UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to .
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
,
(Address of principal executive offices)
Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
| (1) |
| (1) | On March 10, 2025, the Company, received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market indicating that the Company’s shares, warrants and units would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on March 17, 2025 due to the Company’s non-compliance with certain Nasdaq Listing Rules and that a Form 25-NSE will be filed with the SEC. On April 11, 2025, a Form 25-NSE was filed with respect to the Company’s Units and Warrants. |
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | ||
| Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes
As of June 23, 2025, there were
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION CORP.
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | 1 | |
| Item 1. | Condensed Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31 |
| Item 4. | Controls and Procedures | 31 |
| PART II - OTHER INFORMATION | 32 | |
| Item 1. | Legal Proceedings | 32 |
| Item 1A. | Risk Factors | 32 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
| Item 3. | Defaults Upon Senior Securities | 32 |
| Item 4. | Mine Safety Disclosures | 32 |
| Item 5. | Other Information | 32 |
| Item 6. | Exhibits | 32 |
i
PART I – FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
1
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION CORP
CONDENSED BALANCE SHEETS
| MARCH 31, 2025 | DECEMBER 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Marketable securities held in Trust Account | ||||||||
| Total current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES, ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION, AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Due to related party | ||||||||
| Promissory note - related party | ||||||||
| Deferred underwriting fees payable | ||||||||
| Warrant liabilities | ||||||||
| Accrued expenses | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Class A ordinary shares subject to possible redemption, $ | ||||||||
| Shareholders’ deficit | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | $ | ( | ) | $ | ( | ) | ||
| Total Liabilities, Ordinary Shares Subject to Possible Redemption, and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
2
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION
CORP
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For The Three Months Ended March 31, 2025 | For The Three Months Ended March 31, 2024 | |||||||
| General and administrative expenses | $ | $ | ||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Change in fair value of derivative warrant liabilities | ( | ) | ( | ) | ||||
| Realized gain on investments held in Trust Account | ||||||||
| Interest on related party promissory note | ( | ) | ||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Weighted average shares outstanding of Class A ordinary shares subject to possible redemption, basic and diluted | ||||||||
| Basic and diluted net (loss) income per share, Class A ordinary shares subject to possible redemption | $ | ( | ) | $ | ||||
| Weighted average shares outstanding of Class B non-redeemable ordinary shares, basic and diluted | ||||||||
| Basic and diluted net loss per share, Class B non-redeemable ordinary shares | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION
CORP
CONDENSED STATEMENTS OF CHANGES IN ORDINARY SHARES SUBJECT TO POSSIBLE
REDEMPTION AND SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2025
(Unaudited)
| Ordinary Shares Subject to Possible Redemption | Ordinary Shares | Additional | Total | |||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Deemed contribution for administrative support - related party | - | - | ||||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2025 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2024
| Ordinary Shares Subject to Possible Redemption | Ordinary Shares | Additional | Total | |||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Deemed contribution for administrative support - related party | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance as of March 31, 2024 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION
CORP
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| FOR THE THREE MONTHS ENDED MARCH 31, 2025 | FOR THE THREE MONTHS ENDED MARCH 31, 2024 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Realized gain on investments held in Trust Account | ( | ) | ( | ) | ||||
| Interest on related party promissory note | ||||||||
| Deemed contribution for administrative support - related party | ||||||||
| Change in fair value of derivative warrant liabilities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of U.S. government treasury obligations | ( | ) | ( | ) | ||||
| Proceeds from redemption and maturities of marketable securities held in Trust Account | ||||||||
| Net cash used by investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from note payable and advances from related party | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Supplemental disclosure of noncash investing and financing activities: | ||||||||
| Accretion of Class A shares to redemption value | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION
CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization, Business Operations, and Going Concern
Patria Latin American Opportunity Acquisition Corp. (the “Company”) is a blank check company incorporated in Cayman Islands on February 25, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, ordinary shares purchase, reorganization, or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
On May 9, 2024 the Company received a written
notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that since the Company’s
aggregate market value of its outstanding warrants was less than $
On November 7, 2024, the Company received a further
written notice from the Listing Qualifications Department of Nasdaq indicating that the Company’s warrants and units would be subject
to suspension and delisting from The Nasdaq Global Market at the opening of business on November 18, 2024 due to the Company’s non-compliance
with: (i) in relation to the warrants, Nasdaq Listing Rule 5452(b)(C), which requires the Company to maintain an aggregate market value
of its outstanding warrants of at least $
On March 10, 2025, the Company received a written notice from the Listing Qualifications Department of Nasdaq indicating that the Company’s securities would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on March 17, 2025 due to the Company’s non-compliance with IM-5101-2, which requires the company to complete a business combination within 36 months of the effectiveness of its IPO registration statement. Nasdaq informed us that a Form 25-NSE will be filed with the SEC, which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market. Accordingly, the Company’s securities are no longer listed on Nasdaq. On April 11, 2025, a Form 25-NSE was filed with the SEC with respect to the Company’s Units and Warrants.
