UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-40697
HEALTHWELL ACQUISITION
CORP. I
(Exact name of registrant as specified in its
charter)
Delaware | | 86-1911840 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
1001 Green Bay Rd, #227
Winnetka, IL
(Address of principal executive offices)
60093
(Zip code)
(847) 230-9162
(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 |
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant | | HWELU | | The Nasdaq Stock Market LLC |
Class A common stock, par value $0.0001 per share | | HWEL | | The Nasdaq Stock Market LLC |
Redeemable warrants, each warrant exercisable for one share of Class A common stock for $11.50 per share | | HWELW | | The Nasdaq Stock Market LLC |
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. Yes ☒ No
☐
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). Yes
☒ No ☐
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 | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☒ |
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 ☒
No ☐
As of August 18, 2023, there were 10,307,380 shares
of Class A common stock, par value $0.0001 per share, and 1 share of Class B common stock, par value $0.0001 per share, of the
registrant issued and outstanding.
HEALTHWELL ACQUISITION CORP. I
INDEX TO FINANCIAL STATEMENTS
HEALTHWELL ACQUISITION CORP. I
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30,
2023 |
|
|
December 31,
2022 |
|
|
|
(Unaudited) |
|
|
|
|
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash |
|
$ |
46,925 |
|
|
$ |
137,752 |
|
Prepaid expenses |
|
|
108,403 |
|
|
|
330,178 |
|
Total current assets |
|
|
155,328 |
|
|
|
467,930 |
|
Investments held in Trust Account |
|
|
258,894,006 |
|
|
|
253,668,826 |
|
Total Assets |
|
$ |
259,049,334 |
|
|
$ |
254,136,756 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
354,910 |
|
|
$ |
5,100 |
|
Accrued expenses |
|
|
983,993 |
|
|
|
475,928 |
|
Promissory note - related party |
|
|
276,276 |
|
|
|
— |
|
Income tax payable |
|
|
1,027,975 |
|
|
|
393,497 |
|
Franchise tax payable |
|
|
20,400 |
|
|
|
53,733 |
|
Total current liabilities |
|
|
2,663,554 |
|
|
|
928,258 |
|
Warrant liabilities |
|
|
4,646,000 |
|
|
|
1,616,000 |
|
Derivative liability - forward purchase agreement |
|
|
1,296,000 |
|
|
|
484,000 |
|
Deferred underwriting fee payable |
|
|
8,750,000 |
|
|
|
8,750,000 |
|
Deferred tax liability |
|
|
446,466 |
|
|
|
365,381 |
|
Total Liabilities |
|
|
17,802,020 |
|
|
|
12,143,639 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 6) |
|
|
|
|
|
|
|
|
Class A common stock, subject to possible redemption, $0.0001 par value; 25,000,000 shares at redemption value |
|
|
257,299,165 |
|
|
|
252,755,071 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding |
|
|
— |
|
|
|
— |
|
Class A common stock, $0.0001 par value; 380,000,000 shares authorized; no shares issued and outstanding (excluding 25,000,000 shares subject to possible redemption) |
|
|
— |
|
|
|
— |
|
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 6,250,000 shares issued and outstanding |
|
|
625 |
|
|
|
625 |
|
Additional paid-in capital |
|
|
— |
|
|
|
— |
|
Accumulated deficit |
|
|
(16,052,476 |
) |
|
|
(10,762,579 |
) |
Total stockholders’ deficit |
|
|
(16,051,851 |
) |
|
|
(10,761,954 |
) |
Total Liabilities and Stockholders’ Deficit |
|
$ |
259,049,334 |
|
|
$ |
254,136,756 |
|
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
HEALTHWELL ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
Three Months Ended June 30, 2023 | | |
Three Months Ended June 30, 2022 | | |
Six Months Ended June 30, 2023 | | |
Six Months Ended June 30, 2022 | |
| |
| | |
| | |
| | |
| |
Operating and formation costs | |
$ | 1,195,181 | | |
$ | 263,429 | | |
$ | 1,570,476 | | |
$ | 581,116 | |
Franchise tax expense | |
| 50,200 | | |
| 50,400 | | |
| 100,450 | | |
| 100,400 | |
Loss from operations | |
| (1,245,381 | ) | |
| (313,829 | ) | |
| (1,670,926 | ) | |
| (681,516 | ) |
Interest expense | |
| — | | |
| — | | |
| (1,095 | ) | |
| — | |
Interest and dividend income on investments held in Trust Account | |
| 674 | | |
| — | | |
| 674 | | |
| — | |
Unrealized gains on investments held in Trust Account | |
| 232,425 | | |
| 189,623 | | |
| 386,117 | | |
| 262,400 | |
Realized gains on investments held in Trust Account | |
| 2,915,143 | | |
| 126,548 | | |
| 5,465,137 | | |
| 151,838 | |
(Loss) gain on change in fair value of derivative liability - forward purchase agreement | |
| (276,000 | ) | |
| 16,000 | | |
| (812,000 | ) | |
| 232,000 | |
(Loss) gain on change in fair value of warrant liabilities | |
| (2,222,000 | ) | |
| 2,626,000 | | |
| (3,030,000 | ) | |
| 8,080,000 | |
Loss on change in fair value of promissory note - related party | |
| (123 | ) | |
| — | | |
| (123 | ) | |
| — | |
(Loss) income before income taxes | |
| (595,262 | ) | |
| 2,644,342 | | |
| 337,784 | | |
| 8,044,722 | |
Income tax expense | |
| (650,442 | ) | |
| — | | |
| (1,207,434 | ) | |
| — | |
Net (loss) income | |
$ | (1,245,704 | ) | |
$ | 2,644,342 | | |
$ | (869,650 | ) | |
$ | 8,044,722 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding, Class A common stock | |
| 25,000,000 | | |
| 25,000,000 | | |
| 25,000,000 | | |
| 25,000,000 | |
Basic and diluted net income per share, Class A common stock | |
$ | (0.04 | ) | |
$ | 0.08 | | |
$ | (0.03 | ) | |
$ | 0.26 | |
Basic and diluted weighted average shares outstanding, Class B common stock | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,250,000 | | |
| 6,250,000 | |
Basic and diluted net income per share, Class B common stock | |
$ | (0.04 | ) | |
$ | 0.08 | | |
$ | (0.03 | ) | |
$ | 0.26 | |
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
HEALTHWELL ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2023
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance at December 31, 2022 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
$ | (10,762,579 | ) | |
$ | (10,761,954 | ) |
Proceeds received in excess of initial fair value of convertible promissory note - related party | |
| — | | |
| — | | |
| — | | |
| — | | |
| 18,668 | | |
| — | | |
| 18,668 | |
Remeasurement of Class A common stock to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| (18,668 | ) | |
| (2,077,026 | ) | |
| (2,095,694 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 376,054 | | |
| 376,054 | |
Balance at March 31, 2023 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
$ | (12,463,551 | ) | |
$ | (12,462,926 | ) |
Proceeds received in excess of initial fair value of convertible promissory note - related party | |
| — | | |
| — | | |
| — | | |
| — | | |
| 105,179 | | |
| — | | |
| 105,179 | |
Remeasurement of Class A common stock to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| (105,179 | ) | |
| (2,343,221 | ) | |
| (2,448,400 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,245,704 | ) | |
| (1,245,704 | ) |
Balance at June 30, 2023 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
| (16,052,476 | ) | |
| (16,051,851 | ) |
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
HEALTHWELL ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2022
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance at December 31, 2021 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
$ | (19,420,600 | ) | |
$ | (19,419,975 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,400,380 | | |
| 5,400,380 | |
Balance at March 31, 2022 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
$ | (14,020,220 | ) | |
$ | (14,019,595 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,644,342 | | |
| 2,644,342 | |
Balance at June 30, 2022 | |
| — | | |
$ | — | | |
| 6,250,000 | | |
$ | 625 | | |
$ | — | | |
$ | (11,375,878 | ) | |
$ | (11,375,253 | ) |
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
HEALTHWELL ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
For the Six Months Ended June 30, 2023 | | |
For the Six Months Ended June 30, 2022 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net (loss) income | |
$ | (869,650 | ) | |
$ | 8,044,722 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Interest and dividend income on investments held in Trust Account | |
| (674 | ) | |
| — | |
Unrealized gain on investments held in Trust Account | |
| (386,117 | ) | |
| (262,400 | ) |
Realized gain on investments held in Trust Account | |
| (5,465,137 | ) | |
| (151,838 | ) |
Change in fair value of derivative liability - forward purchase agreement | |
| 812,000 | | |
| (232,000 | ) |
Change in fair value of warrant liabilities | |
| 3,030,000 | | |
| (8,080,000 | ) |
Change in fair value of promissory note - related party | |
| 123 | | |
| — | |
Deferred tax expense | |
| 81,085 | | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 221,775 | | |
| 199,944 | |
Accounts payable | |
| 349,810 | | |
| (7,105 | ) |
Accrued expenses | |
| 508,065 | | |
| 89,785 | |
Income tax payable | |
| 634,478 | | |
| — | |
Franchise tax payable | |
| (33,333 | ) | |
| (82,066 | ) |
Net cash used in operating activities | |
| (1,117,575 | ) | |
| (480,958 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Proceeds from Trust Account to pay taxes | |
| 626,748 | | |
| 263,316 | |
Net cash provided by in investing activities | |
| 626,748 | | |
| 263,316 | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Proceeds from issuance of promissory note to related party | |
| 400,000 | | |
| — | |
Net cash provided by financing activities | |
| 400,000 | | |
| — | |
| |
| | | |
| | |
Net change in cash | |
| (90,827 | ) | |
| (217,642 | ) |
| |
| | | |
| | |
Cash - beginning of period | |
| 137,752 | | |
| 749,256 | |
Cash - end of period | |
$ | 46,925 | | |
$ | 531,614 | |
| |
| | | |
| | |
Supplemental disclosure of noncash investing and financing activities: | |
| | | |
| | |
Excess of cash received over fair value of convertible promissory note - related party | |
$ | 123,847 | | |
$ | — | |
Remeasurement of Class A common stock subject to possible redemption to redemption value | |
$ | 4,544,094 | | |
$ | — | |
| |
| | | |
| | |
Supplemental cash flow information | |
| | | |
| | |
Cash paid for income and franchise taxes | |
$ | 626,748 | | |
$ | — | |
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS
OPERATIONS AND GOING CONCERN
Healthwell Acquisition Corp. I (the “Company”)
is a blank check company incorporated in Delaware on February 2, 2021. The Company was formed for the purpose of effectuating a merger,
share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses (the
“Business Combination”). 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.
