Pershing Square SPARC Losses Mount Amid Rising Legal Costs

TL;DR

**Pershing Square SPARC is bleeding cash with legal fees skyrocketing, making a successful business combination look increasingly distant and costly.**

AI Summary

Pershing Square SPARC Holdings, Ltd. reported a net loss of $1,519,058 for the three months ended September 30, 2025, a significant increase from the $703,700 net loss in the prior year period. For the nine months ended September 30, 2025, the net loss was $3,501,168, up from $2,443,399 in the same period of 2024. This increased loss was primarily driven by a substantial rise in legal fees, which jumped from $35,159 in Q3 2024 to $1,203,056 in Q3 2025, and from $146,276 to $1,291,960 for the nine-month periods. The company's total assets decreased from $28,084,860 as of December 31, 2024, to $26,605,807 as of September 30, 2025, mainly due to a reduction in cash and cash equivalents from $23,070,496 to $21,573,283. Total liabilities increased from $43,341,653 to $45,363,768, largely due to a $1,038,232 increase in the Sponsor Warrants liability for the nine months ended September 30, 2025. The company continues its search for a Business Combination, with 60,971,299 SPARs issued and outstanding as of September 30, 2025, which could generate a minimum of $1,219,425,980 upon full exercise.

Why It Matters

This filing reveals Pershing Square SPARC Holdings is burning through cash at an accelerated rate, primarily due to escalating legal fees, as it continues its prolonged search for a business combination. For investors, this signals increased operational risk and a longer path to a potential deal, impacting the time value of their capital. The competitive landscape for SPACs remains challenging, and these rising costs could make it harder for the company to secure an attractive target. Employees and customers of a potential target company might view this extended pre-deal phase and mounting losses with caution, potentially affecting future deal terms or integration. The broader market watches these developments closely as a bellwether for the SPAC sector's viability and the challenges faced by even high-profile sponsors like Pershing Square Capital Management.

Risk Assessment

Risk Level: high — The company reported a net loss of $3,501,168 for the nine months ended September 30, 2025, significantly higher than the $2,443,399 loss in the prior year. Legal fees surged from $146,276 to $1,291,960 over the same period, indicating substantial and growing operational expenses without a revenue-generating business. The accumulated deficit has grown to $22,983,291, and cash and cash equivalents have decreased by $1,497,213, highlighting a negative cash flow from operations and increasing financial strain.

Analyst Insight

Investors should exercise extreme caution and consider the significant burn rate and lack of a definitive business combination. Given the increasing legal expenses and accumulated deficit, potential investors should await concrete progress on a target acquisition and a clear path to profitability before considering an investment. Current holders of SPARs should monitor the company's cash position and legal developments closely, as continued losses could erode the value of the sponsor's contribution and impact the viability of a future deal.

Financial Highlights

debt To Equity

N/A

revenue

N/A

operating Margin

N/A

total Assets

$26,605,807

total Debt

N/A

net Income

-$1,519,058

eps

N/A

gross Margin

N/A

cash Position

$21,573,283

revenue Growth

N/A

Key Numbers

• $1,519,058 — Net loss for Q3 2025 (Increased from $703,700 in Q3 2024)
• $3,501,168 — Net loss for nine months ended Sept 30, 2025 (Increased from $2,443,399 in the prior year period)
• $1,203,056 — Legal fees for Q3 2025 (Significantly increased from $35,159 in Q3 2024)
• $1,291,960 — Legal fees for nine months ended Sept 30, 2025 (Increased from $146,276 in the prior year period)
• $21,573,283 — Cash and cash equivalents as of Sept 30, 2025 (Decreased from $23,070,496 as of Dec 31, 2024)
• $22,983,291 — Accumulated deficit as of Sept 30, 2025 (Increased from $19,482,123 as of Dec 31, 2024)
• $45,363,768 — Total Liabilities as of Sept 30, 2025 (Increased from $43,341,653 as of Dec 31, 2024)
• 60,971,299 — SPARs issued and outstanding (As of September 30, 2025)
• $1,219,425,980 — Minimum proceeds from SPAR exercise (If all SPARs are exercised at $10.00 per share)
• $1,038,232 — Change in fair value of Sponsor Warrants liability (Increased for the nine months ended September 30, 2025)

