UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period
ended
For the transition period from ___________ to _____________
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
| (State of Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| (Address of Principal Executive Offices) | (ZIP Code) |
(Registrant’s Telephone Number, Including Area Code)
Indicate by check whether
the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The | ||||
| The | ||||
| The |
As of August 2, 2024, there were
HUDSON ACQUISITION I CORP.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
TABLE OF CONTENTS
i
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
HUDSON ACQUISITION I CORP.
CONDENSED BALANCE SHEETS
| March 31, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Marketable securities held in Trust Account | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related party | ||||||||
| Franchise tax payable | ||||||||
| Income tax payable | ||||||||
| Excise tax payable | ||||||||
| Note payable - related party | ||||||||
| Total current liabilities | ||||||||
| Deferred underwriting commissions | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 5) | ||||||||
| Common stock subject to possible redemption, | ||||||||
| Stockholders' deficit: | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities, redeemable common stock and stockholders' deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
1
HUDSON ACQUISITION I CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended, | For the Three Months Ended, | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Operating expenses: | ||||||||
| General and administrative | $ | $ | ||||||
| Franchise tax expense | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income: | ||||||||
| Interest earned on marketable securities held in Trust Account | ||||||||
| Interest earned on cash account | ||||||||
| Other income, net | ||||||||
| Income before income taxes | ||||||||
| Provision for income taxes | ( | ) | ( | ) | ||||
| Net (loss) income | $ | ( | ) | $ | ||||
| $ | $ | |||||||
| $ | ( | ) | $ | ( | ) | |||
| (1) |
The accompanying notes are an integral part of these unaudited financial statements.
2
HUDSON ACQUISITION I CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(UNAUDITED)
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholder's | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, January 1, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Accretion of common stock subject to possible redemption | - | ( | ) | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, March 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Total | ||||||||||||||||||||
| Common Stock | Additional | Stockholder's | ||||||||||||||||||
| Shares | Amount | Paid-in Capital | Accumulated Deficit | Equity (Deficit) | ||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Accretion of common stock to redemption value | - | ( | ) | ( | ) | |||||||||||||||
| Net income | - | |||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
3
HUDSON ACQUISITION I CORP.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended, | For the Three Months Ended, | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Expenses paid on behalf of the Company by related parties | ||||||||
| Interest earned on marketable securities held in Trust Account | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Due to related party | ||||||||
| Franchise tax payable | ||||||||
| Income tax payable | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment of cash in Trust Account | ( | ) | ||||||
| Withdrawal of interest from Trust Account to pay taxes | ||||||||
| Net cash provided by investing activities | $ | $ | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds of notes payable - related party | ||||||||
| Net cash provided by financing activities | $ | $ | ||||||
| NET CHANGE IN CASH | ( | ) | ||||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Non-cash investing and financing activities: | ||||||||
| Accretion of common stock subject to possible redemption | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
4
HUDSON ACQUISITION I CORP.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2024
NOTE 1 — NATURE OF THE ORGANIZATION AND BUSINESS
Hudson Acquisition I Corp. (“Hudson”
or the “Company”) was incorporated in the State of Delaware on
Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Hudson Acquisition I Corp.
As of March 31, 2024, the Company had not commenced core operations. All activity for the period from January 13, 2021 (inception) through March 31, 2024 relates to the Company’s formation and raising funds through the initial public offering (“Initial Public Offering”), which is described below, and efforts in identifying a target to consummate an Initial Business Combination. The Company will not generate any operating revenues until after the completion of an Initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement pursuant to which the
Company registered its securities offered in the Initial Public Offering was declared effective on October 14, 2022. On October 18, 2022,
the Company consummated its Initial Public Offering and sold
Simultaneously with the closing of the Initial
Public Offering, the Company’s sponsor, Hudson SPAC Holding LLC (the “Sponsor”) should have purchased a total of
On October 21, 2022, the Company closed the sale
of
Following the closing of the Initial Public Offering
and Overallotment, an amount of $
5
No compensation of any kind (including finder’s, consulting or other similar fees) will be paid to any of the Company’s existing officers, directors, stockholders, or any of their affiliates, prior to, or for any services they render in order to effectuate, the consummation of the Initial Business Combination (regardless of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on the Company’s behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. Since the role of present management after our Initial Business Combination is uncertain, the Company has no ability to determine what remuneration, if any, will be paid to those persons after the Initial Business Combination.