As of March 31, 2025, the Company had not commenced any operations. All activities for the period from February 25, 2021 (inception), through March 31, 2025, relates to the Company’s formation, and the initial public offering (“IPO”) described below, and post-IPO expenses. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of realized and unrealized gains on investments from the proceeds derived from the IPO.
On March 14, 2022, the Company consummated its
IPO of
The Company’s sponsor is Patria SPAC LLC,
a Cayman Islands exempted limited partnership (the “Sponsor”). Simultaneously with the closing of the IPO and pursuant to
the private placement warrants purchase agreement, the Company completed the private sale of
6
Transaction costs amounted to $
Following the closing of the IPO on March 14,
2022, an amount of $
First Extension
On June 12, 2023, the Company held an extraordinary
general meeting of the Company’s shareholders (the “Extraordinary General Meeting”). At the Extraordinary General Meeting,
the Company’s shareholders approved amendments to the Company’s Amended and Restated Memorandum and Articles of Association
to extend the termination date by which the Company has to consummate an initial business combination from June 14, 2023 to June 14, 2024,
in addition to other proposals. Accordingly, the Company had up to June 14, 2024 to consummate its initial business combination. In connection
with the Extraordinary General Meeting, shareholders holding an aggregate of
Second Extension
On June 12, 2024, the Company held an extraordinary
general meeting of the Company’s shareholders (the “Extraordinary General Meeting”). At the Extraordinary General Meeting,
the Company’s shareholders approved the Extension Amendment Proposal to amend, by way of special resolution, the Company’s
Articles, as set forth in the Trust Agreement dated as of March 9, 2022 by and between the Company and the Trustee, to extend the Termination
Date by which the Company has to consummate a Business Combination from June 14, 2024 (the date which is 27 months from the closing date
of the Company’s IPO) on a monthly basis for up to fifteen times by an additional one month each time up to September 14, 2025 (the
date which is 42 months from the closing date of the Company’s IPO), unless the closing of a Business Combination shall have occurred
prior thereto or such earlier date as determined by the Board, for a deposit, for each monthly extension, of the lesser of (i) $
7
Initial Business Combination
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the IPO, although substantially all of the net proceeds are intended to
be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of
at least
8
The Articles of Association provides that a Public
Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as
a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
will be restricted from redeeming its shares with respect to more than an aggregate of
If the Company is unable to complete a Business
Combination within the Combination Period and the Company’s shareholders have not amended the Articles of Association to extend
such Combination Period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably
possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares then outstanding,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on
the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $
The initial shareholders have agreed to waive
their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a
Business Combination within the Combination Period. However, if the initial shareholders acquire Public Shares after the IPO, they will
be entitled to liquidating distributions from the Trust if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to the deferred underwriting commission held in the Trust Account in the event
the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included
with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such
distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account
assets) will be only $
Going Concern
As of March 31, 2025, the Company had
working capital deficit of $
9
The Company anticipates that the cash held
outside of the Trust Account as of March 31, 2025 will not be sufficient to allow the Company to operate for at least the next 12 months
from the issuance of these unaudited condensed financial statements, assuming that a Business Combination is not consummated during that
time. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing accounts payable
and accrued liabilities, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination. These conditions raise substantial doubt about the Company’s ability to continue as a
going concern for a period of time within
These unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Global economic conditions have been worsening, with disruptions to, and volatility in, the credit and financial markets and rising inflation and interest rates in the U.S. If these conditions persist and deepen, the Company could experience an inability to access additional capital, or our liquidity could otherwise be impacted. Management continues to evaluate the impact related to rising interest rates and current market condition and has concluded while it is reasonably possible that these factors could have a negative effect on the Company’s financial position and results of its operations, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. These unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The credit and financial markets have experienced volatility and disruptions due to the current conflict between Ukraine and Russia. The conflict is expected to have further global economic consequences, including but not limited to the possibility of severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation rates and uncertainty about economic and political stability. In addition, the United States and other countries have imposed sanctions on Russia, which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. Any of the foregoing consequences, including those we cannot yet predict, may cause our business, financial condition, results of operations and the price of our ordinary shares to be adversely affected.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair statement of the financial position, operating results and cash flows for the periods presented.
