Patria Latin American Opportunity Acquisition (PLAO) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Financial Statements Unaudited condensed financial statements for Patria Latin American Opportunity Acquisition Corp. detail a net loss, significant warrant liability impact, and going concern challenges Condensed Balance Sheets The condensed balance sheets detail changes in assets and liabilities, notably an increase in cash and a substantial rise in warrant liabilities Condensed Balance Sheet Highlights (March 31, 2025 vs. December 31, 2024) | Item | March 31, 2025 (Unaudited) | December 31, 2024 | | :------------------------------------------ | :-------------------------- | :------------------ | | Cash | $44,006 | $2,121 | | Marketable securities held in Trust Account | $54,740,447 | $54,053,020 | | Total Assets | $54,851,987 | $54,141,379 | | Accounts payable | $119,892 | $47,764 | | Due to related party | $4,213,091 | $4,076,848 | | Promissory note - related party | $1,332,082 | $1,117,227 | | Warrant liabilities | $20,977,295 | $16,378,550 | | Total current liabilities | $30,758,919 | $25,762,862 | | Class A ordinary shares subject to possible redemption | $54,740,447 | $54,053,020 | | Accumulated deficit | $(30,647,954) | $(25,675,078) | | Total shareholders' deficit | $(30,647,379) | $(25,674,503) | - The company's cash balance significantly increased from $2,121 at December 31, 2024, to $44,006 at March 31, 2025[15] - Warrant liabilities saw a substantial increase from $16,378,550 to $20,977,295, contributing to the rise in total current liabilities[15] Unaudited Condensed Statements of Operations This section presents the unaudited condensed statements of operations, revealing a significant net loss in Q1 2025 primarily due to warrant liability revaluation Condensed Statements of Operations Highlights (Three Months Ended March 31, 2025 vs. 2024) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | General and administrative expenses | $253,033 | $235,669 | | Loss from operations | $(253,033) | $(235,669) | | Change in fair value of derivative warrant liabilities | $(4,598,745) | $(780,000) | | Realized gain on investments held in Trust Account | $551,185 | $2,436,139 | | Interest on related party promissory note | $(14,856) | $- | | Net (loss) income | $(4,315,449) | $1,420,470 | | Basic and diluted net (loss) income per share, Class A | $(0.33) | $0.11 | | Basic and diluted net loss per share, Class B | $(0.49) | $(0.08) | - The company reported a net loss of $4,315,449 for the three months ended March 31, 2025, a significant decline from the net income of $1,420,470 in the same period last year[17] - The primary driver for the net loss was a substantial negative change in the fair value of derivative warrant liabilities, increasing from $(780,000) in 2024 to $(4,598,745) in 2025[17] Unaudited Condensed Statements of Changes in Ordinary Shares Subject to Possible Redemption and Shareholders' Deficit This section details changes in ordinary shares subject to redemption and shareholders' deficit, highlighting the increased accumulated deficit from net loss and share accretion Shareholders' Deficit Changes (Three Months Ended March 31, 2025) | Item | Balance as of January 1, 2025 | Deemed contribution for administrative support | Accretion of Class A ordinary shares to redemption value | Net income (loss) | Balance as of March 31, 2025 | | :------------------------------------------ | :---------------------------- | :------------------------------------------- | :------------------------------------------------------- | :---------------- | :----------------------------- | | Class A Shares (Amount) | $54,053,020 | $- | $687,427 | $- | $54,740,447 | | Class B Shares (Amount) | $575 | $- | $- | $- | $575 | | Additional Paid-In Capital | $- | $30,000 | $(30,000) | $- | $- | | Accumulated Deficit | $(25,675,078) | $- | $(657,427) | $(4,315,449) | $(30,647,954) | | Total Shareholders' Deficit | $(25,674,503) | $30,000 | $(687,427) | $(4,315,449) | $(30,647,379) | - The accumulated deficit increased significantly from $(25,675,078) at January 1, 2025, to $(30,647,954) at March 31, 2025, primarily due to the net loss incurred during the period[19] - Accretion of Class A ordinary shares to redemption value contributed $687,427 to the Class A shares amount and reduced accumulated deficit by $657,427[19] Unaudited Condensed Statements of Cash Flows The unaudited condensed statements of cash flows show a net cash increase in Q1 2025, with improved operating cash flow despite the net loss, driven by non-cash adjustments Condensed Statements of Cash Flows Highlights (Three Months Ended March 31, 2025 vs. 2024) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net (loss) income | $(4,315,449) | $1,420,470 | | Net cash used in operating activities | $(158,115) | $(324,047) | | Net cash used by investing activities | $(136,242) | $(900,000) | | Net cash provided by financing activities | $336,242 | $1,180,000 | | Net increase (decrease) in cash | $41,885 | $(44,047) | | Cash - end of period | $44,006 | $2,999 | - The company experienced a net increase in cash of $41,885 for the three months ended March 31, 2025, a positive shift from a net decrease of $44,047 in the prior year period[22] - Cash used in