UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including zip code) |
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(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer | ☐ Accelerated filer |
☒ | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of November 18, 2021, there were
HPX CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
HPX CORP.
CONDENSED BALANCE SHEETS
| September 30, |
| December 31, | |||
2021 | 2020 | |||||
(Unaudited) | (Restated, See Note 2) | |||||
ASSETS | ||||||
Current assets | ||||||
Cash | $ | | $ | | ||
Prepaid expenses | | | ||||
Total Current Assets | | | ||||
Marketable securities held in Trust Account | | | ||||
TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS' DEFICIT |
| |||||
Current liabilities |
| |||||
Accounts payable and accrued expenses | $ | | $ | | ||
Accrued offering costs | | | ||||
Total Current Liabilities | |
| | |||
Warrant liabilities | | |||||
Deferred underwriting fee payable | | |||||
Total LIABILITIES | | |||||
| ||||||
Commitments | ||||||
| ||||||
Class A ordinary shares subject to possible redemption, | | | ||||
Shareholders' Deficit |
| |||||
Preference shares, $ |
| |||||
Class A ordinary shares, $ | — |
| — | |||
Class B ordinary shares, $ | |
| | |||
Accumulated deficit | ( |
| ( | |||
Total Shareholders’ Deficit | ( | ( | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ |
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
HPX CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period | ||||||||||||
from March 20, | ||||||||||||
2020 | ||||||||||||
Nine Months | (Inception) | |||||||||||
Three Months Ended | Ended | through | ||||||||||
September 30, | September 30, | September 30, | ||||||||||
| 2021 |
| 2020 |
| 2021 |
| 2020 | |||||
Operating and formation costs | $ | $ | $ | | $ | | ||||||
Loss from operations | ( | ( | ( | ( | ||||||||
| ||||||||||||
Other income (expense): | ||||||||||||
Change in fair value of warrant liabilities | | ( | | ( | ||||||||
Interest income from operating bank account | | — | | — | ||||||||
Interest earned on marketable securities held in Trust Account | | | | | ||||||||
Other income (expense), net | | ( | | ( | ||||||||
| ||||||||||||
Net income (loss) | $ | | $ | ( | $ | | $ | ( | ||||
Basic and diluted weighted average shares outstanding, Class A ordinary shares(1) | | |||||||||||
Basic and diluted net income (loss) per ordinary share, Class A ordinary shares(1) | | ( | | ( | ||||||||
Basic and diluted weighted average shares outstanding, Class B ordinary shares(1) |
| |
| | ||||||||
Basic and diluted net (loss) income per ordinary share, Class B ordinary shares(1) | | ( | | ( |
(1) |
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
HPX CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
Class A | Class B | Additional | Total | ||||||||||||||||
Ordinary Shares | Ordinary Shares | Paid-in | Accumulated | Shareholders' | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Deficit | ||||||
Balance – January 1, 2021 (Restated, See Note 2) |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | |||||
Remeasurement of Class A ordinary shares to redemption amount (Restated, See Note 2) |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Net income |
| — |
| — |
| — |
| — |
| — |
| |
| | |||||
Balance – March 31, 2021 (Restated, See Note 2) |
| — | $ | — |
| | $ | | $ | — | $ | ( | $ | ( | |||||
Remeasurement of Class A ordinary shares to redemption amount (Restated, See Note 2) | — | — | — | — | — | ( | ( | ||||||||||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance – June 30, 2021 (Restated, See Note 2) |
| — | $ | — |
| | $ | | $ | — | $ | ( | $ | ( | |||||
Remeasurement of Class A ordinary shares to redemption amount (Restated, See Note 2) | — | — | — | — | — | ( | ( | ||||||||||||
Net income |
| — |
| — |
| — |
| — |
| — |
| |
| | |||||
Balance – September 30, 2021 |
| — | $ | — |
| | $ | | $ | — | $ | ( | $ | ( |
THREE MONTHS ENDED SEPTEMBER 30, 2020 AND THE PERIOD FROM MARCH 20, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020
Class A | Class B | Additional | Total | ||||||||||||||||
Ordinary Shares | Ordinary Shares | Paid-in | Accumulated | Shareholders’ | |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||||
Balance – March 20, 2020 (Inception) | | $ | | | $ | | $ | | $ | | $ | | |||||||
Issuance of Class B ordinary share |
| — |
| — |
| |
| — |
| — |
| — |
| — | |||||
Net loss |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance – March 31, 2020 |
| — | $ | — |
| | $ | — | $ | — | $ | ( | $ | ( | |||||
Issuance of Class B ordinary shares | — | — | | | | — | | ||||||||||||
Cancellation of Class B ordinary shares | — | — | ( | — | — | — | — | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - June 30, 2020 | — | $ | — | | $ | | $ | | $ | ( | $ | | |||||||
Remeasurement of Class A ordinary shares to redemption amount (Restated, See Note 2) | — | — | — | — | ( | ( | ( | ||||||||||||
Proceeds Received in Excess of Fair Value of Private Warrants | | | |||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance – September 30, 2020 (Restated, See Note 2) | — | $ | — | | $ | | $ | — | $ | ( | $ | ( |
