DMYY Restates Q1 Earnings, Cites $420K Excise Tax Under-Accrual

TL;DR

**DMYY's restatement reveals a glaring internal control failure and a massive Q1 loss, making this SPAC a risky bet for any investor.**

AI Summary

dMY Squared Technology Group, Inc. (DMYY) filed a 10-Q/A on August 27, 2025, restating its financial statements for the quarter ended March 31, 2025. The restatement was necessary due to an under-accrual of approximately $420,000 in excise tax payable under the Inflation Reduction Act of 2022, related to the redemption of 3,980,414 shares of Class A common stock in January 2024. This error, initially deemed immaterial due to offsetting over-accrued income taxes at December 31, 2024, became material by March 31, 2025, leading to a significant increase in accumulated deficit. The company reported a net loss of $4,556,231 for the three months ended March 31, 2025, a substantial increase from the $168,454 net loss for the same period in 2024. This was primarily driven by a $4,291,360 change in fair value of derivative warrant liabilities. Total liabilities surged from $7,389,300 at December 31, 2024, to $12,947,371 at March 31, 2025, largely due to the derivative warrant liabilities and the newly recognized excise tax payable. The company also identified a material weakness in its internal control over financial reporting regarding excise tax evaluation and recognition.

Why It Matters

This restatement highlights significant internal control deficiencies at dMY Squared Technology Group, Inc., specifically regarding tax compliance under the Inflation Reduction Act. For investors, the material weakness in financial reporting and the substantial increase in net loss to $4,556,231 raise concerns about management's oversight and the reliability of future financial disclosures. The competitive landscape for SPACs is already challenging, and such errors can erode investor confidence, making it harder for DMYY to attract a suitable business combination target. Employees and customers might perceive this as a sign of instability, potentially impacting morale and future business relationships. The broader market will view this as another example of regulatory complexity impacting SPACs, potentially increasing scrutiny on similar entities.

Risk Assessment

Risk Level: high — The risk level is high due to the identified material weakness in internal control over financial reporting related to excise tax evaluation and recognition, as stated in Part I, Item 4. The under-accrual of approximately $420,000 in excise tax payable, which became material by March 31, 2025, directly impacted the accumulated deficit, which ballooned from $(6,847,037) at December 31, 2024, to $(12,499,690) at March 31, 2025.

Analyst Insight

Investors should exercise extreme caution and consider divesting from DMYY given the material weakness in internal controls and the significant increase in net loss. The company's inability to accurately account for a $420,000 tax liability suggests broader financial reporting issues that could lead to further restatements or regulatory penalties.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$26,610,324

total Debt

$12,947,371

net Income

-$4,556,231

eps

N/A

gross Margin

N/A

cash Position

$528

revenue Growth

N/A

Key Numbers

• $420,000 — Excise tax under-accrual (The amount of excise tax payable under the IRA that was under-accrued, leading to the restatement.)
• $4,556,231 — Net loss for Q1 2025 (Significantly higher than the $168,454 net loss in Q1 2024, primarily due to derivative warrant liabilities.)
• $12,499,690 — Accumulated deficit as of March 31, 2025 (Increased from $6,847,037 at December 31, 2024, partly due to the excise tax and remeasurement.)
• $12,947,371 — Total Liabilities as of March 31, 2025 (Increased from $7,389,300 at December 31, 2024, driven by derivative warrant liabilities and excise tax.)
• $4,291,360 — Change in fair value of derivative warrant liabilities (A significant expense contributing to the net loss in Q1 2025.)
• 3,980,414 — Class A common stock shares redeemed (Redeemed in January 2024, triggering the excise tax obligation.)
• $42.0 million — Amount paid for redemptions (Paid on January 4, 2024, for Class A common stock redemptions.)

Key Players & Entities

• dMY Squared Technology Group, Inc. (company) — Registrant filing the 10-Q/A
• U.S. Securities and Exchange Commission (regulator) — Recipient of the 10-Q/A filing
• Inflation Reduction Act of 2022 (regulator) — Legislation imposing the excise tax
• Continental Stock Transfer & Trust Company (company) — Trustee for the Trust Account
• dMY Squared Sponsor, LLC (company) — Sponsor of the company
• NYSE American (company) — Exchange where DMYY securities are registered

