10-Q: Cartica Acquisition Corp Faces Liquidation Risk Amidst SPAC Challenges
Sentiment:
Quarterly Report
Cartica Acquisition Corp reports a significant net loss and liquidity concerns, extending its business combination deadline to February 2026 while continuing efforts to merge with Nidar Infrastructure Limited.
Delay expectedThe initial deadline to consummate a Business Combination was July 7, 2023.This deadline was extended to April 7, 2024, then to January 7, 2025, then to October 7, 2025, and most recently to February 7, 2026.The Termination Date of the Nidar Business Combination Agreement was extended to January 7, 2026.
Capital raiseThe company may need to raise further additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors, or third parties.The Sponsor has provided multiple promissory notes for working capital and extension contributions, totaling $3.5 million outstanding as of the report date, with an additional $149,295 borrowed post-September 30, 2025.The company entered into an agreement with Oppenheimer & Co. Inc. on November 2, 2025, for placement agent services to raise capital for the Nidar Business Combination, with fees structured based on gross proceeds raised from strategic and non-strategic investors.
Worse than expectedA net loss of $3,513,781 was reported for the three months ended September 30, 2025.Cash held in the Trust Account significantly decreased from $26,355,736 at December 31, 2024, to $16,794,222 at September 30, 2025, due to high shareholder redemptions.The company has a substantial working capital deficit of $8,768,103 as of September 30, 2025.The company was delisted from Nasdaq on January 13, 2025, and now trades on the OTC market.Management has explicitly disclosed substantial doubt about the company's ability to continue as a going concern.
Summary
- The company reported a net loss of $3,513,781 for the three months ended September 30, 2025, compared to a net income of $60,908 for the same period in 2024.
- For the nine months ended September 30, 2025, the company had a net income of $2,714,017, a significant improvement from a net loss of $7,815,226 in the prior year period, primarily due to changes in the fair value of warrant liabilities.
- Cash held in the Trust Account decreased from $26,355,736 at December 31, 2024, to $16,794,222 at September 30, 2025, largely due to shareholder redemptions.
- The company has a working capital deficit of $8,768,103 as of September 30, 2025.
- The deadline to consummate a Business Combination has been extended multiple times, most recently to February 7, 2026.
- The company is pursuing a business combination with Nidar Infrastructure Limited, a data center provider for artificial intelligence and high-performance compute in India.
- Cartica Acquisition Corp was delisted from Nasdaq on January 13, 2025, and its securities now trade on the OTC market.
- Management has identified substantial doubt about the company's ability to continue as a going concern due to liquidity issues and the mandatory liquidation if a business combination is not completed by February 7, 2026.
Sentiment
Score: 2
Explanation: The company faces severe financial distress, including a substantial working capital deficit and management's explicit doubt about its ability to continue as a going concern. The delisting from Nasdaq to the OTC market significantly reduces liquidity and investor appeal. While the Nidar Business Combination is progressing (F-4 effective), the history of high redemptions and repeated extensions, coupled with the termination of the Forward Purchase Agreement, indicates a high probability of further shareholder value erosion or even liquidation. The reliance on related-party loans for operational expenses and extensions further highlights the precarious financial position.
Positives
- Net income for the nine months ended September 30, 2025, was $2,714,017, a significant improvement from a net loss of $7,815,226 in the prior year, primarily driven by a favorable change in the fair value of warrant liabilities.
- The Nidar Registration Statement on Form F-4 went effective on November 5, 2025, indicating progress towards the business combination.
- An agreement was secured with Oppenheimer & Co. Inc. on November 2, 2025, for capital markets advisory and placement agent services for the Nidar Business Combination.
- The underwriter for the IPO waived its deferred underwriting commission of $8,050,000, which was recognized as other income and a capital contribution.
Negatives
- A net loss of $3,513,781 was reported for the three months ended September 30, 2025.
- Cash held in the Trust Account significantly decreased from $26,355,736 at December 31, 2024, to $16,794,222 at September 30, 2025, primarily due to high shareholder redemptions.
- The company has a working capital deficit of $8,768,103 as of September 30, 2025.
