QUMS

Business Context and Reporting Period

Company: Quantumsphere Acquisition Corporation (QUMS)

Filing Type: Form 10-Q (Quarterly Report)

Reporting Period: Three months ended June 30, 2026

Business Overview: Quantumsphere is a Cayman Islands exempted company formed as a "blank check" SPAC to effect a merger, share exchange, or asset acquisition. The Company consummated its IPO on August 7, 2025, raising $82.8 million. On October 3, 2025, it entered into a Merger Agreement to combine with SACH Pte. Ltd., a Singapore-based company operating in gaming, technology, and e-commerce, valued at approximately $300 million. The Company has until February 6, 2027, to complete a business combination or face liquidation.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Shift: The Company reported a net income of $574,013 for the quarter ended June 30, 2026, compared to a net loss of $15,549 in the same period in 2025. This reversal is primarily driven by $751,010 in interest income earned on investments held in the Trust Account, which was not present in the prior year period.
• Expense Increase: General and administrative expenses increased significantly to $177,441 from $15,750 year-over-year, reflecting the costs associated with being a public company and pursuing the business combination.
• Cash Position: Cash held outside the Trust Account decreased from $187,907 at March 31, 2026, to $4,901 at June 30, 2026, due to operating cash outflows of $183,006.
• Trust Account Growth: The Trust Account balance increased by $751,010 due to accrued interest, raising the redemption value per share to approximately $10.34.

Outlook, Risks, and Management Commentary

• Merger Status: The Company is actively pursuing the business combination with SACH Pte. Ltd. The transaction is subject to shareholder approval, regulatory clearance, and minimum cash proceeds conditions. The Merger Agreement may be terminated if not consummated by July 31, 2026.
• Going Concern: Management has raised substantial doubt about the Company's ability to continue as a going concern. With only $4,901 in cash outside the Trust and a working capital deficit, the Company lacks sufficient resources to sustain operations for one year without completing the business combination or raising additional capital.
• Internal Controls: Management concluded that disclosure controls and procedures were ineffective as of June 30, 2026, citing a lack of adequate controls to identify and timely disclose agreements requiring commitment and contingency disclosure.
• Contractual Obligations:
  • Deferred Underwriting Fee: $3.312 million payable upon closing of the business combination.
  • Finder's Fee: A $300,000 retainer was paid. The $3.5 million success fee was amended to be satisfied by the Target (SACH) issuing shares, removing the cash obligation from the SPAC.
  • Administrative Fees: $15,000 per month payable to the Sponsor; $45,000 accrued for the quarter.

Investor Verification Checklist

• Merger Timeline: Verify the status of the Merger Agreement with SACH Pte. Ltd., specifically the July 31, 2026, termination deadline and the likelihood of shareholder/regulatory approval.
• Liquidity Risk: Confirm the Company's ability to fund operations until the merger closes given the $4,901 cash balance and $143,042 working capital deficit.
• Internal Control Remediation: Review subsequent filings for plans to remediate the ineffective disclosure controls identified in this report.
• Redemption Levels: Monitor public shareholder redemption rates, as high redemptions could impact the cash available for the business combination and the deferred underwriting fee.
• Target Valuation: Assess the $300 million equity valuation of SACH Pte. Ltd. and the resulting ownership structure for existing SPAC shareholders post-merger.