In connection with the business combination agreement
(as described below) the Company created HWEL Holdings Corp., a newly formed wholly-owned subsidiary of the Company (“Pubco”);
HWEL Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of Pubco (“Purchaser Merger Sub”); 1412384 B.C.
Unlimited Liability Company, a British Columbia unlimited liability company and wholly-owned subsidiary of Pubco (“CallCo”);
and 1412388 B.C. Ltd, a British Columbia corporation and wholly-owned subsidiary of CallCo (“ExchangeCo”). All of these subsidiaries
have not commenced operations and have no or nominal assets.
As of June 30, 2023, the Company had not
commenced any operations. All activity for the period from February 2, 2021 (inception) through June 30, 2023 relates to the Company’s
formation, its initial public offering (“Initial Public Offering”) as described below, and since the closing of the Initial
Public Offering, its search for a prospective initial Business Combination. The Company will not generate any operating revenues until
after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest
income or gains on investments on the cash and investments held in the Trust Account (as defined below) from the proceeds derived from
the Initial Public Offering and the sale of the Private Placement Warrants (as defined below).
The registration statement for the Company’s
Initial Public Offering was declared effective on August 2, 2021. On August 5, 2021, the Company consummated the Initial Public Offering
of 25,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public
Shares”), at $10.00 per Unit, generating gross proceeds of $250,000,000 (see Note 3).
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 7,700,000 warrants (the “Private Placement Warrants”) at a price of $1.00
per Private Placement Warrant in a private placement (the “Private Placement”) to Healthwell Acquisition Corp. I Sponsor LLC
(the “Sponsor”), generating gross proceeds of $7,700,000 (see Note 4).
Transaction costs for the Initial Public Offering
amounted to $21,720,139, consisting of $5,000,000 of underwriting fees, $8,750,000 of deferred underwriting fees, $7,207,313 of non-cash
anchor investor offering costs and $762,826 of other offering costs.
Following the closing of the Initial Public Offering
on August 5, 2021, an amount of $250,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) with Continental Stock
Transfer & Trust Company (“Continental”) acting as trustee, and invested in U.S. government securities within the
meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with
maturities of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions
of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination
or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below. Following the 24-month
anniversary of the effective date of our registration statement for the Initial Public Offering, we instructed Continental to liquidate
the investments held in the Trust Account and thereafter to hold all funds in the Trust Account in an interest bearing demand deposit
account at a bank until the earlier of the consummation of an initial Business Combination or the liquidation of the Company, with Continental
continuing to act as trustee. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from
the Initial Public Offering and the Private Placement will no longer be invested in U.S. government debt securities or money market funds.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
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 Company
must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least
80% of the value of the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust
Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of
the transaction and whether the terms of the transaction would require the Company to seek stockholder approval under applicable law or
stock exchange listing requirement. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the
amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust
Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion
of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption are recorded at redemption
value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities
from Equity (“ASC 480”).
A quorum for a meeting to approve an initial Business
Combination will consist of the holders present in person or by proxy of shares of outstanding capital stock of the Company representing
a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at such meeting. In such case,
pursuant to the terms of a letter agreement entered into with the Company, the initial stockholders have agreed (and their permitted transferees
will agree) to vote their Founder Shares (as defined in Note 5) and any Public Shares held by them in favor of an initial Business Combination.
The Company expects that at the time of any stockholder vote relating to an initial Business Combination, the initial stockholders and
their permitted transferees will own at least 20% of the issued and outstanding common stock entitled to vote thereon. The directors and
officers also have agreed to vote in favor of an initial Business Combination with respect to any Public Shares acquired by them. These
voting thresholds, and the voting agreements of the initial stockholders, may make it more likely that the Company will consummate a Business
Combination. Each public stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether
they vote for or against the proposed transaction.
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s
amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) provides that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder 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 an aggregate of 15% or more of the Public Shares, without the prior
consent of the Company.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The Sponsor has agreed to waive: (i) its redemption
rights with respect to any Founder Shares and Public Shares held by them, as applicable, in connection with the completion of an initial
Business Combination; (ii) its redemption rights with respect to any Founder Shares and Public Shares held by them in connection with
a stockholder vote to amend the Amended and Restated Certificate of Incorporation (A) to modify the substance or timing of the obligation
to allow redemption in connection with an initial Business Combination or to redeem 100% of the Public Shares if the Company do not complete
an initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial Business Combination activity; and (iii) its rights to liquidating distributions
from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete an initial Business Combination within
24 months from the closing the Initial Public Offering (although they will be entitled to liquidating distributions from the Trust Account
with respect to any Public Shares they hold if the Company fail to complete an initial Business Combination within the prescribed time
frame).
The Company will have until December 5,
2023, extended from August 5, 2023, to complete a Business Combination (the “Combination Period”), subject to making
monthly stock transfers to the Holders (as defined in Note 11) of 155,581 Class A shares, which will begin payment on September 5,
2023. The Monthly Shares (as defined in Note 11) will be issued to the Holders substantially concurrently with the closing of the
Company’s Business Combination. If the Company is unable to complete a Business Combination within the Combination 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 ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to
the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors (the
“Board”), dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business
Combination within the Combination Period.
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. However,
if the Sponsor acquires 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. The underwriters have agreed to waive their rights to
their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination
within the Combination 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 order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the independent
registered public accounting firm) 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) $10.00 per
Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account
due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the taxes except as
to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims
under the indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company has
not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s
only assets are securities of the Company and, therefore, the Sponsor may not be able to satisfy those obligations. The Company has not
asked the Sponsor to reserve for such obligations.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Proposed Starton Therapeutics Business Combination
On April 27, 2023, the Company entered into the
business combination agreement (“BCA”) with Starton Therapeutics, Inc. (“Starton”); Pubco; Purchaser Merger Sub;
CallCo; ExchangeCo; the Sponsor, as the representative from and after the Effective Time (as defined in the BCA) of the stockholders of
Pubco (other than the Starton Shareholders (as defined below) and their successors and assignees); and Kiriakos Charlie Perperidis, in
the capacity as the representative of the shareholders of Starton (the “Starton Shareholders”) from and after the Effective
Time (all of the transactions contemplated by the BCA, including the issuances of securities thereunder, the “Starton Business Combination”).