- Delisted from Nasdaq on January 13, 2025, and now trades on the OTC market, which can reduce liquidity and investor interest.
- Multiple extensions have been required for the business combination deadline, indicating difficulties in closing a deal.
- High shareholder redemption rates occurred in connection with extension votes, including 18,785,585 shares in July 2023, 1,964,993 shares in April 2024, 901,326 shares in January 2025, and 420,537 shares in October 2025.
- The Forward Purchase Agreement with Cartica Funds, a potential source of up to $30,000,000 in funding, was terminated.
- The company relies on the Sponsor for working capital loans and extension contributions, with $3.5 million borrowed under various promissory notes as of the report date.
- Management has identified substantial doubt about the company's ability to continue as a going concern.
Risks
- Substantial doubt exists about the company's ability to continue as a going concern due to insufficient liquidity to fund working capital needs through February 7, 2026, and the mandatory liquidation if a business combination is not consummated.
- There is no assurance that the company will be able to complete the Nidar Business Combination successfully by the extended deadline of February 7, 2026.
- If a business combination is not completed, the company will liquidate, and warrants will expire worthless, with public shareholders potentially receiving less than $10.30 per share upon liquidation.
- High shareholder redemption rates in connection with extension votes significantly reduce the funds available in the Trust Account, potentially impacting the ability to complete a business combination.
- Delisting from Nasdaq and trading on the OTC market may result in reduced liquidity, lower share price, and less investor interest.
- Continued reliance on the Sponsor for working capital loans and extension contributions, which may not always be available, poses a financial risk.
- Changes in the fair value of warrant liabilities can significantly impact net income or loss.
- The company's ability to complete an initial business combination may be adversely affected by various factors, including changes in laws or regulations, downturns in financial markets or economic conditions, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability.
Future Outlook
The company has until February 7, 2026, to complete the Nidar Business Combination. It may seek further extensions, which would require shareholder approval and offer redemption rights, potentially further decreasing Trust Account funds. If the business combination is not completed, the company will liquidate, and warrants will expire worthless. The Nidar Registration Statement has gone effective, indicating a step forward in the business combination process. The company intends to maintain funds in the Trust Account in U.S. government securities until the earlier of business combination consummation or liquidation.
Management Comments
- "Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raise substantial doubt about the Company's ability to continue as a going concern for the twelve months from the filing of this Report."
- "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."
- The Certifying Officers concluded that disclosure controls and procedures were effective as of September 30, 2025.
Industry Context
The company operates as a Special Purpose Acquisition Company (SPAC), a sector that has recently experienced increased shareholder redemption rates and regulatory scrutiny, making it challenging to complete de-SPAC transactions. The delisting from Nasdaq and subsequent trading on the OTC market is a common outcome for SPACs that fail to meet listing requirements or complete a business combination within their initial timeframe, often leading to reduced investor confidence and liquidity. The target, Nidar Infrastructure Limited, is positioned in the data center market for artificial intelligence and high-performance computing in India, an emerging and potentially high-growth sector, which represents a strategic focus despite the SPAC's operational challenges.
Comparison to Industry Standards
- The high shareholder redemption rates (e.g., 18.7 million shares in July 2023, 1.9 million in April 2024, 901,326 in January 2025, and 420,537 in October 2025) are consistent with a broader trend of increased redemptions in the SPAC market, where public shareholders often opt to redeem their shares rather than participate in the de-SPAC transaction, especially as the trust value per share increases over time.
- The delisting from Nasdaq and subsequent move to the OTC market is a significant negative event, contrasting with successful SPACs that maintain their listing post-merger and often indicates a loss of institutional investor interest and reduced market access.
- The repeated extensions of the business combination deadline are common for SPACs struggling to close a deal, frequently requiring additional capital contributions from the sponsor to maintain the trust value for non-redeeming shareholders.
