ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this annual report and in the Form F-4 relating to the proposed business combination, before making an investment decision.
We may be required to liquidate if we do not complete an Initial Business Combination by July 18, 2026. Our stockholders have approved extensions that permit us to extend the deadline for completing an Initial Business Combination through July 18, 2026. If we are unable to complete an Initial Business Combination by the end of the combination period, we will be required to wind up, redeem the outstanding public shares and dissolve. In that event, the rights will expire worthless, our founder shares will become worthless and our public stockholders may receive less than they expected from the trust account.
Risks Related to the Proposed Business Combination
The proposed Business Combination may not be completed on the terms currently contemplated, or at all.
Completion of the proposed Business Combination with Aiways Europe is subject to numerous conditions, including stockholder approval, the effectiveness of the registration statement on Form F-4, the receipt of required regulatory approvals, the satisfaction or waiver of customary closing conditions and Pubco’s ability to obtain Nasdaq listing approval. There can be no assurance that these conditions will be satisfied or that the Business Combination will be completed within the required timeframe, or at all.
The absence of a minimum cash condition may result in the combined company having limited liquidity following the Business Combination.
The Business Combination Agreement does not include a minimum cash condition. As a result, the transaction may be completed even if a substantial majority of public stockholders elect to redeem their shares. If significant redemptions occur and additional financing is not obtained, the combined company may have limited cash resources, which could adversely affect its ability to execute its business plan, meet its obligations and sustain operations.
We have experienced substantial redemptions, which significantly reduce available cash and increase financing risk.
We have experienced significant redemptions in connection with prior extension votes, and as of December 31, 2025, only 36,771 public shares remained outstanding, representing a reduction of over 99% of the public shares originally issued in the Initial Public Offering. As a result, the funds remaining in the trust account are minimal. Further redemptions would reduce available cash even further and may impair our ability to complete the Business Combination, increase reliance on external financing and adversely affect the combined company’s post-closing liquidity.
We may not be able to obtain sufficient financing to complete the Business Combination or support the combined company.
The Business Combination contemplates additional transaction financing, including PIPE investments and other capital raising efforts. There can be no assurance that such financing will be obtained on acceptable terms, or at all. If financing is not obtained, we may be unable to complete the Business Combination or the combined company may lack sufficient capital to operate effectively following closing.
The PIPE investment is priced at a significant discount, which may result in dilution and misalignment of investor interests.
The PIPE investors have agreed to purchase shares at $5.00 per share, which is substantially below the $10.00 per share valuation used in the Business Combination. This pricing disparity may result in immediate dilution to public stockholders and may negatively affect market perception of the combined company’s valuation.
Public stockholders will own only a small minority of the combined company following the Business Combination.
Upon completion of the Business Combination, former shareholders of Aiways Europe are expected to own a substantial majority of the combined company, while our public stockholders will own only a small minority interest. This significant dilution will reduce the voting power and economic interest of public stockholders and limit their ability to influence the management and operations of the combined company.
Following the Business Combination, control of the combined company will shift to Aiways Europe’s shareholders.
After the Business Combination, former shareholders of Aiways Europe will hold a controlling interest in Pubco and will be able to exert significant influence over corporate decisions, including the election of directors and approval of major transactions. As a result, public stockholders will have limited ability to influence the management and policies of the combined company.
If Pubco is unable to obtain Nasdaq listing approval, the Business Combination may not be completed.
The Business Combination is conditioned upon Pubco obtaining approval to list its ordinary shares on Nasdaq. There can be no assurance that Pubco will satisfy Nasdaq’s initial listing requirements. If listing approval is not obtained, the Business Combination may not be consummated, and we may be required to liquidate.
The Business Combination may not be favorable to public stockholders.
Although our board of directors has determined that the Business Combination is fair and in the best interests of stockholders, this determination is based on various assumptions and analyses. The combined company’s actual performance may differ materially from expectations, and public stockholders may experience losses on their investment.
Risks Related to Our Sponsor and Corporate Structure
Our Sponsor controls a substantial majority of our voting power and may approve the Business Combination regardless of the votes of our public stockholders.
As of the date of this report, our Sponsor and its affiliates beneficially own approximately 98.27% of our outstanding voting power. As a result, the approval of the proposed Business Combination is effectively controlled by our Sponsor, and the votes of our public stockholders will have little or no impact on the outcome.