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
HPX CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the | ||||||
Period from | ||||||
March 20, 2020 | ||||||
Nine Months | (Inception) | |||||
Ended | Through | |||||
September 30, | September 30, | |||||
| 2021 |
| 2020 | |||
Cash Flows from Operating Activities: | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
| |||||
Change in fair value of warrant liabilities | ( | | ||||
Interest earned on marketable securities held in Trust Account | ( | ( | ||||
Transaction costs incurred in connection with Initial Public Offering | — | | ||||
Changes in operating assets and liabilities: | ||||||
Prepaid expenses | | ( | ||||
Accounts payable and accrued expenses | | | ||||
Net cash used in operating activities | $ | ( | $ | ( | ||
Cash Flows from Investing Activities: | ||||||
Investment of cash into Trust Account | $ | — | $ | ( | ||
Net cash used in operating activities | $ | — | $ | ( | ||
Cash Flows from Financing Activities: | ||||||
Proceeds from issuance of Class B ordinary shares | $ | — | $ | | ||
Proceeds from sale of Units, net of underwriting discounts paid | — |
| | |||
Proceeds from sale of Private Placement Warrants | — |
| | |||
Advances from related party | — | | ||||
Repayment of advances from related party | — | ( | ||||
Proceeds from promissory note – related party | — | | ||||
Repayment of promissory note - related party | — | ( | ||||
Payment of offering costs | — |
| ( | |||
Net cash provided by financing activities | $ | — | $ | | ||
| ||||||
Net Change in Cash | ( |
| | |||
Cash – Beginning | |
| ||||
Cash – Ending | $ | | $ | | ||
Non-Cash Investing and Financing Activities: | ||||||
Offering costs included in accrued offering costs | $ | — | $ | | ||
Deferred underwriting fee payable | — | | ||||
Remeasurement of Class A ordinary shares subject to possible redemption (Restated, See Note 2) | $ | | $ | | ||
Initial value of warrant liabilities | — | |
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
HPX CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
HPX Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on March 20, 2020. The Company was formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses (a “Business Combination”).
Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus on businesses in Brazil. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not commenced any operations. All activity through September 30, 2021 relates to the Company’s formation, its initial public offering (“Initial Public Offering”), which is described below, and the search for a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the Trust Account and non-operating income or expenses from the change in fair value of warrant liabilities.
The registration statements for the Company’s Initial Public Offering became effective on July 15, 2020. On July 20, 2020, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
Following the closing of the Initial Public Offering on July 20, 2020, an amount of $
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The New York Stock Exchange rules require that the Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least
5
The Company will provide the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $
The Company will proceed with a Business Combination only if the Company has net tangible assets, after payment of the deferred underwriting commission, of at least $
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination (and not seek to sell its shares to the Company in any tender offer the Company undertakes in connection with its initial Business Combination) and (b) not to propose an amendment to the Amended and Restated Memorandum of Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem
6
The Company will have until July 20, 2022 to consummate a Business Combination (the “Combination Period”). However, if the Company has not completed a Business Combination within the Combination Period, as may be extended from time to time by the Company as a result of a shareholder vote to amend its Amended and Restated Memorandum and Articles of Association (the “Extension Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period or any Extension Period. However, if the Sponsor or any of its respective affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period or any Extension Period. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period or any Extension Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($
In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Liquidity and Management’s Plan
As of September 30, 2021, the Company had $
7
On August 11, 2021, the Sponsor committed to provide the Company an aggregate of $
Management intends to draw down on these loans as necessary to create cash inflows for working capital purposes. As a result, management has determined that sufficient capital exists to sustain operations through the later of 12 months from the date of filing and the Business Combination deadline date of July, 20, 2022.
