Southern Cross Acquisition I Corp. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to the “Company”, “us,” “our,” or “we” refer to Southern Cross Acquisition I Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes herein. Overview We are a blank check company incorporated as a Cayman Islands exempted company with limited liability on April 15, 2025, under our former name RTNVM Acquisition Corp., which was changed to Southern Cross Acquisition I Corp. on August 4, 2025, for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region. To date, we have not selected any potential target business nor initiated any substantive discussions, directly or indirectly, with any such prospect. We have selected December 31 as our fiscal year end. We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. Prior to the consummation of the IPO (as defined below), our liquidity needs were satisfied through advances from our Sponsor (as defined below) pursuant to an unsecured promissory note. Following the consummation of the IPO and the Private Placement (as defined below), we have relied upon the working capital held outside the Trust Account (as defined below) to fund our operations, as well as any funds loaned by the Sponsor, our officers, directors or their affiliates. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. On July 22, 2026, subsequent to the end of the period covered by this Report, we consummated the initial public offering (the “IPO”) of 11,500,000 units (the “Units”), which included 1,500,000 Units issued pursuant to the underwriters’ exercise in full of their over-allotment option. Each Unit consists of one ordinary share, $0.0001 par value per share (each, an “Ordinary Share”), one right (each, a “Right”) entitling the holder thereof to receive one-fourth (1/4) of one Ordinary Share upon the consummation of the Company’s initial business combination, and one redeemable warrant (each, a “Warrant”), each whole Warrant entitling the holder thereof to purchase one Ordinary Share at an exercise price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $115,000,000. Maxim Group LLC acted as the representative of the underwriters of the IPO (the “Representative”). Simultaneously with the consummation of the IPO, we consummated the private placement of 239,300 units (the “Private Units”) to our Sponsor, Southern Cross Acquisition I Sponsor Corp. (the “Sponsor”), at a price of $10.00 per Private Unit, generating gross proceeds of $2,393,000 (the “Private Placement”). The Private Units are identical to the Units sold in the IPO. A total of $115,000,000 ($10.00 per Unit) from the net proceeds of the IPO and the sale of the Private Units was placed in a trust account (the “Trust Account”) established for the benefit of our public shareholders and the underwriters of the IPO with Continental Stock Transfer & Trust Company acting as trustee. The remaining $645,899 of proceeds was held outside the Trust Account. We also issued to the Representative 115,000 Ordinary Shares as part of the underwriting compensation (the “Representative Shares”), which were issued upon the closing of the IPO. We paid the Representative an underwriting discount of 1.0% of the gross proceeds of the IPO, or $1,150,000, at the closing of the IPO, and an additional 1.0% of the gross proceeds of the IPO, or $1,150,000, will be payable in cash as a deferred underwriting commission upon the consummation of our initial business combination. The Representative Shares are identical to the Ordinary Shares included in the Units, with certain exceptions. 19 Table of Contents Results of Operations and Known Trends or Future Events We have neither engaged in any operations nor generated any revenues to date. Our activities from April 15, 2025 (inception) through June 30, 2026 were related to the Company’s formation and the IPO. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. Following the IPO, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for expenses associated with the search for target opportunities. For the three and six months ended June 30, 2026, we had a net loss of $19,738 and $84,023, respectively, all of which consisted of formation and operating costs. For the period from April 15, 2025 (inception) through June 30, 2025, we had no formation or operating costs and, accordingly, reported no net income or loss. Liquidity and Capital Resources As of June 30, 2026, we had cash of $203,861 available for working capital needs. We intend to use substantially all of the net proceeds of the IPO, including the funds held in the Trust Account, to acquire a target business or businesses and to pay our expenses relating thereto. To the extent that our share capital is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses. Over the next 12 months (assuming a business combination is not consummated prior thereto), we will be using the funds held outside of the Trust Account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination. If our estimates of the costs of undertaking in-depth due diligence and negotiating our initial business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the Trust Account is less than we expect as a result of the current interest rate environment, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. As of June 30, 2026, we had cash of $203,861 and a working capital deficit of $281,439. On April 7, 2026, we issued an unsecured promissory note to the Sponsor pursuant to which the Sponsor agreed to loan us up to $500,000 to fund a portion of the expenses related to the IPO, of which $469,300 had been drawn down as of June 30, 2026. In connection with the closing of the IPO on July 22, 2026, $433,000 of the outstanding balance under the promissory note was settled and the remaining $36,300 was reclassified as other payable – related party. We have incurred and expect to continue to incur significant professional costs to remain as a publicly traded company and to incur significant transaction costs in pursuit of the consummation of a business combination. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements—Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern. Our management’s plan in addressing this uncertainty is through the funds held outside the Trust Account, together with working capital loans from our founders, officers, directors or their affiliates or designees, if necessary. In addition, if we are unable to complete a business combination within 12 months from the closing of the IPO, or by July 22, 2027 (unless such period is extended pursuant to our amended and restated memorandum and articles of association) (the “Combination Period”), our board of directors would proceed to commence a voluntary liquidation and thereby a formal dissolution of us. There is no assurance that our plans to consummate a business combination will be successful within the Combination Period. As a result, management has determined that such additional conditions also raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. 20 Table of Contents Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of June 30, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations As of June 30, 2026, we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities. The Ordinary Shares initially issued to the Sponsor prior to the consummation of the IPO (the “Founder Shares”), Ordinary Shares included in the Private Units, and any Ordinary Shares that may be issued upon conversion of working capital loans or extension loans (and any underlying securities) will be entitled to registration rights pursuant to a registration rights agreement entered into in connection with the IPO, requiring us to register such securities for resale. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statements. Critical Accounting Estimates We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. We have not identified any critical accounting estimates. R ecent Accounting Pronouncements In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements — Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which amends the disclosure or presentation requirements of a variety of codification subtopics. The amendments represent changes to clarify or improve disclosure and presentation requirements of those subtopics and align the requirements in the Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements, the effective date aligns with the date on which the SEC removes the related disclosure from Regulation S-X or Regulation S-K, and early adoption is not permitted. If the SEC has not removed the applicable requirements by June 30, 2027, the related amendments will not become effective. The Company is currently evaluating the impact of the update on its financial statements and related disclosures. On November 4, 2024, the FASB issued ASU No. 2024-03, Expense Disaggregation Disclosures (“ASU 2024-03”). ASU 2024-03 amends ASC 220, Comprehensive Income, to expand income statement expense disclosures and to require disclosure in the notes to the financial statements of specified information about certain costs and expenses. ASU 2024-03 is required to be adopted for fiscal years commencing after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard on its financial statements. In November 2024, the FASB issued ASU 2024-04, Debt — Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting guidance for induced conversions of convertible debt. The amendments clarify that, to account for a settlement as an induced conversion, an inducement offer must provide at least the consideration (in form and amount) issuable under the original conversion terms, even for instruments with cash conversion features, and that the guidance applies to instruments not currently convertible provided they had a substantive conversion feature at issuance and at the time of the inducement offer. The amendments are effective for annual periods beginning after December 15, 2025, with early adoption permitted for entities that have adopted ASU 2020-06. The Company is currently evaluating the impact of the update on its financial statements and related disclosures. Except as mentioned above, the Management does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the on our financial statements. 21 Table of Contents 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.