Palomino Labs Posts $2.4M Loss Amid SPAC Merger, Eyes MicroLED Future

TL;DR

**Palomino Labs is a high-burn, pre-revenue microLED play that just went public via SPAC, making it a speculative bet on future tech adoption.**

AI Summary

Palomino Laboratories Inc. reported a significant net loss of $2,420,589 for the nine months ended September 30, 2025, a substantial increase from the $6,235 loss in the same period of 2024. The company generated no revenue during these periods, indicating its development stage. General and administrative expenses surged to $1,960,195 for the nine months ended September 30, 2025, compared to $2,118 in 2024. A key business change was the reverse recapitalization merger with Unite Acquisition 3 Corp. on September 29, 2025, which transformed Palomino into a public reporting company. The company's cash and cash equivalents increased dramatically to $7,896,569 as of September 30, 2025, up from $134,657 at December 31, 2024, largely due to $8,016,937 from a private placement. Risks include continued net losses and negative cash flows, with the company expecting to incur additional losses as it hires personnel and protects intellectual property. The strategic outlook involves commercializing high-performance microLED-based optoelectronic solutions for data communication, aiming to replace copper-based links in compute-intensive environments.

Why It Matters

This filing reveals Palomino Laboratories' transition into a public entity via a reverse recapitalization, a critical step for its future funding and market visibility. The substantial net loss of $2.4 million and zero revenue highlight the company's early development stage, signaling high risk but also potential for disruptive technology in the microLED space. Investors should note the significant cash infusion from the private placement, which provides a runway for operations, but also the competitive landscape dominated by established semiconductor players. Employees and customers will be watching for progress in commercializing its gallium nitride (GaN) based optical transceivers, which could reshape data movement in AI servers and data centers.

Risk Assessment

Risk Level: high — The company reported an accumulated deficit of $2,438,955 as of September 30, 2025, and incurred a net loss of $2,420,589 for the nine months ended September 30, 2025. Furthermore, Palomino Laboratories Inc. has not generated any revenue since its inception, indicating a high-risk development stage with no proven commercial viability yet.

Analyst Insight

Investors should approach Palomino Laboratories with extreme caution, recognizing it as a highly speculative, pre-revenue technology play. Consider a small, diversified position only if you have a high-risk tolerance and a long-term belief in microLED technology's potential to disrupt the data communication market. Monitor future filings for revenue generation and progress in commercialization.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$2,420,589

eps

-$0.88

gross Margin

N/A

cash Position

$7,896,569

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $2.42M — Net Loss (Increased significantly from $6,235 in the prior year, reflecting development stage expenses.)
• $7.90M — Cash and Cash Equivalents (Substantial increase from $134,657 at December 31, 2024, providing liquidity for operations.)
• $8.02M — Private Placement Proceeds (Gross proceeds from the issuance of common stock and warrants, a key financing activity.)
• $1.96M — General and Administrative Expenses (Surged from $2,118 in 2024, indicating increased operational costs post-merger.)
• 0 — Revenue (Company remains in the development stage with no revenue generated.)
• 18,770,686 — Shares Outstanding (As of November 14, 2025, reflecting shares after the merger and private placement.)
• $2.44M — Accumulated Deficit (As of September 30, 2025, highlighting historical losses.)
• $0.54 — Net Loss Per Share (3 months) (For the three months ended September 30, 2025, reflecting increased losses.)
• $0.88 — Net Loss Per Share (9 months) (For the nine months ended September 30, 2025, indicating significant per-share losses.)
• 1,423,417 — Stock-based Compensation (Non-cash expense for the nine months ended September 30, 2025.)

Key Players & Entities

• Palomino Laboratories Inc. (company) — registrant and accounting acquirer in the merger
• Unite Acquisition 3 Corp. (company) — shell company that merged with Palomino Laboratories Inc.
• Rhino Subsidiary Inc. (company) — new name for Private Palomino after the merger
• SEC (regulator) — Securities and Exchange Commission
• $2,420,589 (dollar_amount) — net loss for the nine months ended September 30, 2025
• $7,896,569 (dollar_amount) — cash and cash equivalents as of September 30, 2025
• $8,016,937 (dollar_amount) — gross proceeds from private placement of common stock and warrants
• September 29, 2025 (date) — date of the merger between Unite Acquisition 3 Corp. and Private Palomino
• Delaware (location) — state of incorporation for Palomino Laboratories Inc. and Unite Acquisition 3 Corp.
• microLED (technology) — core technology for Palomino's optoelectronic solutions