operating activities decreased from $(324,047) in 2024 to $(158,115) in 2025, despite a shift from net income to net loss, largely due to non-cash adjustments like the change in fair value of warrant liabilities[22] Notes to Unaudited Condensed Financial Statements This section provides detailed notes accompanying the unaudited condensed financial statements, clarifying accounting policies, transactions, and financial instrument valuations Note 1 - Description of Organization, Business Operations, and Going Concern Patria Latin American Opportunity Acquisition Corp. is a blank check company formed to effect a business combination, now delisted from Nasdaq and facing substantial doubt about its ability to continue as a going concern - The Company was delisted from The Nasdaq Global Market on March 17, 2025, due to non-compliance with IM-5101-2, which requires completion of a business combination within 36 months of its IPO registration statement's effectiveness[28] - As of March 31, 2025, the Company had a working capital deficit of $5,645,084, excluding restricted marketable securities, deferred underwriting fees, and warrant liabilities[42] - Management has concluded that the cash held outside the Trust Account as of March 31, 2025, will not be sufficient to operate for the next 12 months, raising substantial doubt about the Company's ability to continue as a going concern[43] Note 2 - Summary of Significant Accounting Policies This note outlines the company's significant accounting policies, including its status as an emerging growth company, fair value measurement of financial instruments, and classification of Class A Ordinary Shares - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[48] - Class A Ordinary Shares subject to possible redemption are classified as temporary equity and are accreted to their redemption amount ($10.30 per share) in accordance with ASC 480-10-S99-3A[61][62] - Warrants are accounted for as liability-classified instruments and are re-valued at each reporting date, with changes in fair value recognized in the statements of operations[65] Note 3 - Initial Public Offering The company completed its IPO on March 14, 2022, selling 23,000,000 units, with subsequent redemptions reducing outstanding Class A shares subject to redemption to 4,541,424 - The IPO involved the sale of 23,000,000 units at $10.00 per unit, each consisting of one Class A Ordinary Share and one-half of one redeemable warrant[30][77] Class A Ordinary Share Redemptions | Event | Date | Class A Shares Redeemed | Remaining Class A Shares Outstanding | | :------------------------------------------ | :--------- | :---------------------- | :----------------------------------- | | First Extraordinary General Meeting | June 12, 2023 | 6,119,519 | 16,880,481 | | Second Extraordinary General Meeting | June 12, 2024 | 12,339,057 | 4,541,424 | Note 4 - Private Placement Warrants The Sponsor purchased 14,500,000 Private Placement Warrants for $1.00 each, generating $14,500,000 in gross proceeds added to the Trust Account - The Sponsor purchased 14,500,000 Private Placement Warrants at $1.00 per warrant, totaling $14,500,000[31][81] - Proceeds from the sale of Private Placement Warrants were added to the Trust Account and will be used to fund the redemption of Public Shares if a Business Combination is not completed[81] - The excess proceeds received over the fair value of the Private Placement Warrants, amounting to $9,251,000, were recorded as additional paid-in capital[81] Note 5 - Related Party Transactions This note details various transactions with related parties, primarily the Sponsor, covering Founder Shares, promissory notes, and administrative services - The Sponsor holds 5,750,000 Founder Shares, with 90,000 shares transferred to independent directors, valued at $662,245[82] - No share-based compensation expense was recognized for Founder Shares as the performance condition (completion of an Initial Business Combination) is not considered probable[82] Related Party Promissory Notes and Amounts Due | Item | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Interest-bearing promissory note (Sponsor) | $1,047,082 | $1,032,227 | | Non-interest bearing promissory note (Sponsor) | $285,000 | $85,000 | | Due to Sponsor (extension payments) | $4,213,091 | $4,076,848 | | Administrative fees incurred (deemed contribution) | $30,000 (3 months) | $30,000 (3 months) | Note 6 - Commitments and Contingencies The company has commitments related to registration rights and a deferred underwriting commission, with J.P. Morgan Securities LLC waiving 50% of its entitlement - Holders of Founder Shares and Private Placement Warrants are entitled to registration rights[92] - A deferred underwriting commission of $8,050,000 was agreed upon, payable upon completion of a Business Combination[93] - J.P. Morgan Securities LLC waived its entitlement to 50% of the deferred underwriting fees, leaving $4,025,000 payable to Citigroup Global Market Inc[94] Note 7 - Warrant Liabilities The company's 26,000,000 Public and Private Warrants are classified as liabilities, re-measured at fair value, and become exercisable 30 days after a business combination at an $11.50 exercise price - The 26,000,000 Public and Private Warrants are classified