10-Q: Siddhi Acquisition Corp Reports Q3 2025 Results

Siddhi Acquisition Corp, a blank check company, reported a net income of $2.84 million for Q3 2025, driven by interest earned on its $283 million trust account, as it continues its search for a business combination.

Summary

• Reported a net income of $2,842,367 for the three months ended September 30, 2025.
• Incurred a net loss of $2,807,335 for the nine months ended September 30, 2025, primarily due to advisory fees and general and administrative costs.
• Generated $2,996,664 in interest income from investments held in the Trust Account for Q3 2025, and $5,864,155 for the nine months ended September 30, 2025.
• The Trust Account holds $283,244,155 as of September 30, 2025, invested in U.S. Treasury Bills.
• Cash outside the Trust Account was $759,129 as of September 30, 2025, with working capital of $754,209.
• The company is a blank check company (SPAC) actively seeking a business combination.
• Deferred underwriting fees and advisory fees, each amounting to $8,280,000, are payable upon the closing of an initial Business Combination.

Sentiment

Score: 6

Explanation: The company is performing as expected for a SPAC in its pre-business combination phase, generating significant interest income while incurring operational costs. The primary uncertainty remains the successful identification and completion of a suitable business combination within the defined timeframe. The geopolitical risks add a layer of external uncertainty.

Positives

• Generated significant interest income of $2,996,664 in Q3 2025 and $5,864,155 for the nine months ended September 30, 2025, from Trust Account investments.
• Maintained a healthy cash balance of $759,129 outside the Trust Account and a working capital of $754,209, indicating sufficient liquidity for current operations.
• Successfully completed its Initial Public Offering on April 2, 2025, raising $276,000,000, including the full exercise of the over-allotment option.
• Management believes it has sufficient funds to finance working capital needs for the next year without additional capital raises.

Negatives

• Reported a net loss of $2,807,335 for the nine months ended September 30, 2025, primarily due to significant operating costs, including an $8,280,000 advisory fee.
• Has not yet identified a specific Business Combination target, and there is no assurance that a Business Combination will be successfully effected within the Completion Window.
• Significant deferred fees ($8,280,000 deferred underwriting fee and $8,280,000 advisory fee) are contingent on completing a Business Combination, representing substantial future liabilities.
• Is subject to geopolitical risks (Russia-Ukraine, Israel-Hamas conflicts) that could adversely affect its search for a target business.

Risks

• **Geopolitical Instability**: Ongoing Russia-Ukraine and Israel-Hamas conflicts could lead to market disruptions, volatility in commodity prices, credit and capital markets, supply chain interruptions, and increased cyberattacks, potentially affecting the search for a Business Combination.
• **Investment Company Status**: The longer funds are held in the Trust Account, the higher the risk of being deemed an investment company under the Investment Company Act of 1940, which could necessitate liquidating investments and holding funds in cash.
• **Creditor Claims**: Proceeds in the Trust Account could become subject to claims of creditors, which may have priority over public shareholders' claims.
• **Sponsor Indemnification**: The Sponsor has agreed to indemnify the company if third-party claims reduce Trust Account funds below a certain threshold, but the company has not verified the Sponsor's ability to satisfy these obligations.
• **Failure to Complete Business Combination**: If an initial Business Combination is not completed within the Completion Window (21-24 months from IPO), public shares will be redeemed, and rights holders will not receive any funds.
• **Insufficient Working Capital**: If the estimated costs for identifying a target business, undertaking in-depth due diligence, and negotiating a Business Combination are less than the actual amount necessary, the company may have insufficient funds to operate prior to a Business Combination.
• **Dilution from Working Capital Loans**: Up to $1,500,000 of Working Capital Loans may be converted into Private Placement Units at a price of $10.00 per unit, potentially diluting existing shareholders.

Future Outlook

The company intends to use substantially all funds in the Trust Account to complete a Business Combination. It does not expect to generate operating revenues until after a Business Combination. Management believes it has sufficient funds for operating expenses for the next year but acknowledges the risk of insufficient funds if actual costs for identifying and negotiating a target exceed estimates. The company may need additional financing either to complete a Business Combination or if a significant number of public shares are redeemed.

