Fuel Line Pilot Program selection builds on Terrestrial Energy's Advanced Reactor Pilot Program participation, underscoring DOE’s confidence in the Company’s IMSR technology and its fuel cycle strategy for commercialization Fuel Line Pilot Program selection strengthens domestic nuclear fuel supply chain capabilities while supporting accelerated pathway to commercial deployment CHARLOTTE, N.C., Sept. 30, 2025 (GLOBE NEWSWIRE) -- Terrestrial Energy Inc., a developer of small modular nuclear power plants using ...

Core Insights - Terrestrial Energy has achieved a significant milestone with the U.S. Nuclear Regulatory Commission (NRC) issuing its first Safety Evaluation on the Principal Design Criteria (PDC) for the Integral Molten Salt Reactor (IMSR), marking a pivotal step in the commercialization of molten salt reactor technology [1][6] - The NRC's ruling confirms the IMSR's unique safety mechanisms, particularly its use of temperature as an inherent control mechanism for reactor power, enhancing the safety and efficiency of the licensing process [1][2][5] Company Overview - Terrestrial Energy is focused on developing Generation IV nuclear power plants utilizing its proprietary IMSR technology, which aims to provide a cost-effective, versatile, and reliable source of zero-carbon energy [7][8] - The IMSR is designed to be small and modular, suitable for distributed energy supply across various industrial applications, thereby extending the use of nuclear energy beyond traditional electric power markets [8] Regulatory Progress - The NRC's Safety Evaluation serves as a foundational approval for future operating license applications, establishing a design framework that supports the commercialization of the IMSR [6] - In April 2023, the Canadian Nuclear Safety Commission (CNSC) completed a Vendor Design Review (VDR) of the IMSR, concluding that there are no fundamental barriers to licensing the plant for commercial use, further bolstering confidence in the technology [6] Market Potential - The IMSR technology is positioned to contribute significantly to global decarbonization efforts, providing low-cost, dispatchable energy that can support various industrial processes [8] - The successful regulatory approvals and the innovative design of the IMSR highlight its compelling commercial potential in the evolving energy landscape [5][8]

Core Insights - Terrestrial Energy is advancing the commercialization of its Integral Molten Salt Reactor (IMSR) technology to provide high-temperature, clean, and flexible energy solutions for various sectors, including industrial, data centers, and grid power [1] - The company has opened a new corporate headquarters in Charlotte, North Carolina, marking a significant milestone in its growth and commitment to U.S. nuclear supply chains [2][5] - Terrestrial Energy's strategy includes a domestically-secured supply chain and the use of Standard-Assay Low Enriched Uranium (LEU) fuels, distinguishing it from competitors relying on High-Assay Low-Enriched Uranium (HALEU) [4] Company Developments - The new headquarters will facilitate the development of IMSR plants and strengthen the company's leadership in the U.S. advanced nuclear reactor sector [5] - Terrestrial Energy is collaborating with Siemens for sourcing key electric power components, which enhances its supply chain capabilities [4] - The company has achieved a critical materials testing milestone in partnership with NRG PALLAS and signed a memorandum of understanding with Ameresco, Inc. to develop hybrid energy systems [5] Market Positioning - Terrestrial Energy's focus on a U.S.-anchored supply chain mitigates trade uncertainties and reduces reliance on foreign suppliers, positioning the company to leverage America's nuclear ecosystem [3] - The IMSR technology is designed for distributed supply of zero-carbon, reliable, and low-cost energy, extending nuclear energy applications beyond traditional electric power markets [6] - The company aims to build, license, and commission its first IMSR plants in the early 2030s, indicating a long-term growth strategy in the nuclear energy sector [6]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents HCM II Acquisition Corp.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in shareholders' deficit, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show the company's financial position as of June 30, 2025, and December 31, 2024, highlighting significant changes in cash, marketable securities, and liabilities | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Cash | $124,083 | $668,089 | | Marketable securities held in Trust Account | $240,134,175 | $235,193,585 | | Total Assets | $240,431,477 | $236,066,398 | | Accrued expenses | $2,475,553 | $458,624 | | Total Liabilities | $14,252,677 | $11,178,624 | | Total Shareholders' Deficit | $(13,955,375) | $(10,305,811) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations reflect the company's financial performance, showing net income for the three and six months ended June 30, 2025, primarily driven by interest earned on marketable securities, offset by general and administrative costs and changes in forward purchase agreement liability | Item | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Period from April 4, 2024 (Inception) Through June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :----------------------------- | :----------------------------------------------------------------- | | General and administrative costs | $1,489,307 | $2,592,440 | $52,663 | | Interest earned on marketable securities held in Trust Account | $2,477,726 | $4,940,590 | — | | Initial loss on forward purchase agreement liability | — | $(893,425) | — | | Change in fair value of forward purchase agreement liability | $(387,392) | $(163,699) | — | | Net income (loss) | $601,027 | $1,291,026 | $(52,663) | | Basic net income per ordinary share, Class A ordinary shares | $0.02 | $0.04 | — | | Basic net income (loss) per ordinary share, Class B ordinary shares | $0.02 | $0.04 | $(0.02) | [Condensed Consolidated Statements of Changes in Shareholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Deficit) This statement details the movements in