as liabilities and re-measured at fair value, with changes recognized in the statements of operations[95] - Warrants become exercisable 30 days after the completion of an Initial Business Combination and expire five years thereafter, with an exercise price of $11.50 per share[96][99] - The company may redeem outstanding warrants under specific conditions, including when the Class A Ordinary Share price equals or exceeds $18.00 or $10.00, with Private Placement Warrants having different redemption terms if held by the Sponsor[101][108] Note 8 - Shareholder's Deficit The company is authorized to issue Preferred, Class A, and Class B Ordinary Shares, with specific voting rights for Class B holders on director appointments and jurisdiction changes - As of March 31, 2025, there were 4,541,424 Class A Ordinary Shares issued and outstanding subject to possible redemption[106] - As of March 31, 2025, there were 5,750,000 Class B ordinary shares issued and outstanding[107] - Class B ordinary shareholders have exclusive voting rights on the appointment and removal of directors and continuation in a jurisdiction outside the Cayman Islands prior to the Initial Business Combination[109] Note 9 - Fair Value Measurements This note details fair value measurements, classifying marketable securities as Level 2 and warrants as Level 3 liabilities, valued using Binomial Lattice and Monte Carlo simulation models - Marketable securities held in the Trust Account are measured using Level 2 inputs, totaling $54,740,447 as of March 31, 2025[110][111] - Public and Private Warrants are classified as Level 3 liabilities, valued using Binomial Lattice and Monte Carlo simulation models, totaling $20,977,295 as of March 31, 2025[111][113] Change in Fair Value of Warrant Liabilities | Item | Public Warrants | Private Warrants | Total | | :------------------------------------------ | :-------------- | :--------------- | :---------- | | Fair value at January 1, 2025 | $7,245,000 | $9,133,550 | $16,378,550 | | Change in fair value | $2,033,361 | $2,565,384 | $4,598,745 | | Fair value as of March 31, 2025 | $9,278,361 | $11,698,934 | $20,977,295 | Note 10 – Segment Information The company operates as a single operating segment, with the Chief Financial Officer acting as the chief operating decision maker who reviews net income or loss for resource allocation - The Company has determined it has only one operating segment, with the Chief Financial Officer acting as the chief operating decision maker (CODM)[116] - The CODM assesses performance and allocates resources based on the company's net income or loss[117] Note 11 – Subsequent Events Subsequent to March 31, 2025, the company made additional deposits into the Trust Account to extend the business combination termination date to July 14, 2025 - After March 31, 2025, the Company deposited an additional $272,484 into the Trust Account[119] - These subsequent deposits extended the termination date for completing a business combination to July 14, 2025[119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting its blank check status, Nasdaq delisting, net loss from warrant revaluation, and ongoing liquidity challenges Special Note Regarding Forward-Looking Statements This section cautions that forward-looking statements are subject to risks and uncertainties, with no obligation to update unless legally required - The report includes forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[121] - The company disclaims any obligation to update or revise forward-looking statements unless expressly required by applicable securities law[121] Overview This overview describes the company as a blank check entity, its Nasdaq delisting, and ongoing efforts to complete a business combination - Patria Latin American Opportunity Acquisition Corp. is a blank check company formed to effect a business combination[122] - The company's warrants and units were delisted from The Nasdaq Global Market on November 18, 2024, due to non-compliance with listing rules regarding warrant market value and unit components[123] - The company's securities were further delisted from Nasdaq on March 17, 2025, for failing to complete a business combination within 36 months of its IPO[124] Initial Business Combination This section outlines the company's objectives for an initial business combination, including fair market value requirements and shareholder redemption rights - The company aims to complete a Business Combination with an aggregate fair market value of at least 80% of the net assets held in the Trust Account[125] - Public Shareholders have the opportunity to redeem their shares upon completion of a Business Combination, either via a shareholder meeting or tender offer[125] - Initial shareholders have agreed to vote their Founder Shares and any Public Shares in favor of a Business Combination and waive their redemption rights[125] Results of Operations This section details the company's results of operations, reporting no operating revenues and a net loss in Q1 2025 primarily from warrant revaluation - The company has not generated any operating revenues to date and does not expect to until after completing an initial Business Combination[129] Net Income (Loss) Comparison (Three Months Ended March 31) | Period | Net Income (Loss) | | :------------------------------------------ | :---------------- | | Three months ended March 31, 2025 | $(4,315,449) | | Three months ended March 31, 2024 | $1,420,470 | - The net loss in Q1 2025 was primarily driven by a $4,598,745 change in the fair value of warrant liabilities and general and administrative expenses of $253,033, partially offset by a realized gain on Trust Account investments of $551,185[130] Liquidity and Going Concern Consideration This section addresses liquidity challenges, including a working capital deficit and insufficient cash, raising substantial doubt about the company's ability to continue as a going concern - As of March 31, 2025, the company had a working capital deficit of $5,645,084 and cash of $44,006 held outside the Trust Account[132][133][134] - The company's cash outside the Trust Account is insufficient to operate for the next 12 months, raising substantial doubt about its ability to continue as a going concern[137] - The company relies on promissory notes from its Sponsor to meet working capital requirements, with approximately $1.1 million outstanding as of March 31, 2025[137] Commitments and Contractual Obligations This section outlines commitments and contractual obligations, including deferred underwriting fees and administrative support fees, with no long-term debt - The company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[139] - A deferred underwriting fee of $4,025,000 remains payable to Citigroup Global Market Inc., as J.P. Morgan Securities LLC waived its portion[140] - The company incurred $30,000 in administrative support fees for the three months ended March 31, 2025, recorded as a deemed capital contribution[141] Critical Accounting Estimates This section identifies the valuation of warrant liabilities as a critical accounting estimate, classified as Level 3 due to unobservable inputs - The valuation of warrant liabilities is a critical accounting estimate, classified as Level 3 instruments due to reliance on unobservable inputs[146] Recent Accounting Standards Management believes recently issued accounting standards will not materially affect the company's unaudited condensed financial statements upon adoption - Management believes that recently issued, but not yet effective, accounting standards would not have a material effect on the company's unaudited condensed financial statements if currently adopted[76][147] JOBS Act As an emerging growth company, the company has elected to delay adopting new accounting standards, which may affect comparability with other entities - As an 'emerging growth company' under the JOBS Act, the company has elected to delay the adoption of new or revised accounting standards[148] - This election may make the company's financial statements not comparable to non-emerging growth companies[148] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Patria Latin American Opportunity Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[150] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to identified material weaknesses, particularly in warrant liability valuation Evaluation of Disclosure Controls and Procedures The company's disclosure controls and procedures were deemed not effective as of March 31, 2025, due to material weaknesses in financial reporting - The company's disclosure controls and procedures were deemed not effective as of March 31, 2025[151] - Material weaknesses identified include errors in EPS presentation, Class A ordinary shares subject to redemption, cash flow disclosures, and, in Q1 2025, incorrect valuation methodology for warrant liabilities[152] - The company plans to enhance presentation and disclosure controls through extensive research on complex accounting topics and training of management personnel[154] Changes in Internal Control over Financial Reporting Except for a newly identified material weakness related to warrant liability valuation, no other material changes occurred in internal control over financial reporting - Except for the newly identified material weakness related to warrant liability valuation, there were no other material changes in internal control over financial reporting during the most recent fiscal quarter[155] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - There are no legal proceedings[157] Item 1A. Risk Factors The company refers to the risk factors described in its annual report on Form 10-K, noting no material changes as of the report date - No material changes to the risk factors disclosed in the company's annual report on Form 10-K, except as described[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds - There were no unregistered sales of equity securities and no use of proceeds[159] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[159] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[160] Item 5. Other Information The company reported no other information - There is no other information to report[160] Item 6. Exhibits This section lists the exhibits filed with the report, including certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents - Exhibits include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[161][162] - The report also includes various Inline XBRL taxonomy extension documents[161]