Our Sponsor, officers and directors have financial interests that may differ from those of public stockholders.
Our Sponsor acquired founder shares and private placement securities at prices significantly below those paid by public investors and has provided loans that may convert into equity. As a result, the Sponsor may realize a positive return even if public stockholders experience a loss, which may create incentives to complete the Business Combination rather than liquidate.
Public stockholders have limited ability to influence the outcome of the Business Combination and may primarily rely on their redemption rights.
Given the Sponsor’s voting control, public stockholders may have limited ability to influence the approval of the Business Combination. Accordingly, their primary means of protecting their investment is through the exercise of redemption rights.
Risks Related to Our Financial Condition and Operations
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
We have no operating revenues and depend on the trust account and related-party financing to fund our operations. If we do not complete a Business Combination, we will be required to liquidate. These conditions raise substantial doubt about our ability to continue as a going concern.
We depend on related-party financing and may require additional capital.
We depend on related-party financing and may need additional capital to complete a Business Combination. As of December 31, 2025, the principal amount outstanding under related-party promissory notes was $1,115,977. There is no assurance that the Sponsor or any other financing source will continue to provide funds on acceptable terms, or at all, which could adversely affect our ability to operate and complete a Business Combination.
Our securities have been delisted from Nasdaq, and there is currently no active public market for our securities.
Trading in our securities was suspended in January 2025 and subsequently delisted. As a result, stockholders currently have very limited liquidity and may not be able to sell their securities at desired prices, or at all.
If we are unable to consummate the proposed business combination with Aiways Europe, we are likely to liquidate, and our stockholders may receive only a limited amount, if any, from the trust account.
We have focused our efforts on the proposed transaction with Aiways Europe and are not actively pursuing alternative business combination opportunities. Given our limited remaining time to complete an Initial Business Combination, if the proposed transaction is not completed, we are unlikely to be able to identify and complete another business combination.
In such event, we would be required to wind up our operations, redeem our public shares and liquidate. As a result of significant prior redemptions, the funds remaining in the trust account are minimal, and our public stockholders may receive only a small fraction of their original investment.
We are involved in material litigation that, if resolved unfavorably, could have a material adverse effect on our business, financial condition, and results of operations.
On November 22, 2024, a lawsuit was filed against us and certain officers alleging, among other things, breach of contract and retaliatory discharge, seeking approximately $143,000 in unpaid wages plus additional damages. In response, we have filed a countersuit against the plaintiff, alleging breach of employment contracts and gross negligence, and seeking damages of at least $6.5 million. Both cases are in their early stages, and the outcomes are uncertain. While we intend to vigorously pursue our counterclaims, litigation is inherently uncertain, and an adverse resolution of the plaintiff’s or an to on our could result in significant financial liabilities, management’s attention, and our reputation, any of which could have a material effect on our business and ability to consummate our Initial Business Combination.
Risks Related to Aiways Europe and the Combined Company
Aiways Europe has significant capital requirements and limited liquidity.
Aiways Europe operates in a capital-intensive industry and requires substantial ongoing financing. If adequate financing is not available, its business, operations and growth prospects could be materially adversely affected.
The combined company will be dependent on a single business operating in the electric vehicle industry.
Following the Business Combination, the combined company will rely entirely on Aiways Europe’s business. Any adverse developments in this industry or affecting Aiways Europe specifically could have a material adverse effect on the combined company.
Following the business combination, Pubco is expected to operate as a foreign private issuer with operations outside the United States, which will subject it to additional risks.
Upon completion of the business combination, Pubco will operate the business of Aiways Europe, which has operations outside the United States. As a result, the combined company will be subject to risks associated with international operations, including differences in regulatory environments, economic and political conditions, foreign currency fluctuations, and compliance with foreign laws and regulations.
In addition, Pubco is expected to qualify as a foreign private issuer under U.S. securities laws and will be subject to different reporting and governance requirements than U.S. domestic issuers. These differences may result in less frequent or less detailed disclosure to investors and may make it more difficult for investors to evaluate the combined company’s performance and prospects.
The issuance of additional equity securities by Pubco in connection with the business combination and under its incentive equity plan will dilute the ownership interests of existing stockholders.