10
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of these unaudited condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of these unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had $
Marketable Securities Held in Trust Account
The assets held in the Trust Account were held
in U.S. government treasury obligations with maturities of
11
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet. The Company’s derivative financial instruments are accounted for as liabilities, and the derivative instrument is recorded at its fair value on the issuance date and is then re-valued at each reporting date. The fair value of the Company’s derivative financial instruments is evaluated at the end of each reporting period, with changes in the fair value reported in the statements of operations. The Company had no other financial assets or liabilities that were required to be measured at fair value on a recurring basis.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 - Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets of liabilities, that are observable, or (iv) inputs that are derived principally from or corroborated by market data through correlation or other means.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Net Income (loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of ASC 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary share outstanding during the period. The Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. For the three months March 31, 2025 and 2024, the Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placements to purchase Class A Ordinary Shares in the calculation of diluted income (loss) per share, since their inclusion is contingent on a future event. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the periods presented.
12
A reconciliation of the income (loss) per share is below:
| For The Three months ended March 31, 2025 | For The Three months ended March 31, 2024 | |||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Accretion of temporary equity in excess of fair value | ( | ) | ( | ) | ||||
| Net income (loss) including accretion of temporary equity in excess of fair value | $ | ( | ) | $ | ( | ) | ||
The Company’s unaudited condensed statements of operations include a presentation of income (loss) per share for shares of ordinary shares subject to possible redemption in a manner similar to the two-class method of earnings per share. With respect to the accretion of the Class A Ordinary Shares subject to possible redemption and consistent with ASC 480, “Distinguishing Liabilities from Equity,” in accordance with ASC 480-10-S99-3A, the Company has treated the accretion in excess of fair value in the same manner as a dividend, to the extent the redemption value exceeds the fair value, in the calculation of the net income (loss) per ordinary share.
| For The Three Months ended March 31, 2025 | For The Three Months ended March 31, 2024 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net income (loss) per share | ||||||||||||||||
| Numerator | ||||||||||||||||
| Allocation of net income (loss) including accretion of temporary equity in excess of fair value | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividend for accretion of temporary equity in excess of fair value | ||||||||||||||||
| Allocation of net income (loss) and deemed dividend | ( | ) | ( | ) | ( | ) | ||||||||||
| Denominator | ||||||||||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
| Basic and diluted net income (loss) per share | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
13
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A Ordinary Shares subject to possible redemption in accordance with the guidance in ASC 480.
Conditionally redeemable ordinary shares (including
ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders’ equity. The Company’s Class A Ordinary Shares feature contains certain redemption rights that
are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class
A Ordinary Shares subject to possible redemption are classified as temporary equity, outside of the shareholders’ equity section
of the Company’s balance sheets. Accordingly, as of March 31, 2025,
The Class A Ordinary Shares subject to
possible redemption are subject to the subsequent measurement guidance in ASC 480-10-S99. Under such guidance, the Company must
subsequently measure the shares to their redemption amount because, as a result of the allocation of net proceeds to transaction
costs, the initial carrying amount of the ordinary shares is less than $
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss under the caption change in fair value of warrant liabilities on the statements of operations.
14
The Class A Ordinary Shares and warrants comprising the units began separate trading on the 52nd day following the date of the IPO. No fractional warrants issued upon separation of the units and only whole warrants will trade. Accordingly, unless a multiple of two units is purchased, the number of warrants issuable to you upon separation of the units will be rounded down to the nearest whole number of warrants.
Additionally, the units will automatically separate into their component parts and will not be traded after completion of the Initial Business Combination.