- The termination of the Forward Purchase Agreement highlights the difficulty many SPACs face in securing Private Investment in Public Equity (PIPE) financing or other committed capital in a challenging market environment, which can leave them with insufficient funds to complete a business combination.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Directors | Subramanian Ramadorai, Keki M. Mistry, Farida Khambata, Parul Bhandari, Asif Ramji, Steven J. Quamme | Suresh Guduru, Suresh Singamsetty, Kishore Kondragunta, Rana Gujral, Kyle Ingvald Parent, John F. Levy | May 23, 2023 | In connection with the Membership Interest Purchase Agreement (Transfer) between the Sponsor, Cartica Funds, and Namaste. |
| Interim Chief Executive Officer | Steven J. Quamme | May 23, 2023 | Resignation in connection with the Transfer. | |
| Class I Director | Kyle Ingvald Parent, Suresh Singamsetty | May 23, 2023 | Appointment by holders of Class B ordinary shares. | |
| Class II Director | John F. Levy, Kishore Kondragunta | May 23, 2023 | Appointment by holders of Class B ordinary shares. | |
| Class III Director | Rana Gujral, Suresh Guduru | May 23, 2023 | Appointment by holders of Class B ordinary shares. | |
| Audit Committee Member | John F. Levy, Rana Gujral, Kyle Ingvald Parent | May 23, 2023 | Appointment by the Board. | |
| Compensation, Nominating and Corporate Governance Committee Member | John F. Levy, Rana Gujral, Kyle Ingvald Parent | May 23, 2023 | Appointment by the Board. | |
| Chairman of Audit Committee | John F. Levy | May 23, 2023 | Appointment by the Board. | |
| Chairman of Compensation, Nominating and Corporate Governance Committee | Rana Gujral | May 23, 2023 | Appointment by the Board. | |
| Director and Audit Committee Member | Kyle Ingvald Parent | November 15, 2024 | Resignation, leading to non-compliance with Nasdaq's Audit Committee Listing Rule. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Administrative Support Agreement Amendment | Amended the administrative support agreement on May 23, 2023, ceasing certain payments to the Sponsor and adjusting officer compensation and administrative support arrangements. | May 23, 2023 | Reduced administrative expenses paid to the Sponsor, but continued payments for COO/CFO salary and administrative support. |
| Charter Amendment (Redemption Limitation) | Shareholders approved an amendment on January 3, 2025, to eliminate the Redemption Limitation (net tangible assets of less than US$5,000,001), allowing the company to redeem Public Shares irrespective of this limit. | January 3, 2025 | Facilitated further redemptions, potentially reducing the Trust Account balance without being constrained by net tangible asset requirements. |
| Auditor Ratification | Shareholders ratified the selection and appointment of CBIZ CPAs P.C. as the independent registered public accounting firm for the year ending December 31, 2025, at the Fourth Extension Meeting on October 3, 2025. | October 3, 2025 | Ensures continuity of independent audit services for the upcoming fiscal year. |
Legal Proceedings
- To the knowledge of management, there is no material litigation currently pending or contemplated against the company, its officers or directors in their capacity as such, or against any of its property.
Related Party Transactions
- **Founder Shares**: Issued to the Sponsor, with some subsequently granted to executive officers, consultants, and former directors. These shares are subject to lock-up and vesting conditions.
- **Private Placement Warrants**: The Sponsor purchased 15,900,000 Private Placement Warrants for an aggregate of $15,900,000.
- **Promissory Notes Related Party**: The Sponsor has provided multiple non-interest bearing promissory notes for working capital and extension contributions. As of September 30, 2025, $2,445,435 was outstanding under the Working Capital Note (amended to allow borrowing up to $2,750,000). An additional $149,295 was borrowed post-September 30, 2025, bringing the Working Capital Note balance to $2,594,731. Various extension notes (Second, Third, Fourth, Fifth) were also issued to the Sponsor to fund monthly contributions to the Trust Account for deadline extensions, totaling $3,290,750 outstanding under all promissory notes as of September 30, 2025.
- **Administrative Support Agreement**: An amended agreement with the Sponsor requires the company to pay $16,666.67 per month for the Chief Operating Officer and Chief Financial Officer's annual cash salary and administrative support.
- **Non-Redemption Agreements**: The company agreed to issue an aggregate of 962,500 Class A ordinary shares to unaffiliated institutional investors in exchange for their agreement not to redeem shares, which was recognized as a capital contribution by the Sponsor.