The Company intends to use the excess working capital available for miscellaneous expenses such as paying fees to consultants to assist with the search for a target business and for director and officer liability insurance premiums, with the balance being held in reserve in the event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed estimates, as well as for reimbursement of any out-of-pocket expenses incurred by insiders, officers and directors in connection with activities on the Company’s behalf as described below.
The allocation of the net proceeds available to
the Company outside of the Trust Account, along with the interest earned on the funds held in the Trust Account available to pay for income
and other tax liabilities, represents the best estimate of the intended uses of these funds. In the event that the assumptions prove to
be inaccurate, the Company may reallocate some of such proceeds within the above-described categories. If the estimate of the costs of
undertaking due diligence and negotiating the Initial Business Combination is less than the actual amount necessary to do so, or the amount
of interest available to the Company from the Trust Account is insufficient as a result of the volatile interest rate environment, the
Company may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. In this
event, the Company could seek such additional capital through loans or additional investments from the Sponsor or third parties. The Sponsor
has agreed to loan the Company up to an aggregate of $
The Company will likely use substantially all of the net proceeds of the Initial Public Offering, including the funds held in the Trust Account, in connection with the Initial Business Combination and to pay expenses relating thereto, including the deferred underwriting discounts payable to the underwriters. To the extent that the Company’s capital stock is used in whole or in part as consideration to effect the Initial Business Combination, the proceeds held in the Trust Account which are not used to consummate an Initial Business Combination will be disbursed to the combined company and will, along with any other net proceeds not expended, 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.
To the extent that the Company is unable to consummate an Initial Business Combination, the Company will pay the costs of liquidation from the remaining assets outside of the Trust Account. If such funds are insufficient, the Sponsor has agreed to pay the funds necessary to complete such liquidation and has agreed not to seek repayment of such expenses.
If no business combination is completed prior
to the mandatory liquidation date, the proceeds then on deposit in the Trust Account including interest earned on the funds held in the
Trust Account and not previously released to the Company to pay taxes (less $
6
In connection with the shares purchased by the founders, the founders waive any and all right, title, interest or claim of any kind in or to any distributions by the Company from the Trust Account which will be established for the benefit of the Company’s public stockholders and into which substantially all of the proceeds of the Initial Public Offering will be deposited (the “Trust Account”), in the event of a liquidation of the Company upon the Company’s failure to timely complete an Initial Business Combination.
Extension Amendment
On July 17, 2023, the Company held the Special
Meeting. On June 28, 2023, the record date for the Special Meeting, there were
On July 17, 2023, the Company filed a certificate
of amendment (the “Certificate of Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation
(the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware. The Certificate of Amendment amends
the Certificate of Incorporation to (i) give the Company the option to extend the date by which the Company must effect a Business Combination
beyond July 18, 2023 up to nine (9) times for an additional (1) month each time to April 18, 2024 upon the deposit into the Trust Account
of $
On April
17, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of State
of the State of Delaware. The Certificate of Amendment amends the Certificate of Incorporation to (i) give the Company the option to extend
the date by which the Company must effect a Business Combination beyond April 18, 2024, up to nine (9) times for an additional (1) month
each time to January 18, 2025, upon the deposit into the Trust Account of $
On July 10, 2024, the Company filed a Certificate of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the Certificate of Incorporation to (i) give the Company the option to extend the date by which the Company must effect a Business Combination beyond January 18, 2025, up to nine (9) times for an additional (1) month each time to October 18, 2025, and will no longer require monthly deposits into the Trust Account as of July 5, 2024 (See Note 9).