The warrants were valued using a Monte Carlo simulation model until the Class A ordinary shares and warrants began trading separately on May 4, 2022. From May 4, 2022 through September 30, 2024, the Public Warrants have been measured using the listed market price and the Private Placement Warrants have been measured by reference to the trading price of the Public Warrants. In the fourth quarter of 2024 fiscal year, the Company’s public warrants ceased trading on NASDAQ as they did not meet the continued listing requirement of the NASDAQ (Note 1). As of March 31, 2025, the warrants were valued using a combination of Binomial Lattice and Monte Carlo simulation models.
Share-based Compensation
The Company accounts for Founder Shares issued to its independent directors in accordance with SEC Staff Accounting Bulletin 5T and ASC 718, “Compensation-Stock Compensation.” The fair value of the Founder Shares issued in this arrangement was determined using the implied stock price as of the date of Initial Public Offering of the Company’s Class A ordinary shares and the probability of the success of the Business Combination.
Offering Costs
Offering costs consist of legal, accounting, underwriting and other costs incurred that are directly related to the IPO. Upon the completion of the IPO, the offering costs were allocated using the relative fair values of the Company’s Class A Ordinary Shares and its Public Warrants and Private Placement Warrants. The costs allocated to warrants were recognized in other expenses and those related to the Company’s Class A Ordinary Shares were charged against the carrying value of Class A Ordinary Shares.
Underwriting Fees Waiver
The waiver of the deferred underwriting fees liability is allocated between the instruments issued at the Initial Public Offering. A portion of the deferred underwriting fees waived are allocated to income for the amounts previously allocated to the fair value of liability instruments issued, which was initially expensed. The remaining deferred underwriting fees waived are recorded in accumulated deficit with a related increase in income available to Class B Ordinary Shares for the amounts previously recognized as a deemed dividend that reduced the net income available to Class B Ordinary Shares (as the Class A Ordinary Shares Subject to Possible Redemption were accreted to their maximum redemption amount).
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of March 31, 2025 and December 31, 2024, there were no unrecognized tax benefits and no amounts were accrued for the payment of interest and penalties.
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There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. U.S. taxation could be imposed if the Company is engaged in a U.S. trade or business. The Company is not expected to be treated as engaged in a U.S. trade or business at this time. Additionally, given the nature of the investment income generated from the funds held in the trust account, it is not subject to tax withholdings in the U.S. Moreover, the Company determined that no income tax liability would arise from any other jurisdictions outside of the Cayman Islands. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
Note 3 - Initial Public Offering
Pursuant to the IPO, the Company sold
The Company had granted the Underwriters in the
IPO (the “Underwriters”) a
On June 12, 2023,
On June 12, 2024,
Note 4 - Private Placement Warrants
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of
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Note 5 - Related Party Transactions
Founder Shares
On March 3, 2021, one of our officers paid $
On March 14, 2022, the underwriters fully exercised
the over-allotment option; thus, the
The Sponsor has agreed not to transfer, assign
or sell any of their founder shares and any Class A Ordinary Shares issued upon conversion thereof until the earlier to occur of (A) one
year after the completion of our initial business combination; or (B) subsequent to our initial business combination, (x) if the last
reported sale price of the Class A Ordinary Shares equals or exceeds $
The Founder Shares will convert concurrently with
or immediately following the consummation of our initial business combination at the option of the holders thereof or at any earlier date
at the option of the holders thereof (where such holders have waived any right to receive funds from the trust account) on a one-for-one
basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject
to further adjustment as provided herein. In the case that additional Class A Ordinary Shares or equity-linked securities are issued or
deemed issued in connection with the Company’s Initial Business Combination, the number of Class A Ordinary Shares issuable upon
conversion of all Founder Shares will equal, in the aggregate,
17
Promissory Note - Related Party
On March 3, 2021, the Company issued an unsecured
promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal
amount of $
On December 6, 2023, the Company entered into
another promissory note agreement with the Sponsor. This note is payable on demand and has an interest rate equal to the CME Term Secured
Overnight Financing Rate (SOFR) three-month rate, fixed on a quarterly basis. As of March 31, 2025 and December 31, 2024, the Company
has $
On June 12, 2024, the Company entered into another
promissory note agreement with the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $
Due to Related Party
As of March 31, 2025 and December 31, 2024, the
Company had an outstanding balance of $
Administrative Services Agreement
Following our IPO, the Company pays the Sponsor
or an affiliate a monthly fee of $
Working Capital Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination or, at the lender’s discretion, up to $
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Note 6 - Commitments and Contingencies
Registration Rights