The BCA was amended by the First Amendment to the Business Combination Agreement, dated May 15, 2023 (the “First BCA Amendment”)
pursuant to which the Parties agreed to amend Section 9.1 of the Business Combination Agreement to add a new closing condition which requires
that, immediately after the Closing, and after giving effect to the Redemption, the Starton Shareholders will own a number of voting shares
of Pubco representing, in the aggregate, no less than 51% of the total voting power of all issued and outstanding shares of Pubco.
Pursuant to the BCA, subject to the terms and
conditions set forth therein, Purchaser Merger Sub will merge with and into the Company, with the Company continuing as the surviving
entity and wholly-owned subsidiary of Pubco (the “Purchaser Merger”), in connection with which all of the existing securities
of the Company will be exchanged for rights to receive securities of Pubco as follows: (a) each share of the Company’s common stock
outstanding immediately prior to the Effective Time will automatically convert into one share of common stock, par value $0.0001, issued
by Pubco (“Pubco Common Stock”), and (b) each whole Public Warrant, Private Placement Warrant and Forward Purchase Warrant
will automatically convert into one warrant to purchase shares of Pubco Common Stock on substantially the same terms and conditions. Immediately
following the Purchaser Merger, by means of a statutory plan of arrangement under the Business Corporations Act (British Columbia) (the
“Plan of Arrangement”), (i) CallCo will acquire a portion of the issued and outstanding common shares of Starton (“Starton
Shares”) from certain holders in exchange for Pubco Common Stock (the “Pubco Share Exchange”), and will contribute such
Starton Shares to ExchangeCo in exchange for ExchangeCo common shares, (ii) following the Pubco Share Exchange, ExchangeCo will acquire
the remaining issued and outstanding Starton Shares from the remaining shareholders of Starton in exchange for shares of ExchangeCo (“Exchangeable
Shares”). The Exchangeable Shares will be exchangeable, on a one-for-one basis, into shares of Pubco Common Stock, with each share
valued at the price at which the Company redeems Public Shares held by its public stockholders in connection with the Starton Business
Combination (the “Redemption Price”). As a result of the foregoing, Starton will become a wholly-owned subsidiary of ExchangeCo
and an indirect subsidiary of Pubco.
Each outstanding Starton option will be assumed by Pubco and automatically
converted into an option to purchase shares of Pubco Common Stock in accordance with the Plan of Arrangement and under an equity incentive
plan to be adopted by Pubco prior to the closing of the Starton Business Combination (the “Closing”).
Pursuant to the terms of the BCA, the aggregate base consideration
to be delivered to the Starton Shareholders in connection with the Starton Business Combination will be $260.0 million (including up to
$20.0 million of incentive shares provided to potential PIPE investors), subject to adjustments for Starton’s closing debt (net
of cash) and certain other adjustments, which consideration will be payable in newly-issued shares of (i) Pubco Common Stock or (ii) Exchangeable
Shares, each valued at the Redemption Price.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
In addition to the shares of Pubco Common Stock or Exchangeable Shares
deliverable at the Closing, the Starton Shareholders will have the contingent right to receive up to an additional shares 25,000,000 shares
of Pubco Common Stock or Exchangeable Shares, as earnout consideration after the Closing (the “Earnout Consideration” and
such shares the “Earnout Shares”). The Earnout Consideration will be issuable to the Starton Shareholders (as of the date
of the Closing) as follows:
| ● | one-third of the Earnout Shares are issuable upon the VWAP equaling or exceeding $12.00 per share for any twenty (20) out of any twenty
(20) consecutive trading days during the five-year period after the Closing; |
| ● | one-third of the Earnout Shares are issuable upon (i) the VWAP equaling or exceeding $14.00 per share for any twenty (20) out of any
twenty (20) consecutive trading days during the Earnout Period or (ii) successful completion of a Phase 1B clinical trial for multiple
myeloma, meaning the completion of an interim data analysis which is sufficient to obtain an agreement with the U.S. Food and Drug Administration
(“FDA”) in which the FDA permits Starton to move forward to a phase 2 clinical study following a Type B End-of-Phase-1 meeting;
and |
| ● | one-third of the Earnout Shares are issuable upon (i) the VWAP equaling or exceeding $16.00 per share for any twenty (20) out of any
twenty (20) consecutive trading days during the Earnout Period or (ii) achievement of the successful completion of an FDA required bridging
study in healthy volunteers that proves bio-equivalence between the ambulatory subcutaneous pump and either a transdermal patch or an
on body subcutaneous pump. |
Simultaneously with the execution and delivery
of the BCA, the Company and Starton entered into voting agreements (collectively, the “Voting Agreements”) with certain Starton
Shareholders required to approve the Starton Business Combination. Under the Voting Agreements, such Starton Shareholders agreed to vote
all of their Starton Shares in favor of the BCA and the related transactions. Such Starton Shareholders also agreed to take certain other
actions in support of the BCA and related transactions and refrain from taking actions that would adversely affect their ability to perform
their obligations under the Voting Agreements. Such Starton Shareholders also provided a proxy to the Company to vote their Starton Shares
in accordance with the foregoing. The Voting Agreements prevent transfers of the Starton Shares held by such Starton Shareholders between
the date of the Voting Agreement and the date of Closing, except for certain permitted transfers where the recipient also agrees to comply
with the Voting Agreement.
Simultaneously with the execution of the BCA,
the Company, Pubco, Starton and the Sponsor also entered into a sponsor support agreement (the “Sponsor Support Agreement”),
pursuant to which the Sponsor agreed to vote all of its shares of the Company’s common stock in favor of the BCA and the Starton
Business Combination. The Sponsor also agreed to waive its anti-dilution rights that would otherwise allow it to maintain ownership of
20% of Pubco. The Sponsor Support Agreement also prevents transfers of the Company’s securities held by the Sponsor between the
date of the Sponsor Support Agreement and the termination of the Sponsor Support Agreement.
The BCA and related agreements and the First BCA
Amendment are further described in our Current Reports on Form 8-K filed with the SEC on May 3, 2023 and May 15, 2023, respectively and
the Registration Statement on Form S-4 of Pubco, initially filed with the SEC on May 15, 2023 (as amended, the “Registration Statement”).
The foregoing descriptions of each of the BCA, the form of Voting Agreement and the Sponsor Letter Agreement are qualified in their entirety
by reference to such agreement filed as an exhibit to the Quarterly Report filed on May 18, 2023.
Going Concern and Liquidity
As of June 30, 2023, the Company had $46,925
in cash held outside of the Trust Account and a working capital deficit of $1,459,851 (excluding income tax payable and franchise tax
payable). The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. The Company
anticipates that the cash held outside of the Trust Account as of June 30, 2023, will not be sufficient to allow the Company to operate
until December 5, 2023, the date at which the Company must complete a Business Combination. Further, if a Business Combination is
not consummated by December 5, 2023, there will be a mandatory liquidation and subsequent dissolution of the Company. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the
date that these condensed consolidated financial statements are issued.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Management plans to address this uncertainty through
a Business Combination as discussed above. There is no assurance that the Company’s plans to consummate a Business Combination will
be successful or successful within the Combination Period. The condensed consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus
commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have
instituted economic sanctions against the Russian Federation and Belarus. As a result of this action and related economic sanctions, the
Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately
consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a
transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result
of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company
or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial
position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The condensed consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Inflation Reduction Act of 2022 and Excise
Tax
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law, which, among other things, imposes a 1% excise tax on the fair market
value of stock repurchased by a domestic corporation beginning in 2023, with certain exceptions (the “Excise Tax”). Because
the Company is a Delaware corporation, it will be a “covered corporation” within the meaning of the IR Act, and while not
free from doubt, it is possible that, unless an exemption is available, the Company (or any post-combination company) will be subject
to the Excise Tax as a result of any redemptions by the Company of its common stock that occurs after December 31, 2022, including redemptions
in connection with an initial Business Combination. Whether and to what extent the Company would be subject to the Excise Tax in connection
with a Business Combination would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases
in connection with the Business Combination, (ii) the structure of the Business Combination, (iii) the nature and amount of any “PIPE”
or other equity issuances in connection with the Business Combination (or otherwise issued not in connection with the Business Combination
but issued within the same taxable year of the Business Combination) and (iv) the content of regulations and other guidance from the U.S.
