HCM II Acquisition Corp.(HOND) - 2025 Q1 - Quarterly Report

Part I. Financial Information Item 1. Interim Financial Statements 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 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 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 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] - 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] Condensed Consolidated Statement of Cash Flows 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) 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][26] - 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] - The company has a deferred underwriting fee of $10,720,000 payable upon the completion of the initial Business Combination[99] - 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][104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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][131] - 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] - 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] - As of March 31, 2025, the company had $517,160 in cash held outside of the trust account available for working capital needs[144] - The company has a contractual obligation to pay a deferred underwriting discount of $10,720,000 upon completion of its initial Business Combination[151] Item 3. 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 - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[155] Item 4. Controls and Procedures 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] - 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] Part II. Other Information Item 1. Legal Proceedings The company reports no legal proceedings - None[161] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - 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] - An aggregate of $231,150,000 from the IPO and private placement sales was placed in the Trust Account[164] - 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] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[166] Item 4. Mine Safety Disclosures The company reports no mine safety disclosures - None[166] Item 5. Other Information The company reports no other information - None[166] Item 6. Exhibits 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] Part III. Signatures 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][176]