8
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s financial statements as of September 30, 2021, management determined it should restate certain of its previously reported financial statements. The Company determined, at the closing of the Company’s Initial Public Offering, it had improperly valued its Class A ordinary shares subject to possible redemption. The Company previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $
In connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also restated its income (loss) per ordinary share calculation to allocate net income (loss) on a pro rata basis to Class A and Class B ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income (loss) of the Company.
The restatement does not result in any changes in the Company’s total assets, liabilities or operating results.
9
The impact of the restatement on the Company’s financial statements for previous periods is reflected in the following table.
| As Previously |
|
|
|
| ||||
Balance Sheet as of July 20, 2020 | Reported | Adjustment | As Restated | ||||||
Class A Ordinary Shares subject to possible redemption | $ | | $ | | $ | | |||
Class A Ordinary Shares | $ | | $ | ( | $ | — | |||
Additional paid-in capital | $ | | $ | ( | $ | — | |||
Accumulated deficit | $ | ( | $ | ( | $ | ( | |||
Total Shareholders’ Equity (Deficit) | $ | | $ | ( | $ | ( | |||
Number of Ordinary shares subject to possible redemption | | | | ||||||
Condensed Balance Sheet as of September 30, 2020 (Unaudited) | |||||||||
Class A Ordinary Shares subject to possible redemption | $ | | $ | | $ | | |||
Class A Ordinary Shares | $ | | $ | ( | $ | — | |||
Additional paid-in capital | $ | | $ | ( | $ | — | |||
Accumulated deficit | $ | ( | $ | ( | $ | ( | |||
Total Shareholders’ Equity (Deficit) | $ | | $ | ( | $ | ( | |||
Number of Ordinary shares Subject to possible redemption | | | | ||||||
Balance Sheet as of December 31, 2020 | |||||||||
Class A Ordinary Shares subject to possible redemption | $ | | $ | | $ | | |||
Class A Ordinary Shares | $ | | $ | ( | $ | — | |||
Additional paid-in capital | $ | | $ | ( | $ | — | |||
Accumulated deficit | $ | ( | $ | ( | $ | ( | |||
Total Shareholders’ Equity (Deficit) | $ | | $ | ( | $ | ( | |||
Number of Ordinary shares Subject to possible redemption | | | | ||||||
Condensed Balance Sheet as of March 31, 2021 (Unaudited) | |||||||||
Class A Ordinary Shares subject to possible redemption | $ | | $ | | $ | | |||
Class A Ordinary Shares | $ | | $ | ( | $ | — | |||
Additional paid-in capital | $ | | $ | ( | $ | — | |||
Accumulated deficit | $ | ( | $ | ( | $ | ( | |||
Total Shareholders’ Equity (Deficit) | $ | | $ | ( | $ | ( | |||
Number of Ordinary shares Subject to possible redemption | | | | ||||||
Condensed Balance Sheet as of June 30, 2021 (Unaudited) | |||||||||
Class A Ordinary Shares subject to possible redemption | $ | | $ | | $ | | |||
Class A Ordinary Shares | $ | | $ | ( | $ | — | |||
Additional paid-in capital | $ | | $ | ( | $ | — | |||
Accumulated deficit | $ | ( | $ | ( | $ | ( | |||
Total Shareholders’ Equity (Deficit) | $ | | $ | ( | $ | ( | |||
Number of Ordinary shares Subject to possible redemption | | | | ||||||
Condensed Statement of Operations for the Three Months ended September 30, 2020 (Unaudited) |
|
|
|
|
|
| |||
Weighted average shares outstanding, Class A ordinary shares | $ | | ( | | |||||
Basic and diluted net loss per ordinary share, Class A ordinary shares |
| — |
| ( |
| ( | |||
Weighted average shares outstanding, Class B ordinary shares | $ | | ( | | |||||
Basic and diluted net loss per ordinary share, Class B ordinary shares | ( | | ( | ||||||
Condensed Statement of Operations for the Period March 20, 2020 (Inception) to September 30, 2020 (Unaudited) |
| ||||||||
Weighted average shares outstanding, Class A ordinary shares | | $ | ( | | |||||
Basic and diluted net loss per ordinary share, Class A ordinary shares | $ | — | $ | ( | $ | ( | |||
Weighted average shares outstanding, Class B ordinary shares | | $ | ( | | |||||
Basic and diluted net loss per ordinary share, Class B ordinary shares | $ | ( | $ | | $ | ( |
10
| As Previously |
|
|
|
| ||||
Reported | Adjustment | As Restated | |||||||
Statement of Operations for the Period March 20, 2020 (Inception) to December 31, 2020 | |||||||||
Weighted average shares outstanding, Class A ordinary shares | | ( | | ||||||
