, 2022, generating net proceeds of $3,145,340[21]. - The company raised a total of $64,137,850 from the IPO, private placements, and loans, which was placed in a trust account[27]. - As of December 31, 2022, the trust account held $64,703,943 in investments[29]. - The company has conducted private placements of warrants, generating gross proceeds of $2,884,660[22][23]. - The total funds in trust available for the initial business combination amount to $60,900,000[159]. - The company has placed $64,137,850 in the trust account from gross proceeds received from its initial public offering and related sales[181]. Business Combination Plans - The company intends to focus on acquiring businesses in the professional service industry with enterprise valuations between $500 million and $2 billion[32]. - The company plans to structure its initial business combination to acquire 100% of the target business or businesses[35]. - The company has established a due diligence process for evaluating prospective target businesses, which may include meetings with management and financial reviews[36]. - The company has a 15-month period from the closing of its initial public offering to complete the initial business combination, extendable to 21 months if necessary[46]. - The company may only complete one business combination with the proceeds from its initial public offering, which could lead to dependency on a single business and limit diversification[104]. - The company has not selected a specific business combination target but intends to target businesses with enterprise values greater than the net proceeds from its initial public offering[130]. Shareholder Rights and Approvals - The company requires a majority vote from public shareholders, specifically 2,250,001 shares or 37.5% of the 6,000,000 public shares sold, to approve the initial business combination[53]. - The company may not seek shareholder approval for the business combination if not required by law, potentially limiting public shareholders' voting rights[51]. - Redemption rights are limited to 15% of public shares without prior consent, aimed at preventing large shareholders from blocking business combinations[44]. - Initial shareholders own 20% of the outstanding common stock, which may influence the likelihood of obtaining shareholder approval for the business combination[53]. Financial Condition and Risks - The independent auditor has expressed substantial doubt about the company's ability to continue as a going concern if a business combination is not completed by January 4, 2024[64]. - The company may face challenges in completing its initial business combination due to potential shareholder redemption rights, which could limit the cash available for the transaction[57]. - If a significant number of shares are redeemed, the company may need to restructure the transaction or seek third-party financing, potentially leading to dilution of equity[57]. - The company has approximately $239,000 in cash and working capital of approximately $343,000, which includes tax obligations of approximately $242,000[80]. - The company may need to borrow funds from its sponsor or management team to fund its search for a target business if the net proceeds from the initial public offering are insufficient[79]. - The company may incur substantial debt to complete a business combination, which could adversely affect its leverage and financial condition[103]. Market and Competitive Environment - The company may face competition from other entities with greater financial resources, which could limit its ability to acquire larger target businesses[47]. - The company is subject to significant competition for business combination opportunities, which may hinder its ability to complete a successful acquisition[77]. - Increased competition among special purpose acquisition companies (SPACs) may lead to scarcity of attractive targets, raising costs and complicating business combinations[137]. - Recent inflation increases could lead to price volatility for publicly traded securities, impacting the ability to consummate business combinations[138]. - Military conflict in Ukraine may cause economic disruptions, complicating the identification of business combination partners[139]. Operational and Regulatory Risks - The ongoing COVID-19 pandemic may adversely affect the company's ability to find suitable target businesses and complete transactions due to market volatility and restrictions on meetings[60]. - The company must comply with SEC reporting requirements, including filing annual and quarterly reports[49]. - The company is subject to a 1% excise tax on stock repurchases after December 31, 2022, which may affect the attractiveness of business combination transactions[189]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements and restrictions on its activities[183]. - The company intends to avoid being classified as an investment company by limiting its investments to U.S. government securities and maintaining a business plan focused on long-term growth[187]. Management and Governance - The company is dependent on a small group of executive officers and directors, whose loss could adversely affect operations[143]. - Conflicts of interest may arise as executive officers and directors allocate time to other business ventures, affecting the ability to complete business combinations[146]. - The company has not adopted a policy to prohibit conflicts of interest among its directors and executive officers[150]. - Members of the management team may be involved in unrelated litigation, which could divert attention and resources from identifying and selecting a target business[131]. Shareholder Equity and Securities - The company may issue additional shares of Class A common stock or preferred stock to complete its initial business combination, which could dilute existing shareholders[200]. - The nominal purchase price for founder shares may lead to significant dilution of public shares upon the business combination[158]. - The company’s warrants are expected to be accounted for as derivative liabilities, which may adversely affect the market price of Class A common stock[171]. - The company has issued a total of 6,044,160 warrants, including 3,159,500 from the initial public offering and 2,884,660 from a private placement, each exercisable at $11.50 per share[169]. - The company’s unit structure includes one-half of one warrant, which may make its units worth less compared to other special purpose acquisition companies[170]. Trust Account and Redemption - If the company cannot complete the business combination within the specified period, it will redeem public shares at a cash price based on the trust account balance, which must not fall below $5,000,001 in net tangible assets[54]. - If the initial business combination is not completed within the specified time, the company will redeem public shares at a price equal to the amount in the trust account, minus up to $100,000 for dissolution expenses[72]. - The trust account funds may only be invested in U.S. government treasury obligations with a maturity of 185 days or less, or in certain money market funds[181]. - If the trust account balance falls below $64,137,850 due to negative interest rates, the per-share redemption amount may be reduced below $10.15[181]. Miscellaneous - The company has not paid any cash dividends on its common stock to date and does not intend to do so prior to completing its initial business combination[217]. - The company is classified as an emerging growth company, which allows it to take advantage of certain exemptions from disclosure requirements[207]. - Cyber incidents could lead to financial loss and operational disruption, as the company lacks significant investments in data security protection[206]. - The company may face additional risks if it pursues a target company located outside of the United States, including challenges in conducting due diligence and obtaining local government approvals[117].