FAQ

Risk Factors

• Continued Net Losses and Negative Cash Flows [high — financial]: The company reported a net loss of $2,420,589 for the nine months ended September 30, 2025, with no revenue generated. Management expects to incur additional losses as it scales operations, hires personnel, and protects intellectual property, posing a significant financial risk.
• Dependence on Development Stage Technology [high — operational]: Palomino is pioneering microLED-based optoelectronic solutions. The success of the company is heavily reliant on the successful development, commercialization, and market adoption of this advanced technology, which is still in its early stages.
• Reliance on Future Financing [medium — financial]: While the company secured $8,016,937 from a private placement, its continued losses and lack of revenue indicate a potential future need for additional capital. Failure to secure further funding could impede its ability to execute its business plan.
• Market Adoption of New Technology [medium — market]: The company aims to replace copper-based links with its microLED-based optoelectronic solutions. Significant market education and adoption hurdles exist for this novel technology to displace established solutions in data communication.
• Intellectual Property Protection [medium — operational]: Protecting its proprietary gallium nitride (GaN) compound semiconductor materials and microLED technology is critical. The company anticipates incurring costs related to IP protection, and any infringement or failure to protect its IP could severely impact its competitive advantage.

Industry Context

Palomino operates in the rapidly evolving semiconductor industry, specifically targeting the high-performance data communication market. The industry is characterized by intense innovation, driven by demand for faster and more efficient data transfer in areas like AI servers and data centers. Key trends include the shift towards optical interconnects to overcome the limitations of copper wiring, and the development of advanced materials like GaN for next-generation components.

Regulatory Implications

As a newly public company, Palomino must comply with SEC reporting requirements, including timely filing of 10-Q and 10-K reports. Its operations in semiconductor technology may also be subject to export controls and trade regulations, particularly concerning advanced materials and manufacturing processes.

What Investors Should Do

1. Monitor progress on technology commercialization: Investors should closely track milestones related to product development, customer adoption, and revenue generation, as the company is currently pre-revenue.
2. Assess cash burn rate and future funding needs: Given the significant net losses and operational expenses, investors should evaluate the company's cash runway and the likelihood of securing future financing.
3. Evaluate competitive landscape: Understand how Palomino's microLED technology differentiates itself from existing and emerging solutions in the data communication market.
4. Review management's execution of strategic plan: Assess the company's ability to scale operations, protect intellectual property, and achieve its market penetration goals post-merger.

Key Dates

• 2025-09-29: Reverse Recapitalization Merger with Unite Acquisition 3 Corp. — Transformed Palomino into a public reporting company, providing access to capital markets and increased visibility.
• 2025-09-30: End of Nine Months Reporting Period — Reported significant net loss and substantial increase in cash due to private placement, reflecting development stage activities.
• 2024-09-30: End of Prior Year Nine Months Reporting Period — Reported minimal net loss ($6,235) and very low G&A expenses ($2,118), indicating a much earlier stage of development.
• 2024-12-31: End of Prior Fiscal Year — Company had significantly lower cash reserves ($134,657) prior to the merger and private placement.

Glossary

Reverse Recapitalization

A transaction where a private company effectively becomes public by merging with a publicly traded shell company. The private company is treated as the acquirer for accounting purposes, and its financial statements are retroactively presented as if it had always been public. (This is how Palomino became a public company. It means the historical financial data presented is recast to reflect the post-merger share structure.)

MicroLED

A type of display technology that uses microscopic light-emitting diodes (LEDs) as individual pixels. It offers advantages in brightness, efficiency, and lifespan compared to traditional LEDs. (This is the core technology Palomino is developing for its optoelectronic solutions in data communication.)

Optoelectronic Solutions

Devices or systems that combine optical (light) and electronic (electricity) functions. In this context, it refers to components that convert electrical signals to optical signals and vice versa for data transmission. (Palomino's product focus is on high-performance optoelectronic solutions for data communication.)

Fabless Semiconductor Company

A semiconductor company that designs and markets semiconductor chips but does not own or operate a semiconductor fabrication plant (fab). They outsource manufacturing to third-party foundries. (Palomino operates as a fabless company, focusing on R&D and design, while relying on external manufacturing for its GaN-based microLED technology.)

Gallium Nitride (GaN)

A wide-bandgap semiconductor material known for its high electron mobility and thermal conductivity, making it suitable for high-frequency, high-power, and high-temperature electronic and optoelectronic devices. (Palomino's proprietary platform is built on GaN compound semiconductor materials for its microLEDs.)

Stock-based Compensation

Compensation provided to employees in the form of stock options, restricted stock units, or other equity awards, rather than cash. It is recognized as an expense on the income statement. (The company incurred $1,423,417 in stock-based compensation for the nine months ended September 30, 2025, which is a non-cash expense impacting net loss.)

Year-Over-Year Comparison

Compared to the prior year period (nine months ended September 30, 2024), Palomino Laboratories Inc. has undergone a dramatic transformation. While revenue remains at $0, indicating its continued development stage, the company has transitioned from a private entity to a public one via a reverse recapitalization merger. This is reflected in a substantial increase in cash and cash equivalents to $7.90M from $134,657 at year-end 2024, largely due to an $8.02M private placement. Concurrently, General and Administrative expenses have surged from $2,118 to $1.96M, and the net loss has widened significantly from $6,235 to $2.42M, highlighting increased operational costs associated with its public status and development efforts.