Following the completion of the business combination, Pubco, rather than the Company, will operate the combined business. Pubco expects to issue a substantial number of ordinary shares in connection with the transaction and may issue additional equity securities in the future, including under an incentive equity plan adopted in connection with the business combination.
The issuance of such securities, including awards under the incentive plan that may represent up to 10% of Pubco’s issued and outstanding shares following the closing (after giving effect to redemptions), will dilute the ownership interests of existing stockholders. In addition, any future equity issuances may further dilute stockholders and could adversely affect the market price and value of Pubco’s securities.
Our management team has limited experience in the electric vehicle industry.
Our management may not be able to fully evaluate the risks associated with Aiways Europe’s business, which could adversely affect the success of the Business Combination.
Risks Related to Regulatory and Structural Matters
Following the Business Combination, Pubco is expected to qualify as a foreign private issuer, which will result in reduced reporting requirements.
Pubco will be exempt from certain U.S. securities laws requirements, including quarterly reporting and proxy rules. As a result, investors may receive less frequent or less detailed information.
If we are deemed to be an investment company, we may be required to liquidate.
If we are deemed an investment company under the Investment Company Act, we would be subject to burdensome compliance requirements and may be forced to abandon our Business Combination efforts and liquidate.
We may be required to liquidate if we do not complete a Business Combination by July 18, 2026.
If we do not complete a Business Combination within the required timeframe, we will be required to wind up our operations, redeem our public shares and liquidate. In such event, our public stockholders may receive less than they expected and our warrants and rights will expire worthless.
The extremely high level of redemptions has significantly altered our capital structure and may adversely affect the viability of the combined company.
We have experienced redemptions exceeding 99% of our public shares, leaving only a very small number of shares outstanding. As a result, our remaining public float is extremely limited, and the capital available from the trust account is minimal.
This unusual capital structure may adversely affect investor confidence, increase financing risk, and make it more difficult for the combined company to operate effectively following the Business Combination.
Even if Pubco obtains Nasdaq listing approval, there may be limited or no active trading market for its securities.
Given the limited number of public shares outstanding and reduced public float, there can be no assurance that an active or liquid trading market will develop following the Business Combination. As a result, investors may experience significant volatility in the trading price of Pubco’s securities or may be unable to sell their shares at desired prices, or at all.
Our ability to generate value for stockholders is dependent on the completion of a single transaction.
We have focused substantially all of our efforts on the proposed Business Combination with Aiways Europe and are not actively pursuing alternative transactions. If the Business Combination is not completed, we are unlikely to identify and complete another transaction within the required timeframe and would be required to liquidate.
The Business Combination involves a complex transaction with a capital-intensive and operationally challenging business.
The proposed transaction involves combining with a company operating in the electric vehicle industry, which requires substantial capital, involves complex supply chains and is subject to regulatory and market uncertainties. In addition, the transaction involves cross-border elements and integration challenges.
These factors increase the risk that the combined company may not achieve its expected business objectives or financial performance.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
Our securities have been delisted from Nasdaq, and there is currently no active public market for our securities. Trading in our common stock, units and rights was suspended on January 24, 2025 and Nasdaq subsequently filed a Form 25 on July 11, 2025 to complete the delisting. As a result, our stockholders currently have very limited liquidity and may not be able to sell their securities at desired prices, or at all. Delisting also may impair our ability to attract investors, complete financing transactions and consummate an Initial Business Combination. In addition, delisting reduces the market transparency and investor protections that would otherwise accompany a Nasdaq-listed security. Although Pubco has applied to list its ordinary shares on Nasdaq in connection with the closing, there can be no assurance that it will satisfy the applicable initial listing standards or that it will be able to maintain such listing following the Business Combination.
We have substantial doubt about our ability to continue as a going concern. As a SPAC, we have no operating revenues and depend on the trust account, working capital advances and related-party financing to fund our operations. If we do not complete an Initial Business Combination by the end of the combination period, we will be required to liquidate. These conditions raise substantial doubt about our ability to continue as a going concern.
We recently changed our independent registered public accounting firm, which could result in additional costs and may affect the timing or effectiveness of our financial reporting.
