Horizon Space Acquisition Issues $300K Promissory Note

Horizon Space Acquisition I Corp. (NASDAQ:HSPO), a special purpose acquisition company with a market capitalization of $92 million, has entered into a material definitive agreement through the issuance of a promissory note, as disclosed in their recent SEC filing. According to InvestingPro data, the company maintains a GOOD financial health score despite trading at a relatively high P/E ratio of 40. The unsecured note, in the principal amount of $300,000, was issued to its sponsor, Horizon Space Acquisition I Sponsor Corp., on February 5, 2025.

The note is designed to bolster the company’s working capital as it seeks to complete its initial business combination. It carries no interest and must be repaid by the earlier of two events: the consummation of a business combination or the expiry of the company’s term. InvestingPro analysis reveals that the company’s short-term obligations exceed its liquid assets, with a current ratio of 0.09, making this additional funding particularly significant. In case of default, which includes non-payment or bankruptcy among other conditions, the note may be accelerated.

Additionally, the sponsor has the option, though not the obligation, to convert the note into private units of the company. Each unit consists of one ordinary share, one warrant, and one right to receive one-tenth of an ordinary share upon completion of a business combination. The conversion rate is set at $10.00 per unit.

The issuance of the note was made pursuant to an exemption from registration under the Securities Act of 1933. The note and its potential conversion into equity highlight the company’s fundraising efforts and preparation for future growth strategies.

The securities that may be issued upon conversion of the note, including ordinary shares and warrants, are subject to certain transfer restrictions until the completion of Horizon Space Acquisition I Corp.’s initial business combination and are entitled to registration rights. With the company’s next earnings report scheduled for February 13, 2025, InvestingPro subscribers can access additional insights and 6 more ProTips to better evaluate this investment opportunity.

This financial maneuver is part of Horizon Space Acquisition I Corp.’s broader strategy to secure the necessary capital for its operations and potential mergers or acquisitions. The details of the promissory note are based on the information provided in the company’s SEC filing.

In other recent news, Horizon Space Acquisition I Corp. has been actively extending its initial business combination deadline. The company has secured additional funding, depositing $120,000 into its trust account, which has allowed for the extension. This move is part of Horizon’s ongoing efforts to finalize its merger with Squirrel Enlivened Technology Co., Ltd and its subsidiaries, collectively known as the "Squirrel Companies".

As part of the agreement, Horizon has issued an unsecured promissory note to Squirrel Enlivened (Hong Kong) Technology Limited, repayable upon the earliest of the completion of the business combination or the expiry of the company’s term. The note may be subject to acceleration upon certain events of default.

In addition, Horizon Space Acquisition I Corp. has amended its Trust Agreement and Charter, permitting the company to extend the deadline to liquidate its trust account by up to twelve months. This decision comes as Horizon works towards completing a business combination within the newly established timeframe.

These recent developments offer investors a clearer timeline regarding Horizon’s future operations and potential business combination efforts. The merger is anticipated to enhance Horizon Space’s market position, subject to the satisfaction of closing conditions and shareholder approvals.

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