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 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 June 30, 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.
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.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities through June 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 June 30, 2021, we had a net loss of $1,829,884, which
consisted of operating costs of $385,917 and a change in fair value of warrant
liabilities of $1,450,300, offset by interest income from the operating bank
account of $24 and interest income interest income on marketable securities held
in the Trust Account of $6,309.
For the six months ended June 30, 2021, we had a net income of $3,121,329, which
consisted of a change in fair value of warrant liabilities of $3,674,300,
interest income from the operating bank account of $51, and interest income
interest income on marketable securities held in the Trust Account of $12,548,
offset by operating costs of $565,570.
For the three months ended June 30, 2020, we had a net loss of $193, which
consisted of an operating cost of $193.
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For the period from March 20, 2020 (inception) through June 30, 2020, we had a
net loss of $5,193, which consisted of formation and operating costs of $5,193.
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 six months ended June 30, 2021, net cash used in operating activities
was $212,676. Net income of $3,121,329 was affected by interest expense on
marketable securities of $12,548 and a change in fair value of warrant
liabilities of $3,674,300. Changes in operating assets and liabilities provided
$352,843 of cash from operating activities.
For the period from March 20, 2020 (inception) through June 30, 2020, net cash
used in operating activities was $5,193 with a Net loss of $5,193.
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 June 30, 2021, we had marketable securities held in the Trust Account of
$253,024,759. 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 June 30, 2021, we had cash of $919,374 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.
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.
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.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 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:
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, 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, 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.
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Net Income (Loss) Per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income
(loss) per ordinary share, basic and diluted, for Class A ordinary shares
subject to possible redemption is calculated by dividing the interest income
earned on the Trust Account, net of applicable taxes, if any, by the weighted
average number of shares of Class A ordinary shares subject to possible
redemption outstanding for the period. Net income (loss) per ordinary share,
basic and diluted, for non-redeemable ordinary shares is calculated by dividing
net income (loss) less income attributable to Class A ordinary shares subject to
possible redemption, by the weighted average number of shares of non-redeemable
ordinary shares outstanding for the period presented.
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