The holders of Founder Shares and Private Placement Warrants, including any that may be issued upon conversion of Working Capital Loans, if any (and any Class A Ordinary Shares issuable upon the exercise of the Private Placement Warrants, including any that may be issued upon conversion of the Working Capital Loans), will be entitled to registration rights pursuant to a registration rights agreement entered into prior to the consummation of the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company is not required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
On December 4, 2023, the Company received an executed
deferred underwriting fees waiver letter from J.P. Morgan Securities LLC., one of the Company’s underwriters, informing the Company
of its decision to waive any entitlement it may have to its deferred underwriting fees payable held in the Trust Account in respect of
any Business Combination. The waiver does not cover deferred underwriting fees payable to Citigroup Global Market Inc. (representing
Note 7 - Warrant Liabilities
The Company accounted for the
Each whole Warrant entitles the holder thereof
to purchase
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants issued upon separation of the Units and only whole Public Warrants will trade. The Public
Warrants will become exercisable
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The Warrants have an exercise price of $
The Private Placement Warrants are identical to
the Public Warrants, except that, so long as they are held by the Sponsor or its permitted transferees, (i) they will not be redeemable
by the Company, (ii) they (including the Class A Ordinary Shares issuable upon exercise of these Warrants) may not, subject to certain
limited exceptions, be transferred, assigned or sold by the Sponsor until
On the exercise of any Warrant, the Warrant exercise price will be paid directly to us and not placed in the Trust Account.
Redemption of Warrants when the price per Class
A Ordinary Share equals or exceeds $
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last reported sale price of Class A Ordinary Shares equals or exceeds $ |
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The Company will not redeem the Warrants as described above unless an effective registration statement under the Securities Act covering the Class A Ordinary Shares issuable upon exercise of the Warrants is effective and a current prospectus relating to those Class A Ordinary Shares is available throughout the 30-day redemption period. Any such exercise would not be on a cashless basis and would require the exercising warrant holder to pay the exercise price for each Warrant being exercised.
Redemption of Warrants when the price per Class A Ordinary Share equals or exceeds $10.00: Once the Warrants become exercisable, the Company may redeem the outstanding Warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | if, and only if, the closing price of Class A Ordinary Shares equals or exceeds $ |
| ● | if the closing price of the Class A Ordinary Shares for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $ |
Solely for the purposes of this redemption provision, the “redemption fair market value” of the Company’s Class A Ordinary Shares shall mean the volume weighted average price of the Class A Ordinary Shares for the ten (10) trading days immediately following the date on which notice of redemption is sent to the holders of Warrants.
No fractional Class A Ordinary Shares issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of Class A Ordinary Shares to be issued to the holder.
Note 8 - Shareholder’s Deficit
Preferred Shares - The Company is
authorized to issue
Class A Ordinary Shares - The Company
is authorized to issue
Class B Ordinary Shares - The Company
is authorized to issue
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Holders of the Class A Ordinary Shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares shall have the right to vote on the appointment and removal of the Company’s directors prior to the Initial Business Combination or continuing the Company in a jurisdiction outside the Cayman Islands (including any special resolution required to amend the constitutional documents of the Company or to adopt new constitutional documents of the Company, in each case, as a result of the Company approving a transfer by way of continuation in a jurisdiction outside the Cayman Islands).
Note 9 - Fair Value Measurements
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025. Management determined the fair value of marketable securities held in Trust Account by using Level 2 inputs. The Trust Account is comprised of U.S. treasury notes and bills which are considered Level 2 investments as they were issued before the most recent issue and were still outstanding at measurement day (off-the-run).
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | ||||||||||||||||
| Private Placement Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2024, including the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities held in Trust Account | $ | $ | $ | $ | ||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public Warrants | ||||||||||||||||
| Private Placement Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The Warrants are accounted for as liabilities pursuant to ASC 815-40 and are measured at fair value as of each reporting date. Changes in the fair value of the Warrants are recorded in the statements of operations for each period.
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. As of March 31, 2025, there were no transfers between Levels. In the fourth quarter of fiscal year ended December 31, 2024, the Company’s Public and Private Warrants were transferred from Level 1 and Level 2, respectively, to Level 3 due to changes in observability of the inputs. The warrants are now valued using a combination of Binomial Lattice and Monte Carlo simulation models.