shareholders' deficit, showing the impact of accretion for Class A ordinary shares to redemption amount and net income/loss for the three and six months ended June 30, 2025, and from inception through June 30, 2024 | Item | Balance – January 1, 2025 | Accretion for Class A ordinary shares to redemption amount | Net income | Balance – June 30, 2025 | | :----------------------------------- | :------------------------ | :------------------------------------------------------- | :--------- | :---------------------- | | Total Shareholders' Deficit | $(10,305,811) | $(4,940,590) | $1,291,026 | $(13,955,375) | - For the period from April 4, 2024 (inception) through June 30, 2024, the total shareholders' deficit was **$(27,663)**, resulting from the issuance of Class B ordinary shares (**$575** amount, **$24,425** additional paid-in capital) and a net loss of **$(52,663)**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement outlines the cash activities, primarily showing net cash used in operating activities for the six months ended June 30, 2025, and no cash activity for the inception period through June 30, 2024 | Item | Six Months Ended June 30, 2025 | Period from April 4, 2024 (Inception) To June 30, 2024 | | :---------------------------------------------------------------- | :----------------------------- | :------------------------------------------------- | | Net income (loss) | $1,291,026 | $(52,663) | | Interest earned on marketable securities held in Trust Account | $(4,940,590) | — | | Initial loss on forward purchase agreement liability | $893,425 | — | | Change in fair value of forward purchase agreement liability | $163,699 | — | | Net cash used in operating activities | $(544,006) | — | | Cash – End of period | $124,083 | $0 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering the company's business, significant accounting policies, IPO, related party transactions, commitments, and fair value measurements [NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS](index=8&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) HCM II Acquisition Corp. is a blank check company formed to effect a Business Combination, and it has entered into a Business Combination Agreement with Terrestrial Energy Inc. The company's liquidity is a concern due to a working capital deficit and reliance on completing the Business Combination by August 19, 2026 - The Company was incorporated on April 4, 2024, as a Cayman Islands exempted corporation, for the purpose of effecting a Business Combination[22](index=22&type=chunk) - On March 26, 2025, the Company entered into a Business Combination Agreement with Terrestrial Energy Inc., where Merger Sub will merge into Terrestrial Energy, with the combined company operating through Terrestrial Energy[24](index=24&type=chunk) - The Company consummated its Initial Public Offering (IPO) on August 19, 2024, selling **23,000,000 units** at **$10.00 per unit**, generating gross proceeds of **$230,000,000**. Simultaneously, **6,850,000 Private Placement Warrants** were sold for **$6,850,000**[28](index=28&type=chunk)[30](index=30&type=chunk) - As of June 30, 2025, the Company had **$124,083** in its operating bank account and a working capital deficit of **$2,185,772**, raising substantial doubt about its ability to continue as a going concern if a Business Combination is not completed by August 19, 2026[42](index=42&type=chunk)[45](index=45&type=chunk) [NOTE 2. SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the key accounting principles, including the basis of presentation under GAAP, consolidation of its subsidiary, the company's status as an emerging growth company, and policies for cash, marketable securities, offering costs, fair value measurements, income taxes, and earnings per share - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and include the accounts of the Company and its wholly-owned subsidiary formed on March 4, 2025[48](index=48&type=chunk)[50](index=50&type=chunk) - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[51](index=51&type=chunk)[52](index=52&type=chunk) - The fair value of the Company's financial instruments approximates their carrying amounts due to their short-term nature[59](index=59&type=chunk) - The Company is an exempted Cayman Islands company and is not subject to income taxes in the Cayman Islands or the United States, resulting in a **zero tax provision** for the period presented[62](index=62&type=chunk) [NOTE 3. INITIAL PUBLIC OFFERING](index=18&type=section&id=NOTE%203.%20INITIAL%20PUBLIC%20OFFERING) This note details the Initial Public Offering, including the sale of 23,000,000 units, the terms of the public warrants, and the conditions under which warrants can be redeemed or exercised on a cashless basis - On August 19, 2024, the Company sold **23,000,000 Units** at **$10.00 per Unit**, including the full exercise of the over-allotment option[74](index=74&type=chunk) - Each Unit consists of one Class A ordinary share and one-half of one redeemable Public Warrant, with each whole warrant exercisable at **$11.50 per share**[74](index=74&type=chunk) - As of June 30, 2025, there were **18,350,000 warrants outstanding** (**11,500,000 Public Warrants** and **6,850,000 Private Placement Warrants**)[75](index=75&type=chunk) - The Company may redeem outstanding warrants if the closing price of Class A ordinary shares equals or exceeds **$18.00 per share** for **20 trading days** within a **30-trading day period**[82](index=82&type=chunk)[85](index=85&type=chunk) [NOTE 4. PRIVATE PLACEMENT](index=20&type=section&id=NOTE%204.%20PRIVATE%20PLACEMENT) This section describes the private placement of 6,850,000 warrants to the Sponsor and Cantor Fitzgerald & Co. at $1.00 per warrant, noting their identical nature to public warrants but with specific transfer restrictions and registration rights - The Sponsor and Cantor Fitzgerald & Co. purchased an aggregate of **6,850,000 Private Placement Warrants** at **$1.00 per warrant**, totaling **$6,850,000**[83](index=83&type=chunk) - The Private Placement Warrants are identical to Public Warrants but have transfer restrictions and registration rights as long as they are held by the Sponsor, Cantor Fitzgerald & Co., or their permitted transferees[84](index=84&type=chunk) [NOTE 5. RELATED PARTY TRANSACTIONS](index=21&type=section&id=NOTE%205.