Liquidity and Capital Resources
As of March 31, 2024, the Company had $
7
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
October 18, 2025 (see Note 9), assuming the monthly extension requirements are satisfied, to consummate a Business Combination (the “Combination
Period”). The Company is able to extend the date by which an Initial Business Combination must be consummated beyond July 18, 2023
up to nine times for an additional one month each time to April 18, 2024 upon the deposit into the Trust Account of $
NOTE 2 — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the SEC on July 23, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
8
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statement, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of March 31, 2024 and December 31, 2023.
Marketable Securities Held in Trust Account
The Company classifies its Marketable Securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying condensed balance sheet and adjusted for the amortization or accretion of premiums or discounts. When the Company’s investments held in the Trust Account are comprised of money market securities, the investments are classified as trading securities. Gains and losses resulting from the change in fair value of these securities is included in interest earned on investments held in the Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Offering Costs
Offering costs consist of professional fees, filing, regulatory and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
9
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.
| Common stock subject to possible redemption, December 31, 2022 | $ | |||
| Less: | ||||
| Redemption of common stock in connection with Trust Extension | ( | ) | ||
| Add: | ||||
| Accretion of carrying value to redemption value | ||||
| Common stock subject to possible redemption, December 31, 2023 | $ | |||
| Add: | ||||
| Accretion of carrying value to redemption value | ||||
| Common stock subject to possible redemption, March 31, 2024 | $ |
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net (Loss) Income per Share of Common Stock
The Company has two outstanding classes of shares,
which are referred to as redeemable common stock and non-redeemable common stock. Earnings and losses are shared pro rata between the
two classes of stock. The
10
For the Three Months Ended March 31, 2024
| Net loss | $ | ( | ) | |
| Accretion of interest earned on Trust Account, after deduction of franchise tax and income tax expense | ( | ) | ||
| Net loss including accretion of temporary equity to redemption value | $ | ( | ) |
| Common Shares Subject to Redemption | Non-redeemable Common Shares | |||||||
| Basic and diluted net loss per share: | ||||||||
| Numerator: | ||||||||
| Allocation of net loss including accretion of temporary equity | $ | ( | ) | $ | ( | ) | ||
| Accretion of temporary equity to redemption value | ||||||||
| Allocation of net income (loss) | $ | $ | ( | ) | ||||
| Denominator: | ||||||||
| $ | $ | ( | ) | |||||
| Net income | $ | |||
| Accretion of interest earned on Trust Account, after deduction of franchise tax and income tax expense | ( | ) | ||
| Net loss including accretion of temporary equity to redemption value | $ | ( | ) |
| Common Shares Subject to Redemption | Non-redeemable Common Shares | |||||||
| Basic and diluted net income (loss) per share: | ||||||||
| Numerator: | ||||||||
| Allocation of net loss including accretion of temporary equity | $ | ( | ) | $ | ( | ) | ||
| Accretion of temporary equity to redemption value | ||||||||
| Allocation of net income (loss) | $ | $ | ( | ) | ||||
| Denominator: | ||||||||
| $ | $ | ( | ) | |||||
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
11
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Unit Purchase Option
At the closing of the Initial Public Offering,
the Company sold to the underwriter, for an aggregate of $
Representative Shares
The Company agreed to issue to the underwriter
at the closing of the Initial Public Offering up to
Recent Accounting Pronouncements
In August 2020, FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted for fiscal years beginning after December 15, 2020. The Company does not expect the adoption of this ASU would have a material effect on the Company’s financial statements.