Treasury. In addition, because the Excise Tax would be payable by the Company, and not by the redeeming stockholder, the mechanics of
any required payment of the Excise Tax have not been determined. The foregoing could cause a reduction in the per-share amount that the
public stockholder would otherwise be entitled to receive or reduce the cash available on hand to complete a Business Combination. This
may make a transaction with the Company less appealing to potential Business Combination targets, and thus, potentially hinder the Company’s
ability to enter into and consummate an initial Business Combination, particularly an initial Business Combination in which substantial
PIPE or other equity issuances are not contemplated. The Company will not use, now or in the future, any funds in the Trust Account, including
any interest thereon, to pay for any excise tax imposed under the Inflation Reduction Act of 2022. See Note 11.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of 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 comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of
management, the accompanying unaudited condensed consolidated 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 consolidated financial statements should be read in conjunction with the Company’s annual report
on Form 10-K as filed with the SEC on March 3, 2023. The interim results for the three and six months ended June 30, 2023 are not necessarily
indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.
Principles of Consolidation
The accompanying condensed consolidated financial
statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions
have been eliminated in consolidation.
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 stockholder approval of any golden parachute payments not previously approved. The Company has elected to implement the
aforementioned exemptions.
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 unaudited condensed consolidated
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 unaudited condensed consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
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 unaudited condensed consolidated financial statements, which management considered in formulating its
estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly
from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2023
and December 31, 2022.
Investments Held in Trust Account
At June 30, 2023 and December 31, 2022, the
assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury securities. Trading securities are
presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value
of these securities, along with interest and dividend income on the securities, is included in realized and unrealized gains (losses)
on investments held in Trust Account in the accompanying condensed consolidated statements of operations. At June 30, 2023 and December
31, 2022, the assets held in the Trust Account were $258,894,006 and $253,668,826. For the three and six months June 30, 2023, $80,000
and $626,748, respectively, of income was released from the Trust Account for the payment of taxes.
Warrant
Liabilities
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions
for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance
and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued
or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial
fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized
as a non-cash gain or loss on the condensed consolidated statement of operations. As of June 30, 2023 and December 31, 2022, the
Company estimated the fair value of the warrant derivative liabilities to be $4,646,000 and $1,616,000, respectively. See Note 10 for
additional information related to fair value measurements.
Class
A Common Stock Subject to Possible Redemption
All of the
25,000,000 shares of Class A common stock sold as part of the Units in the Initial Public Offering contain a redemption feature
which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote
or tender offer in connection with the Business Combination and in connection with certain amendments to the Amended and Restated Certificate
of Incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC
480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified
outside of permanent equity. Therefore, all Public Shares have been classified outside of permanent equity.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital
and accumulated deficit. The redemption value of the redeemable common stock as of June 30, 2023 increased as the income earned on
the Trust Account exceeds the Company’s expected tax obligations plus up to $100,000 to pay dissolution expenses (see Note 1). As
such, the Company recorded an increase in the carrying amount of the redeemable common stock of $2,095,694 and $2,448,400 for the three
and six months ended June 30, 2023, respectively. The carrying value of the Class A common stock subject to redemption represents
the redemption value as of June 30, 2023. The actual redemption value will be net of the Company’s tax obligations and dissolution
expenses as of the date of redemption.
As of June 30, 2023, the Class A common stock
subject to redemption reflected in the balance sheet are reconciled in the following table:
Class A common stock subject to possible redemption at December 31, 2022 | |
$ | 252,755,071 | |
Remeasurement of carrying value to redemption value | |
| 2,095,694 | |
Class A common stock subject to possible redemption at March 31, 2023 | |
| 254,850,765 | |
Remeasurement of carrying value to redemption value | |
| 2,448,400 | |
Class A common stock subject to possible redemption at June 30, 2023 | |
$ | 257,299,165 | |
Offering Costs associated with the Initial
Public Offering
The Company complies with the requirements of
ASC Topic 340, Other Assets and Deferred Costs and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering. Offering
costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial
Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as
a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The
Company incurred offering costs amounting to $21,720,139 as a result of the Initial Public Offering (consisting of a $5,000,000 underwriting
discount, $8,750,000 of deferred underwriting fees (as defined in Note 6), $7,207,313 of anchor investor offering costs, and $762,826
of other offering costs). The Company recorded $20,699,265 of offering costs as a reduction of equity in connection with the Class A common
stock included in the Units. The Company immediately expensed $1,020,874 of offering costs in connection with the Public Warrants (as
defined in Note 3) and Private Placement Warrants that were classified as liabilities.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its
fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated
statements of operations. Derivative instruments are classified in the balance sheet as current or non-current based on whether or not
net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The forward purchase agreement is accounted for
as a derivative instrument in accordance with ASC 815 and is presented as a derivative forward purchase agreement liability on the balance
sheet. The forward purchase agreement was measured at fair value at the Initial Public Offering and on a recurring basis, with subsequent
changes in fair value to be recorded in the condensed consolidated statement of operations. As of June 30, 2023 and December 31,
2022, the Company estimated the fair value of the forward purchase agreement to be a derivative liability of $1,296,000 and $484,000,
respectively. See Note 10 for additional information related to fair value measurements.
Income Taxes
The Company complies with the accounting and reporting
requirements of ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the condensed
consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based
on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the condensed consolidated financial statement recognition and measurement of tax positions 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, if any, as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2023 and December
31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
See Note 9 for additional information on income taxes for the periods
presented.
Net Income Per Share of Common Stock
Net income per common share is computed by dividing
net income by the weighted-average number of shares of common stock outstanding during the period. Remeasurement associated with the redeemable
shares of Class A common stock is excluded from net income per share as the redemption value approximates fair value. Therefore, the net
income per share calculation allocates income and losses shared pro rata between Class A and Class B common stock. As a result, the calculated
net income per share is the same for Class A and Class B shares of common stock. The Company has not considered the effect of the warrants
sold in the Initial Public Offering and private placement to purchase an aggregate of 20,200,000 shares in the calculation of diluted
income per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted net income
per share is the same as basic net income per share for the periods presented.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The following table reflects the calculation of
basic and diluted net income per common share (in dollars, except share amounts):
| |
Three Months Ended June 30, 2023 | | |
Three Months Ended June 30, 2022 | | |
Six Months Ended June 30, 2023 | | |
Six Months Ended June 30, 2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income per share: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Net income | |
$ | (996,563 | ) | |
$ | (249,141 | ) | |
$ | 2,115,474 | | |
$ | 528,868 | | |
$ | (695,720 | ) | |
$ | (173,930 | ) | |
$ | 6,435,778 | | |
$ | 1,608,944 | |
Denominator: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 25,000,000 | | |
| 6,250,000 | | |
| 25,000,000 | | |
| 6,250,000 | | |
| 25,000,000 | | |
| 6,250,000 | | |
| 25,000,000 | | |
| 6,250,000 | |
Basic and diluted net income per share | |
$ | (0.04 | ) | |
$ | (0.04 | ) | |
$ | 0.08 | | |
$ | 0.08 | | |
$ | (0.03 | ) | |
$ | (0.03 | ) | |
$ | 0.26 | | |
$ | 0.26 | |
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration 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 Company applies ASC Topic 820, Fair Value
Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value
within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to
transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants
on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants
would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting
entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the
assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information
available in the circumstances.
The carrying amounts reflected in the balance sheet for current assets
and current liabilities approximate fair value due to their short-term nature.
Level 1 — Assets and liabilities with unadjusted, quoted prices
listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets
for identical assets or liabilities.
