HCM Acquisition p(HCMA) - 2022 Q3 - Quarterly Report

Part I. Financial Information Financial Statements The company reported a net income of $11.96 million for the nine months ended September 30, 2022, driven by non-operating income, holding $295.2 million in its Trust Account, and showing a $16.4 million shareholders' deficit Condensed Balance Sheets As of September 30, 2022, total assets increased to $296.4 million from $0.34 million, primarily due to $295.2 million in the Trust Account, with total liabilities at $17.6 million and a shareholders' deficit of $16.4 million due to redeemable Class A shares Condensed Balance Sheet Highlights (Unaudited) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $969,621 | $158 | | Cash and marketable securities held in trust account | $295,191,698 | $0 | | Total Assets | $296,413,382 | $342,022 | | Liabilities & Equity | | | | Total Liabilities | $17,596,434 | $332,808 | | Class A ordinary shares subject to possible redemption | $295,191,698 | $0 | | Total Shareholders' (Deficit) Equity | $(16,374,750) | $9,214 | Condensed Statements of Operations For the three and nine months ended September 30, 2022, the company reported net incomes of $1.87 million and $11.96 million respectively, primarily driven by non-operating income from interest, unrealized gains, and changes in warrant liability fair value Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Loss from operations | $(377,546) | $(946,108) | | Interest earned on marketable securities | $599,266 | $1,146,917 | | Unrealized gain on marketable securities | $824,061 | $794,781 | | Change in fair value of warrant liabilities | $821,250 | $11,497,500 | | Net income (loss) | $1,867,031 | $11,956,900 | | Basic and diluted net income per share, Class A | $0.05 | $0.33 | Condensed Statements of Changes in Shareholders' (Deficit) Equity Shareholders' equity transitioned from a positive $9,214 to a $16.4 million deficit by September 30, 2022, primarily due to the $33.0 million accretion of Class A ordinary shares to redemption value, offsetting the $11.96 million net income - Shareholders' deficit grew to $(16,374,750) as of September 30, 2022, from a positive balance of $9,214 at the beginning of the year[16] - The primary drivers for the change in shareholders' deficit were the accretion for Class A ordinary shares to redemption amount, totaling over $33 million for the nine months, and the net income of approximately $12 million[16] Condensed Statements of Cash Flows For the nine months ended September 30, 2022, financing activities provided $294.9 million, investing activities used $293.25 million for the Trust Account, and operating activities used $0.71 million, resulting in a cash balance increase to $969,621 Cash Flow Summary for the Nine Months Ended September 30, 2022 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | $(712,987) | | Net cash used in investing activities | $(293,250,000) | | Net cash provided by financing activities | $294,932,450 | | Net Change in Cash | $969,463 | | Cash – End of period | $969,621 | Notes to Condensed Financial Statements The notes detail the company's SPAC formation, January 2022 IPO raising $287.5 million with $293.25 million in trust, key accounting policies for warrants and redeemable shares, a going concern uncertainty due to the April 25, 2023 business combination deadline, and contingent liabilities including a $15.125 million deferred underwriting fee - The company is a blank check company formed to effect a business combination and consummated its Initial Public Offering on January 25, 2022, placing $293,250,000 into a trust account[21][24][27] - The company has until April 25, 2023 (15 months from IPO closing) to complete a business combination, or it must liquidate, raising substantial doubt about its ability to continue as a going concern[36][41] - The company has significant contingent liabilities, including a deferred underwriting fee of $15,125,000 and a potential finder's fee of $1,000,000, both payable only upon the completion of a Business Combination[88][89] - Warrant liabilities are measured at fair value, with Public Warrants classified as Level 1 and Private Placement Warrants as Level 3, and as of September 30, 2022, the fair value of warrant liabilities was $1,916,250[108] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company with no operations, reporting net income of $1.87 million for Q3 2022 and $11.96 million for the nine months, primarily from non-operating items, with a significant going concern uncertainty due to the April 25, 2023 business combination deadline - The company is a blank check company with activities limited to organizational tasks, the IPO, and searching for a business combination target[116][118] Results of Operations Summary | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | Q3 2022 | $1,867,031 | Interest income, unrealized gains, change in warrant liability value | | Nine Months 2022 | $11,956,900 | Interest income, unrealized gains, change in warrant liability value | | Q3 2021 | $0 | No operations | | Inception to Sep 30, 2021 | $(15,786) | Formation and operating costs | - Management has determined that the mandatory liquidation date of April 25, 2023, if a Business Combination is not completed, raises substantial doubt about the Company's ability to continue as a going concern[132] Quantitative and Qualitative Disclosures Regarding Market Risk The company is a smaller reporting company and is not required to provide the information requested under this item - As a smaller reporting company, disclosure under this item is not required[144] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2022, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective[146] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[147] Part II. Other Information Legal Proceedings The company reports no legal proceedings to report - The company reports no legal proceedings[149] Risk Factors A new risk factor concerns the Inflation Reduction Act of 2022's 1% U.S. federal excise tax on stock repurchases, which, despite the company's non-U.S. entity status, presents uncertainty regarding its potential impact on future share redemptions - A new 1% U.S. federal excise tax on stock repurchases (including redemptions) for certain corporations will be effective after December 31, 2022, under the Inflation Reduction Act of 2022[150] - As a non-U.S. corporation, the company does not believe it will be subject to the tax, but notes that the interpretation and application of the new law are uncertain and could affect future redemptions[151] 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 reported[153] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[153] Mine Safety Disclosures The company has no mine safety disclosures to report - None reported[153] Other Information The company has no other information to report - None reported[153] Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including officer certifications and XBRL data files - The report lists various exhibits filed, including CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL instance documents[154]