Basic and diluted net loss per ordinary share, Class A ordinary shares | $ | — | $ | ( | $ | ( | |||
Weighted average shares outstanding, Class B ordinary shares | | ( | | ||||||
Basic and diluted net loss per ordinary share, Class B ordinary shares | $ | ( | $ | | $ | ( | |||
Condensed Statement of Operations for the Three Months Ended March 31, 2021 (Unaudited) | |||||||||
Weighted average shares outstanding, Class A ordinary shares | | | |||||||
Basic and diluted net loss per ordinary share, Class A ordinary shares | $ | — | $ | | $ | | |||
Weighted average shares outstanding, Class B ordinary shares | |
| ( |
| | ||||
Basic and diluted net loss per ordinary share, Class B ordinary shares | $ | | $ | ( | $ | | |||
Condensed Statement of Operations for the Three Months Ended June 30, 2021 (Unaudited) | |||||||||
Weighted average shares outstanding, Class A ordinary shares | | | | ||||||
Basic and diluted net loss per ordinary share, Class A ordinary shares | $ | — | $ | | $ | | |||
Weighted average shares outstanding, Class B ordinary shares |
| |
| ( |
| | |||
Basic and diluted net loss per ordinary share, Class B ordinary shares | $ | ( | $ | | $ | | |||
Condensed Statement of Operations for the Six Months Ended June 30, 2021 (Unaudited) | |||||||||
Weighted average shares outstanding, Class A ordinary shares | | | | ||||||
Basic and diluted net loss per ordinary share, Class A ordinary shares | $ | — | $ | ( | $ | ( | |||
Weighted average shares outstanding, Class B ordinary shares |
| |
| ( |
| | |||
Basic and diluted net loss per ordinary share, Class B ordinary shares | $ | | $ | ( | $ | ( | |||
Condensed Statement of Changes in Shareholders’ Equity (Deficit) for the Three months ended September 30, 2020 (Unaudited) | |||||||||
Sale of | $ | | ( | — | |||||
Class A ordinary shares subject to possible redemption | $ | |
| ( | — | ||||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | ( | ( | |||||
Total shareholders’ equity (deficit) | $ | | $ | ( | $ | ( | |||
Statement of Changes in Shareholders’ Equity (Deficit) for the Period March 20, 2020 (Inception) to December 31, 2020 | |||||||||
Class A Ordinary shares subject to possible redemption | $ | | ( | — | |||||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | ( | ( | |||||
Total shareholders’ equity (deficit) | $ | | ( | ( | |||||
Condensed Statement of Changes in Shareholders’ Equity (Deficit) for the Three Months ended March 31, 2021 (Unaudited) | |||||||||
Class A Ordinary shares subject to possible redemption | $ | | ( | — | |||||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | ( | ( | |||||
Total shareholders’ equity (deficit) | $ | | ( | ( | |||||
Condensed Statement of Changes in Shareholders’ Equity (Deficit) for the Three Months ended June 30, 2021 (Unaudited) | |||||||||
Class A Ordinary shares subject to possible redemption | $ | | ( | — | |||||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | ( | ( | |||||
Total shareholders’ equity (deficit) | $ | | ( | ( | |||||
Condensed Statement of Cash Flows for the Period March 20, 2020 (inception) to September 30, 2020 (Unaudited) |
| ||||||||
Change in value of Class A Ordinary Shares ordinary shares subject to possible redemption | $ | ( | $ | | $ | — | |||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | | | |||||
Statement of Cash Flows for the Period March 20, 2020 (Inception) to December 31, 2020 | |||||||||
Change in value of Class A Ordinary Shares ordinary shares subject to possible redemption | $ | ( | $ | | $ | — | |||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | | $ | | ||||
Condensed Statement of Cash Flows for the Three Months Ended March 31, 2021 (Unaudited) | |||||||||
Change in value of Class A Ordinary Shares ordinary shares subject to possible redemption | $ | | $ | ( | $ | — | |||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | $ | | $ | | |||
Condensed Statement of Cash Flows for the Six Months Ended June 30, 2021 (Unaudited) | |||||||||
Change in value of Class A Ordinary Shares ordinary shares subject to possible redemption | $ | | $ | ( | $ | — | |||
Remeasurement of Class A ordinary share subject to redemption amount | $ | — | $ | | $ | |
11
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A as filed with the SEC on July 1, 2021. The interim results for the nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the period ending December 31, 2021 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates.