FAQ

Risk Factors

• Inflation Reduction Act Excise Tax [high — regulatory]: The company restated its financial statements due to an under-accrual of approximately $420,000 in excise tax payable under the Inflation Reduction Act of 2022. This tax is related to the redemption of 3,980,414 shares of Class A common stock in January 2024, which had a fair market value of approximately $42.0 million. The initial assessment deemed the tax immaterial due to offsetting income tax accruals, but this offset was eliminated by March 31, 2025, making the full excise tax payable material.
• Material Weakness in Internal Controls [high — operational]: The company identified a material weakness in its internal control over financial reporting concerning the evaluation and recognition of excise tax liabilities. This weakness contributed to the under-accrual of the IRA excise tax, necessitating the restatement of financial statements for the period ended March 31, 2025.
• Volatile Derivative Warrant Liabilities [high — financial]: The company experienced a significant negative change in the fair value of derivative warrant liabilities, amounting to $(4,291,360) for the three months ended March 31, 2025. This volatility substantially contributed to the net loss for the period and impacts the company's financial stability.
• Increasing Accumulated Deficit [medium — financial]: The company's accumulated deficit increased substantially from $6,847,037 at December 31, 2024, to $12,499,690 at March 31, 2025. This increase is driven by net losses, including the impact of derivative warrant liabilities and the newly recognized excise tax payable.
• Dependence on Trust Account and Business Combination [high — financial]: As a blank check company, dMY Squared Technology Group, Inc. has not commenced operations and will not generate operating revenues until after a Business Combination. Its financial health is heavily dependent on the successful completion of a Business Combination within the specified timeframe, with proceeds from its IPO held in a Trust Account.

Industry Context

dMY Squared Technology Group, Inc. operates as a special purpose acquisition company (SPAC), a segment of the financial services industry focused on facilitating mergers and acquisitions. The SPAC market has faced increased regulatory scrutiny and investor caution following a period of rapid growth. Companies in this space are characterized by their lack of operating revenue and dependence on identifying and completing a successful business combination within a limited timeframe.

Regulatory Implications

The restatement highlights the critical importance of accurate tax compliance, particularly with new legislation like the Inflation Reduction Act. The identification of a material weakness in internal controls signals potential future scrutiny from regulators regarding financial reporting processes and the adequacy of oversight.

What Investors Should Do

1. Review the restated financial statements carefully to understand the full impact of the excise tax and derivative warrant liabilities on the company's financial position and accumulated deficit.
2. Assess the company's progress and strategy for completing a business combination, as this remains the primary driver of future value and revenue generation.
3. Monitor management's efforts to remediate the identified material weakness in internal controls over financial reporting to ensure future accuracy and reliability of financial statements.
4. Evaluate the volatility of derivative warrant liabilities and its ongoing impact on net income, considering its significant contribution to recent losses.

Key Dates

• 2024-01-04: Payment for share redemptions — Triggered the excise tax obligation under the IRA, which was initially under-accrued.
• 2025-03-31: Quarter end for restated financials — The excise tax under-accrual became material, necessitating the restatement of financial statements.
• 2025-05-15: Original filing of Form 10-Q for Q1 2025 — The initial financial statements filed on this date were later found to be inaccurate and required restatement.
• 2025-08-26: Form 8-K filing disclosing restatement — Company disclosed the determination to restate its financial statements for the period ended March 31, 2025.
• 2025-08-27: Filing of Form 10-Q/A — Amended report filed to restate the financial statements for the quarter ended March 31, 2025, reflecting the excise tax payable.

Glossary

Inflation Reduction Act of 2022 (IRA)

A U.S. federal law that includes provisions for climate change, energy, prescription drug pricing, and tax reform, including an excise tax on stock repurchases. (The source of the excise tax obligation that led to the financial restatement.)

Derivative warrant liabilities

Financial instruments that give the holder the right, but not the obligation, to purchase or sell an asset (like stock) at a specified price. Their fair value can fluctuate, impacting net income. (A significant factor in the company's net loss for Q1 2025 due to a substantial adverse change in fair value.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income or additional paid-in capital. (Increased significantly due to the restatement and net losses, impacting the company's equity position.)

Blank check company

A company with no commercial operations that is formed to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company. (Describes the nature of dMY Squared Technology Group, Inc., highlighting its reliance on a future business combination for revenue generation.)

Material weakness

A deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. (Identified in the company's controls related to excise tax evaluation, indicating a significant risk to financial reporting accuracy.)