Stakeholder Impact
- **Shareholders (Public)**: Face significant risk of losing their investment if the business combination fails and the company liquidates. High redemption rates indicate a lack of confidence, and the delisting to the OTC market reduces liquidity and potentially share value. Those who redeemed received a pro rata portion of the Trust Account, which increased per share over time due to interest and fewer outstanding shares.
- **Shareholders (Sponsor/Insiders)**: Have provided substantial loans to support the company's operations and extensions. Their Founder Shares and Private Placement Warrants will expire worthless if a business combination is not completed. Their Class A shares are subject to lock-up and vesting conditions.
- **Creditors**: The Sponsor has agreed to be liable to the company for certain third-party claims that reduce Trust Account funds below a specified threshold, offering some protection to the Trust Account.
- **Employees (Officers)**: Compensation arrangements are tied to the Sponsor and the company's operational status.
- **Target Business (Nidar Infrastructure Limited)**: The ongoing delays, financial instability, and delisting of Cartica Acquisition Corp could negatively impact the successful completion of the merger and Nidar's ability to become a public company with the intended market access and valuation.
Next Steps
- Complete the Nidar Business Combination by the extended deadline of February 7, 2026.
- Continue efforts to raise capital for the Nidar Business Combination through placement agent services with Oppenheimer & Co. Inc.
- Deposit $37,102.36 per month into the Trust Account for monthly extensions until February 7, 2026.
- Seek shareholder approval for further extensions of the Combination Period if needed.
- Delist from OTC markets and deregister under the Exchange Act as soon as practicable following the First Effective Time of the Nidar Business Combination.
Key Dates
| Date | Description |
|---|---|
| February 3, 2021 | Company incorporated in the Cayman Islands. |
| February 9, 2021 | Company issued Founder Shares to the Sponsor. |
| January 7, 2022 | Initial Public Offering (IPO) closed. |
| October 13, 2022 | Cartica Management advised that the Cartica Funds would be liquidated in the first half of 2023. |
| March 14, 2023 | Cartica Management notified the company that its investment committee would not approve the purchase of any Forward Purchase Shares. |
| April 14, 2023 | J.P. Morgan, the IPO underwriter, terminated its association and waived deferred fees of $8,050,000. |
| May 23, 2023 | Sponsor entered a Membership Interest Purchase Agreement with Cartica Funds and Namaste, resulting in a change in the board of directors and the termination of the Forward Purchase Agreement. |
| June 16, 2023 | Company entered into non-redemption agreements with unaffiliated institutional investors. |
| June 26, 2023 | Company entered into additional non-redemption agreements with unaffiliated institutional investors. |
| June 29, 2023 | Conversion of 4,750,000 Class B ordinary shares to Class A ordinary shares for the Sponsor. |
| June 30, 2023 | First Extension Meeting held, where shareholders holding 18,785,585 Class A ordinary shares exercised their right to redeem. |
| July 17, 2023 | Paid $200,917,798 to redeeming shareholders from the First Extension Meeting. |
| August 2023 | Working Capital Note issued to the Sponsor. |
| September 25, 2023 | Received a written notice from Nasdaq regarding non-compliance with the Minimum Total Holders Rule. |
| January 5, 2024 | Instructed the trustee to liquidate money market funds in the Trust Account and hold all funds in cash items. |
| February 16, 2024 | Working Capital Note amended to increase the principal sum to up to $750,000. |
| April 3, 2024 | Second Extension Meeting held, where shareholders holding 1,964,993 Public Shares exercised their right to redeem. |
| April 4, 2024 | Working Capital Note further amended to increase the principal sum to up to $1,250,000. |
| April 7, 2024 | First $40,000 deposited into the Trust Account for the Second Extension. |
| April 8, 2024 | Paid $21,871,605 to redeeming shareholders from the Second Extension Meeting. |
| April 16, 2024 | Received a notice from Nasdaq indicating non-compliance with the Minimum Total Holders Rule during the Extension Period. |
| May 23, 2024 | Appeared before the Nasdaq Hearings Panel. |
