HCM Acquisition p(HCMA) - 2022 Q2 - Quarterly Report

Part I. Financial Information This section presents the unaudited condensed financial statements, management's discussion and analysis, and disclosures on market risk and controls Financial Statements This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes Condensed Balance Sheet Data (Unaudited) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $1,071,079 | $158 | | Cash and marketable securities held in trust account | $293,768,371 | $0 | | Total Assets | $295,159,633 | $342,022 | | Liabilities & Equity | | | | Warrant liabilities | $2,737,500 | $0 | | Deferred underwriting fee payable | $15,125,000 | $0 | | Class A ordinary shares subject to possible redemption | $293,768,371 | $0 | | Total Liabilities | $18,209,716 | $332,808 | | Total Shareholders' (Deficit) Equity | ($16,818,454) | $9,214 | Condensed Statement of Operations (Unaudited) | Description | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Loss from operations | ($162,138) | ($568,562) | | Interest earned on marketable securities held in Trust Account | $452,149 | $547,651 | | Change in fair value of warrant liabilities | $2,737,500 | $10,676,250 | | Net income (loss) | $2,985,788 | $10,089,869 | Note 1 — Organization and Plan of Business Operations This note details the company's formation as a blank check company, its IPO proceeds, trust account funding, and the going concern risk due to its mandatory liquidation date - The Company is a blank check company formed for the purpose of effecting a business combination and has not commenced any operations as of June 30, 2022[22][24] - On January 25, 2022, the Company consummated its IPO of 28,750,000 units at $10.00 per unit, generating gross proceeds of $287,500,000[25] - An amount of $293,250,000 from the IPO and private placement proceeds was placed in a trust account[28] - The Company has until April 25, 2023, to complete a Business Combination, or it will be required to liquidate, which raises substantial doubt about the Company's ability to continue as a going concern[37][42] Note 2 — Summary of Significant Accounting Policies This note outlines the company's significant accounting policies, including its status as an emerging growth company, warrant liability treatment, and share classification - 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[48][49] - Warrants are accounted for as a liability at fair value, with changes in fair value recognized in the statement of operations at each reporting period[56] - Class A ordinary shares subject to possible redemption are classified as temporary equity and presented at redemption value, outside of the shareholders' equity section[58] Note 5 — Related Party Transactions This note details transactions with related parties, including the Sponsor's founder share acquisition, administrative service fees, and a repaid promissory note - The Sponsor paid $25,000 to cover certain costs in exchange for 7,187,500 Class B ordinary shares (Founder Shares), later increased to 10,062,500 shares[80] - The Company pays an affiliate of the Sponsor up to $10,000 per month for office space and administrative services; $20,000 was incurred for the six months ended June 30, 2022[82] - A promissory note with the Sponsor for up to $300,000 was fully repaid in January 2022[83] Note 6 — Commitments and Contingencies This note outlines the company's financial commitments, including deferred underwriting fees and a finder's agreement, both contingent on a business combination - The underwriter is entitled to a deferred fee of $15,125,000 ($12,500,000 from the initial units and $2,625,000 from the over-allotment option), payable upon completion of a Business Combination[87] - The Company entered into a finder's agreement and will be required to pay a fee of $1,000,000, contingent on the consummation of a Business Combination with a target introduced by the service provider[88] Note 7 — Warrant Liabilities This note details the outstanding Public and Private Placement Warrants, including their exercisability, redemption terms, and cashless exercise provisions - As of June 30, 2022, there are 14,375,000 outstanding Public Warrants and 13,000,000 outstanding Private Placement Warrants[89][98] - Public Warrants are redeemable by the Company at $0.01 per warrant if the closing price of Class A ordinary shares equals or exceeds $18.00 per share for a specified period[95][102] - Private Placement Warrants are non-redeemable (so long as held by initial purchasers) and are exercisable on a cashless basis[98] Note 9 — Fair Value Measurements This note describes the fair value measurement of warrant liabilities, classifying Public Warrants as Level 1 and Private Placement Warrants as Level 3, valued using a binomial lattice model Fair Value of Financial Instruments (June 30, 2022) | Description | Level | Fair Value | | :--- | :--- | :--- | | Assets: | | | | Marketable securities held in Trust Account | 1 | $293,768,371 | | Liabilities: | | | | Warrant liability – Public Warrants | 1 | $1,437,500 | | Warrant liability – Private Placement Warrants | 3 | $1,300,000 | - Public Warrants are classified as Level 1 fair value measurement due to the use of an observable market quote (ticker HCMAW); Private Placement Warrants are valued using a Level 3 binomial lattice model[108] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and results, highlighting net income drivers and the going concern uncertainty due to the mandatory liquidation date Results of Operations Summary | Period | Net Income (Loss) | Key Drivers | | :--- | :--- | :--- | | Three months ended June 30, 2022 | $2,985,788 | Change in fair value of warrant liabilities ($2.74M), Interest income ($0.45M) | | Six months ended June 30, 2022 | $10,089,869 | Change in fair value of warrant liabilities ($10.68M), Interest income ($0.55M) | | Three months ended June 30, 2021 | ($3,286) | Formation and operating costs | - As of June 30, 2022, the company had $1,071,079 in cash held outside the Trust Account for working capital and $293,768,371 in marketable securities held in the Trust Account[127][128] - Management has determined that the mandatory liquidation date of April 25, 2023, raises substantial doubt about the Company's ability to continue as a going concern[131] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, HCM Acquisition Corp is not required to provide the information for this item - Not required for smaller reporting companies[144] Controls and Procedures Based on an evaluation conducted by management, including the principal executive and financial officers, the company's disclosure controls and procedures were deemed effective as of June 30, 2022 - Management concluded that disclosure controls and procedures were effective as of the end of the fiscal quarter ended June 30, 2022[146] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control[147] Part II. Other Information This section covers legal proceedings, risk factors, unregistered equity sales, defaults, mine safety disclosures, and exhibits Legal Proceedings The company reports that there are no legal proceedings - None[149] Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its Form 10-K for the fiscal year ended December 31, 2021, and its Form 10-Q for the fiscal quarter ended March 31, 2022 - There have been no material changes to the risk factors disclosed in the Company's previous Form 10-K and Form 10-Q filings[149] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - None[150] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[150] Mine Safety Disclosures The company reports no mine safety disclosures - None[150] Other Information The company reports no other information - None[150] Exhibits This section lists the exhibits filed with the Form 10-Q, which include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, as well as XBRL data files - The exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL Instance Documents[151] Part III. Signatures This section contains the required certifications and signatures for the report - The report was signed on August 15, 2022, by Shawn Matthews, Chairman and Chief Executive Officer, and James Bond, President and Chief Financial Officer[155]