12
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. ASU 2023-09 will become effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of this ASU would have a material effect on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic, Russia-Ukraine war, and the Middle East geopolitical tension on the economy and the capital markets and has concluded that, while it is reasonably possible that such events could have negative effects on the Company’s financial position and outlook for an Initial Business Combination, the specific impacts are not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
The current challenging economic climate may lead to adverse changes in cash flows, working capital levels and/or debt balances, which may also have a direct impact on the Company’s future operating results and financial position after any such Initial Business Combination in the future. The ultimate duration and magnitude of the impact and the efficacy of government interventions on the economy and the financial effect on the Company is not known at this time. The extent of such impact will depend on future developments, which are highly uncertain and not in the Company’s control.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, on October
18, 2022, the Company sold
Simultaneously with the closing of the Initial
Public Offering, the Sponsor should have purchased a total of
13
On October 21, 2022, the Company closed the sale
of
Following the closing of the Initial Public Offering
and Overallotment, an amount of $
NOTE 4 — RELATED PARTY TRANSACTIONS
Private Placement Units
Simultaneously with the closing of the Initial
Public Offering, the Sponsor should have purchased a total of
Promissory Note — Related Party
On April 5, 2021, as further amended on April
28, 2021 and September 8, 2022, the Company entered into a promissory note with the Sponsor for principal amount up to $
On May 6, 2021, the Company made a drawdown of
$
On December 1, 2022, the Sponsor applied the outstanding
balance on the Promissory Note of $
On July 20, 2023, the Company and the Sponsor
amended and restated the promissory note, dated as of April 5, 2021, providing for loans up to $
14
In connection with the approval of the extension
amendment proposal, on July 18, 2023, the Sponsor entered into a non-interest bearing, unsecured promissory note issued by the Company
in favor of the Sponsor (the “Extension Note”), providing for loans up to the aggregate principal amount of $
Administrative Support Agreement
Commencing on October 14, 2022, the Company has
agreed to pay the Sponsor or its affiliate a total of $
Due to Related Party
In January 2024, the Company entered into an agreement in which the
Company will pay $
NOTE 5 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the (i) the Founder Shares, which were issued in a private placement prior to the closing of the Initial Public Offering, and (ii) Private Placement Units, which were sold simultaneously with the closing of the Initial Public Offering, are entitled to registration rights pursuant to a registration rights agreement signed prior to or on the effective date of the Initial Public Offering. The holders of the majority of these securities are entitled to make up to three demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the Founder Shares are to be released from escrow. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our consummation of our Initial Business Combination.
Underwriting Agreement
The underwriters received a cash underwriting
discount of $
Excise Tax
The Inflation Reduction Act of 2022 imposes a
As a result, subject to certain rules, the Excise
Tax will apply to any redemption by a U.S.-domiciled SPAC taking place after December 31, 2022, including redemptions (i) by shareholders
in connection with the SPAC’s Initial Business Combination or a proxy vote to extend the lifespan of the SPAC, (ii) by SPACs if
the SPAC does not complete a de-SPAC transaction within the required time set forth in its constituent documents, or (iii) in connection
with the wind-up and liquidation of the SPAC. The financial responsibility for such Excise Tax resides with the Company and the Sponsor.
This amount of
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At this
time, it has been determined that the IR Act tax provisions have an impact to the Company’s accompanying financial statements as
there were redemptions by the public stockholders in July 2023; as a result, the Company recorded $
Unit Purchase Option
At the closing of the Initial Public Offering,
the Company sold to the underwriter, for an aggregate of $
NOTE 6 — COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION
The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity”.
NOTE 7 — STOCKHOLDERS’ DEFICIT
Authorized Shares
The total number of shares of capital stock, par
value of $
Founder’s Shares
At inception, January 13, 2021, the Company issued
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Initial Public Offering
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased a total of
On October 21, 2022, simultaneously with the consummation
of the Overallotment Offering, the Company completed the private placement of additional
Rights
Except in cases where the Company is not the surviving company in the Initial Business Combination, each holder of a public right will automatically receive one-fifth (1/5) of a share of common stock upon consummation of the Initial Business Combination. In the event the Company is not be the surviving company upon completion of the Initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the one-fifth (1/5) of a share underlying each right upon consummation of the Initial Business Combination. The Company will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, holders of Rights must hold such Rights in multiples of 5 in order to receive shares for all of the holder’s rights upon closing of an Initial Business Combination. If the Company is unable to complete an Initial Business Combination within the required time period and the public shares are redeemed for the funds held in the Trust Account, holders of rights will not receive any of such funds for their rights and the rights will expire worthless.