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Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of six months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2021 and December 31, 2020.
Marketable Securities Held in Trust Account
At September 30, 2021, and December 31, 2020, substantially all of the assets held in the Trust Account were held in money market funds which primarily invest in U.S. Treasury securities.
Offering Costs
The Company complies with the requirement of Accounting Standards Codification (ASC) 340-10-S99-1. Offering costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A ordinary shares issued were initially charged to temporary equity and accreted to ordinary shares subject to redemption upon the completion of the Initial Public Offering.
Warrant Liabilities
The Company accounts for the Public Warrants (as defined in Note 4) and Private Placement Warrants (together, with the Public Warrants, the “Warrants”) in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjusts the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The Warrants for periods where no observable traded price was available are valued using a binomial lattice simulation. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to initial redemption amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional paid-in capital and accumulated deficit.
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At September 30, 2021 and December 31, 2020, the Class A ordinary shares reflected in the condensed balance sheets are reconciled in the following table:
Gross proceeds |
| $ | |
Less: |
|
| |
Proceeds allocated to Public Warrants |
| ( | |
Class A ordinary shares issuance costs |
| ( | |
$ | ( | ||
Plus: |
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| |
Initial remeasurement of carrying value to redemption value |
| | |
Subsequent remeasurement of carrying value to redemption value | | ||
Total remeasurement of carrying value to redemption value | $ | | |
Class A ordinary shares subject to possible redemption, December 31, 2020 |
| | |
Plus: |
|
| |
Remeasurement of carrying value to redemption value |
| | |
Class A ordinary shares subject to possible redemption, September 30, 2021 | $ | |
Income Taxes
The Company accounts for income taxes under ASC Topic 740 “Income Taxes”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. Remeasurement associated with the redeemable Class A ordinary shares is excluded from income (loss) per ordinary share as the redemption value approximates fair value.
The calculation of diluted income (loss) per ordinary share does not consider the effect of the Warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the Warrants is contingent upon the occurrence of future events. The Warrants are exercisable to purchase
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The following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
| Three Months Ended |
| Nine Months Ended | |||||||||
September 30, 2021 | September 30, 2021 | |||||||||||
Class A |
| Class B |
| Class A | Class B | |||||||
Basic and diluted net income per ordinary share |
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Allocation of net income | $ | | $ | | $ | | $ | | ||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net income per ordinary share | | | | |
For the Period from March 20, | ||||||||||||
Three Months Ended | 2020 (Inception) Through | |||||||||||
September 30, 2020 | September 30, 2020 | |||||||||||
As Restated-See Note 2 | As Restated-See Note 2 | |||||||||||
| Class A |
| Class B |
| Class A |
| Class B | |||||
Basic and diluted net loss per ordinary share | ||||||||||||
Numerator: |
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Allocation of net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net loss per ordinary share | ( | ( | ( | ( |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature, except for the Warrants (see Note 10).
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed financial statements.
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NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering on July 20, 2020, the Company sold
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
On April 8, 2020, the Sponsor purchased
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier of: (A)
Administrative Services Agreement
The Company entered into an agreement whereby, commencing on July 16, 2020, the Company will pay the Sponsor up to $
Advances – Related Party
The Sponsor advanced the Company an aggregate of $
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Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $
Commitment Letter
On August 11, 2021, the Sponsor committed to provide the Company an aggregate of $
NOTE 7. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement entered into on July 15, 2020, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued on conversion of Working Capital Loans (and any Class A Ordinary Shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Company’s Class A Ordinary Shares). The holders of these securities will be entitled to make up to
Underwriting Agreement
The underwriter is entitled to a deferred fee of $
Consulting Arrangements
The Company has arrangements with a consultant to provide services to the Company relating to market and industry analyses, assistance with due diligence, and financial modeling and valuation of a potential targets. The Company agreed to pay the service provider a fee of
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NOTE 8. SHAREHOLDERS’ DEFICIT
Preference Shares—The Company is authorized to issue
Class A Ordinary Shares— The Company is authorized to issue
Class B Ordinary Shares— The Company is authorized to issue
Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law.
