Financial Condition - As of December 31, 2024, the company had $2,121 in cash held outside of the Trust Account and a working capital deficit of $(5,270,953) indicating significant financial challenges [120]. - The company has incurred significant costs in pursuit of financing and acquisition plans, raising doubts about its ability to continue as a going concern [120]. - The company may face challenges in negotiating business combinations due to the requirement to complete transactions within a prescribed timeframe, potentially undermining shareholder value [137]. - The company may not complete its initial business combination within the Combination Period, leading to a potential liquidation of public shares [138]. - If the initial business combination is not completed, public shareholders may only receive their pro rata portion of the funds in the trust account, and warrants will expire worthless [145]. - The company may face limitations in obtaining additional financing due to covenants in existing debt securities, impacting flexibility and operational planning [176]. - The company may incur substantial debt to complete a business combination, which could negatively impact financial condition and shareholder value [174]. - The company may be required to take write-downs or impairments post-combination, negatively affecting financial condition and market perception [158]. Internal Control and Compliance - The company identified material weaknesses in internal control over financial reporting, which could adversely affect investor confidence and financial results [121]. - In the fiscal year ended December 31, 2023, the company reported errors in the presentation and disclosures of financial statements, highlighting ongoing internal control issues [122]. - Material weaknesses in internal control could lead to misstatements in financial reporting, impacting compliance with securities law requirements [124]. - The company may not be able to maintain effective disclosure controls, which could adversely affect timely financial reporting and investor confidence [123]. - The company may not hold an annual general meeting until after the initial business combination, delaying shareholder director appointments [166]. - The company is exempt from certain SEC rules protecting investors in blank check companies, meaning investors do not receive the same protections as those in other similar companies [207]. Business Combination Challenges - The company expects to face competition from other entities for business combination opportunities, which may limit its ability to complete acquisitions [131]. - The trust account is expected to contain approximately $10.30 per Class A ordinary share at the time of the initial business combination, potentially incentivizing public shareholders to redeem their shares [136]. - If too many public shareholders exercise their redemption rights, the company may not meet cash requirements for business combinations, limiting its ability to proceed with transactions [133]. - The company may face challenges in completing initial business combinations with private companies due to limited public information, potentially leading to less profitable acquisitions than anticipated [151]. - The company may pursue acquisition opportunities with early-stage or financially unstable businesses, which could involve significant risks due to lack of proven business models and limited historical financial data [150]. - The company may have limited ability to assess the management of a prospective target business, which could impact the success of the business combination [149]. - Key personnel from acquisition candidates may resign post-combination, negatively impacting operations and profitability [153]. - The company may enter into business combinations outside of management's areas of expertise, potentially affecting the success of such combinations [147]. Shareholder Dynamics - Initial shareholders own approximately 55.9% of the issued and outstanding ordinary shares as of December 31, 2024, which may influence shareholder approval for the initial business combination [140]. - If the company seeks shareholder approval for the initial business combination, initial shareholders and management have agreed to vote in favor, increasing the likelihood of approval [140]. - The company’s initial shareholders collectively own 25.4% of the issued and outstanding ordinary shares entitled to vote, which may facilitate amendments to the memorandum and articles of association [232]. - The increasing number of special purpose acquisition companies may lead to a scarcity of attractive targets, raising costs and complicating the ability to find suitable business combinations [186]. - The absence of a specified maximum redemption threshold may allow the company to complete a business combination that a substantial majority of shareholders do not agree with [182]. - Initial shareholders control approximately 55.9% of the issued and outstanding ordinary shares, potentially influencing shareholder votes in ways that may not align with other investors [185]. Regulatory and Market Risks - The company may face restrictions on completing a business combination with U.S. target companies due to foreign investment regulations [167]. - The company may face significant adverse consequences due to its securities no longer qualifying as "covered securities" under federal statutes, subjecting it to state regulations [205]. - The market for directors and officers liability insurance has become less favorable, potentially increasing costs for the company in completing an initial business combination [199]. - The company received notice from Nasdaq regarding the delisting of its securities due to non-compliance with the requirement to complete a business combination within 36 months of its IPO registration statement [203]. - Following the delisting, the company is no longer required to complete a business combination with a target business valued at least 80% of the net assets in the trust account, allowing for acquisitions below that threshold [204]. - The company may experience reduced liquidity and trading activity in its securities due to being classified as a "penny stock" following the delisting [208]. Economic and Geopolitical Factors - The company is subject to various risks associated with investing in Latin America, including political instability and economic fluctuations [254]. - Political and economic conditions in Latin America, including government influence and instability, could adversely affect the trading price of the company's Class A ordinary shares [269]. - Recent economic and political instability in Brazil has led to a negative perception of the Brazilian economy, potentially impacting the company's Class A ordinary shares [271]. - The ongoing military conflict between Russia and Ukraine may lead to increased inflation and economic volatility, affecting the company's operations and expansion plans [275]. - High levels of inflation in countries like Argentina and Brazil have historically harmed economic growth and capital markets, creating uncertainty [281]. - Brazilian inflation rates were 4.8%, 4.6%, and 5.8% for the years ended December 31, 2024, 2023, and 2022, respectively [282]. - The SELIC rate fluctuated significantly, reaching a low of 2.00% on December 31, 2020, and increasing to 14.25% by April 8, 2025 [282]. - The Brazilian real depreciated by 29% against the U.S. dollar in 2020, followed by a 7% depreciation in 2021, and a 7.2% appreciation in 2023 [284]. Share Structure and Securities - The company has authorized the issuance of up to 200 million Class A ordinary shares, with 177 million currently available for issuance [226]. - The company may issue additional Class A ordinary shares or preferred shares to complete the initial business combination, which could dilute existing shareholders' interests [226]. - The company issued an aggregate of 23,000,000 warrants in connection with its IPO, which are accounted for as a warrant liability and recorded at fair value upon issuance [238]. - The exercise price of the warrants may be adjusted if additional ordinary shares or equity-linked securities are issued for capital raising purposes at a Newly Issued Price of less than $9.20 per Class A ordinary share [237]. - The company may redeem outstanding warrants at a price of $0.10 per warrant if the Reference Value equals or exceeds $10.00 per share [240]. - The company may amend the terms of the warrants in a manner that could be adverse to holders of public warrants with the approval of a majority of the then outstanding public warrants [234]. - The company’s ability to amend its governing instruments may make it easier to complete an initial business combination that some shareholders may not support [231].
Patria Latin American Opportunity Acquisition Corp.(PLAOU) - 2024 Q4 - Annual Report