NOTE 8 — FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
| Fair value measurements at reporting date using: | ||||||||||||||||
| Description | Fair Value | Quoted prices in active markets for identical liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in Trust Account as of March 31, 2024 | $ | $ | $ | $ | ||||||||||||
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| Fair value measurements at reporting date using: | ||||||||||||||||
| Description | Fair Value | Quoted prices in active markets for identical liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in Trust Account as of December 31, 2023 | $ | $ | $ | $ | ||||||||||||
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers to or from Level 3 assets or liabilities during the three months ended March 31, 2024 and 2023.
NOTE 9 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements are available to be issued. Other than below, there are no subsequent events identified that would require disclosure in the financial statements.
Trust Extension
The Company was informed by its Sponsor that, due to factors unrelated to the Company’s operations, the Sponsor could not facilitate the drawdown of funds under the Extension Note issued for purposes of meeting the Company’s monthly contribution to the Trust Account. Therefore, the Company did not make the monthly payment to the Trust Account since the last payment on October 26, 2023. The Company’s Sponsor confirmed its intention to continue its commitment under the promissory note, and will make the payment as soon as practicable.
The delinquent extension payments have been included in the common stock subject to possible redemption figure as of March 31, 2024 to represent the total possible redemption amount shareholders would be entitled to.
On
April 17, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of
State of the State of Delaware. The Certificate of Amendment amends the Certificate of Incorporation to (i) give the Company the option
to extend the date by which the Company must effect a Business Combination beyond April 18, 2024, up to nine (9) times for an additional
(1) month each time to January 18, 2025, upon the deposit into the Trust Account of $
On July 10, 2024, the Company filed a Certificate of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the Certificate of Incorporation to (i) give the Company the option to extend the date by which the Company must effect a Business Combination beyond January 18, 2025, up to nine (9) times for an additional (1) month each time to October 18, 2025, and will no longer require monthly deposits into the Trust Account as of July 5, 2024.
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Nasdaq Compliance
On July 23, 2024, the Company received notice from The NASDAQ Stock Market (“Nasdaq”) that its securities will be delisted from The Nasdaq Global Market. On December 15, 2023, the staff of Nasdaq (the “Staff”) notified the Company that the market value of its listed securities had been below the minimum $50,000,000 required for continued listing as set forth in Listing Rule 5450(b)(2)(A) (the “Rule”) for the previous 30 consecutive trading days.1 Therefore, in accordance with Listing Rule 5810(c)(3)(C), the Company was provided 180 calendar days, or until June 12, 2024, to regain compliance with the Rule. However, the Company did not regain compliance with the Rule.
In addition, based on the Staff’s review of the Company’s Definitive Proxy Statement filed June 24, 2024, the Staff determined that the Company does not comply Listing Rule 5450(b)(2)(A), requiring a minimum 1,100,000 Publicly Held Shares, and Listing Rule 5450(b)(2)(C), requiring a minimum of $15 million Market Value of Publicly Held Shares requirement.
Based on the Company’s equity information as of July 22, 2024, the Company does not comply with the requirement for continued listing on the Nasdaq Capital Market under Listing Rule 5550..
Additionally, the Staff has concerns that the Company may also no longer comply with the minimum 400 Total Holders requirement of Listing Rule 5450(a)(2) due to the substantial number of shareholder redemptions and low number of shares remaining outstanding.
Finally, the Company has failed to timely file its Form 10-K for the year ended December 31, 2023, and its Form 10-Q for the period ended March 31, 2024, as required by Listing Rule 5250(c)(1).
