Quantumsphere Acquisition Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations References to the “Company,” “our,” “us” or “we” refer to Quantumsphere Acquisition Corporation. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes related thereto. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form S-1 filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our initial business combination using cash from the proceeds of the Initial Public Offering (“IPO” as defined below), and the private placement of the private placement units, the proceeds of the sale of our securities in connection with our initial business combination, our shares, debt or a combination of cash, stock and debt. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an initial business combination will be successful. Recent Developments On August 7, 2025, the Company consummated its initial public offering (“IPO”) of 8,280,000 units (the “Public Units”), including the full exercise of the underwriter’s over-allotment option for 1,080,000 additional Units, at a price of $10.00 per Unit, generating gross proceeds of $82,800,000. Simultaneously with the IPO, the Company completed a private placement with its sponsor, Whiteowl Holdings LLC, of 228,650 private units at $10.00 per unit, generating additional gross proceeds of $2,286,500. A total of $82,800,000 of the net proceeds from the IPO and private placement was deposited into a trust account for the benefit of the Company’s public shareholders. 19 On August 8, 2025, the Company entered into a finder’s agreement with Aspira Capital Consulting LTD (“Aspira”) pursuant to which the Company agreed to pay Aspira (i) a one-time, non-refundable retainer fee of $300,000, (ii) a success fee of $3,500,000 payable upon the closing of a qualifying transaction, and (iii) reimbursement for reasonable out-of-pocket expenses up to $150,000 without prior written approval. The Company acknowledges and agrees that the Finder is not a registered broker-dealer under U.S. securities laws, and is not acting as a broker-dealer in connection with the transaction. As of September 30, 2025, the retainer fee of $300,000 had been paid in full, and there was no outstanding balance. Merger Agreement On October 3, 2025, Quantumsphere Acquisition Corporation (the “Company” or the “SPAC”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Omnivate Global Ltd., a Cayman Islands exempted company (“HoldCo”), SACH Pte. Ltd., a Singapore exempted company (“SACH”), QUMS Pubco Ltd., a Cayman Islands exempted company (“Pubco”) and wholly owned subsidiary of the Company, and SACH Merge Sub Ltd., a Cayman Islands exempted company and wholly owned subsidiary of Pubco (“Merger Sub”). In connection with the proposed business combination described in the Merger Agreement, the Company caused the formation of Pubco and Merger Sub. Each of Pubco and Merger Sub has been duly incorporated as a Cayman Islands exempted company in accordance with the terms of the Merger Agreement. On the terms and subject to the conditions of the Merger Agreement, the Company will merge with and into Pubco, with Pubco surviving as the publicly listed company (the “SPAC Merger”). Immediately prior to the Acquisition Merger (as defined below), HoldCo will become the direct parent of SACH. Immediately thereafter, Merger Sub will merge with and into HoldCo, with HoldCo surviving as a wholly-owned subsidiary of Pubco (the “Acquisition Merger”). The SPAC Merger, the Acquisition Merger and the other transactions contemplated by the Merger Agreement are collectively referred to as the “Business Combination,” and as a result of the Business Combination, Pubco will continue as a Cayman Islands exempted company, with HoldCo and SACH as its wholly-owned subsidiaries, and Pubco’s ordinary shares are expected to remain listed on the Nasdaq Stock Market LLC. Under the Merger Agreement, all of the issued and outstanding shares of SACH will be exchanged for newly issued ordinary shares of Pubco, and no cash consideration will be paid to SACH shareholders. The transaction values SACH at an equity value of approximately $300 million. Upon completion of the Business Combination, the existing shareholders of SACH will receive newly issued ordinary shares of Pubco based on the agreed valuation in the Merger Agreement, and the existing shareholders of the Company (including the Sponsor) will retain their existing equity interests in Pubco following the transaction. The final ownership percentages will depend on the level of redemptions by Quantumsphere’s public shareholders and other transaction adjustments. Closing Conditions and Termination The closing of the Business Combination is subject to approval by the shareholders of both the Company and SACH, regulatory approvals, satisfaction of customary closing conditions and the availability of minimum cash proceeds following any redemptions of the Company’s public shares. The Merger Agreement may be terminated by either party under customary circumstances, including failure to consummate the transaction by July 31, 2026 or a material breach of representations, warranties, or covenants. Sponsor Support Agreement Whiteowl Holdings LLC, the sponsor of the Company (the “Sponsor”), entered into a Sponsor Support Agreement pursuant to which it agreed to vote its shares of the Company in favor of the Merger Agreement and take certain other actions in support of the transaction. Lock-Up Agreements Pubco, the Sponsor, certain HoldCo shareholders, and other key holders entered into Lock-Up Agreements restricting the transfer of certain Pubco ordinary shares for specified periods following the closing of the Business Combination. Registration Rights Agreement Pubco, the Sponsor, and certain investors entered into a Registration Rights Agreement providing such investors with customary demand and piggyback registration rights with respect to Pubco ordinary shares received in the Business Combination. 20 Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from July 23, 2024 (inception) through September 30, 2025 were organizational activities and those necessary to consummate the IPO, and subsequent to the IPO, identifying a target company for an initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the IPO. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination. For the three ended September 30, 2025, we had a net loss of $90,319, which consisted of general and administrative expenses of $596,977, partially offset by interest income of $506,658. For the six months ended September 30, 2025, we had a net loss of $105,778, which consisted of general and administrative expenses of $612,727, partially offset by interest income of $506,949. For the period from July 23, 2024 (Inception) to September 30, 2024, we had a net loss of $12,089, all of which consisted of general and administrative expenses. Liquidity and Capital Resources On August 7, 2025, we consummated our IPO of 7,200,000 units (the “Units”), at $10.00 per Unit. In connection with the closing of the IPO, the underwriter fully exercised its over-allotment option to purchase 1,080,000 additional Units for an aggregate of 8,280,000 Units sold. The Units were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $82,800,000. Simultaneously with the closing of our IPO, we consummated the sale of 228,650 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, generating total gross proceeds of $2,286,500. Upon the closing of the IPO and the private placement on August 7, 2025, a total of $82,800,000 from the net proceeds of the IPO and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company as a trustee and will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and that invest only in direct U.S. government treasury obligations. We intend to use substantially all of the net proceeds of the IPO and the private placement, including the funds held in the Trust Account, in connection with our initial business combination and to pay our expenses relating thereto, including deferred underwriting discounts and commissions payable to the underwriters in the IPO in an amount equal to 4.0% of the total gross proceeds raised in the IPO upon consummation of our initial business combination. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses. As of September 30, 2025, we had cash of $444,818 and a working capital of $539,658. 21 The Company has incurred and expects to continue to incur significant costs in pursuit of the consummation of an initial Business Combination. In addition, the Company currently has until February 6, 2027 (unless the Company extends such period by amending its Amended and Restated Memorandum and Articles of Association) to consummate the initial Business Combination. If the Company does not complete a Business Combination within the prescribed timeline, the Company will trigger an automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Memorandum and Articles of Association. In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has determined that it has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful within the Combination Period. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the date of the issuance of the financial statements. Therefore, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate. The financial statement does not include any adjustments that might result from the outcome of this uncertainty. Off-Balance Sheet Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations Promissory Note — Related Party On March 9, 2025 and July 22, 2025, the Sponsor agreed to loan the Company up to an aggregate amount of $200,000 and $500,000, respectively, to be used, in part, for transaction costs incurred in connection with the IPO (the “Promissory Notes”). Prior to the closing of the IPO on August 7, 2025, the Company has an outstanding loan balance of $210,000 under the Promissory Notes. The Promissory Notes are unsecured, interest-free and due on the date on which the Company closes the IPO. The loan balance was repaid upon the closing of the IPO out of the offering proceeds not held in the Trust Account on August 7, 2025. Administrative Services Agreement The Company entered into an Administrative Services Agreement with the Sponsor on August 5, 2025, commencing on the effective date of the registration statement of the initial public offering through the earlier of the consummation of a business combination or the Company’s liquidation, to pay the Sponsor a total of $15,000 per month for office space and administrative and support services. Underwriting Agreement We granted SPAC Advisory Partners (“SAP”), the representative of the underwriters, a 45-day option from the date of IPO, to purchase up to 1,080,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. The underwriter fully excised its over-allotment option on August 7, 2025. The underwriters is entitled to a cash underwriting discount of 0.71% of the gross proceeds of the Proposed Public Offering, or $510,000 (or $586,500 if the over-allotment option is exercised in full). In addition, SAP will be entitled to a deferred fee of 4.0% of the gross proceeds of the Proposed Public Offering, or $3,312,000, which will be paid upon the closing of a Business Combination solely from amounts remaining in the Trust Account following all properly submitted shareholder redemption in connection with the consummation of the initial Business Combination and such deferred fee shall be capped at such amount so remaining in the Trust Account. 22 Right of First Refusal We granted SAP a right of first refusal for a period commencing from the consummation of the IPO until the earlier of (i) 10 months after the consummation of the initial business combination (or the liquidation of the Trust Account in the event that the Company fails to consummate its initial business combination within the prescribed time period) or (ii) 36 months after the consummation of the IPO in accordance with FINRA Rule 5110(g)(6)(A) to act as lead financial advisor, capital markets advisor, underwriter and/or private placement agent in connection with any initial business combination or in connection with any financing that occurs between the closing of the IPO and the date that is the earlier of (i) 10 months after the closing of the initial business combination or (ii) 36 months after the consummation of the IPO. Finder’s Agreement On August 8, 2025, the Company entered into a Finder’s Agreement with Aspira Capital Consulting LTD. Pursuant to the Finder’s Agreement, the Company agreed to pay the Finder a one-time, non-refundable retainer fee in the amount of $300,000, payable upon the execution of Finder’s Agreement. The Company also agreed to pay the Finder a success fee in the amount of $3,500,000, payable upon the closing (or closings) of a transaction (as defined in the Finder’s Agreement). In addition, the Company agreed to reimburse the Finder on a monthly basis for all reasonable, actual, and verifiable out-of-pocket expenses incurred in connection with the Finder’s engagement under the agreement, provided that such expenses shall not exceed $150,000 without the Company’s prior written approval. The Company acknowledges and agrees that the Finder is not a registered broker-dealer under U.S. securities laws and is not acting as a broker-dealer in connection with the transaction. The Company acknowledges and agrees that the Finder is not a registered broker-dealer under U.S. securities laws, and is not acting as a broker-dealer in connection with the transaction. As of September 30, 2025, the retainer fee of $300,000 had been paid in full, and there was no outstanding balance. Critical Accounting Policies and Estimates The preparation of unaudited financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies and estimates. Recent Accounting Standards In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires the disclosure of additional segment information. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU No. 2023-07 as of March 31, 2025. In December 2023, the FASB issued ASU 2023-09, Income taxes (Topic 740): Improvements to Income Tax Disclosure (“ASU 2023-09”), which enhances the transparency and usefulness of income tax disclosures. ASU 2023-09 will be effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company adopted ASU 2023-09 as of March 31, 2025 and there were no significant impact. Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results As of September 30, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. 23 JOBS Act On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not required for smaller reporting companies.