| June 17, 2024 | Received a written notice from the Nasdaq Hearings Panel granting continued listing on Nasdaq Capital Market, subject to compliance by June 28, 2024. |
| June 24, 2024 | Entered into the Agreement and Plan of Merger with Nidar Infrastructure Limited; Working Capital Note further amended to increase the principal sum to $1,750,000. |
| July 11, 2024 | Nasdaq notified the company of approval to list its securities on the Nasdaq Capital Market. |
| July 12, 2024 | Company's securities were transferred to the Nasdaq Capital Market. |
| July 26, 2024 | Nasdaq notified the company that it had demonstrated compliance with Listing Rule 5450(a)(2). |
| November 15, 2024 | Kyle Ingvald Parent resigned from the board of directors and the audit committee. |
| November 27, 2024 | Received a written notice from Nasdaq indicating non-compliance with the Audit Committee Listing Rule. |
| December 20, 2024 | Working Capital Note again amended to increase the principal sum to $2,750,000. |
| December 31, 2024 | Entered into an amendment to the Nidar Business Combination Agreement, extending the Termination Date to January 7, 2026. |
| January 3, 2025 | Third Extension Meeting held, where shareholders holding 901,326 Public Shares exercised their right to redeem. |
| January 4, 2025 | Deadline for the company to complete its initial business combination under Nasdaq Listing Rule IM-5101-2. |
| January 6, 2025 | Paid $10,561,755 to redeeming shareholders from the Third Extension Meeting; issued the Second Extension Note. |
| January 8, 2025 | First $40,442.88 deposited into the Trust Account for the Third Extension. |
| January 13, 2025 | Company's securities were delisted from Nasdaq and began trading on the OTC market. |
| April 1, 2025 | Issued the Third Extension Note in the principal amount of up to $161,772 to the Sponsor. |
| April 8, 2025 | First $53,924 deposited into the Trust Account for the second three months of the Third Extension. |
| June 4, 2025 | Form 25-NSE was filed with the SEC for delisting from Nasdaq. |
| August 11, 2025 | Issued the Fourth Extension Note in the principal amount of up to $202,214.40 to the Sponsor. |
| September 30, 2025 | End of the quarterly reporting period. |
| October 3, 2025 | Fourth Extension Meeting held, where shareholders holding 420,537 Public Shares exercised their right to redeem. |
| October 7, 2025 | Issued the Fifth Extension Note in the aggregate principal amount of up to $148,409.44 to the Sponsor. |
| October 9, 2025 | Deposited $37,102.36 into the Trust Account for the first month's extension under the Fourth Extension; remaining Trust Account funds of $11,589,551 redeposited into U.S. government securities. |
| November 2, 2025 | Entered into an agreement with Oppenheimer & Co. Inc. to advise on the Nidar Business Combination and provide placement agent services. |
| November 5, 2025 | The Nidar Registration Statement on Form F-4 went effective. |
| November 10, 2025 | Deposited $37,102.36 into the Trust Account for the second month's extension under the Fourth Extension. |
| November 14, 2025 | Date of this Quarterly Report on Form 10-Q filing. |
| February 7, 2026 | Extended deadline to consummate a Business Combination. |
Recommendation
sellThe company faces severe financial distress, including a substantial working capital deficit and management's explicit doubt about its ability to continue as a going concern. The delisting from Nasdaq to the OTC market significantly reduces liquidity and investor appeal. While a business combination with Nidar is in progress, the history of high redemptions and repeated extensions, coupled with the termination of the Forward Purchase Agreement, indicates a high probability of further shareholder value erosion or even liquidation. The reliance on related-party loans for operational expenses and extensions further highlights the precarious financial position. A seasoned investor would likely view the risks as outweighing any potential upside from the Nidar merger, especially given the current market conditions for SPACs.
Keywords
SPAC, Special Purpose Acquisition Company, Nidar Infrastructure Limited, Business Combination, De-SPAC, Liquidation, Going Concern, Nasdaq Delisting, OTC Market, Warrant Liabilities, Shareholder Redemptions, Promissory Notes, India Data Center, Financial Reporting, SEC Filing, 10-Q, Cartica Acquisition Corp
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