%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions with related parties, including the issuance of founder shares to the Sponsor, an administrative services agreement, and the status of related party loans - The Sponsor received **5,750,000 founder shares** for a capital contribution of **$25,000** on April 8, 2024[88](index=88&type=chunk) - The Company pays the Sponsor **$15,000 per month** for office space, utilities, and administrative support services, incurring **$45,000** for the three months and **$90,000** for the six months ended June 30, 2025[91](index=91&type=chunk) - As of June 30, 2025, and December 31, 2024, **$4,466** was due from the Sponsor for covered expenses[93](index=93&type=chunk) - No Working Capital Loans from related parties were outstanding as of June 30, 2025, or December 31, 2024[94](index=94&type=chunk) [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This section addresses various commitments and contingencies, including geopolitical risks, registration rights, the underwriter's deferred fee, and the details of the Business Combination Agreement with Terrestrial Energy Inc., including the domestication and Forward Purchase Agreement liability - Geopolitical instability (Russia-Ukraine, Israel-Hamas conflicts) could adversely affect the Company's search for an initial Business Combination[95](index=95&type=chunk)[96](index=96&type=chunk) - The underwriter is entitled to a deferred underwriting discount of **$10,720,000**, payable upon the completion of the initial Business Combination[101](index=101&type=chunk) - The Business Combination Agreement with Terrestrial Energy Inc. was unanimously approved by both boards and is expected to close in the **fourth quarter of 2025**, subject to shareholder approvals[102](index=102&type=chunk)[104](index=104&type=chunk) - The Company plans to change its jurisdiction to Delaware (Domestication) and offer public shareholders redemption rights prior to the Business Combination closing[105](index=105&type=chunk) - As of June 30, 2025, the fair value of the forward purchase agreement liability was **$1,057,124**[108](index=108&type=chunk) [NOTE 7. SHAREHOLDERS' DEFICIT](index=26&type=section&id=NOTE%207.%20SHAREHOLDERS'%20DEFICIT) This note outlines the authorized and outstanding share capital, including preference shares, Class A ordinary shares, and Class B ordinary shares, along with the conversion terms for Class B shares - No preference shares were issued or outstanding as of June 30, 2025, and December 31, 2024[110](index=110&type=chunk) - **23,000,000 Class A ordinary shares** were subject to possible redemption as of June 30, 2025, and December 31, 2024[111](index=111&type=chunk) - **5,750,000 Class B ordinary shares** were issued and outstanding, which will automatically convert into Class A ordinary shares on a one-for-one basis concurrently with or immediately following the initial Business Combination[112](index=112&type=chunk)[113](index=113&type=chunk) [NOTE 8. FAIR VALUE MEASUREMENTS](index=27&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) This section explains the fair value hierarchy (Level 1, 2, 3) and presents the fair value measurements for the company's marketable securities held in the Trust Account and the forward purchase agreement liability - Marketable securities held in the Trust Account are classified as Level 1, with a fair value of **$240,134,175** as of June 30, 2025[117](index=117&type=chunk) - The forward purchase agreement liability is classified as Level 3, with a fair value of **$1,057,124** as of June 30, 2025[117](index=117&type=chunk) - The fair value of the forward purchase agreement derivative liability changed from an initial measurement of **$893,425** on March 26, 2025, to **$1,057,124** as of June 30, 2025[121](index=121&type=chunk) [NOTE 9. SEGMENT INFORMATION](index=28&type=section&id=NOTE%209.%20SEGMENT%20INFORMATION) The company operates as a single reportable segment, with the Chief Financial Officer serving as the Chief Operating Decision Maker (CODM) who evaluates overall financial performance and resource allocation - The Company has only one reportable segment, and its Chief Financial Officer acts as the Chief Operating Decision Maker (CODM)[124](index=124&type=chunk) - The CODM reviews key metrics such as net income, total assets, interest earned on marketable securities in the Trust Account, and general and administrative expenses to assess performance and allocate resources[125](index=125&type=chunk)[126](index=126&type=chunk) [NOTE 10. SUBSEQUENT EVENTS](index=29&type=section&id=NOTE%2010.%20SUBSEQUENT%20EVENTS) No subsequent events requiring adjustment or disclosure were identified by management up to the date the financial statements were issued - No subsequent events requiring adjustment or disclosure were identified up to the date the unaudited condensed consolidated financial statements were issued[127](index=127&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its blank check nature, recent developments regarding the Business Combination with Terrestrial Energy, analysis of financial performance, liquidity, and critical accounting estimates [Overview](index=30&type=section&id=Overview) The Company is a blank check company formed to execute a business combination, and it anticipates incurring significant costs in pursuit of its acquisition plans - The Company is a blank check company incorporated on April 4, 2024, for the purpose of effecting a business combination[130](index=130&type=chunk) - The Company expects to incur significant costs in the pursuit of its acquisition plans[131](index=131&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) The Company entered into a Business Combination Agreement with Terrestrial Energy Inc. on March 26, 2025, which is expected to close in Q4 2025. This involves a merger, domestication to Delaware, and a PIPE Financing of 5,000,000 shares at $10.00 each - On March 26, 2025, the Company entered into a Business Combination Agreement with Terrestrial Energy Inc., with the merger expected to close in the **fourth