Key Players & Entities

• Pershing Square SPARC Holdings, Ltd. (company) — registrant
• William A. Ackman (person) — Chairman of the Board and Chief Executive Officer
• Pershing Square SPARC Sponsor, LLC (company) — Company's sponsor
• Pershing Square Capital Management, L.P. (company) — affiliate of the Sponsor and registered investment advisor
• Securities and Exchange Commission (regulator) — declared registration statement effective
• Continental Stock Transfer & Trust (company) — SPAR rights agent
• Jennifer Blouin (person) — independent director
• Kathryn Judge (person) — independent director
• Linda Rottenberg (person) — independent director
• Lisa Gersh (person) — Advisory Board member

FAQ

Risk Factors

• Increased Legal Fees Impacting Net Loss [high — legal]: Legal fees surged from $35,159 in Q3 2024 to $1,203,056 in Q3 2025, and from $146,276 to $1,291,960 for the nine-month periods. This substantial increase in legal expenses is a primary driver of the widening net loss, which grew from $703,700 in Q3 2024 to $1,519,058 in Q3 2025.
• Growing Accumulated Deficit [medium — financial]: The accumulated deficit increased from $19,482,123 as of December 31, 2024, to $22,983,291 as of September 30, 2025. This trend indicates that the company's expenses have consistently outpaced its revenues, leading to a growing deficit.
• Fluctuating Sponsor Warrants Liability [medium — financial]: The Sponsor Warrants liability increased by $1,038,232 for the nine months ended September 30, 2025. Changes in the fair value of these warrants can introduce volatility into the company's financial statements and impact reported liabilities.
• Decreasing Cash Reserves [medium — financial]: Cash and cash equivalents decreased from $23,070,496 as of December 31, 2024, to $21,573,283 as of September 30, 2025. While still substantial, this reduction in liquidity, coupled with increasing losses, warrants attention.
• Uncertainty of Business Combination [high — operational]: The company's primary objective is to find and complete a business combination. The success of this objective is uncertain and depends on identifying a suitable target and securing shareholder approval, with no specific target announced.

Industry Context

Pershing Square SPARC Holdings operates within the Special Purpose Acquisition Company (SPAC) sector. This industry is characterized by companies formed with the sole purpose of raising capital through an initial public offering to acquire an existing company. The landscape is highly competitive, with numerous SPACs vying to identify and complete attractive business combinations, often facing pressure to deploy capital within a set timeframe.

Regulatory Implications

As a SPAC, Pershing Square SPARC Holdings is subject to SEC regulations governing public companies and securities offerings. The company must comply with disclosure requirements and rules related to business combinations. Any changes in SPAC regulations or increased scrutiny from regulatory bodies could impact the company's ability to execute its strategy and its overall valuation.

What Investors Should Do

1. Monitor progress on identifying and completing a business combination, as this is the primary value driver for the company.
2. Analyze the impact of increasing legal fees on the company's burn rate and cash runway.
3. Evaluate the potential dilution and financial implications should the outstanding SPARs be exercised.
4. Assess the fair value changes in the Sponsor Warrants liability and its effect on the company's financial position.

Glossary

SPARs

Special Purpose Acquisition Rights, which are rights issued by a special purpose acquisition company (SPAC) that allow holders to purchase shares of the SPAC at a later date, typically upon the completion of a business combination. (Pershing Square SPARC Holdings has 60,971,299 SPARs outstanding, representing a significant potential capital raise of at least $1,219,425,980 if exercised.)

Business Combination

The merger or acquisition of a SPAC with an operating company, which is the primary purpose of a SPAC's existence. (Pershing Square SPARC Holdings is actively seeking a business combination, and its future operations and value are contingent on the successful completion of such a transaction.)

Sponsor Warrants

Warrants issued to the sponsors of a SPAC, typically in exchange for their initial investment, which allow them to purchase shares at a predetermined price. (The fair value of the Sponsor Warrants liability has increased by $1,038,232, impacting the company's overall liabilities and financial results.)

