Hudson Acquisition I Corp. (HUDA) 10-K Review

Table of Contents

Warren.AI 💰 3.0 / 10

1. Introduction
2. What Is a SPAC?
3. The HUDA Story: Business Purpose & IPO
4. The Trust Account & Use of Proceeds
5. Timeline of Extension Amendments
6. Financial Highlights: 2023–2024
   • Net Loss (2024)
   • Operating Expenses
   • Interest Income & Other Items
   • Liquidity & Going Concern
7. Risk Factors
8. The Aiways Deal
9. Nasdaq Delisting Notice
10. Investment Outlook & Score
11. Key Takeaways / Next Steps

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1. Introduction

Hudson Acquisition I Corp. (NASDAQ: HUDA) is a blank‐check company—or SPAC—formed with a single goal: to merge with or acquire a private operating business and take it public in a more efficient, cost-effective manner. In this post, we dissect HUDA's latest Annual Report on Form 10-K, covering its financial position, key events, risk factors, and the prospects for its proposed combination with European EV manufacturer Aiways Automobile Europe GmbH.

2. What Is a SPAC?

A Special Purpose Acquisition Company (SPAC) is essentially an empty shell formed to raise capital by listing its shares—and then hunting for a “target” business to merge with. Once a SPAC completes its “de-SPAC” merger, the private target becomes a public company, often with fewer regulatory hurdles and faster execution than a traditional IPO.

3. The HUDA Story: Business Purpose & IPO

• Incorporation & Purpose
  HUDA was incorporated in Delaware on January 13, 2021. It has no operating revenues or core business of its own; its sole mission is to identify, acquire, and combine with one or more operating businesses.
• Initial Public Offering
  On October 14, 2022, HUDA raised $60 million (6 million units at $10/unit) in a Nasdaq‐listed IPO.
  • Each Unit = 1 share of common stock + 1 right (to receive one-fifth of a share) upon closing of an Initial Business Combination.
  • Sponsor Private Placement: Hudson SPAC Holding LLC committed up to $3.4 million in additional units.
• Over-Allotment Option
  In October 2022, HUDA exercised 845,300 overallotment units, adding ~$8.45 million to its trust account.

4. The Trust Account & Use of Proceeds

• Trust Account Funding: $69.48 million was deposited in a U.S. trust (invested in short-term U.S. Treasury instruments).
• Restrictions: These funds can only be used to complete an Initial Business Combination or to redeem public shares if no combination occurs.
• Operating Cash: Separately, HUDA holds working capital outside the trust, used to pay legal, accounting, listing, and administrative expenses.

5. Timeline of Extension Amendments

Nasdaq rules originally gave SPACs 18 months to complete a merger. HUDA has extended its deadline three times by depositing additional funds into its trust:

Extension	Deadline	Deposit Required	Notes
1st Extension	Apr 18, 2024	$80,000/month	Voted at July 2023 special meeting
2nd Extension	Jan 18, 2025	$25,000/month	Voted at April 2024 special meeting
3rd Extension	Oct 18, 2025	No deposit required	Voted at July 2024 special meeting

If HUDA fails to complete a deal by October 18, 2025, it must liquidate and redeem public shares at the pro-rata trust balance.

6. Financial Highlights: 2023–2024

HUDA has incurred no operating revenues. Its financial results consist of IPO/trust income and fees.

Net Loss (2024)

• Net Loss: $(817,025)
• Net Income (2023): +$121,221

Operating Expenses (2024)

• Legal, accounting, SEC & listing fees: $~994,000
• Delaware franchise tax: $58,400
• Expenses due to misallocated tax deposits: $172,200

Interest Income & Other Items

• Interest on Trust Account: $582,231 (2024) vs. $2.28 million (2023)
• Interest on Operating Cash: $3,307 (2024) vs. $177 (2023)
• Convertible Debt Fair‐Value Adjustment: $790 income (2024)

Liquidity & Going Concern

• Cash (Operating): $68,758 (Dec 2024)
• Trust Account Balance: $1.12 million (Dec 2024) vs. $26.04 million (Dec 2023)
• Working Capital Deficit: ~$4.44 million
• Accumulated Deficit: ~$6.93 million

Management acknowledges “substantial doubt” about HUDA's ability to continue as a going concern absent a completed merger by October 18, 2025.

7. Risk Factors

Key SPAC risks detailed in Item 1A of the 10-K:

1. No Operating History: HUDA has no revenues and no business until it acquires a target.
2. Redemption Risk: Shareholders can redeem; large redemptions reduce merger capital.
3. Extension Costs: Each extension dilutes trust funds, reducing what public investors receive.
4. Concentration Risk: Post-merger, HUDA becomes a single‐business entity.
5. Target Uncertainty: Due diligence on private targets is limited; risks in assessing management.
6. Delisting Risk: Failure to comply with Nasdaq listing rules can lead to suspension/delisting.
7. Tax & Litigation: Excise tax on buybacks and creditor claims can reduce trust assets.

8. The Aiways Deal

On November 22, 2024, HUDA signed a Business Combination Agreement with Aiways Automobile Europe GmbH, a German EV manufacturer. Aiways produces electric SUVs and crossovers—an attractive sector. HUDA has also received bridge loans of $1.48 million from Aiways to fund its search and working capital.

9. Nasdaq Delisting Notice

On January 22, 2025, HUDA received a Nasdaq Panel notice to delist its securities and suspend trading on January 24, 2025. The reasons:

• Failure to meet minimum market value of listed securities.
• Failure to maintain public float and holder count.
• Late filings (SEC Form 10-K and Form 10-Q).

HUDA may appeal but has told Nasdaq it will not. Delisting raises serious concerns about investor liquidity and the fate of the pending Aiways merger.

10. Investment Outlook & Score (3.0/10)

Factor	Comments	Impact
SPAC Structure	No operations until business combination.	Negative
Trust Account	Majority of cash locked pending merger.	Neutral
Financial Health	Net loss, expenses outpacing interest.	Negative
Merger Target	Aiways is a promising EV player but untested.	Mixed
Nasdaq Status	Delisting notice issued, dramatic risk.	Highly Negative

Overall Score: 3.0 / 10
Reasoning: HUDA’s SPAC model is well-established, but its repeated extensions, diminishing trust balance, net losses, and delisting notice make this a high‐risk proposition. The Aiways deal offers a glimmer of EV‐sector promise, but the Nasdaq delisting and uncertain completion timeline weigh heavily on the investment outlook.

11. Key Takeaways / Next Steps

1. Close on Aiways Deal: The merger must be consummated by October 18, 2025, to avoid liquidation.
2. Nasdaq Appeal: HUDA will remain suspended once delisted, impacting liquidity.
3. Monitor Trust Balance: Public investors need to track how redemptions and tax draws deplete the trust.
4. Watch SEC Filings: Quarterly Form 10-Q and Form 8-K updates will reveal merger progress, tax liabilities, and Nasdaq status.

If you’re a SPAC investor, HUDA demands a cautious approach. The EV opportunity via Aiways is exciting, but liquidity and regulatory hurdles create significant risk. Stay informed, set your exit plan, and consider whether the risk-return profile fits your portfolio.

Note: This post is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell securities.