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dMY Squared Technology Group, Inc. (NYSE American:DMYY) announced Tuesday that its previously issued unaudited condensed financial statements for the first quarter of 2025 should no longer be relied upon. The company’s audit committee, in consultation with management, determined that the financial statements filed in its Quarterly Report on Form 10-Q for the period ended March 31, 2025, did not properly account for an excise tax payable related to a share redemption event in January 2024.
According to a statement released in a U.S. Securities and Exchange Commission filing, the error stemmed from an under-accrual of a 1% excise tax under the Inflation Reduction Act of 2022. The tax obligation arose when the company redeemed 3,980,414 shares of its Class A common stock, paying approximately $42 million to shareholders on January 4, 2024. This transaction resulted in an excise tax liability of about $420,000.
While the impact of the excise tax was offset by an over-accrual of income taxes as of December 31, 2024, this offset was eliminated in the first quarter of 2025, making the omission material to the March 31, 2025 financial statements. The company identified the error during the preparation of its second quarter 2025 financial statements.
dMY Squared Technology Group stated that it will restate its first quarter 2025 financials to recognize the excise tax liability and adjust the accumulated deficit. The restatement will be limited to these items and will not affect the company’s cash position or funds held in its trust account.
The company also disclosed that it will report a material weakness in its internal control over financial reporting and that its disclosure controls and procedures were ineffective as of March 31, 2025. Remediation efforts are underway, and the company plans to address the issue in its restated first quarter filing and upcoming second quarter report.
The audit committee and management have discussed these matters with the company’s independent registered public accounting firm, WithumSmith+Brown, PC. The information in this article is based on a statement released in a SEC filing.
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