The Class B Shares will automatically convert into Class A ordinary shares on the first business day following the completion of the Business Combination, or earlier at the option of the holder, on a
NOTE 9. WARRANTS
As of September 30, 2021 and December 31, 2020, there were
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
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The Company has agreed that as soon as practicable, but in no event later than
Redemption of warrants when the price per Class A ordinary share equals or exceeds $
● | in whole and not in part; |
● | at a price of $ |
● | upon not less than |
● | if, and only if, the reported last sale price of the Class A ordinary shares for any |
Redemption of warrants when the price per Class A ordinary share equals or exceeds $
● | in whole and not in part; |
● | at $ |
● | if, and only if, the Reference Value equals or exceeds $ |
● | if the Reference Value is less than $ |
If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period or any Extension Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
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In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
As of September 30,2021 and December 31, 2020, there were
NOTE 10. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
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The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
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| September 30, |
| December 31, | ||||
Description | Level | 2021 | 2020 | |||||
Assets: |
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Marketable securities held in Trust Account | 1 | $ | | $ | | |||
Liabilities: | ||||||||
Warrant Liability – Public Warrants | 1 | $ | | $ | | |||
Warrant Liability – Private Placement Warrants |
| 3 |
| $ | | $ | |
The Warrants were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed statements of operations.
The Private Placement Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own Public Warrant pricing. The measurement of the Public Warrants after the detachment of the Public Warrants from the Units on September 8, 2020, is classified as Level 1 due to the use of an observable market quote in an active market. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date.
The following table presents the quantitative information regarding Level 3 fair value measurements:
| September 30, |
| December 31, |
| |||
2021 | 2020 |
| |||||
Exercise price | $ | | $ | | |||
Stock price | $ | | $ | | |||
Volatility |
| | % |
| | % | |
Term |
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Risk-free rate |
| | % |
| | % | |
Dividend yield |
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| | % |
The following table presents the changes in the fair value of Level 3 warrant liabilities:
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| Private Placement | |
Fair value as of December 31, 2020 | $ | | |
Change in fair value |
| ( | |
Fair value as of September 30, 2021 |
| |
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to HPX Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to HPX Capital Partners LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K/A filed with the SEC on July 1, 2021. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect to the restatement of our financial statements as of September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021. Management identified errors made in its historical financial statements where, at the closing of our Initial Public Offering, we improperly valued our Class A ordinary shares subject to possible redemption. We previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A ordinary share while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Class A ordinary shares issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside of the Company’s control. Therefore, management concluded that the redemption value should include all Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification error related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares.
Overview
We are a blank check company incorporated in the Cayman Islands on March 20, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
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Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities through September 30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and the search for a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.
For the three months ended September 30, 2021, we had a net income of $4,455,741, which consisted of a change in fair value of warrant liabilities of $4,603,900, interest income from the operating bank account of $21 and interest income on marketable securities held in the Trust Account of $6,379, partially offset by operating costs of $154,559.
For the nine months ended September 30, 2021, we had a net income of $7,577,070, which consisted of a change in fair value of warrant liabilities of $8,278,200, interest income from the operating bank account of $72, and interest income on marketable securities held in the Trust Account of $18,927, partially offset by operating costs of $720,129.
For the three months ended September 30, 2020, we had a net loss of $5,127,691, which consisted of a change in fair value of warrant liabilities of $4,533,300 and operating costs of $600,224, partially offset by interest income from the operating bank account of $5,833.
For the period from March 20, 2020 (inception) through September 30, 2020, we had a net loss of $5,132,884, which consisted of a change in fair value of warrant liabilities of $4,533,300 and operating costs of $605,417, partially offset by interest income from the operating bank account of $5,833.