quarter of 2025**[132](index=132&type=chunk)[134](index=134&type=chunk) - The Business Combination involves the Company changing its jurisdiction to Delaware (Domestication) and offering public shareholders the opportunity to redeem their shares[135](index=135&type=chunk) - The Company also entered into PIPE Subscription Agreements to issue and sell **5,000,000 shares** of Domesticated Common Stock at **$10.00 per share**[137](index=137&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) The Company reported net income for the three and six months ended June 30, 2025, primarily from interest earned on marketable securities, contrasting with a net loss in the prior inception period due to general and administrative costs - For the three months ended June 30, 2025, the Company had net income of **$601,027**, driven by **$2,477,726** in interest income, offset by **$1,489,307** in operating costs and a **$387,392** change in fair value of FPA Liability[139](index=139&type=chunk) - For the six months ended June 30, 2025, net income was **$1,291,026**, with **$4,940,590** in interest income, offset by **$2,592,440** in operating costs, an initial loss of **$893,425** on FPA Liability, and a **$163,699** change in fair value of FPA Liability[140](index=140&type=chunk) - For the period from April 4, 2024 (inception) through June 30, 2024, the Company had a net loss of **$52,663**, consisting solely of general and administrative costs[140](index=140&type=chunk) [Factors That May Adversely Affect our Results of Operations](index=32&type=section&id=Factors%20That%20May%20Adversely%20Affect%20our%20Results%20of%20Operations) The Company's operations and ability to complete a business combination are susceptible to adverse effects from economic uncertainty, financial market volatility, and geopolitical instability, such as ongoing conflicts in Ukraine and the Middle East - Economic uncertainty, volatility in financial markets, and geopolitical instability (e.g., conflicts in Ukraine and the Middle East) may adversely affect the Company's results of operations and its ability to complete an initial business combination[141](index=141&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity is primarily derived from its IPO and private placement proceeds held in the Trust Account. It faces a working capital deficit and a going concern uncertainty, necessitating a successful Business Combination by August 19, 2026, or additional financing - The Company's liquidity sources include gross proceeds of **$230,000,000** from the IPO and **$6,850,000** from the sale of Private Placement Warrants[143](index=143&type=chunk) - As of June 30, 2025, marketable securities held in the Trust Account totaled **$240,134,175**, and cash held outside the Trust Account was **$124,083**[148](index=148&type=chunk)[149](index=149&type=chunk) - The Company had a working capital deficit of **$2,185,772** as of June 30, 2025, and management has determined that the liquidity condition raises substantial doubt about its ability to continue as a going concern[42](index=42&type=chunk)[153](index=153&type=chunk) - The Company must complete a Business Combination by **August 19, 2026**, or face mandatory liquidation and dissolution[150](index=150&type=chunk)[153](index=153&type=chunk) [Forward Purchase Agreement Liability](index=34&type=section&id=Forward%20Purchase%20Agreement%20Liability) The Forward Purchase Agreement is accounted for as a derivative instrument, subject to re-measurement at each balance sheet date, with its fair value recorded as a liability - The Forward Purchase Agreement is accounted for as a derivative instrument under ASC 815-40, with changes in fair value recognized in the condensed statements of operations[154](index=154&type=chunk) - As of June 30, 2025, the fair value of the forward purchase derivative liability was **$1,057,124**[154](index=154&type=chunk) [Off-Balance Sheet Financing Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Financing%20Arrangements) The Company confirms that it has no off-balance sheet arrangements, obligations, assets, or liabilities as of June 30, 2025 - The Company has no off-balance sheet arrangements as of June 30, 2025[155](index=155&type=chunk) [Contractual Obligations](index=35&type=section&id=Contractual%20Obligations) The Company's primary contractual obligations include a monthly administrative services fee to the Sponsor and a deferred underwriting discount payable upon the completion of a Business Combination - The Company has an agreement to pay the Sponsor **$15,000 per month** for office space, utilities, and administrative support services[156](index=156&type=chunk) - A deferred underwriting discount of **$10,720,000** is payable upon the completion of the Company's initial Business Combination[157](index=157&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) As of June 30, 2025, the Company did not have any critical accounting estimates requiring disclosure - As of June 30, 2025, the Company did not have any critical accounting estimates to be disclosed[158](index=158&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) Management believes that recently issued, but not yet effective, accounting standards will not have a material effect on the Company's financial statements - Management does not believe that any recently issued, but not effective, accounting standards would have a material effect on the Company's unaudited condensed consolidated financial statements[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, HCM II Acquisition Corp. is exempt from providing quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The company's principal executive officer and principal financial and accounting officer concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness identified in an incorrect footnote disclosure in a prior report - The Company's internal controls over financial reporting were not effective as of June 30, 2025[163](index=163&type=chunk) - A material weakness was identified due to an incorrect statement in a footnote disclosure in the Quarterly Report on Form 10-Q for the three months ended March 31, 2025[163](index=163&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the