Year-Over-Year Comparison

The restated Q1 2025 financials show a significant increase in net loss to $4,556,231 compared to a loss of $168,454 in Q1 2024, primarily driven by a $4,291,360 change in fair value of derivative warrant liabilities. Total liabilities have also surged to $12,947,371 from $7,389,300 at year-end 2024, largely due to derivative warrant liabilities and the newly recognized excise tax payable. A new material weakness in internal controls related to excise tax evaluation has been identified.

Key Financial Figures

• $0.0001 — hare of Class A common stock, par value $0.0001 per share, and one-half of one redeemab
• $11.50 — A Common Stock at an exercise price of $11.50 DMYY.WS NYSE American Securities
• $42.0 million — med, and the Company paid approximately $42.0 million on January 4, 2024. The IRA imposes a 1
• $420,000 — excise tax obligation of approximately $420,000. The Company did not liquidate at year

Filing Documents

• dmysquaredtech_10qa.htm (10-Q/A) — 727KB
• dmysquaredtech_ex31-1.htm (EX-31.1) — 12KB
• dmysquaredtech_ex32-1.htm (EX-32.1) — 5KB
• 0001829126-25-006781.txt ( ) — 4689KB
• cik0001915380-20250331.xsd (EX-101.SCH) — 46KB
• cik0001915380-20250331_cal.xml (EX-101.CAL) — 39KB
• cik0001915380-20250331_def.xml (EX-101.DEF) — 238KB
• cik0001915380-20250331_lab.xml (EX-101.LAB) — 328KB
• cik0001915380-20250331_pre.xml (EX-101.PRE) — 308KB
• dmysquaredtech_10qa_htm.xml (XML) — 626KB

FINANCIAL

PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed

Financial Statements

Financial Statements 1 Condensed Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024 1 Unaudited Condensed Statements of Operations for the Three Months Ended March 31, 2025 and 2024 2 Unaudited Condensed Statements of Changes in Shareholders' Deficit for the Three Months Ended March 31, 2025 and 2024 3 Unaudited Condensed Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 4 Notes to Unaudited Condensed

Financial Statements

Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3. Quantitative and Qualitative Disclosures About Market Risk 32 Item 4.

Controls and Procedures

Controls and Procedures 32

OTHER

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 34 Item 1A.

Risk Factors

Risk Factors 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 36 Item 3. Defaults Upon Senior Securities 36 Item 4. Mine Safety Disclosures 36 Item 5. Other Information 36 Item 6. Exhibits 37 SIGNATURE 38 i EXPLANATORY NOTE Overview This Amendment No. 1 on Form 10-Q/A (the "Amendment") amends the Quarterly Report on Form 10-Q for the period ended March 31, 2025 (the "Original Report") of dMY Squared Technology Group, Inc. (the "Company"), as originally filed with the U.S. Securities and Exchange Commission (the "SEC") on May 15, 2025. Restatement Background As previously disclosed in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on August 26, 2025, the audit committee of the board of directors of the Company, in consultation with management, determined that the Company's previously issued unaudited condensed financial statements contained in its Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2025, filed with the SEC on May 15, 2025 (the "Affected Period"), should no longer be relied upon due to the under-accrual of excise tax payable under the Inflation Reduction Act of 2022 ("IRA") in connection with the redemption of Class A common stock subject to possible redemption in January 2024 and the corresponding impact on accumulated deficit presented in the balance sheet for the Affected Period, and therefore, a restatement of the financial statements for the Affected Period is required. In connection with the shareholder meeting on January 2, 2024, an aggregate of 3,980,414 shares of Class A common stock were redeemed, and the Company paid approximately $42.0 million on January 4, 2024. The IRA imposes a 1% excise tax on the fair market value of repurchased shares, subject to netting rules and certain exceptions. As a result, the Company incurred an excise tax obligation of approximately $420,000. The Company did not li

, Item 1. Financial Statements

Part I, Item 1. Financial Statements

, Item 4, Controls and Procedures

Part I, Item 4, Controls and Procedures

, Item 1A. Risk Factors

Part II, Item 1A. Risk Factors In addition, the Company's Principal Executive Officer and Principal Financial and Accounting Officer has provided new certifications dated as of the date of this filing in connection with this Form 10-Q/A (Exhibits 31.1 and 32.1). Except as described above, this Form 10-Q/A does not amend, update or change any other items or disclosures in the Original Report and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Form 10-Q/A speaks only as of the date the Original Report was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Report to give effect to any subsequent events. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Report, including any amendment to those filings. ii