Accordingly, these matters each serve as additional and separate basis for delisting.
Under Listing Rule 5810, a company that fails to comply with the continued listing requirements is normally afforded a compliance period or the ability to submit a plan of compliance in order to be granted time to regain compliance. However, given that the Company fails to comply with multiple continued listing requirements by such significant margins, and that each of these requirements is related to the security’s liquidity necessary to maintain a fair and orderly market, the Staff has determined to apply more stringent criteria pursuant to its discretionary authority set forth in Listing Rule 5101. Accordingly, the Staff has concluded that continued listing is inappropriate and to delist the Company’s securities in order to maintain the quality of and public confidence in the Nasdaq market, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest.
Accordingly, the Staff has determined that the Company’s securities will be delisted from The Nasdaq Global Market. In that regard, unless the Company requests an appeal of this determination by July 30, 2024, as described below, trading of the Company’s ordinary shares, warrants, and units will be suspended at the opening of business on August 1, 2024, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market.
The Company may appeal the Staff’s determination to a Hearings Panel, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. Hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. A request for a hearing regarding a delinquent filing will stay the suspension of the Company’s securities only for a period of 15 days from the date of the request.
When the Company requests a hearing, it may also request a stay of the suspension, pending the hearing. The request should include an explanation of why an extended stay is appropriate. A Panel will review the request for an extended stay and notify the Company of its conclusion as soon as is practicable but in any event no later than 15 calendar days following the deadline to request the hearing.
Requests for a hearing and for an extended stay should be submitted electronically through Nasdaq’s Listing Center, and must be received no later than 4:00 Eastern Time on June 30, 2024. If a request is not received by that date and time, trading in the Company’s shares will be suspended on the second business day following the deadline. The request for a hearing should be accompanied by confirmation of a wire transfer of the fee for a hearing. The fee for a hearing is $20,000.
In response to the Nasdaq delisting notice, the Company has taken the following actions:
| ● | On July 23, 2024, the Company applied to transfer from Nasdaq Global Market to Nasdaq Capital Market. |
| ● | On July 24, 2024, the Company requested a hearing and paid the fee for the hearing. |
| ● | On July 24, 2024, the Company received hearing instructions from Nasdaq, and has secured the hearing date for August 22, 2024. |
The Company aims to submit its written submission to Nasdaq by August 2, 2024.
The Company has also confirmed with Nasdaq that, in the event that the Company is delisted, the delisting will not preclude the combined entity (the de-SPAC entity) from receiving initial listing approval for listing on the Nasdaq Stock Market. In fact, the combined entity will be held to the same quantitative initial listing standards irrespective of the listing status of the SPAC as a business combination resulting in a change of control and/or a de-SPAC business combination necessitates initial listing approval.
The Company filed its Form 10-K for the year ended December 31, 2023 on July 23, 2024.
The Company has come up with a series of action plans to regain compliance, and is confident to resolve the delisting issue after the hearing on August 22, 2024.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Hudson Acquisition I Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Hudson SPAC Holding, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on January 13, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our Initial Business Combination using cash from the proceeds of the initial public offering, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an Initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through March 31, 2024 were organizational activities and those necessary to prepare for our initial public offering and identifying a target for an Initial Business Combination. We do not expect to generate any operating revenues until after the completion of our Initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2024, we had a net loss of $82,504, which consisted of interest earned on marketable securities held in the trust account of $340,660 and interest earned on the operating cash account of $181, offset by general and administrative expenses of $282,344, franchise tax expense of $50,000, and provision for income taxes of $91,000.
For the three months ended March 31, 2023, we had net income of $290,779, which consisted of interest earned on marketable securities held in the trust account of $746,698, offset by general and administrative expenses of $211,919 and franchise tax expense of $50,000.
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Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an Initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an Initial Business Combination.
