DRUGS MADE IN AMERICA ACQUISITION CORP. (Form 10-Q)
Drugs Made in America Acquisition Corp. (DMAAC) filed its Form 10-Q for the quarterly period ended March 31, 2025. The company reported a net loss of $1.3 million for the three months ended March 31, 2025, compared to a net loss of $1.1 million for the same period in 2024. As of March 31, 2025, DMAAC had cash and cash equivalents of $14.4 million and a total shareholders’ deficit of $33.5 million. The company’s ordinary shares were listed on the Nasdaq Stock Market LLC under the ticker symbols DMAAU, DMAA, and DMAAR. DMAAC did not have any revenue for the three months ended March 31, 2025, and its expenses primarily consisted of general and administrative expenses. The company’s management’s discussion and analysis of financial condition and results of operations is included in the report.
Overview
Drugs Made In America Acquisition Corp. is a blank check company formed in the Cayman Islands on May 23, 2024. The company’s purpose is to merge, acquire, or combine with one or more businesses, with a focus on the pharmaceutical industry.
The company completed its initial public offering (IPO) on January 29, 2025, raising $200 million by selling 20 million units at $10 per unit. Each unit consists of one ordinary share and one right to receive one-eighth of an ordinary share upon the completion of an initial business combination. The underwriters were granted a 45-day option to purchase up to an additional 3 million units to cover over-allotments, which they exercised in full on February 18, 2025, raising an additional $30 million.
Simultaneously with the IPO, the company sold 400,000 private placement units to its sponsor, Drugs Made In America Acquisition LLC, at $10 per unit, generating $4 million in proceeds. An additional 30,000 private placement units were sold to the sponsor upon the exercise of the over-allotment option, raising another $300,000.
After the IPO and private placements, a total of $231.15 million was placed in a trust account to be used for the company’s initial business combination. The company has up to 15 months (which can be extended up to 21 months) to complete the initial business combination, after which the funds in the trust account will be used to redeem the public shares if no business combination is completed.
Results of Operations
The company has not engaged in any operations or generated any revenues to date. Its only activities have been organizational, preparing for the IPO, and identifying a target company for an initial business combination. The company generates non-operating income in the form of interest earned on the cash and investments held in the trust account.
For the three months ended March 31, 2025, the company had a net income of $1,254,543, which consists of $1,585,468 in interest earned on the trust account, offset by $330,925 in general and administrative costs.
Liquidity and Capital Resources
As of March 31, 2025, the company had $923 in cash. Prior to the IPO, the company’s only source of liquidity was an initial purchase of ordinary shares by the sponsor and loans from the sponsor.
After the IPO and over-allotment option exercise, the company had a total of $231.15 million in the trust account. The company intends to use these funds to complete its initial business combination. The company may also use debt or a combination of cash, shares, and debt to finance the initial business combination.
The company has an unsecured subscription promissory note with the sponsor, which allows the company to borrow up to $1.1 million in working capital loans. These loans may be converted into private placement units at $10 per unit.
The company incurred $8,898,201 in transaction costs related to the IPO, including $1,150,000 in cash underwriting fees, $6,900,000 in deferred underwriting fees, and $848,201 in other offering costs.
Going Concern
Management has determined that the mandatory liquidation and subsequent dissolution of the company if an initial business combination is not completed within the required timeframe raises substantial doubt about the company’s ability to continue as a going concern.
Contractual Obligations
The company has no long-term debt, capital lease obligations, or operating lease obligations. It does have an agreement to pay the sponsor $10,000 per month for office space and administrative support, which will terminate upon completion of the initial business combination or the company’s liquidation.
The underwriters are entitled to a cash underwriting discount of 0.5% of the gross IPO proceeds, as well as a deferred fee of 3% of the gross IPO proceeds, payable upon completion of the initial business combination. The underwriters will also receive 200,000 (or up to 230,000 if the over-allotment option is exercised in full) ordinary shares as representative shares.
Critical Accounting Estimates
The company has not identified any critical accounting estimates. Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the company’s financial statements if currently adopted.