fiscal quarter of 2025 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No change in internal control over financial reporting occurred during the fiscal quarter of 2025 that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting[165](index=165&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, unregistered equity sales, and other disclosures [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The Company reports no legal proceedings - There are no legal proceedings[167](index=167&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The Company refers to its Annual Report on Form 10-K for a description of risk factors and states that there have been no material changes since its filing on March 31, 2025 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K filed on March 31, 2025[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Initial Public Offering and the private sale of warrants, including the gross proceeds generated, the amount placed in the Trust Account, and the total offering costs incurred - The Initial Public Offering on August 19, 2024, involved the sale of **23,000,000 Units** at **$10.00 per Unit**, generating gross proceeds of **$230,000,000**[168](index=168&type=chunk) - Simultaneously, **6,850,000 Private Placement Warrants** were sold at **$1.00 per warrant**, generating gross proceeds of **$6,850,000**[169](index=169&type=chunk) - An aggregate of **$231,150,000** from the IPO and private placement proceeds was placed in the Trust Account[170](index=170&type=chunk) - Total offering costs amounted to **$15,396,014**, including **$4,000,000** cash underwriting fee and **$10,720,000** deferred underwriting fee[170](index=170&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reports no defaults upon senior securities - There are no defaults upon senior securities[172](index=172&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The Company reports no mine safety disclosures - There are no mine safety disclosures[172](index=172&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) The Company reports no other information - There is no other information to report[172](index=172&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including various agreements and certifications - Exhibits include the Underwriting Agreement, Amended and Restated Memorandum and Articles of Association, Warrant Agreement, Investment Management Trust Agreement, Registration Rights Agreement, Private Placement Warrants Purchase Agreements, Letter Agreement, Administrative Support Agreement, and certifications[174](index=174&type=chunk) [PART III. SIGNATURES](index=39&type=section&id=Part%20III.%20Signatures) This section contains the official signatures for the Quarterly Report on Form 10-Q [Signatures](index=39&type=section&id=Signatures) The Quarterly Report is duly signed on behalf of HCM II Acquisition Corp. by its Chief Executive Officer and Chief Financial Officer - The report is signed by Shawn Matthews, Chief Executive Officer, and Steven Bischoff, Chief Financial Officer, on August 12, 2025[180](index=180&type=chunk)

Core Insights - The U.S. Department of Energy (DOE) has selected Terrestrial Energy's Project TETRA for its Advanced Reactor Pilot Program, marking a significant step in the commercialization of the Integral Molten Salt Reactor (IMSR) technology [1][2][3] - The program aims to expedite the licensing and deployment of advanced nuclear reactor technologies, with a target for reactor criticality by July 4, 2026 [2][3] - Terrestrial Energy's IMSR technology is designed to meet the increasing demand for clean and reliable energy across various industrial sectors, including industrial heat and power users [3][4] Company Overview - Terrestrial Energy is focused on developing Generation IV nuclear plants utilizing its proprietary IMSR technology, which offers cost reduction, versatility, and functionality in nuclear energy supply [5][6] - The IMSR plant is designed to provide zero-carbon, reliable, and dispatchable energy, extending the application of nuclear energy beyond traditional electric power markets [5][6] - The company is engaged with regulators and partners to build and license the first IMSR plants, aiming for deployment in the early 2030s [6] Technology and Market Position - The IMSR plant utilizes Standard-Assay Low Enriched Uranium (LEU) fuel, which is more readily available and avoids supply challenges associated with High-Assay Low-Enriched Uranium (HALEU) [4] - The plant's capacity is 822 MWth / 390 MWe, enabling high-temperature thermal energy supply for efficient steam turbine operation and low-cost electricity [3] - Terrestrial Energy's approach supports U.S. manufacturing and supply chains, enhancing the competitiveness of the nuclear sector in the context of energy dominance [3][4]

Core Viewpoint - HCM II Acquisition Corp. and Terrestrial Energy Inc. are moving forward with a proposed business combination, which will lead to the listing of the combined company on Nasdaq under the ticker symbol "IMSR" [3][6]. Company Overview - HCM II Acquisition Corp. is a special-purpose acquisition company (SPAC) focused on merging with established businesses poised for growth [8]. - Terrestrial Energy Inc. is developing small modular nuclear plants utilizing proprietary Generation IV Integral Molten Salt Reactor (IMSR) technology, aimed at providing clean and flexible energy solutions [4][7]. Business Combination Details - The business combination agreement was entered into on March 26, 2025, and is subject to stockholder approval and SEC clearance [3]. - The registration statement filed with the SEC includes a preliminary proxy statement/prospectus related to the business combination [2][11]. Financial Aspects - The transaction is expected to generate approximately $280 million in gross proceeds, including $50 million from common stock PIPE commitments and about $230 million from HCM II's trust account [5]. - Proceeds will be allocated to accelerate the commercial deployment of Terrestrial Energy's IMSR technology and cover transaction expenses [5]. Timeline - The completion of the proposed business combination is anticipated in the third or fourth quarter of 2025 [6].