Liquidity and Capital Resources
On October 18, 2022, we consummated our Initial Public Offering of 6,000,000 Units, at a price to the public of $10.00 per Unit, resulting in total gross proceeds of $60,000,000. On October 18, 2022, simultaneously with the consummation of the Initial Public Offering, our Sponsor partially consummated the Private Placement by subscribing to 238,500 units instead of the full Initial Private Placement Units, generating gross proceeds of approximately $2,385,000 instead of the full $3,400,000, part of the proceeds of which were placed in the Trust Account. The Trust Account was nonetheless fully funded.
On October 21, 2022, we closed the sale of 845,300 Over-allotment Units at $10.00 per unit as a result of the underwriters’ partial exercise of their Over-allotment Option in connection with the previously announced Initial Public Offering pursuant to the underwriting agreement by and between us and Chardan Capital Markets, LLC dated October 14, 2022. Each Over-allotment Unit consists of one share of Common Stock of the Company, par value $0.0001 per share and one Right to receive one-fifth (1/5) of one share of the Common Stock upon the consummation of an Initial Business Combination. Such Over-allotment Units were registered pursuant to our registration statement. As a result of the Overallotment Offering, we received gross proceeds of $8,453,000 (before deducting certain underwriting discount and fees), part of which was placed in the Trust Account. On October 21, 2022, simultaneously with the consummation of the Overallotment Offering, we completed the Overallotment Private Placement of additional 31,500 units pursuant to the Unit Private Placement Agreement dated October 14, 2022 by and between us and our Sponsor, in connection with the underwriters’ partial exercise of the over-allotment option, at a purchase price of $10.00 per Overallotment Private Placement Unit, generating gross proceeds of $315,000, a portion of which was placed in the Trust Account.
For the three months ended March 31, 2024, net cash used in operating activities was $272,052. Net loss of $82,504 was offset by a non-cash charge for interest earned on marketable securities held in the Trust Account of $340,660. Changes in operating assets and liabilities provided $151,113 of cash from operating activities.
For the three months ended March 31, 2023, net cash used in operating activities was $102,832. Net income of $290,779 consisted of a non-cash charge for interest earned on marketable securities held in the Trust Account of $746,698. Changes in operating assets and liabilities provided $353,087 of cash from operating activities.
As of March 31, 2024, we had cash held in the trust account of $26,235,157. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete our Initial Business Combination. We may withdraw interest to pay taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Initial Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of March 31, 2024, we had $12,604 of cash held outside of the trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete an Initial Business Combination.
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In order to fund working capital deficiencies or finance transaction costs in connection with an Initial Business Combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete an Initial Business Combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that an Initial Business Combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment.
If our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an Initial Business Combination are less than the actual amount necessary to do so, 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 complete 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 Initial Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Initial Business Combination. If we are unable to complete our Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our Initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Going Concern
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have until October 18, 2025, assuming the monthly extension requirements are satisfied, to consummate a Business Combination. We are able to extend the date by which an Initial Business Combination must be consummated beyond July 18, 2023 up to nine times for an additional one month each time to April 18, 2024 upon the deposit into the Trust Account of $80,000 each calendar month. We are able to extend the date by which an Initial Business Combination must be consummated beyond April 18, 2024 up to an additional nine times for an additional one month each time to January 18, 2025 upon the deposit into the Trust Account of $25,000 each calendar month, with monthly extension payments ceasing on July 5, 2024. We are able to extend the date by which an Initial Business Combination must be consummated beyond January 18, 2025 up to nine times for an additional one month each time to October 18, 2025. It is uncertain that we will be able to consummate a Business Combination by this time. If a Business Combination is not consummated within the Combination Period, there will be a mandatory liquidation and subsequent dissolution. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. Management intends to complete a Business Combination prior to the end of the Combination Period. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after the end of the Combination Period.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2024.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor a monthly fee of $20,000 for office space, utilities and secretarial and administrative support provided to the Company. We began incurring these fees on October 18, 2022 and will continue to incur these fees monthly until the earlier of the consummation of an Initial Business Combination or our liquidation.