Level 2 — Inputs to the fair value measurement are determined
using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs,
such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 — Inputs to the fair value measurement are unobservable
inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
See Note 10 for additional information on assets and liabilities measured
at fair value.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited
condensed consolidated financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
The registration statement for the Company’s
Initial Public Offering was declared effective on August 2, 2021. On August 5, 2021, the Company completed its Initial Public
Offering of 25,000,000 Units, at $10.00 per Unit, generating gross proceeds of $250,000,000. Each Unit consisted of one share of Class
A common stock and one-half of one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase
one share of Class A common stock at an exercise price of $11.50 per whole share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 7,700,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant
($7,700,000 in aggregate). Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50
per share. The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the
sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law). There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Placement Warrants.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On February 10, 2021, the Sponsor paid $25,000
to cover certain expenses on behalf of the Company in exchange for the issuance of 7,187,500 Class B common stock (the “Founder
Shares”). The Founder Shares included an aggregate of up to 937,500 Class B common stock subject to forfeiture by the Sponsor to
the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor would own, on an
as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (see Note 5).
On September 11, 2021, the remaining option expired.
As a result, 937,500 shares of Class B common stock were forfeited (see Note 8).
The Sponsor has agreed that, subject to certain
limited exceptions, the Founder Shares will not be transferred, assigned, sold until the earlier of (A) one year after the completion
of a Business Combination or (B) subsequent to a Business Combination or (x) if the last reported sale price of the Class A common stock
equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination
or (y) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that
results in all of the Company’s public stockholders having the right to exchange their common stock for cash, securities or other
property.
A total of twelve anchor investors (the “Anchor
Investors” representing both the Original Anchor Investors and the Additional Anchor Investors as defined below) purchased Units
in the Initial Public Offering; nine of which each purchased 2,400,000 Units at the offering price of $10.00 per Unit, and three of which
each purchased 1,200,000 Units at the offering price of $10.00 per Unit. Pursuant to such Units, the Anchor Investors have not been granted
any stockholder or other rights in addition to those afforded to the Company’s other public stockholders.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Three anchor investors (the “Original Anchor
Investors”) entered into separate subscription agreements in February 2021 with the Sponsor for indirect interests in the Founder
Shares held by the Sponsor for a nominal amount. Certain interests in Founder Shares were granted to the Original Anchor Investors subject
to a performance condition (i.e., if any Anchor Investor transfers the Units purchased in the Initial Public Offering (or the Class A
common stock underlying such Units) prior to the closing of an initial Business Combination (other than to its affiliates or such other
parties that are approved in advance in writing by the Sponsor) or it elects to redeem any of the Class A common stock purchased in this
offering) and must be returned to the Sponsor if performance conditions are not met. Compensation expense related to these interests will
be recognized only when the performance condition is probable of occurrence under ASC Topic 718, Compensation—Stock Compensation
(“ASC 718”). As of June 30, 2023 and December 31, 2022, no stock-based compensation expense has been recognized. Stock-based
compensation would be recognized at the date satisfaction of the performance obligation is considered probable in an amount equal to the
number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for
the purchase of the Founder Share interests. The fair value of these interests in the Founder Shares sold to the Original Anchor Investors
was estimated at $1,796,901 or approximately $4.09 per share.
The other nine anchor investors (the “Additional
Anchor Investors”) entered into separate subscription agreements in July 2021 with the Sponsor for indirect interests in the Founder
Shares held by the Sponsor. The Additional Anchor Investors purchased interests representing an aggregate of 1,125,000 Founder Shares
at a purchase price of $0.004 per share or $3,938 in the aggregate. Further, the Additional Anchor Investors are not required to (i) hold
any Units, shares of Class A common stock or warrants they may purchase in the Initial Public Offering or thereafter for any amount of
time, (ii) vote any shares of Class A common stock they may own at the applicable time in favor of the Business Combination or (iii) refrain
from exercising their right to redeem their Public Shares at the time of the Business Combination. The Anchor Investors will have the
same rights to the funds held in the Trust Account with respect to the shares of Class A common stock underlying the Units they may purchase
in the Initial Public Offering as the rights afforded to the Company’s other public stockholders.
The Company estimated the fair value at July 20,
2021 of the Founder Share interests attributable to the Additional Anchor Investors to be $7,211,250 or $6.41 per share. The excess of
the fair value of the Founder Shares sold over the purchase price was determined to be an offering cost in accordance with Staff Accounting
Bulletin Topic 5A. Accordingly, the offering cost will be 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 derivative warrant liabilities
were expensed immediately in the condensed consolidated statement of operations upon the Initial Public Offering. Offering costs allocated
to the Public Shares were charged to stockholder’s equity (deficit) at the date of the Initial Public Offering.
On February 24, 2021, the Company granted units
in the Sponsor to certain of its directors, executive officers, and other advisors representing indirect interests in the Founder Shares
for no cash consideration. These awards are subject to ASC 718. Under ASC 718, stock-based compensation associated with equity-classified
awards is measured at fair value upon the grant date. The indirect interests in the Founder Shares were granted subject to a performance
condition (i.e., the occurrence of a Business Combination). Compensation expense related to the indirect interests in the Founder Shares
are recognized only when the performance condition is probable of occurrence. As of June 30, 2023, the Company determined that a
Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based
compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination)
in an amount equal to the number of indirect interests in the Founder Shares that ultimately vest multiplied by the grant date fair value
per share (unless subsequently modified).
The total number of indirect interests in the Founder Shares granted
were 1,404,532 shares with a grant date fair value consistent with that of the Original Anchor Investors.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
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 directors and officers may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such
Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants
would be identical to the Private Placement Warrants issued to the Sponsor.
On March 17, 2023, the Company issued an unsecured
promissory note in the principal amount of up to $750,000 to the Sponsor (the “March Working Capital Loan”).The March Working
Capital Loan bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial Business
Combination is consummated and (ii) the liquidation of the Company on or before December 5, 2023, or such later liquidation date
as may be approved by the Company’s stockholders. At the election of the Sponsor, the unpaid principal amount of the March Working
Capital Loan may be converted into warrants of the Company (the “Conversion Warrants”) with the total Conversion Warrants
so issued equal to: (x) the portion of the principal amount of the March Working Capital Loan being converted divided by (y) $1.00, rounded
up to the nearest whole number of warrants. During the six months ended June 30, 2023, the Company drew an aggregate of $400,000
from the March Working Capital Loan, which has not yet been repaid as of June 30, 2023.
The fair value option was elected (see Note 10)
and, as such, the fair value of the March Working Capital Loan is shown on the condensed consolidated balance sheets as $276,276 and $0
as of June 30, 2023 and December 31, 2022, respectively. The difference between the amount of the borrowing of $400,000 and the fair
value at the time of initial borrowings of $276,154 is $123,847 and is recorded as an equity contribution in the Condensed Consolidated
Statements of Changes in Stockholders’ Deficit.
Public Relation Services
Daniel J. Edelman Inc. provides public relation services to the Company
relating to finding a suitable target for the initial Business Combination. George Hornig who serves as Co-Chair of the Company’s
Board, is also a Director of Daniel J. Edelman Holdings Inc., the parent company of Daniel J. Edelman Inc. For the three months ended
June 30, 2023 and June 30, 2022, the Company incurred $82,000 and $0, respectively, of expenses in relation to the services described above. For the
six months ended June 30, 2023 and June 30, 2022, the Company incurred $82,000 and $0, respectively, of expenses in relation to the services described
above.
NOTE 6. COMMITMENTS
Registration Rights
Pursuant to a registration rights agreement entered
into on August 2, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion
of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants or warrants issued
upon conversion of the Working Capital Loans and upon conversion of the Founders Shares) are entitled to registration rights. The holders
of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration
statements.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Underwriting Agreement
The Company granted the underwriters a 45-day
option to purchase up to 3,750,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting
discounts and commissions. On September 11, 2021, the over-allotment option expired.
The underwriters were paid a cash underwriting
discount of $0.20 per Unit, or $5,000,000 in the aggregate, upon the closing of the Initial Public Offering. In addition, $0.35 per Unit,
or $8,750,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
Vendor Agreements
On April 7, 2023, the Company entered into an
agreement with a financial filing and printing firm (the “Printer”) for services as needed by the Company in connection with
a Business Combination. Pursuant to this agreement, the Company incurred approximately $15,000 in fees during the six months ended June 30,
2023. Pursuant to the agreement, the Company will pay the Printer a total of approximately of $125,000, inclusive of the $15,000 paid
by the Company during the six months ended June 30, 2023. The remaining $110,000 is contingent upon the consummation of the Business
Combination.
