dMY Squared Technology (US:DMYY)2023-11-13 16:00PART I. FINANCIAL INFORMATION This section provides comprehensive financial data and disclosures for the reporting period Item 1. Condensed Financial Statements This section presents unaudited condensed financial statements and notes on the company's financial position and operations Condensed Balance Sheets | Metric | Sep 30, 2023 (unaudited) | Dec 31, 2022 | | :-------------------------- | :----------------------- | :------------- | | Total Assets | $66,941,260 | $65,507,954 | | Total Liabilities | $6,111,860 | $6,323,935 | | Shareholders' Deficit | $(5,092,433) | $(5,178,055) | | Investments held in Trust Account | $66,625,243 | $64,703,943 | Unaudited Condensed Statements of Operations | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | Period from Feb 15, 2022 (inception) through Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------------------------------------------------------- | | General and administrative expenses | $240,703 | $2,914 | $982,210 | $43,914 | | Loss from operations | $(240,703) | $(2,914) | $(1,102,430) | $(43,914) | | Interest income from investments held in Trust Account | $872,501 | — | $2,225,300 | — | | Change in fair value of derivative warrant liabilities | $(543,980) | — | $967,060 | — | | Net income (loss) | $(72,939) | $(2,914) | $1,645,381 | $(43,914) | | Basic and diluted net income (loss) per share, Class A common stock | $(0.01) | — | $0.21 | — | Unaudited Condensed Statements of Changes in Shareholders' Deficit | Metric | Balance—December 31, 2022 | Balance—September 30, 2023 (unaudited) | | :--------------------------------------- | :------------------------ | :--------------------------------------- | | Total Shareholders' Deficit | $(5,178,055) | $(5,092,433) | | Accretion for Class A common stock to redemption amount (9 months) | N/A | $(1,559,759) | | Net income (9 months) | N/A | $1,645,381 | Unaudited Condensed Statements of Cash Flows | Metric | 9 Months Ended Sep 30, 2023 | Period from Feb 15, 2022 (inception) through Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :----------------------------------------------------------------------- | | Net income (loss) | $1,645,381 | $(43,914) | | Net cash (used in) provided by operating activities | $(600,342) | $4 | | Net cash provided by investing activities | $304,000 | — | | Net cash provided by financing activities | $57,812 | $40,439 | | Net change in cash | $(238,530) | $40,443 | | Cash—End of the period | $9 | $40,443 | Notes to Unaudited Condensed Financial Statements Note 1—Description of Organization and Business Operations - dMY Squared Technology Group, Inc. is a blank check company (SPAC) formed for a business combination, with no operations commenced as of September 30, 20232021135 - The company raised approximately $63.2 million from its Initial Public Offering (IPO) and Partial Over-Allotment, with $64.1 million placed in a Trust Account2225136 - Management has identified substantial doubt about the company's ability to continue as a going concern due to de minimis cash, a working capital deficit of approximately $1.1 million, and the mandatory liquidation if a business combination is not completed by January 4, 2024 (or July 4, 2024, with extensions)373944 Note 2—Summary of Significant Accounting Policies - The company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards, which may affect comparability5556169 - Investments held in the Trust Account are classified as trading securities or money market funds and recognized at fair value, with gains and losses included in interest income61 - Derivative warrant liabilities are recognized at fair value, with subsequent changes in fair value recognized in the condensed statements of operations each reporting period6668 Note 3—Initial Public Offering | IPO Event | Date | Units/Warrants | Price per Unit/Warrant | Gross Proceeds | | :-------------------------- | :----------- | :------------- | :--------------------- | :------------- | | Initial Public Offering | Oct 4, 2022 | 6,000,000 units | $10.00 | $60.0 million | | Partial Over-Allotment | Oct 11, 2022 | 319,000 units | $10.00 | $3.2 million | - Each unit consists of one share of Class A common stock and one-half of one redeemable Public Warrant, exercisable at $11.50 per share89 Note 4—Related Party Transactions - The Sponsor initially purchased 2,875,000 Founder Shares for $25,000, which were subsequently adjusted to 1,579,750 shares outstanding as of September 30, 2023, due to surrenders and forfeitures90118 - The Sponsor purchased 2,884,660 Private Placement Warrants for approximately $2.8 million, which are non-redeemable and exercisable on a cashless basis while held by the Sponsor9295137 - The Sponsor provided Overfunding Loans totaling $947,850, deposited into the Trust Account, which will be repaid or converted into Class A common stock upon a business combination2498139 - The company pays the Sponsor $10,000 per month for office space, administrative and support services103160 Note 5—Commitments and Contingencies - Holders of Founder Shares, Private Placement Warrants, and warrants from Working Capital Loans and Extension Loans are entitled to registration rights105162 | Underwriting Fee Type | Amount | Payment Condition | | :-------------------- | :----- | :---------------- | | Initial Discount | $0.8 million | Upon IPO closing | | Deferred Commission | $2.1 million | Upon Business Combination completion | | Over-Allotment Fee | $45,000 | Upon Partial Over-Allotment closing | | Deferred Over-Allotment Commission | $112,000 | Upon Business Combination completion | Note 6—Derivative Warrant Liabilities - The company has 6,044,160 warrants outstanding, comprising 3,159,500 Public Warrants and 2,884,660 Private Placement Warrants109 - Warrants have an exercise price of $11.50 per share and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation110 - Public Warrants can be redeemed by the company if Class A common stock price reaches $18.00 (for $0.01 per warrant) or $10.00 (for $0.10 per warrant, with cashless exercise option)112114 Note 7—Shareholders' Deficit | Stock Class | Par Value | Authorized Shares | Issued & Outstanding (Sep 30, 2023) | | :---------- | :-------- | :---------------- | :---------------------------------- | | Preferred | $0.0001 | 1,000,000 | None | | Class A | $0.0001 | 35,000,000 | 6,319,000 (all redeemable) | | Class B | $0.0001 | 5,000,000 | 1,579,750 | - Class B common stock