Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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.

On November 22, 2024, the Company executed the Business Combination Agreement with Aiways Automobile Europe GmbH, a German limited liability company engaged in the business of developing electric powered vehicles and vehicle ("Aiways"). Consistent with our strategy, we have identified and used general criteria and guidelines that we believe are important in evaluating the targets businesses, and we conducted a thorough due diligence review that encompassed, among other things, meetings with incumbent management and employees, document reviews and inspection of facilities, as applicable, as well as a review of financial and other information in related to the Aiways Automobile Combination.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through September 30, 2025 were organizational activities and those necessary to prepare for our initial public offering, described below, 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 after the initial public offering. 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 nine months ended September 30, 2025, we had a net loss of $610,871, which consisted of interest earned on marketable securities held in the trust account of $34,177, interest earned on operating and saving cash account of $526 and prior year true up for income tax of $18,000, offset by general and administrative expenses of $499,724 and franchise tax expenses of $153,850.

For the nine months ended September 30, 2024, we had a net loss of $596,826, which consisted of interest earned on marketable securities held in the trust account of $569,338 and interest earned on the operating cash account of $1,990, offset by general and administrative expenses of $776,033, franchise tax expense of $42,600, loss on overpayment of franchise tax of 172,166, and provision for income taxes of $177,355.

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 November 30, 2022, the Company received an additional remittance of $515,000 underlying the Sponsor's purchase of the Private Placement. On December 1, 2022, the Sponsor applied the outstanding balance on the Promissory Note of $500,000 towards the remaining stock subscription balance, which fully funded the Sponsor's purchase of the Private Placement Units.

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 nine months ended September 30, 2025, cash used in operating activities was $675,462, consisting of a net loss of $610,871, interest received on marketable securities held in the Trust Account of $34,177, a lease payment of $3,599, and an increase in accounts payable and accrued expenses of $261,901, that were partially offset by the amortization expense of $23,120, and interest expense of $6,150.

For the nine months ended September 30, 2024, cash used in operating activities was $961,938, consisting of a net loss of $596,826, interest received on marketable securities held in the Trust Account of $569,338, and an increase in prepaid expenses and other current assets of $43,252, and a decrease in accounts payable and accrued expenses of $145,171, that were partially offset by the increase in franchise tax payable of $214,766, income tax payable of $177,000, excise tax payable of $257,476 and amortization on debt discount on notes to target company of $883.

For the nine months ended September 30, 2025, cash provided by investing activities was $78,659, consisting of cash withdrawn from the Trust Account of $78,659.

For the nine months ended September 30, 2024, cash provided by investing activities was $25,492,597, consisting of cash withdrawn from the Trust Account of $26,045,551, that was partially offset by an investment of cash in Trust Account of $552,954.

For the nine months ended September 30, 2025, cash provided by financing activities was $873,076, consisting of the repayment of borrowing from related parties of $147,417, that were partially offset by cash proceeds from the related party borrowing of $675,987 and proceeds from receipt of clawbacked income tax related to redemption of $344,506.

For the year nine months ended September 30, 2024, cash used in financing activities was $24,163,604, consisting of cash paid for the redemption of Public Units of $25,747,589 and the repayment of borrowing from related parties of $80,000, that were partially offset by cash proceeds from the target company of $1,476,882 and cash proceeds from the related party borrowing of $187,103.

As of September 30, 2025, the Company had cash held in the trust account of $1,078,515. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned in 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 September 30, 2025, the Company had $345,031 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.

In order to fund 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.

Franchise and Income Tax Withdrawals from Trust Account

Since the completion of its IPO on October 14, 2022, and through September 30, 2025, the Company withdrew $674,236 from the Trust Account in total to pay its liabilities related to the income taxes and Delaware franchise taxes. Through September 30, 2025, the Company remitted $215,265, $236,286 and $216,450 to the Delaware franchise tax authorities to pay its outstanding Delaware franchise tax of the fiscal year 2022, 2023 and 2024, respectively. which resulted in $6,235 in excess of the total withdrawn from the Trust Account not remitted to the tax payments, but held in HUDA's operating account for upcoming tax payments, including the 2025 franchise tax, and not used for operating expenses. On September 30, 2025, HUDA regained the Certificate of Good Standing from the State of Delaware.

The Company continues to incur further tax liabilities and intends to cover such liabilities from the funds in its operating account and, if necessary, from the proceeds from the promissory note to Sponsor, without additional withdrawals from the Trust Account, until the excess of the funds withdrawn from the Trust Account over the amounts remitted to the government authorities is cured.

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 July 18, 2026, 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. We are able to extend the date by which an Initial Business Combination must be consummated beyond October 18, 2025 up to nine times for an additional one month each time to July 18, 2026. 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 September 30, 2025.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than a three-year operating lease for a Lexus vehicle with an effective date of October 29, 2024, and will be expired in October 2027. This lease offers a purchase option at the end of the lease term and the Company has determined not to exercise it. The vehicle lease was classified as an operating lease.

As of September 30, 2025, we had recorded deferred underwriting commissions and representative shares of $2,723,060 payable only upon completion of our Initial Business Combination, which consisted of commissions payable in cash of $2,395,855 and representative shares issued in connection with the Initial Public Offering. We agreed to issue to the underwriter at the closing of the Initial Public Offering 136,906 representative shares ("Representative Shares"), due to the partial exercise of the over-allotment, which will be issued upon the completion of our Initial Business Combination.

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 not limited to the valuation allowance for deferred tax assets and estimates and assumptions that affect the fair value of convertible promissory notes.