NOTE 7. WARRANTS
As of June 30, 2023 and December 31, 2022,
there were 7,700,000 Private Placement Warrants and 12,500,000 Public Warrants outstanding.
A warrant holder may exercise its warrants only
for a whole number of Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. No fractional
warrants will be issued upon separation of the Units and only whole warrants will trade. Accordingly, unless you purchase at least two
Units, you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of an initial
Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any
shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective
and a current prospectus relating thereto is current, subject to the satisfying the obligations described below with respect to registration.
No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant
unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities
laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding
sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such
warrant may have no value and expire worthless. In no event will the Company be required to net cash settle any warrant. In the event
that a registration statement is not effective for the exercised warrants, the purchaser of a Unit containing such warrant, if not cash
settled, will have paid the full purchase price for the Unit solely for the share of Class A common stock underlying such Unit.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The Company has agreed that as soon as practicable,
but in no event later than 20 business days after the closing of an initial Business Combination, the Company will use commercially reasonable
efforts to file with the SEC a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise
of the warrants, and the Company will use commercially reasonable efforts to cause the same to become effective within 60 business days
after the closing of an initial Business Combination and to maintain the effectiveness of such registration statement and a current prospectus
relating to those shares of Class A common stock until the warrants expire or are redeemed; provided that if the shares of Class A common
stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at the option, require holders of Public
Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act
and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration statement.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the outstanding
Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per Public Warrant; |
| ● | upon not less than 30 days’ prior written notice of
redemption to each warrant holder; and |
| ● | if, and only if, the reported last reported sale price of
the Class A common stock for any 20 trading days within a 30-trading day period ending three business days before the Company sends the
notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share. |
The Company will not redeem the warrants for cash
unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise
of the warrants is then effective and a current prospectus relating to those Class A common stock is available throughout the 30-day redemption
period, unless the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities
Act. If and when the warrants become redeemable, the Company may exercise the redemption right even if the Company are unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $10.00. Commencing ninety days after the Public Warrants become exercisable, the Company
may redeem the outstanding Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.10 per warrant upon a minimum of 30 days’
prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption
and receive that number of shares determined by the redemption date and the fair market value of the Company’s Class A common stock;
and; |
| ● | if the closing price of the Class A common stock for any
20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company send the notice
of redemption to the warrant holders is less than $18.00 per share, then the Private Placement Warrants must also be concurrently called
for redemption on the same terms as the outstanding Public Warrants. |
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
In addition, if (x) the Company issue additional
common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial Business Combination
(excluding any Forward Purchase Securities) at an issue price or effective issue price of less than $9.20 per share of common stock (with
such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
60% of the total equity proceeds, and interest thereon, available for the funding of an Business Combination on the date of the completion
of an initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common
stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummate an initial Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted
(to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per
share redemption trigger prices described below under “Redemption of warrants when the price per share of Class A common stock equals
or exceeds $18.00” and “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”
will be adjusted (to the nearest cent) to be equal to 100% and 180%, respectively, of the higher of the Market Value and the Newly Issued
Price.
The Private Placement Warrants are identical to
the warrants sold as part of the Units in the Initial Public Offering except that, so long as they are held by the Sponsor or its permitted
transferees: (1) they will not be redeemable (except as described above under Redemption of warrants when the price per share of Class
A common stock equals or exceeds $10.00); (2) they (including the shares of Class A common stock issuable upon exercise of these warrants)
may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of
an initial Business Combination, as described below; (3) they may be exercised by the holders on a cashless basis; and (4) they (including
the common stock issuable upon exercise of these warrants) are entitled to registration rights.
In connection with the Initial Public Offering,
the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Peterson Partners, a member
of the Sponsor, pursuant to which Peterson Partners has subscribed to purchase from the Company 4,000,000 units, with each unit consisting
of one share of Class A common stock (“Forward Purchase Shares”), and one-half of one warrant to purchase one share of Class
A common stock (“Forward Purchase Warrants”, together with the Forward Purchase Shares the “Forward Purchase Securities”)
for $10.00 per unit, or an aggregate amount of up to $40,000,000, in a private placement that will close concurrently with the closing
of a Business Combination. The Forward Purchase Shares will be identical to the shares of Class A common stock included in the Units being
sold in the Initial Public Offering, except that they will be subject to certain transfer restrictions, and the Forward Purchase Warrants
shall be identical to the Private Placement Warrants. As of June 30, 2023 and December 31, 2022, the Company estimated the fair value
of the forward purchase agreement to be a derivative liability of $1,296,000 and $484,000, respectively.
The obligations under the Forward Purchase Agreement
do not depend on whether any shares of Class A common stock are redeemed by the public stockholders. Peterson Partners obligation to purchase
forward units will, among other things, be terminated in the event that the Company does not complete a Business Combination within the
Combination Period.
The Company accounts for the 20,200,000 warrants
issued in connection with the Initial Public Offering (including 12,500,000 Public Warrants and 7,700,000 Private Placement Warrants)
in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for
equity treatment thereunder, each warrant must be recorded as a liability.
The accounting treatment of derivative financial
instruments required that the Company record the warrants as derivative liabilities at fair value upon the closing of the Initial Public
Offering. As of June 30, 2023 and December 31, 2022, the Company estimated the fair value of the warrant derivative liabilities to
be $4,646,000 and $1,616,000. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its
fair value. The warrant liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant
liabilities are adjusted to current fair value, with the change in fair value recognized in the Company’s condensed consolidated
statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result
of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 8. STOCKHOLDERS’ DEFICIT
Preferred stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2023 and December
31, 2022, there were no shares of preferred stock issued or outstanding.
Class A common stock — The
Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s
common stock are entitled to one vote for each share. As of June 30, 2023 and December 31, 2022, there were 25,000,000 shares of
Class A common stock issued and outstanding, of which 25,000,000 shares of Class A common stock are subject to possible redemption.
Class B common stock — The
Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company’s
common stock are entitled to one vote for each share. As of June 30, 2023 and December 31, 2022, there were 6,250,000 shares of Class
B common stock issued and outstanding. On September 11, 2021, the underwriters 45-day option expired. As a result, 937,500 shares of Class
B common stock were forfeited.
Prior to the closing of a Business Combination,
holders of Class B common stock have the right to appoint all of the directors and may remove members of the board of directors for any
reason. On any other matter submitted to a vote of the stockholders, holders of the shares of Class B common stock and holders of the
Class A common stock will vote together as a single class, except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of an initial Business Combination, or earlier at the option of the holder, on
a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked
securities (as described herein), are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related
to the closing of an initial Business Combination, the ratio at which the shares of Class B common stock will convert into shares of Class
A common stock will be adjusted (unless the holders of a majority of the issued and outstanding shares of Class B common stock agree to
waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common
stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, 20% of the sum of all shares of Class
A common stock issued and outstanding at the date of the Initial Public Offering, plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with an initial Business Combination, excluding any Forward Purchase Securities and any
shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination.