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The following table provides quantitative information regarding Level 3 fair value measurement inputs for the Public Warrants and Private Placement Warrants at their measurement date:
| March 31, 2025 | December 31, 2024 | |||||||
| Exercise price | $ | $ | ||||||
| Underlying share price | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term to business combination (years) | ||||||||
| Risk-free rate | % | % | ||||||
| Time remaining post-merger (years) | ||||||||
| Probability of merger closing | % | % | ||||||
The table below shows the change in fair value of the warrant liabilities as of March 31, 2025 and December 31, 2024:
| Public Warrants | Private Warrants | Total | ||||||||||
| Fair value at January 1, 2025 | $ | $ | $ | |||||||||
| Change in fair value | ||||||||||||
| Fair value as of March 31, 2025 | $ | $ | $ | |||||||||
| Public Warrants | Private Warrants | Total | ||||||||||
| Fair value at January 1, 2024 | $ | $ | $ | |||||||||
| Change in fair value | ||||||||||||
| Fair value as of December 31, 2024 | $ | $ | $ | |||||||||
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Note 10 – Segment Information
ASC Topic 280,“Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s CODM has been identified as
the Chief Financial Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources
and assessing financial performance. Accordingly, management has determined that the Company only has
The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the statements of operations as net income or loss. The CODM uses net income or loss to manage the business and forecasts to ensure enough capital is available to complete a business combination or similar transaction within the business combination period. The CODM also reviews significant expenses, which are consistent with those reported on the statements of operations, to manage, maintain, and enforce contractual agreements to ensure costs are aligned with agreements and the budget. The measure of segment assets is reported on the balance sheets as total assets. All segment items included in net income or loss are reported on the statements of operations and described within their respective disclosures.
Note 11 – Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the condensed financial statements were issued. The Company did not identify any other subsequent events, except as stated below, that would have required adjustment or disclosure in the consolidated financial statements.
Following the fiscal quarter ended March 31, 2025, the Company made
aggregate deposits of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Patria Latin American Opportunity Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Patria SPAC LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (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 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. 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 final prospectus for its Initial Public Offering 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 in Cayman Islands on February 25, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, ordinary share purchase, reorganization or similar business combination with one or more businesses, or the “Business Combination.” The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
On November 7, 2024, the Company received a further written notice from the Listing Qualifications Department of Nasdaq indicating that the Company’s warrants and units would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on November 18, 2024 due to the Company’s non-compliance with: (i) in relation to the warrants, Nasdaq Listing Rule 5452(b)(C), which requires the Company to maintain an aggregate market value of its outstanding warrants of at least $1 million; and (ii) in relation to the units, Nasdaq Listing Rule 5225(a)(1)(A), which requires that all components of the unit comply with the requirements for continued listing.
On March 10, 2025, the Company received a written notice from the Listing Qualifications Department of Nasdaq indicating that the Company’s securities would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on March 17, 2025 due to the Company’s non-compliance with IM-5101-2, which requires the company to complete a business combination within 36 months of the effectiveness of its IPO registration statement. Nasdaq informed us that a Form 25-NSE will be filed with the SEC, which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market. Accordingly, the Company’s securities are no longer listed on Nasdaq.
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Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and any future sales of additional notes or debt securities, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined below) (excluding the amount of deferred underwriting commission held in Trust and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company only intends to complete a Business Combination if the post-business combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Upon the closing of the IPO, management has agreed that an amount equal to at least $10.30 per Unit sold in the IPO, including the proceeds from the sale of the Private Placement Warrants, will be held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below. The Company will provide the holders (the “Public Shareholders”) of the Company’s issued and outstanding Class A ordinary shares, par value $0.0001 per share, sold in the IPO (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Public Shares for a pro rata portion of the amount then held in the Trust Account. The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters. If the Company seeks shareholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Articles of Association (the “Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem the Public Shares then outstanding in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below) have agreed to vote their Founder Shares (as defined below) and any Public Shares purchased during or after the IPO in favor of a Business Combination. In addition, the initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Articles of Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company. The holders of the Founder Shares (the “initial shareholders”) have agreed not to propose an amendment to the Articles of Association (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (B) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
26
If the Company is unable to complete a Business Combination within the Combination Period and the Company’s shareholders have not amended the Articles of Association to extend such Combination Period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares then outstanding, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman law to provide for claims of creditors and the requirements of other applicable law.