Liquidity and Capital Resources
On July 20, 2020, we consummated the Initial Public Offering of 25,300,000 Units, inclusive of the underwriter’s election to fully exercise its option to purchase an additional 3,300,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $253,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 7,060,000 Private Placement Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $7,060,000.
Following the Initial Public Offering, the exercise of the over-allotment option in full and the sale of the Private Placement Warrants, a total of $253,000,000 was placed in the Trust Account. We incurred $14,528,328 in transaction costs, including $5,060,000 of underwriting fees, $8,855,000 of deferred underwriting fees and $613,328 of other costs.
For the nine months ended September 30, 2021, net cash used in operating activities was $398,507. Net income of $7,577,070 was affected by interest expense on marketable securities of $18,927 and a change in fair value of warrant liabilities of $8,278,200. Changes in operating assets and liabilities provided $321,550 of cash from operating activities.
For the period from March 20, 2020 (inception) through September 30, 2020, net cash used in operating activities was $355,367. Net loss of $5,132,884 was affected by a change in fair value of warrant liabilities of $4,533,300 and transaction costs incurred in connection with the Initial Public Offering of $497,297, offset by interest expense on marketable securities of $5,833. Changes in operating assets and liabilities used $247,247 of cash from operating activities.
At September 30, 2021, we had marketable securities held in the Trust Account of $253,031,138. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
At September 30, 2021, we had cash of $ 733,543 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a Business Combination.
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In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants. As at September 30, 2021, there were no amount drawn.
On August 11, 2021, the Sponsor committed to provide the Company an aggregate of $150,000 in loans for working capital purposes. These loans will be non-interest bearing, unsecured and will be repaid upon the consummation of a business combination. If the Company does not consummate a business combination, all amounts loaned to the Company in connection with these loans will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account. At September 30, 2021 and through filing date of this Quarterly Report on Form 10-Q, no amount was drawn under this agreement.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2021. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space, administrative and support services, provided to the Company. We began incurring these fees on July 16, 2020 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $8,855,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement. Of such deferred fee amount, up to $0.175 per Unit, or up to $4,427,500, may be paid to third parties not participating in the Initial Public Offering (but who are members of FINRA or regulated broker-dealers) that assist us in consummating a Business Combination. The election to make such payments to third parties will be solely at the discretion of our management team, and such third parties will be selected by our management team in its sole and absolute discretion.
We have arrangements with a consultant to provide services to us relating to market and industry analyses, assistance with due diligence, and financial modeling and valuation of a potential targets. We agreed to pay the service provider a fee of 6,600 BRL per month (approximately $1,200 per month).
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
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Warrant Liabilities
We account for the Warrants in accordance with the guidance contained in ASC 815-40 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the Warrants as liabilities at their fair value and adjust the Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheets date until exercised, and any change in fair value is recognized in our statements of operations. The Warrants for periods where no observable traded price was available are valued using a binomial lattice simulation. For periods subsequent to the detachment of the Public Warrants from the Units on September 8, 2020, the Public Warrant quoted market price was used as the fair value as of each relevant date.
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, all Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the condensed balance sheets.
Net Income (Loss) Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. Remeasurement associated with the redeemable Class A ordinary shares is excluded from income (loss) per ordinary share as the redemption value approximates fair value.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2021, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, solely due to the material weakness in our internal control over financial reporting related to the Company’s accounting for complex financial instruments resulting in imprecise accounting measurements, our controls were not effective. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
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Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2021 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In light of the material weakness identified and the resulting restatement, management has implemented remediation steps to improve our internal control over financial reporting. We plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans also include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K/A for the period ended December 31, 2020 as filed with the SEC on July 1, 2021. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on July 1, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
| Description of Exhibit |
3.1(1) | Amended and Restated Memorandum and Articles of Association of the Registrant | |
31.1* |
| |
32.1** |
| |
101.INS* |
| XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.CAL* |
| XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH* |
| XBRL Taxonomy Extension Schema Document |
101.DEF* |
| XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
| XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* |
| XBRL Taxonomy Extension Presentation Linkbase Document |
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** Furnished.
(1) Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 21, 2020.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HPX CORP. | |
|
|
|
Date: November 18, 2021 |
| /s/ Carlos Piani |
| Name: | Carlos Piani |
| Title: | Chief Executive Officer and Chief Financial Officer |
|
| (Principal Executive Officer and Principal Financial and Accounting Officer) |
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