NOTE 9. INCOME TAX
The Company’s effective tax rate for
the three and six months ended June 30, 2023, was (109.3%) and 357.5%, respectively. The Company’s effective tax rate for
the three and six months ended June 30, 2022, was 0.0%. The Company’s effective tax rate differs from the statutory income tax
rate of 21% primarily due to the recognition of gains or losses from the change in the fair value of warrant liabilities and
derivative asset - forward purchase agreement, which are not recognized for tax purposes, and recording a full valuation allowance
on deferred tax assets. The Company has used a discrete effective tax rate method to calculate taxes for the three and six months
ended June 30, 2023 and 2022. The Company believes that, at this time, the use of the discrete method for the three and six months
ended June 30, 2023 and 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual
effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 10. FAIR VALUE MEASUREMENTS
The following table presents information about
the Company’s financial assets and liabilities that are measured at fair value on a recurring basis at June 30, 2023 and December
31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Amount at
Fair Value | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
June 30, 2023 | |
| | |
| | |
| | |
| |
Assets | |
| | |
| | |
| | |
| |
Investments held in Trust Account: | |
| | |
| | |
| | |
| |
Money Market investments | |
$ | 258,894,006 | | |
$ | 258,894,006 | | |
$ | — | | |
$ | — | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Warrant liability – Public Warrants | |
$ | 2,875,000 | | |
$ | 2,875,000 | | |
$ | — | | |
$ | — | |
Warrant liability – Private Placement Warrants | |
$ | 1,771,000 | | |
$ | — | | |
$ | 1,771,000 | | |
$ | — | |
Derivative liability - forward purchase agreement | |
$ | 1,296,000 | | |
$ | — | | |
$ | — | | |
$ | 1,296,000 | |
Convertible promissory note - related party | |
$ | 276,276 | | |
$ | — | | |
$ | — | | |
$ | 276,276 | |
December 31, 2022 | |
| | | |
| | | |
| | | |
| | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments held in Trust Account: | |
| | | |
| | | |
| | | |
| | |
Money Market investments | |
$ | 253,668,826 | | |
$ | 253,668,826 | | |
$ | — | | |
$ | — | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Warrant liability – Public Warrants | |
$ | 1,000,000 | | |
$ | 1,000,000 | | |
$ | — | | |
$ | — | |
Warrant liability – Private Placement Warrants | |
$ | 616,000 | | |
$ | — | | |
$ | 616,000 | | |
$ | — | |
Derivative liability- forward purchase agreement | |
$ | 484,000 | | |
$ | — | | |
$ | — | | |
$ | 484,000 | |
The Company utilized a binomial lattice model
for the initial valuation of the Public Warrants. The subsequent measurement of the Public Warrants as of June 30, 2023 and December
31, 2022 is classified as Level 1 due to the use of an observable market quote in an active market under the ticker HWELW. The quoted
price of the Public Warrants was $0.23 and $0.08 per warrant as of June 30, 2023 and December 31, 2022.
In prior periods, the Company utilized a binomial
lattice model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the condensed
consolidated statement of operations. The estimated fair value of the Private Placement Warrant liability was initially determined using
Level 3 inputs. As of June 30, 2023 and December 31, 2022, the Private Placement Warrants are classified as Level 2 due to the use
of an observable market quote for a similar asset in an active market.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The model used to estimate the fair value of the
derivative asset for the Forward Purchase Agreement is based on the assumption that the Forward Purchase Securities are equivalent to
the Company’s Units and determined, on a per unit basis, as the price of the Company’s Units less the present value of the
contractually stipulated forward price of $10.00.
Transfers to/from Levels 1, 2 and 3 are recognized
at the end of the reporting period. The estimated fair value of the Private Placement Warrants transferred from a Level 3 fair value measurement
to a Level 2 fair value measurement in the fourth quarter of 2022 due to the use of an observable market quote for a similar asset in
an active market.
The following table provides the significant inputs
to the model for the fair value of the Forward Purchase Agreement:
| |
As of
June 30,
2023 | | |
As of
December 31,
2022 | |
Stock price | |
$ | 10.28 | | |
$ | 9.91 | |
Strike price | |
$ | 11.50 | | |
$ | 11.50 | |
Dividend yield | |
| — | % | |
| — | % |
Term to expected Business Combination (in years) | |
| 0.3 | | |
| 0.5 | |
Volatility | |
| de minimus | | |
| de minimus | |
Risk-free rate(1) | |
| 5.36% / 4.07 | % | |
| 4.70% / 3.98 | % |
Probability of Business Combination | |
| 70.0 | % | |
| 60.0 | % |
Fair value of derivative liability - forward purchase agreement | |
$ | 0.324 | | |
$ | 0.121 | |
The convertible promissory notes - related party
were valued using a Black-Scholes model, which is considered to be a Level 3 fair value measurement. The following table provides the
significant inputs to the model for the fair value of the convertible promissory note - related party:
| |
As of
June 30,
2023 | | |
As of
May 4,
2023 (Initial
Measurement) | | |
As of
April 26,
2023 (Initial
Measurement) | | |
As of
April 17,
2023 (Initial
Measurement) | |
Warrant exercise price | |
$ | 1.00 | | |
$ | 1.00 | | |
$ | 1.00 | | |
$ | 1.00 | |
Term to expected Business Combination (in years) | |
| 0.25 | | |
| 0.24 | | |
| 0.26 | | |
| 0.29 | |
Volatility | |
| de minimus | | |
| de minimus | | |
| de minimus | | |
| de minimus | |
Risk free rate | |
| 5.36 | % | |
| 5.22 | % | |
| 5.09 | % | |
| 5.12 | % |
Discount factor | |
| 0.99 | | |
| 0.99 | | |
| 0.99 | | |
| 0.99 | |
Probability of Business Combination | |
| 70 | % | |
| 70 | % | |
| 70 | % | |
| 70 | % |
Fair value convertible promissory note - related party | |
$ | 276,276 | | |
$ | 134,794 | | |
$ | 13,814 | | |
$ | 86,214 | |
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The following table provides a summary of the
changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis:
Fair value as of December 31, 2021 | |
$ | 4,559,000 | |
Change in fair value | |
| (2,295,000 | ) |
Fair value as of March 31, 2022 | |
| 2,264,000 | |
Change in fair value | |
| (1,017,000 | ) |
Fair value as of June 30, 2022 | |
$ | 1,247,000 | |
| |
| | |
Fair value as of December 31, 2022 | |
$ | 484,000 | |
Initial measurement of draw on convertible promissory note - related party on March 31, 2023 | |
| 41,332 | |
Change in fair value | |
| 536,000 | |
Fair value as of March 31, 2023 | |
| 1,061,332 | |
Initial measurement of draw on convertible promissory note - related party on April 17, 2023 | |
| 86,214 | |
Initial measurement of draw on convertible promissory note - related party on April 26, 2023 | |
| 13,814 | |
Initial measurement of draw on convertible promissory note - related party on May 8, 2023 | |
| 134,794 | |
Change in fair value | |
| 276,123 | |
Fair value as of June 30, 2023 | |
$ | 1,572,276 | |
The Company recognized loss in connection with
changes in the fair value of warrant liabilities of $3,030,000 (including $1,875,000 related to the Public Warrants - Level 1 and $1,155,000
related to the Private Placement Warrants - Level 2) within the condensed consolidated statement of operations for the six months June
30, 2023. The Company recognized a loss in connection with changes in the fair value of derivative liability - forward purchase agreement
of $812,000 within the condensed consolidated statement of operations for the six months June 30, 2023. The Company recognized a loss
on the change in fair value of the Sponsor Working Capital Loans of $123 within the condensed statements of operations for the six months
June 30, 2023.
The Company recognized loss in connection with
changes in the fair value of warrant liabilities of $2,222,000 (including $1,375,000 related to the Public Warrants - Level 1 and $847,000
related to the Private Placement Warrants - Level 2) within the condensed consolidated statement of operations for the three months ended
June 30, 2023. The Company recognized a loss in connection with changes in the fair value of derivative liability - forward purchase agreement
of $276,000 within the condensed consolidated statement of operations for the three months ended June 30, 2023. The Company recognized
a loss on the change in fair value of the Working Capital Loans of $123 within the condensed consolidated statement of operations for
the three months ended June 30, 2023.
The Company recognized gains in connection with
changes in the fair value of warrant liabilities of $8,080,000 (including $5,000,000 related to the Public Warrants - Level 1 and $3,080,000
related to the Private Placement Warrants - Level 3) within the unaudited condensed consolidated statement of operations for the six months
ended June 30, 2022. The Company recognized a gain in connection with changes in the fair value of derivative asset - forward purchase
agreement of $232,000 within the unaudited condensed consolidated statement of operations for the six months ended June 30, 2022.
The Company recognized gains in connection with
changes in the fair value of warrant liabilities of $2,626,000 (including $1,625,000 related to the Public Warrants—Level 1 and
$1,001,000 related to the Private Placement Warrants—Level 3) within the unaudited condensed statement of operations for the three
months ended June 30, 2022. The Company recognized a gain in connection with changes in the fair value of derivative asset—forward
purchase agreement of $16,000 within the unaudited condensed statement of operations for the three months ended June 30, 2022.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred up to the date unaudited condensed consolidated financial statements were issued. Based upon this review, other than as
described below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited
condensed consolidated financial statements.