The initial shareholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders acquire Public Shares after the IPO, they will be entitled to liquidating distributions from the Trust if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.30. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.30 per unit or (ii) the lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of interest which may be withdrawn to pay taxes, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from February 25, 2021 (inception) through March 31, 2025 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and the Company’s search for a target business with which to complete a Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of realized gains on the investments held in the trust account. We are incurring 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 completing a Business Combination.
27
For the three months ended March 31, 2025, we reported net loss of $4,315,449 which consists of realized gain on the investments held in the trust account of $551,185, offset by change in fair value of warrant liabilities of $4,598,745, interest on related party promissory note of $14,856, and general and administrative expenses of $253,033 (made up of professional services fees of $127,859 and other general and administrative fees of $125,174).
For the three months ended March 31, 2024, we reported net income of $1,420,470 which consists of general and administrative expenses of $235,669 (made up of professional services fees of $97,216 and other general and administrative fees of $138,453), change in fair value of derivative warrant liabilities of $780,000, and realized gain on the investments held in the trust account of $2,436,139.
Liquidity and Going Concern Consideration
As of March 31, 2025, the Company had working capital deficit of $5,645,084 excluding marketable securities held in Trust Account, deferred underwriting fees payable, and warrant liabilities. The Company’s ability to continue operations through the liquidation date is contingent on the payment of the monthly extension deposit.
For the three months ended March 31, 2025, cash used in operating activities was $158,115, which is made up of a net loss of 4,315,449, changes in operating assets and liabilities of $64,918. These amounts were offset by a gain on Investments held in the Trust account of $551,185, deemed contribution for administrative support - related party of $30,000, interest on related party promissory note of $14,856, and change in fair value of warrant liabilities of $4,598,745. Cash of $44,006 was held outside of the Trust Account and is available for the Company’s working capital purposes.
As of March 31, 2025, we had cash of $44,006. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
In order to finance transaction costs in connection with an Initial Business Combination, the Company’s sponsor, or an affiliate of the sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide Working Capital Loans to the Company. As of March 31, 2025, there were no amounts outstanding under any Working Capital Loans.
If the Company’s estimates of the costs of identifying a target business, undertaking due diligence and negotiating an Initial Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to an Initial Business Combination. Moreover, the Company may need to obtain additional financing either to complete an Initial Business Combination or because it becomes obligated to redeem a significant number of its Public Shares upon completion of an Initial Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Initial Business Combination.
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The Company anticipates that the cash held outside of the Trust Account as of March 31, 2025 will not be sufficient to allow the Company to operate for at least the next 12 months from the issuance of the unaudited condensed financial statements, assuming that a Business Combination is not consummated during that time. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing accounts payable and accrued liabilities, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. Management plans to address this uncertainty through the Business Combination as discussed above. In addition, the sponsor or an affiliate of the sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required under the Working Capital Loans. There is no assurance that the Company’s plans to consummate the Business Combination will be successful or successful within the Combination Period or that the sponsor or an affiliate of the sponsor, or certain of the Company’s officers and directors will loan the Company funds as may be required under the Working Capital Loans. Since fiscal year 2023, the Company was able to meet its working capital requirements through the issuance of promissory notes to its Sponsor. As of March 31, 2025, the Company had approximately $1.1 million outstanding under the promissory notes. Up until May 2024, we deposited $300,000 monthly into the Trust Account to effect the extension of the termination date and provide time for us to complete a business combination. The monthly deposit into Trust Account changed to $68,121 following June 2024 extension meeting. As of March 31, 2025, we had deposited $4,213,091 in aggregate in connection with these extensions as disclosed in Note 1 of the accompanying unaudited condensed financial statements. This amount allowed us to extend the termination date through March 15, 2025. Following March 31, 2025, we made additional deposits totaling $272,484 to extend the termination date to July 14, 2025.
The unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Commitments and Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate. The deferred fee will be waived by the underwriters in the event that the Company does not complete a Business Combination, subject to the terms of the underwriting agreement.
On December 4, 2023, the Company received an executed deferred underwriting fees waiver letter from J.P. Morgan Securities LLC, one of the Company’s underwriters, informing the Company of its decision to waive any entitlement it may have to its deferred underwriting fees payable held in the Trust Account in respect of any Business Combination. The waiver does not cover deferred underwriting fees payable to Citigroup Global Market Inc. (representing 50% of the total deferred underwriting fees payable, or $4,025,000).