Management Comments

• "We do not expect to generate any operating revenues until after the completion of our Business Combination."
• "We cannot provide assurance that our plans to complete a Business Combination will be successful."
• "We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business within one year from the date of issuance of the unaudited condensed financial statements."

Industry Context

Siddhi Acquisition Corp operates as a Special Purpose Acquisition Company (SPAC), a common vehicle for private companies to go public. The current market for SPACs has seen increased scrutiny and competition, making the identification and successful completion of a suitable business combination more challenging. The geopolitical risks mentioned in the filing are broad industry concerns that could impact deal flow and valuations across various sectors, potentially affecting SPACs' ability to find attractive targets. The generation of significant interest income from the Trust Account is a common feature for SPACs in a higher interest rate environment, helping to offset some operational costs.

Comparison to Industry Standards

• The company's structure as a blank check company is standard for SPACs, with funds held in a trust account and a defined period to complete a business combination.
• The 21-month (or 24-month) Completion Window is typical for SPACs, aligning with industry norms for the time frame to identify and execute a de-SPAC transaction.
• The deferred underwriting fee and advisory fee, contingent on a business combination, are standard compensation structures for SPAC underwriters and advisors.
• The generation of interest income from the Trust Account is a common and expected outcome for SPACs, especially in the current interest rate environment, and helps preserve capital for the eventual business combination.
• The disclosure of geopolitical risks is a standard practice for companies with global market exposure, including SPACs seeking international targets.

Related Party Transactions

• Sponsor (Siddhi Sponsor LLC) initially loaned up to $300,000 via an unsecured promissory note, which has been fully repaid.
• A monthly administrative support fee of $15,000 is paid to Siddhi Capital Holdings (affiliated with the Sponsor) for technology, software, computer, systems, administrative support, secretarial services, and infrastructure.
• A consulting firm affiliated with the Chief Financial Officer provides accounting services for a monthly fee of $3,500 and a success fee of 40,000 shares upon completion of a Business Combination.
• The Sponsor or its affiliates, or certain officers and directors, may provide Working Capital Loans up to $1,500,000, convertible into Private Placement Units, to finance transaction costs. No such loans were outstanding as of September 30, 2025.

Stakeholder Impact

• **Shareholders (Class A)**: Their investment is held in the Trust Account, earning interest, but is subject to redemption if no Business Combination is completed. Their rights are tied to the completion of a Business Combination.
• **Shareholders (Class B/Sponsor)**: Hold founder shares, which convert to Class A shares upon Business Combination. They have voting control over director appointments pre-Business Combination and waive redemption rights. Their primary return is contingent on a successful Business Combination.
• **Underwriters/Advisors (Santander)**: Entitled to significant deferred fees ($8,280,000 underwriting, $8,280,000 advisory) upon the successful completion of a Business Combination.
• **Employees/Management**: Compensation (e.g., CFO's success fee) and continued employment are tied to the successful completion of a Business Combination.
• **Creditors**: Potential claims on Trust Account funds if not waived, though the Sponsor has indemnification obligations.

Next Steps

• Identify and evaluate target businesses for a Business Combination.
• Perform business due diligence on prospective target businesses.
• Structure, negotiate, and complete a Business Combination within the Completion Window (by January 2027 or April 2027).

Key Dates

Recommendation

Siddhi Acquisition Corp is a SPAC in its pre-business combination phase, operating as expected. The company has successfully completed its IPO, secured funds in a trust account earning interest, and is actively searching for a target. There are no immediate red flags or significant positive catalysts in this routine quarterly report. The investment thesis for a SPAC hinges entirely on the eventual business combination, which remains uncertain. Therefore, a 'hold' recommendation is appropriate for existing investors awaiting a de-SPAC announcement, while new investors might consider waiting for more concrete information regarding a potential target.

Keywords

SPAC, Blank Check Company, Business Combination, Merger, Acquisition, SEC Filing, 10-Q, Financial Report, Trust Account, Siddhi Acquisition Corp, SDHI