Core Insights - Terrestrial Energy Inc. and NRG PALLAS have initiated the final phase of graphite irradiation and selection for the Integral Molten Salt Reactor (IMSR), which aims to provide high-temperature, clean energy with competitive economics and rapid time-to-market [1][4][5] - The IMSR utilizes approximately 125 tonnes of graphite as a neutron moderator, and the tests at NRG PALLAS' High Flux Reactor (HFR) will validate the performance of selected graphite grades over a seven-year operating cycle [2][3] Company Overview - Terrestrial Energy is focused on developing Generation IV nuclear plants, specifically the IMSR, which is designed for low-cost, reliable, and zero-carbon energy supply, extending nuclear energy applications beyond traditional electric power markets [5] - The company is engaged with regulators and partners to license and commission the first IMSR plants by the early 2030s, aiming to support global decarbonization efforts [5] Collaboration Details - NRG PALLAS has over 50 years of experience in nuclear technology research and is conducting comprehensive irradiation tests to support advanced reactor development and licensing [4][7] - The collaboration between Terrestrial Energy and NRG PALLAS has been ongoing for five years, with the current phase marking a significant milestone in the graphite selection process [5] Business Combination Announcement - On March 26, 2025, Terrestrial Energy and HCM II Acquisition Corp. announced a definitive Business Combination Agreement, which will lead to Terrestrial Energy being listed on the Nasdaq under the ticker symbol "IMSR" [6]

Part I. Financial Information [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) HCM II Acquisition Corp. reported **$689,999 net income** for Q1 2025, driven by Trust Account interest, with **$238.4 million total assets** and a **$12.1 million shareholders' deficit**, following a business combination agreement with Terrestrial Energy Inc [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to **$238.4 million**, mainly due to Trust Account interest, while total liabilities rose to **$12.8 million**, resulting in a **$12.1 million shareholders' deficit** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $517,160 | $668,089 | | Marketable securities held in Trust Account | $237,656,449 | $235,193,585 | | **Total Assets** | **$238,369,487** | **$236,066,398** | | **Liabilities & Shareholders' Deficit** | | | | Accrued expenses | $1,401,982 | $458,624 | | Deferred underwriting fee | $10,720,000 | $10,720,000 | | Forward purchase agreement liability | $669,732 | $0 | | **Total Liabilities** | **$12,791,714** | **$11,178,624** | | Class A ordinary shares subject to possible redemption | $237,656,449 | $235,193,585 | | **Total Shareholders' Deficit** | **($12,078,676)** | **($10,305,811)** | [Condensed Consolidated Statement of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) For Q1 2025, the company reported **$689,999 net income**, driven by **$2.46 million** in Trust Account interest offsetting **$1.10 million** in general and administrative costs Statement of Operations for the Three Months Ended March 31, 2025 (Unaudited) | Item | Amount ($) | | :--- | :--- | | General and administrative costs | $1,103,133 | | Loss from operations | ($1,103,133) | | Interest earned on marketable securities held in Trust Account | $2,462,864 | | Net income | **$689,999** | | Basic and diluted net income per ordinary share, Class A | $0.02 | | Basic and diluted net income per ordinary share, Class B | $0.02 | [Condensed Consolidated Statement of Changes in Shareholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Shareholders'%20Deficit) The shareholders' deficit increased by **$1.77 million** in Q1 2025, from **$10.31 million** to **$12.08 million**, primarily due to accretion of Class A ordinary shares partially offset by net income - The shareholders' deficit increased by **$1,772,865** during the quarter, moving from **($10,305,811)** to **($12,078,676)**[18](index=18&type=chunk) - The increase in deficit was primarily due to the accretion of Class A ordinary shares to their redemption value amounting to **$2,462,864**, which was partially offset by the net income of **$689,999** for the period[18](index=18&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash outflow from operating activities was **$150,929** for Q1 2025, decreasing cash from **$668,089** to **$517,160**, primarily for operating expenses Cash Flow Summary for the Three Months Ended March 31, 2025 (Unaudited) | Cash Flow Item | Amount ($) | | :--- | :--- | | Net cash used in operating activities | ($150,929) | | Net Change in Cash | ($150,929) | | Cash – Beginning of period | $668,089 | | **Cash – End of period** | **$517,160** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail the company's blank-check status, definitive business combination agreement with Terrestrial Energy Inc., significant accounting policies, and going concern uncertainty - The Company is a blank check company formed to effect a Business Combination. On March 26, 2025, it entered into a Business Combination Agreement with Terrestrial Energy Inc[24](index=24&type=chunk)[26](index=26&type=chunk) - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern, as it has until August 19, 2026, to consummate a business combination or face mandatory liquidation[47](index=47&type=chunk) - The company has a deferred underwriting fee of **$10,720,000** payable upon the completion of the initial Business Combination[99](index=99&type=chunk) - In connection with the proposed merger, the company entered into PIPE Subscription Agreements for an aggregate of **5,000,000 shares** at **$10.00 per share**[27](index=27&type=chunk)[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's blank-check status, the Terrestrial Energy Inc. business combination, Q1 2025 net income, and liquidity concerns regarding the August 2026 merger deadline - On March 26, 2025, the Company entered into a Business Combination Agreement with Terrestrial Energy Inc., with the transaction expected to close in the **fourth quarter of 2025**[130](index=130&type=chunk)[131](index=131&type=chunk) - For