Administrative Services Agreement
Following our IPO, the Company pays the Sponsor or an affiliate a monthly fee of $10,000 for office space, utilities, secretarial and administrative services. In August 2023, the Company and its Sponsor executed an agreement to discontinue the remittance of administrative fees to the Sponsor with an effective date of August 1, 2023. For the three months ended March 31, 2025 and 2024, we incurred $30,000 and $30,000 in administrative support fees respectively.
Promissory Note - Related Party
On December 6, 2023, the Company entered into a promissory note agreement with the Sponsor. This note is payable on demand and has an interest rate equal to the CME Term Secured Overnight Financing Rate (SOFR) three-month rate, fixed on a quarterly basis. For the three months ended March 31, 2025 and 2024, the Company incurred $14,856 and $0 in interest under this promissory note.
On June 12, 2024, the Company entered into another promissory note agreement with the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $1,125,000. The promissory note is non-interest bearing and payable on the earlier of (i) December 31, 2025, and (ii) the consummation of the Initial Business Combination. As of March 31, 2025, the Company had $285,000 outstanding balance under this promissory note.
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Registration Rights
The holders of Founder Shares and Private Placement Warrants, including any that may be issued upon conversion of Working Capital Loans, if any (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants, including any that may be issued upon conversion of the Working Capital Loans), will be entitled to registration rights pursuant to a registration rights agreement entered into prior to the consummation of the IPO. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company is not required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Critical Accounting Estimates
The preparation of the unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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 unaudited condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting estimates.
Warrant liability
The Company accounted for the Public and Private Warrants issued in connection with the Initial Public Offering and the private placement in accordance with Financial Accounting Standards Board (FASB) ASC Topic 815, “Derivatives and Hedging.” As a result, the Company assessed the warrants and recognized them at fair value, with subsequent changes in fair value recorded in earnings. Given the reliance on unobservable inputs in the valuation process, the warrants are classified as Level 3 instruments under the fair value hierarchy.
Recent Accounting Standards
See “Recent Accounting Pronouncements” in Note 2 of the accompanying unaudited condensed financial statements.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are 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, the unaudited condensed 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of March 31, 2025 due to the material weaknesses described below.
As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K as of December 31, 2023, we identified a material weakness related to errors in the presentation and disclosure of earnings per share related to the waived deferred underwriter fees and the calculation of weighted average number of shares outstanding, Class A ordinary shares subject to possible redemption and related accretion, certain supplemental disclosures on the statement of cash flows and certain disclosures in the financial statements related to comparative information, as well as incomplete disclosures in the Results of Operations, Liquidity and Capital Resources and Critical Accounting Policies sections in Management’s Discussion and Analysis of Financial Condition and Results of Operations. In the preparation of the Company’s annual report for fiscal year 2024, we identified material weakness related to incorrect inputs used in the valuation methodology for the Company’s warrant liabilities. These errors were corrected in the financial statements attached to our annual report on Form 10-K for the year ended December 31, 2024. Additionally, in the preparation of our quarterly report for the period ended March 31, 2025, we identified a material weakness related to the incorrect valuation methodology used in the valuation of the Company’s warrant liabilities. These errors were corrected in the financial statements attached to our Form 10-Q for the period ended March 31, 2025. As part of such process, management concluded that material weaknesses in internal control over financial reporting existed related to the process of presentation and disclosure and valuation. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
In light of these material weaknesses, we plan to enhance our presentation and disclosure controls. Our plans currently include extensive research on complex accounting topics and training of management personnel. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Changes in Internal Control over Financial Reporting
Except for the newly identified material weakness noted above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a- 15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in in the Company’s annual report on Form 10-K as filed with the SEC on April 11, 2025. As of the date of this Report, there have been no material changes to the risk factors disclosed in our form 10-K filed with the SEC, except as described below.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information
Item 6. Exhibits
| * | Filed herewith. |
| ** | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
PATRIA LATIN AMERICAN OPPORTUNITY ACQUISITION CORP. | |||
| Date: June 23, 2025 | By: | /s/ José Augusto Gonçalves de Araújo Teixeira | |
| Name: | José Augusto Gonçalves de Araújo Teixeira | ||
| Title: | Chief Executive Officer | ||
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