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item1. Unaudited Condensed Financial Statements DMY SQUARED TECHNOLOGY GROUP, INC. CONDENSED BALANCE SHEETS AS RESTATED March 31, 2025 December 31, 2024 (unaudited) Assets: Current assets: Cash $ 528 $ 309,399 Prepaid expenses 347,312 133,023 Total current assets 347,840 442,422 Cash and investments held in Trust Account 26,262,484 25,587,986 Total Assets $ 26,610,324 $ 26,030,408 Liabilities, Class A Common Stock Subject to Possible Redemption and Shareholders' Deficit: Current liabilities: Accounts payable $ 617,242 $ 486,018 Accrued expenses 1,063,125 777,616 Convertible note - related parties 791,667 641,667 Advances from related parties 1,151,953 389,871 Corporate tax payable - 180,115 Excise tax payable 421,924 - Income tax payable - 303,913 Total current liabilities 4,045,911 2,779,200 Overfunding loans 947,850 947,850 Derivative warrant liabilities 5,741,960 1,450,600 Deferred underwriting commissions 2,211,650 2,211,650 Total Liabilities 12,947,371 7,389,300 Commitments and Contingencies Class A common stock, $ 0.0001 par value; 35,000,000 shares authorized; 2,338,586 shares subject to possible redemption at approximately $ 11.19 and $ 10.90 per share as of March 31, 2025 and December 31, 2024, respectively 26,162,485 25,487,987 Shareholders' Deficit: Preferred stock, $ 0.0001 par value 1,000,000 shares authorized none issued or outstanding as of March 31, 2025 and December 31, 2024 - - Class A common stock, $ 0.0001 par value; 35,000,000 shares authorized; no non-redeemable shares issued or outstanding as of March 31, 2025 and December 31, 2024 - - Class B common stock, $ 0.0001 par value; 5,000,000 shares authorized; 1,579,750 shares issued and outstanding as of March 31, 2025 and December 31, 2024 158 158 Additional paid-in capital - - Accumulated

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2025 Note 1— Description of Organization and Business Operations dMY Squared Technology Group, Inc. (the "Company") is a blank check company incorporated in Massachusetts. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the "Business Combination"). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies. As of March 31, 2025, the Company had not commenced any operations. All activity for the period from February 15, 2022 (inception) through March 31, 2025 relates to the Company's formation and the initial public offering (the "Initial Public Offering") as described below, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company's sponsor is dMY Squared Sponsor, LLC, a Delaware limited liability company (the "Sponsor"). The registration statement for the Company's Initial Public Offering was declared effective on September 29, 2022. On October 4, 2022, the Company consummated its Initial Public Offering of 6,000,000 units (the "units" and, with respect to the Class A common stock included in the units offered, the "Class A Shares" or the "Public Shares"), at $ 10.00 per unit, generating gross proceeds of $ 60.0 million, and incurring offering costs of approximately $ 3.7 million, of which $ 2.1 million and approximately $ 26,000 were for deferred underwriting commissions (see Note 6) and offering costs allocated to derivative warrant liabilities, respectively. On Octobe

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2025 Upon the closing of the Initial Public Offering, the Partial Over-Allotment, the Private Placement and the Overfunding Loans, approximately $ 64.1 million ($ 10.15 per unit) of the net proceeds of the sale of the units and the Private Placement Warrants and the proceeds from the Overfunding Loans were initially placed in a trust account (the "Trust Account") with Continental Stock Transfer & Trust Company acting as trustee. According to the terms of the Investment Management Trust Agreement, dated October 4, 2022, between the Company and Continental Stock Transfer & Trust Company (the "Trust Agreement"), the funds held in the Trust Account were initially invested in United States government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of (i) the completion of a Business Combination, (ii) the redemption of Public Shares properly submitted in connection with a shareholder vote to amend the Amended and Restated Articles of Organization (the "Charter") to modify the substance or timing of the Company's obligation to redeem 100 % of its Public Shares if the Company does not complete the initial Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to shareholders' rights or pre-initial Business Combination activity, and (iii) return of the funds held in the Trust Account to holders of Public Shares (the "Public Shareholders") as part of the redemption of the Public Shares if the Company does not complete an initial Business Combination during the Combination Period. On September 25, 2024, the Company instructed Continental Stoc

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2025 In January 2024, the shareholders approved the proposal to amend the Charter and eliminate such Redemption Limitation (as defined below). If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Charter, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission ("SEC") and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination. The Company's Charter provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a "group" (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % or more of the Public Shares, without the prior consent of the Company. The Sponsor and the Company's officer

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