RCF Acquisition (RCFA) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements RCF Acquisition Corp., a blank check company, presents its unaudited condensed financial statements as of September 30, 2022, primarily reflecting cash and investments in a trust account and non-operating income from warrant fair value changes and interest Unaudited Condensed Balance Sheets Condensed Balance Sheet Summary (as of Sep 30, 2022 vs Dec 31, 2021) | Account | September 30, 2022 (USD) | December 31, 2021 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $113,000 | $700,293 | | Investment Held in Trust Account | $236,015,754 | $234,602,251 | | Total Assets | $236,588,818 | $236,294,113 | | Liabilities | | | | Warrant liability | $3,712,000 | $13,920,000 | | Deferred underwriting commission | $8,050,000 | $8,050,000 | | Total Liabilities | $12,112,859 | $22,102,074 | | Redeemable Class A ordinary shares | $234,600,000 | $234,600,000 | | Total Shareholders' Deficit | ($10,124,041) | ($20,407,961) | - The significant decrease in warrant liability from $13.92 million to $3.71 million is a primary driver of the change in total liabilities and shareholders' deficit between December 31, 2021, and September 30, 2022[8] Unaudited Condensed Statements of Operations Statement of Operations Summary | Metric | Three Months Ended Sep 30, 2022 (USD) | Nine Months Ended Sep 30, 2022 (USD) | | :--- | :--- | :--- | | General and administrative expenses | ($402,372) | ($1,337,583) | | Loss from operations | ($402,372) | ($1,337,583) | | Change in fair value of warrant liability | $3,016,000 | $10,208,000 | | Interest earned in Trust Account | $1,060,800 | $1,413,503 | | Net Income (Loss) | $3,674,428 | $10,283,920 | - The company's net income is primarily driven by non-operating income, specifically the positive change in the fair value of its warrant liability and interest earned on funds in the Trust Account, which more than offset the general and administrative expenses[10] Unaudited Condensed Statement of Cash Flows Cash Flow Summary (Nine Months Ended Sep 30, 2022) | Cash Flow Activity | Amount (USD) | | :--- | :--- | | Net cash flows used in operating activities | ($587,293) | | Net change in cash | ($587,293) | | Cash, beginning of period | $700,293 | | Cash, end of period | $113,000 | - For the nine months ended September 30, 2022, net income of $10.3 million was adjusted for non-cash items, primarily a $10.2 million change in the fair value of warrant liability and $1.4 million in interest earned in the Trust Account, resulting in a net cash outflow from operations[17] Notes to Unaudited Condensed Financial Statements These notes detail the company's SPAC formation, Public Offering, key accounting policies for warrants and Class A shares, and a going concern uncertainty due to liquidity and the May 2023 business combination deadline - The Company is a SPAC formed to effect a business combination and has 18 months from the closing of its Public Offering (November 15, 2021) to complete one[19][29] - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern due to its liquidity condition and the mandatory liquidation date of May 15, 2023, if a business combination is not completed[38] - The Company's public and private warrants are classified as derivative liabilities on the balance sheet and are remeasured at fair value each reporting period, with changes recognized in the statement of operations[49][76] - The Sponsor can provide up to $5 million in financing through a convertible promissory note for ongoing expenses, with no amount outstanding as of September 30, 2022[96] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, non-operating income drivers, and acknowledges a going concern risk due to insufficient liquidity outside the trust account, offset by a $5 million convertible note from its Sponsor - The company is a blank check company intending to target assets or businesses of scale across the critical minerals value chain that are poised to benefit from the global energy transition[104] - Management has identified a going concern issue, stating that cash held outside the Trust Account ($113,000 as of Sep 30, 2022) is not sufficient to operate until the May 15, 2023 deadline for completing a Business Combination[118][119] Results of Operations Summary | Period | Net Income (Loss) (USD) | Key Drivers | | :--- | :--- | :--- | | Nine Months Ended Sep 30, 2022 | $10,283,920 | Change in fair value of warrant liability ($10.2 million), Interest earned ($1.4 million) | | Three Months Ended Sep 30, 2022 | $3,674,428 | Change in fair value of warrant liability ($3.0 million), Interest earned ($1.1 million) | | Period from Inception to Sep 30, 2021 | ($33,641) | General and administrative expenses | Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is marked 'Not applicable', indicating the company has no material market risk exposures requiring detailed disclosure - The company states that this item is not applicable, implying it does not have significant market risk exposures requiring detailed disclosure[143] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[144] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[146] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings, nor are any threatened against it or its officers and directors - As of the filing date, the company is not involved in any material legal proceedings[148] Item 1A. Risk Factors No material changes to Form 10-K risk factors, but the company emphasizes potential adverse effects from COVID-19, geopolitical instability, and volatile markets on its business combination search - The company's search for a business combination may be materially and adversely affected by several external factors[151] - Key risks highlighted include: - The ongoing impact of the COVID-19 pandemic on economies, financial markets, and the ability to conduct business[151] - Geopolitical instability from the invasion of Ukraine by Russia, leading to market disruptions, volatility, and supply chain interruptions[152] - The general status of debt and equity markets, which could make it difficult to raise capital for a transaction[154] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Public Offering of 23 million units for $230 million and a concurrent Private Placement of 11.7 million warrants to the Sponsor for $11.7 million, with $234.6 million net proceeds placed in the Trust Account - Simultaneously with its IPO, the company sold 11.7 million Private Placement Warrants to the Sponsor at $1.00 each, generating gross proceeds of $11.7 million, with this sale exempt from registration under Section 4(a)(2) of the Securities Act[159] - Net proceeds of $234.6 million from the Public Offering and Private Placement were deposited into the Trust Account[161] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL data files - The exhibits filed with this report include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002[167]