the three months ended March 31, 2025, the company reported net income of **$689,999**, which consisted of **$2,462,864** in interest income from the trust account, offset by **$1,103,133** in operating costs[136](index=136&type=chunk) - Management has determined that the company's liquidity condition raises substantial doubt about its ability to continue as a going concern, given the deadline of **August 19, 2026**, to complete a business combination[147](index=147&type=chunk) - As of March 31, 2025, the company had **$517,160** in cash held outside of the trust account available for working capital needs[144](index=144&type=chunk) - The company has a contractual obligation to pay a deferred underwriting discount of **$10,720,000** upon completion of its initial Business Combination[151](index=151&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the company's Certifying Officers concluded that disclosure controls and procedures were effective as of **March 31, 2025**[157](index=157&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[159](index=159&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no legal proceedings - None[161](index=161&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K filed on **March 31, 2025**, have occurred[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed its IPO of **23,000,000 units** at **$10.00 each** and sold **6,850,000 private placement warrants**, placing **$231.15 million** in the Trust Account with total offering costs of **$15.4 million** - On **August 19, 2024**, the company consummated its IPO of **23,000,000 Units** at **$10.00 per Unit**, for gross proceeds of **$230,000,000**[162](index=162&type=chunk) - Simultaneously with the IPO, the company sold **6,850,000 Private Placement Warrants** at **$1.00 per warrant**, generating gross proceeds of **$6,850,000**[163](index=163&type=chunk) - An aggregate of **$231,150,000** from the IPO and private placement sales was placed in the Trust Account[164](index=164&type=chunk) - Total offering costs amounted to **$15,396,014**, which included a **$4,000,000** cash underwriting fee and a **$10,720,000** deferred underwriting fee[164](index=164&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[166](index=166&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None[166](index=166&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) The company reports no other information - None[166](index=166&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including key corporate and transaction documents and officer certifications - The exhibits filed include key corporate and transaction documents such as the Underwriting Agreement, Warrant Agreement, and various officer certifications required by the Sarbanes-Oxley Act[168](index=168&type=chunk) Part III. Signatures [Signatures](index=36&type=section&id=Signatures) The report was duly authorized and signed on May 20, 2025, by Shawn Matthews, Chief Executive Officer, and Steven Bischoff, Chief Financial Officer - The report is signed by Shawn Matthews (Chief Executive Officer) and Steven Bischoff (Chief Financial Officer) on **May 20, 2025**[175](index=175&type=chunk)[176](index=176&type=chunk)

IPO and Financial Proceeds - The company completed its Initial Public Offering (IPO) on August 19, 2024, raising gross proceeds of $230,000,000 from the sale of 23,000,000 units at $10.00 per unit[28]. - An additional $6,850,000 was generated from the sale of 6,850,000 Private Placement Warrants at $1.00 each, bringing total gross proceeds to $236,850,000[29]. - A total of $231,150,000 from the net proceeds was placed in a trust account, with an initial value of $10.05 per unit[30]. - Transaction costs related to the IPO amounted to $15,396,014, including $4,000,000 in underwriting fees and $10,720,000 in deferred underwriting fees[41]. - As of December 31, 2024, the company had approximately $235,193,585 held in the trust account, providing options for liquidity events, capital for growth, or debt reduction[69]. - The anticipated amount in the trust account is $10.05 per public share, which includes interest earned on the funds held[82]. - The company expects to have access to approximately $1,150,000 from the Initial Public Offering proceeds to cover potential claims and liquidation costs[111]. Business Combination Plans - The company must complete a business combination with a fair market value of at least 80% of the assets held in the trust account[42]. - The company anticipates structuring its initial business combination to acquire 100% of the equity interests or assets of the target business, but may also acquire less than 100% under certain conditions[51]. - The company has not contacted any previously considered target businesses but may do so if they express interest post-Initial Public Offering[60]. - The management team has developed a broad network of contacts that is expected to provide a substantial number of potential initial business combination targets[58]. - The company has entered into a Business Combination Agreement with Terrestrial Energy Inc., expecting to close the transaction in Q4 2025, subject to shareholder approvals[145][146]. - The Business Combination will involve the conversion of Class B Ordinary Shares into Class A Ordinary Shares on a one-for-one basis prior to the Domestication[148]. - The company plans to issue 5,000,000 shares of Domesticated Common Stock at a price of $10.00 per share as part of the PIPE Financing[149]. Shareholder Rights and Redemption - The company will provide stockholders the opportunity to redeem shares for a pro rata portion of the trust account, initially valued at $10.05 per share[43]. - Public shareholders can redeem their shares for cash upon completion of the initial business combination, regardless of their voting decision[82]. - A public stockholder is restricted from seeking redemption rights for more than 10% of the shares sold in the Initial Public Offering, referred to as "Excess Shares"[88]. - Shareholders are restricted from seeking redemption rights for Excess Shares without prior consent, limiting the ability of large shareholders to block the business combination[94]. - The