Year-Over-Year Comparison

For the three months ended September 30, 2025, Pershing Square SPARC Holdings reported a net loss of $1,519,058, a significant increase from the $703,700 net loss in the same period of 2024. This widening loss is largely attributable to a substantial rise in legal fees. Total assets have seen a slight decrease, primarily driven by a reduction in cash and cash equivalents, while total liabilities have increased, notably due to the Sponsor Warrants liability. The company's core objective of finding a business combination remains ongoing.

Key Financial Figures

• $0 — 2,533 shares of common stock, par value $0.0001, of Pershing Square SPARC Holdings

Filing Documents

• ck0001895582-20250930.htm (10-Q) — 828KB
• ck0001895582-ex31_1.htm (EX-31.1) — 19KB
• ck0001895582-ex31_2.htm (EX-31.2) — 18KB
• ck0001895582-ex32_1.htm (EX-32.1) — 9KB
• ck0001895582-ex32_2.htm (EX-32.2) — 8KB
• 0001193125-25-255886.txt ( ) — 3581KB
• ck0001895582-20250930.xsd (EX-101.SCH) — 607KB
• ck0001895582-20250930_htm.xml (XML) — 410KB

- Financial Information

Part I - Financial Information 1

Financial Statements

Item 1. Financial Statements 1 Balance Sheets 1 2 3 4 Notes to the Unaudited Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 21

Controls and Procedures

Item 4. Controls and Procedures 21

- OTHER INFORMATION

Part II - OTHER INFORMATION 22

Legal Proceedings

Item 1. Legal Proceedings 22

Risk Factors

Item 1A. Risk Factors 22

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 22

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 22

Other Information

Item 5. Other Information 22

Exhibits

Item 6. Exhibits 23

- SIGNATURES

Part III - SIGNATURES 24 - i -

—FINANCIA L INFORMATION

Part I—FINANCIA L INFORMATION Item1. Fina ncial Statements PERSHING SQUARE SPARC HOLDINGS, LTD. Balance SheetS As of September 30, 2025 (Unaudited) December 31, 2024 (Audited) Assets Current Assets: Cash and cash equivalents $ 21,573,283 $ 23,070,496 Prepaid expenses 31,524 13,364 Total Current Assets 21,604,807 23,083,860 Cash held in segregated account 5,001,000 5,001,000 Total Assets $ 26,605,807 $ 28,084,860 Liabilities And Stockholders' Equity/(Deficit) Current Liabilities: Accrued expenses $ 1,341,221 $ 357,338 Directors compensation payable 225,000 225,000 Total Current Liabilities 1,566,221 582,338 Advisor Warrants liability 3,000,000 3,000,000 Sponsor Warrants liability 40,797,547 39,759,315 Total Liabilities 45,363,768 43,341,653 Stockholders' Equity/(Deficit) Common Stock, $ 0.0001 par value; 3,000,000,000 shares authorized and 422,533 issued and outstanding at September 30, 2025 and December 31, 2024 42 42 Additional paid-in capital 4,225,288 4,225,288 Accumulated deficit ( 22,983,291 ) ( 19,482,123 ) Total Stockholders' Equity/(Deficit) ( 18,757,961 ) ( 15,256,793 ) Total Liabilities And Stockholders' Equity/(Deficit) $ 26,605,807 $ 28,084,860 The accompanying notes are an integral part of the unaudited financial statements. - 1 - PERSHING SQUARE SPARC HOLDINGS, LTD. For the three months ended For the nine months ended September 30, 2025 (Unaudited) September 30, 2024 (Unaudited) September 30, 2025 (Unaudited) September 30, 2024 (Unaudited) Legal fees $ ( 1,203,056 ) $ ( 35,159 ) $ ( 1,291,960 ) $ ( 146,276 ) Compensation expense ( 225,000 ) ( 225,000 ) ( 675,000 ) ( 675,000 ) Accounting and tax expense ( 91,544 ) ( 87,705 ) ( 273,597 ) ( 262,795 ) Franchise tax expense ( 50,000 ) ( 50,000 ) ( 150

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