Key Financial Figures

• $0.0001 — bined Company's common stock, par value $0.0001 per share. In addition, in connection w
• $1.5 — shares of common stock and warrants at $1.5 per share and all of Private Palomino's

Filing Documents

• form10-q.htm (10-Q) — 693KB
• ex31-1.htm (EX-31.1) — 18KB
• ex31-2.htm (EX-31.2) — 19KB
• ex32-1.htm (EX-32.1) — 8KB
• ex32-2.htm (EX-32.2) — 8KB
• 0001493152-25-023285.txt ( ) — 3972KB
• uniteacq3-20250930.xsd (EX-101.SCH) — 33KB
• uniteacq3-20250930_cal.xml (EX-101.CAL) — 35KB
• uniteacq3-20250930_def.xml (EX-101.DEF) — 171KB
• uniteacq3-20250930_lab.xml (EX-101.LAB) — 267KB
• uniteacq3-20250930_pre.xml (EX-101.PRE) — 215KB
• form10-q_htm.xml (XML) — 517KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 5 Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024 6 Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024 7 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2025 and 2024 8 Notes to Unaudited Condensed Consolidated Financial Statements 9 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 22 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 28 Item 4.

Controls and Procedures

Controls and Procedures 29

– OTHER INFORMATION

PART II – OTHER INFORMATION 29 Item 1.

Legal Proceedings

Legal Proceedings 29 Item 1A.

Risk Factors

Risk Factors 29 Item 2. Unregistered Sales of Equity Securities 30 Item 3. Defaults Upon Senior Securities 30 Item 4. Mine Safety Disclosures 30 Item 5. Other Information 30 Item 6. Exhibits 30

SIGNATURES

SIGNATURES 31 2 CAUTIONARY You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial The registrant was incorporated as Unite Acquisition 3 Corp. ("Unite Acquisition" or "Unite") in the State of Delaware on March 10, 2022. Prior to the Merger (as defined below), the registrant was a "shell company" (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). On September 29, 2025, Unite Acquisition's wholly owned subsidiary, Palomino Acquisition Co., a Delaware corporation formed in the corporation ("Private Palomino"). Pursuant to this transaction (the "Merger"), Private Palomino was the surviving corporation and became the Company's wholly owned subsidiary, and all of the outstanding stock of Private Palomino was converted into shares of the combined Company's common stock, par value $0.0001 per share. In addition, in connection with the Merger, all of Private Palomino's outstanding SAFEs converted into shares of common stock and warrants at $1.5 per share and all of Private Palomino's outstanding warrants became exercisable for shares of common stock. As a result of the Merger, we acquired the business of Private Palomino and continued its business operations as a public reporting company under the same name, Palomino Laboratories Inc. Concurrent with the consummation of the Merger, Private Palomino changed its name to "Rhino Subsidiary Inc." In accordance with "reverse merger" or "reverse acquisition" accounting treatment, our historical financial statements as of period ends, and for periods ended, prior to the Merger have b

Business

Business Description Palomino Laboratories Inc., (the "Company") was incorporated in the State of Delaware on February 9, 2023. The Company's management has chosen December 31 for its fiscal year end. In 2025, the Company changed its name, concurrent with the consummation of the Merger, to Rhino Subsidiary Inc. ("Private Palomino"). On September 29, 2025, Unite Acquisition 3 Corp.'s ("Unite") wholly owned subsidiary, Palomino Acquisition Co., a Delaware corporation formed in the State of Delaware on August 19, 2025 ("Merger Sub"), merged with and into Palomino Laboratories Inc., a privately held Delaware corporation (prior to the merger, "Private Palomino"). Pursuant to this transaction (the "Merger"), Private Palomino was renamed to Rhino Subsidiary Inc and became the Company's wholly owned subsidiary and all of the outstanding stock of Private Palomino was converted into shares of the Company's common stock, par value $ 0.0001 per share .As a result, Unite ceased to be a shell company and continues as a public reporting company under the new name, Palomino Laboratories Inc. The Merger was accounted for as a reverse recapitalization as the Company was determined to be the accounting acquirer under Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 805, Business Combinations. Please refer to Note 3 - Reverse Recapitalization for additional details of the Merger. Upon the completion of the Merger between the Company and Unite, the share, per share value and net loss per share in the accompanying unaudited condensed consolidated financial statements for all dates prior to the Merger were retroactively recast to reflect the exchange ratio pursuant to the Merger. The Company is a fabless semiconductor company pioneering the next generation of high-performance microLED-based optoelectronic solutions for data communication. Its mission is to enable ultra-high-speed, energy-efficient optical interconnects that replace

View Full Filing

View this 10-Q filing on SEC EDGAR