redemption process requires shareholders to deliver share certificates or electronically transfer shares to the transfer agent before the scheduled vote[97]. - If the total cash consideration for redeeming Class A Ordinary Shares exceeds available cash, the initial business combination will not be completed, and shares will be returned to holders[93]. Management and Governance - The company’s management team has a track record of acquiring assets at disciplined valuations and fostering financial discipline[24]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[66]. - The board of directors consists of five members, with three independent directors as defined by Nasdaq rules, ensuring compliance and governance[190]. - The audit committee is composed solely of independent directors, including Jacob Loveless, ensuring oversight of financial reporting and compliance[192]. - The compensation committee, also made up of independent directors, is responsible for executive compensation and performance evaluations[194]. - The company has adopted a code of ethics applicable to all directors, officers, and employees, promoting integrity and compliance[199]. Financial Performance and Risks - The company has not generated any revenues to date and does not expect to do so until after the completion of the business combination[150]. - The company may face significant risks, including the inability to complete its initial business combination and potential dilution of public shareholders' investments[124]. - The company has incurred significant costs related to being a public company and pursuing acquisition plans[144]. - The company may face adverse impacts from economic uncertainties, including geopolitical instability and market volatility, affecting its ability to complete a business combination[152]. - There is a possibility that the Business Combination might not occur within the 24-month period from the date of the auditors' report, raising substantial doubt about the company's ability to continue as a going concern[162]. Conflicts of Interest - Conflicts of interest may arise among the company's officers and directors due to their obligations to other entities, but it is believed these will not materially affect the ability to complete the initial business combination[56]. - The company’s officers and directors may have conflicts of interest in evaluating business combinations due to their ownership of shares[210]. - The company is not required to obtain a fairness opinion for business combinations with affiliates of the Sponsor, officers, or directors[206]. - The company has provisions allowing directors to engage in similar business activities, which may present potential conflicts of interest[204]. Operational and Compliance Matters - The company has no long-term debt or off-balance sheet financing arrangements as of December 31, 2024[163]. - The company is required to file periodic reports with the SEC, including annual and quarterly reports, which will contain audited financial statements[116]. - The company will provide shareholders with audited financial statements of the prospective target business as part of the proxy solicitation materials[117]. - The company does not expect that any recently issued accounting standards will have a material effect on its financial statements[168]. - The company has no critical accounting estimates to disclose as of December 31, 2024[166].

Company Overview - Terrestrial Energy is a developer of Generation IV nuclear plants utilizing proprietary Integral Molten Salt Reactor (IMSR) technology, which enhances affordability, efficiency, and versatility in nuclear energy supply [2][22] - The IMSR plants are designed to provide zero-carbon, clean, firm, low-cost, high-temperature industrial heat and electricity for various applications, including data centers and green fuels [3][22] Business Combination Details - Terrestrial Energy has announced a business combination with HCM II Acquisition Corp, which will lead to Terrestrial Energy becoming a public company listed on Nasdaq under the ticker symbol "IMSR" [1][19] - The transaction is expected to generate approximately $280 million in gross proceeds, with $50 million from common stock PIPE commitments and about $230 million from HCM II's trust account [16][17] - The pre-money equity value of Terrestrial Energy is set at $925 million, with a pro forma enterprise value of around $1 billion and a pro forma equity value of approximately $1.3 billion [17][19] Technology and Market Position - Terrestrial Energy's IMSR technology is differentiated from legacy nuclear technologies by its use of molten salt, which allows for high efficiency and inherently safe operations [4][10] - The IMSR plants are designed to utilize low-cost, readily available Standard-Assay Low Enriched Uranium (LEU) fuel, addressing supply chain challenges associated with High-Assay Low-Enriched Uranium (HALEU) [5][22] - The company has established partnerships with notable organizations, including Westinghouse Fuels and the U.S. Department of Energy, enhancing its market position [11][22] Regulatory Milestones - In April 2023, the Canadian Nuclear Safety Commission completed its Vendor Design Review of the IMSR plant design, marking a historic first for a Generation IV reactor powered by molten salt technology [13][22] - The company has been engaged with the U.S. Nuclear Regulatory Commission since 2016, successfully navigating interagency reviews [13][22] Management and Leadership - Terrestrial Energy is led by CEO Simon Irish and a highly experienced management team, supported by a board of directors with extensive backgrounds in the nuclear industry [7][18] - The leadership team includes advisors with significant experience in energy and government, enhancing the company's strategic direction [7][22] Future Outlook - The transaction is anticipated to be completed in the fourth quarter of 2025, subject to customary closing conditions [19][20] - Terrestrial Energy aims to accelerate the commercial deployment of its IMSR technology, positioning itself to meet the growing demand for clean energy solutions across various industrial sectors [15][22]