As of March 31, 2024, we had recorded deferred underwriting commissions of $2,723,060 payable only upon completion of our Initial Business Combination, which consisted of deferred underwriting commissions and representative shares (see Note 5).
Critical Accounting Estimates
The preparation of the financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
The Company’s significant accounting estimates include, but are not limited to, the valuation allowance for deferred tax assets and estimates and assumptions that affect the fair value of representative shares and unit purchase option.
22
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures means controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving their desired control objectives.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures under the supervision of our Chief Executive Officer and our Chief Financial Officer and concluded that our disclosure controls and procedures were not effective as of March 31, 2024 because the material weaknesses in our internal control over financial reporting as of December 31, 2022 and as described below, continues to exist as of March 31, 2024.
In connection with management’s report on internal controls over financial reporting included in our Annual Report on Form 10-K for the year ended December 31, 2022, management concluded that, as of December 31, 2022, our internal control over financial reporting was not effective as of December 31, 2022. We identified material weaknesses in our internal control over financial reporting, and those material weaknesses were not fully remediated as of March 31, 2024. The following material weaknesses continue to exist in our internal control over financial reporting:
| 1. | delinquent filings with the SEC including Form 10-K for the year ended December 31, 2022, Form 10-Q for the period ended March 31, 2023, and Form 10-Q for the period ended June 30, 2023; |
| 2. | complex accounting, specifically the accounting for representative shares and the Unit Purchase Option; and |
| 3. | the timely forfeiture of founder shares upon the over-allotment in connection with the Initial Public Offering. |
A material weakness, as defined in the SEC regulations, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles.
Management plans to remediate the material weakness by enhancing our processes to identify and appropriately apply applicable accounting requirements and increased communication among our personnel and third-party professionals with whom we consult regarding accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Changes in Internal Control over Financial Reporting
Other than the remediation efforts described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report include the risk factors described in our Annual Report on Form 10-K filed with the SEC. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On October 18, 2022, we consummated our Initial Public Offering of 6,000,000 Units, at a price to the public of $10.00 per Unit, resulting in total gross proceeds of $60,000,000. On October 18, 2022, simultaneously with the consummation of the Initial Public Offering, our Sponsor partially consummated the Private Placement by subscribing to 238,500 units instead of the full Initial Private Placement Units, generating gross proceeds of approximately $2,385,000 instead of the full $3,400,000, part of the proceeds of which were placed in the Trust Account. The Trust Account was nonetheless fully-funded.
On October 21, 2022, we closed the sale of 845,300 Over-allotment Units at $10.00 per unit as a result of the underwriters’ partial exercise of their Over-allotment Option in connection with the previously announced Initial Public Offering pursuant to the underwriting agreement by and between us and Chardan Capital Markets, LLC dated October 14, 2022. Each Over-allotment Unit consists of one share of Common Stock of the Company, par value $0.0001 per share and one Right to receive one-fifth (1/5) of one share of the Common Stock upon the consummation of an Initial Business Combination. Such Over-allotment Units were registered pursuant to our registration statement. As a result of the Overallotment Offering, we received gross proceeds of $8,453,000 (before deducting certain underwriting discount and fees), part of which was placed in the Trust Account. On October 21, 2022, simultaneously with the consummation of the Overallotment Offering, we completed the Overallotment Private Placement of additional 31,500 units pursuant to the Unit Private Placement Agreement dated October 14, 2022 by and between us and our Sponsor, in connection with the underwriters’ partial exercise of the over-allotment option, at a purchase price of $10.00 per Overallotment Private Placement Unit, generating gross proceeds of $315,000, a portion of which was placed in the Trust Account.
For a description of the use of the proceeds generated in our Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HUDSON ACQUISITION I CORP. | ||
| Date: August 2, 2024 | By: | /s/ Warren Wang |
| Warren Wang | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 2, 2024 | By: | /s/ Pengfei Xie |
| Pengfei Xie | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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