will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of the initial Business Combination on a one-for-one basis, subject to adjustment122 Note 8—Fair Value Measurements | Financial Instrument | Sep 30, 2023 Fair Value | Dec 31, 2022 Fair Value | Fair Value Hierarchy Level (Sep 30, 2023) | | :------------------- | :---------------------- | :---------------------- | :---------------------------------------- | | Investments held in Trust Account | $66,625,243 | $64,703,943 | Level 1 | | Public Warrants | $789,880 | $1,295,400 | Level 2 | | Private Warrants | $721,170 | $1,182,710 | Level 3 | - The fair value measurement for Public Warrants was transferred to Level 2 as of September 30, 2023, due to low trading volume, after being a Level 1 measurement in December 2022126 - The estimated fair value of the Private Placement Warrants is determined using the Monte Carlo simulation method with Level 3 unobservable inputs128129 Note 9—Subsequent Events - No subsequent events requiring adjustment to or disclosure in the unaudited condensed financial statements were identified up to the date of issuance131 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, IPO, going concern status, and key risks Overview - The company is a blank check company (SPAC) with no operating revenues, focused on completing a business combination135 - The IPO raised $60.0 million, with an additional $3.2 million from a partial over-allotment, and $64.1 million was placed in a Trust Account136140 - The company has 15 months from the IPO closing (January 4, 2024) to complete a business combination, extendable up to 21 months (July 4, 2024) with additional Sponsor funding; failure to do so will result in liquidation143144 Going Concern Consideration - Substantial doubt exists about the company's ability to continue as a going concern due to de minimis cash, a $1.1 million working capital deficit, and the risk of mandatory liquidation146149 - Liquidity needs were satisfied through net proceeds from the IPO and Private Placement held outside the Trust Account, and advances from related parties totaling approximately $173,000 as of September 30, 2023147 Risks and Uncertainties - The company is evaluating the impact of the COVID-19 pandemic and the Russia-Ukraine conflict, but their specific financial impacts are not yet determinable150151 - The Inflation Reduction Act of 2022 imposes a 1% excise tax on certain stock repurchases after December 31, 2022, which could reduce cash available for a business combination or redemptions153 - Interim guidance (Notice 2023-2) clarifies some aspects of the excise tax, excluding distributions upon complete liquidation, but other aspects remain unclear154 Results of Operations - The company generates non-operating income from investments in the Trust Account and incurs expenses for public company compliance and due diligence155 | Metric | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Period from Feb 15, 2022 (inception) through Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :----------------------------------------------------------------------- | | Net income (loss) | $(73,000) | $1.6 million | $(3,000) | $(44,000) | | General and administrative expenses | $241,000 | $982,000 | $3,000 | $44,000 | | Interest income from Trust Account | $873,000 | $2.2 million | — | — | | Change in fair value of derivative warrant liabilities | $(544,000) | $967,000 | — | — | Contractual Obligations - The company pays its Sponsor $10,000 per month for office space, administrative and support services160 - Deferred underwriting commissions totaling $2.212 million are payable to the underwriter only upon the completion of a business combination163164 - Overfunding Loans of $947,850 from the Sponsor are repayable or convertible into Class A common stock upon the closing of an initial Business Combination165 Critical Accounting Estimates - The determination of the fair value of derivative warrant liabilities is a significant accounting estimate, subject to change and potential significant differences from actual results167 Off-Balance Sheet Arrangements and Contractual Obligations - As of September 30, 2023, the company had no off-balance sheet arrangements or additional contractual obligations beyond those already disclosed168 JOBS Act - As an "emerging growth company" under the JOBS Act, the company has elected to delay the adoption of new accounting standards and is exempt from certain reporting requirements, including auditor attestation on internal controls and full executive compensation disclosure169170 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, DMY Squared Technology Group, Inc. is not required to provide market risk disclosures - As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk171 Item 4. Controls and Procedures This section evaluates disclosure controls and procedures and reports on internal control changes Evaluation of Disclosure Controls and Procedures - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023174 Changes in Internal Control over Financial Reporting - There were no material changes in the company's internal control over financial reporting during the fiscal quarter ended September 30, 2023175 PART II. OTHER INFORMATION This section includes legal, risk, equity, and control information not covered in financial statements Item 1. Legal Proceedings The company reported no legal proceedings as of the date of this Quarterly Report on Form 10-Q - There are no legal proceedings to report176 Item 1A. Risk Factors This section confirms no material changes to previously disclosed risk factors - No material changes to previously disclosed risk factors were identified as of the report date177 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report178 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities to report179 Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable180 Item 5. Other Information The company reported no other information - No other information to report181 Item 6. Exhibits This section lists exhibits filed with the report, including executive certifications and XBRL documents - The report includes various exhibits, such as certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents182183185 SIGNATURE This section contains the official signatures certifying the accuracy of the report - The report was signed by Harry L. You (Chief Financial Officer) and Niccolo de Masi (Chief Executive Officer) on November 14, 2023190