On April 8, 2026, our audit committee approved the dismissal of WWC, P.C. as our independent registered public accounting firm and the appointment of HCL, PLLC as our new independent registered public accounting firm. Although there were no disagreements or reportable events with our former auditor, the transition to a new auditor requires the new firm to become familiar with our business, accounting policies and internal controls.
This transition may result in additional costs, increased demands on management and potential delays in the completion of our audits or the filing of our periodic reports. In addition, if our new auditor identifies issues in the course of its audit procedures, including matters relating to our internal controls over financial reporting, we may be required to devote additional resources to address such matters. Any delays or issues in our financial reporting could adversely affect our ability to complete the proposed business combination and maintain compliance with applicable reporting requirements.
Our Delisting from Nasdaq Increases the Risk of Pubco Failing to Obtain Listing Approval.
We have been delisted from Nasdaq after the signing of the Business Combination Agreement but prior to the Closing. While Nasdaq has confirmed that the our delisting will not automatically preclude Pubco from obtaining initial listing approval, there remains an increased risk that Pubco may fail to satisfy Nasdaq’s initial listing requirements, which is a condition precedent to Closing.
As a result of the Business Combination, Nasdaq will evaluate the listing eligibility of Pubco under its standard initial listing requirements, including minimum share price, market capitalization, shareholder equity, public float, and corporate governance standards. Our prior delisting may not directly impact this review, but it could still contribute to perceived risks that may indirectly affect the likelihood of listing approval, including:
Market and investor confidence concerns, which may impact trading activity and pricing stability
Regulatory and compliance risks, particularly if the prior delisting was due to governance, reporting, or financial deficiencies;
Potential Nasdaq inquiries into the circumstances surrounding HUDA’s delisting, which could result in additional scrutiny of Pubco’s eligibility; and
Extended review periods or additional requirements imposed by Nasdaq that could delay the approval process.
If Pubco fails to meet Nasdaq’s initial listing requirements, the business Combination cannot be consummated, and the transaction may be terminated pursuant to the Business Combination Agreement. In such an event, we may be forced to liquidate and return trust funds to Public Stockholders, potentially resulting in investors receiving less than their original investment and missing out on the opportunity to participate in any appreciation in Pubco’s securities.
We may be unable to recover overpayments made to redeeming stockholders in connection with our Extension Meetings, which could adversely affect our cash position or result in reputational or legal risk.
In connection with the redemption of shares pursuant to our First, Second, and Third Extension Meetings held on July 17, 2023, February 15, 2024, and July 5, 2024, respectively, redemption payments were made to public stockholders by Continental Stock Transfer & Trust Company (“CST”), as trustee of our Trust Account, at rates that were later determined to be overstated. The Company had not withdrawn all of the interest that it was entitled to withdraw from the Trust Account to pay tax liabilities prior to calculating the redemption price. As a result, an aggregate overpayment amount of approximately $819,949.42 (the “Aggregate Total Overpayment Amount”) was made to redeeming stockholders.
We have engaged CST to notify affected stockholders and requested the return of the overpaid funds. Subsequent to June 30, 2025, as of October 9, 2025, 44.4% of the total overpaid amount has been recovered, approximately $364,084.26 have been received.
While the Company currently expects to fully recover the Aggregate Total Overpayment Amount, there can be no assurance that stockholders will return all or any portion of the remaining overpayments. In the event the Overpayment Amount is not fully recovered, the Sponsor has committed, pursuant to the Sponsor Agreement, to pay all pre-closing tax liabilities of the Company. The Sponsor will remit such payment directly to the relevant taxing authorities prior to the consummation of the Business Combination. However, the Company may nonetheless face reputational harm or legal claims relating to the overpayment and attempted recovery.
The application of the excise tax under the Inflation Reduction Act of 2022 to us is uncertain and may be subject to interpretation or dispute.
Although our securities were delisted from Nasdaq on July 11, 2025 following the filing of a Form 25, it remains unclear whether we are subject to the 1% excise tax imposed on certain stock repurchases by publicly traded corporations. The application of the excise tax to redemptions of our public shares or to transactions undertaken in connection with the proposed business combination may be subject to differing interpretations and could be challenged by tax authorities.
If the excise tax is determined to apply, it could reduce the funds available to complete the business combination or for distribution to stockholders and could adversely affect the value of our securities. In addition, any dispute or uncertainty regarding the application of the excise tax could result in additional costs or liabilities.