On July 21, 2023, the Company issued an aggregate
of 6,249,999 Class A Shares to the Sponsor upon the conversion of an equal number of Class B Shares. The 6,249,999 Class A Shares issued
in the Conversion, approximately 20.0% of the total issued and outstanding Class A Shares after the Conversion, are subject to the same
restrictions as applied to the Class B Shares before the Conversion, including, among others, certain transfer restrictions, waiver of
redemption rights and the obligation to vote in favor of an initial business combination as described in the prospectus for the IPO.
Between July 22, 2023 and July 25, 2023, the Company
and the Sponsor, entered into seven voting and non-redemption agreements (the “Non-Redemption Agreements”) with certain unaffiliated
third parties (each, a “Holder,” and collectively, the “Holders”) in exchange for the Holders agreeing either
not to request redemption, or to reverse any previously submitted redemption demand, with respect to an aggregate of 3,889,523 Public
Shares sold in its Initial Public Offering in connection with the special meeting in lieu of an annual meeting of stockholders of the
Company, which was held on July 26, 2023 (the “Extension Meeting”). The Extension Meeting was held to, among other things,
consider a proposal to amend to the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the
Company must consummate a Business Combination from August 5, 2023 to December 5, 2023 (or such earlier date as determined by the Company’s
board of directors) (the “Extension Amendment”). In consideration of the Non-Redemption Agreements, the Sponsor and Starton
have agreed to transfer to the Holders an aggregate of 155,581 Class A Shares for each month beginning on September 5, 2023 and continuing
for each subsequent month thereafter (including partial months) until the consummation of the Company’s Business Combination (the
“Monthly Shares”). The Monthly Shares will be issued to the Holders substantially concurrently with the closing of the Company’s
Business Combination.
As of the date of this Quarterly Report, the Company
and the Sponsor have entered into Non-Redemption Agreements with respect to an aggregate of 3,889,523 Class A Shares, and the Sponsor
and Starton have agreed to transfer an aggregate of 155,581 Class A Shares for each month beginning on September 5, 2023 and continuing
for each subsequent month thereafter (including partial months) until the consummation of the Company’s Business Combination.
The Non-Redemption Agreements are expected to
increase the amount of funds that remain in the Company’s Trust Account following the Meeting. Pursuant to the Non-Redemption Agreements,
each Holder has also agreed to vote any Class A Shares held by it as of the record date for the Extension Meeting in favor of the Extension
Amendment at the Extension Meeting and cause all such shares to be counted as present at the Extension Meeting for purposes of establishing
a quorum.
HEALTHWELL ACQUISITION CORP. I
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
On July 26, 2023, the Company held the Extension
Meeting. At the Extension Meeting, the Company’s stockholders approved (1) an amendment to the Company’s Amended and Restated
Certificate of Incorporation to extend the date by which the Company must consummate an initial Business Combination from August 5, 2023
to December 5, 2023 (or such earlier date as determined by the Company’s board of directors); (2) an amendment to the Amended and
Restated Certificate of Incorporation to provide that, subject to the rights of the holders of any outstanding class of preferred stock,
the number of authorized shares of any class of common stock or preferred stock may be increased or decreased (but not below the number
of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of the Company’s
capital stock entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law; (3)
an amendment to the Amended and Restated Certificate of Incorporation to eliminate from the Amended and Restated Certificate of Incorporation
the limitation that the Company may not redeem the shares of Class A common stock sold as part of the units in the IPO to the extent that
such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities
Exchange Act of 1934, as amended) of less than $5,000,001 (the “Redemption Limitation”) in order to allow the Company to redeem
public shares irrespective of whether such redemption would exceed the Redemption Limitation (all of the aforementioned amendments, collectively
the “Amendments”); and (4) a proposal to ratify the selection by the audit committee of the Board of Marcum LLP to serve as
the Company’s independent registered public accounting firm for the year ending December 31, 2023. The Company filed the Amendments
with the Secretary of State of the State of Delaware on July 26, 2023.
In connection with the Extension Meeting, stockholders holding 20,942,619
public shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account. As a result, approximately
$215,635,294 (approximately $10.30 per public share) was removed from the Trust Account to pay such holders and approximately $41,776,749
remained in the Trust Account. Following redemptions, the Company has 4,057,381 public shares outstanding.
In the event of either the closing of the BCA
or a mandatory liquidation of the Company prior to December 31, 2023, the Company does not expect the redemptions that occurred in connection
with the Extension Meeting to be subject to the Excise Tax under the IR Act.
On August 10, 2023, the Company, Starton, Pubco, Purchaser Merger Sub, CallCo, ExchangeCo, and the Sponsor entered into the Second Amendment
to Business Combination Agreement (the “Second BCA Amendment”), pursuant to which the the Company, Starton, Pubco, Purchaser
Merger Sub, CallCo, ExchangeCo, and the Sponsor agreed to amend the Business Combination Agreement to (a) increase the size of the option
award pool under the Pubco equity plan to fifteen percent (15%) of the aggregate number of shares of Pubco Common Stock issued and outstanding
after the Closing and to provide for an annual “evergreen” increase of five percent (5%); (b) provide that the Sponsor incentive
shares and Company incentive shares to be provided as incentives to support an equity investment or debt financing will be provided on
a pari passu basis; and (c) remove the Closing condition that, upon the Closing, after giving effect to the redemptions and any equity
investment or debt financing, the Company will have net tangible assets of at least $5,000,001.
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 Healthwell Acquisition Corp. I References
to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor”
refer to Healthwell Acquisition Corp. I Sponsor LLC The following discussion and analysis of the Company’s financial condition
and results of operations should be read in conjunction with the unaudited condensed consolidated 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” 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 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 “expect,” “believe,” “anticipate,” “intend,”
“estimate,” “seek” and variations 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 “Cautionary
Note Regarding Forward-Looking Statements and Risk Factor Summary” and “Item 1A. Risk Factors” included in the Company’s
annual report on Form 10-K as filed with the SEC on March 3, 2023 and the Company’s definitive proxy statement on Schedule 14A
as filed with the SEC on July 5, 2023. 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 on
February 2, 2021 as a Delaware corporation and formed for the purpose of effectuating a business combination with one or more businesses.
We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering that occurred on
August 5, 2021 and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection with
our initial business combination (including to the target or pursuant to the forward purchase agreement or other forward purchase agreements
or backstop agreements we may enter into or otherwise, shares issued to the owners of the target, debt issued to bank or other lenders
or the owners of the target, or a combination of the foregoing.
Recent Developments
On April 27, 2023, the Company entered into the
BCA with Starton; Pubco; Purchaser Merger Sub; CallCo; ExchangeCo; the Sponsor, as the representative from and after the Effective Time
of the stockholders of Pubco (other than the Starton Shareholders (as defined below) and their successors and assignees); and Kiriakos
Charlie Perperidis, in the capacity as the representative of the Starton Shareholders from and after the Effective Time. The BCA was
amended by the First BCA Amendment on May 15, 2023, pursuant to which the Parties agreed to amend Section 9.1 of the Business Combination
Agreement to add a new closing condition which requires that, immediately after the Closing, and after giving effect to the Redemption,
the Starton Shareholders will own a number of voting shares of Pubco representing, in the aggregate, no less than 51% of the total voting
power of all issued and outstanding shares of Pubco.
Pursuant to the BCA, subject to the terms and
conditions set forth therein, Purchaser Merger Sub will merge with and into the Company, with the Company continuing as the surviving
entity and wholly-owned subsidiary of Pubco, in connection with which all of the existing securities of the Company will be exchanged
for rights to receive securities of Pubco as follows: (a) each share of the Company’s common stock outstanding immediately prior
to the Effective Time will automatically convert into one share of Pubco Common Stock, and (b) each whole Public Warrant, Private Placement
Warrant and Forward Purchase Warrant will automatically convert into one warrant to purchase shares of Pubco Common Stock on substantially
the same terms and conditions. Immediately following the Purchaser Merger, by means of the Plan of Arrangement, (i) CallCo will acquire
a portion of the issued and outstanding Starton Shares from certain holders in exchange for Pubco Common Stock, and will contribute such
Starton Shares to ExchangeCo in exchange for ExchangeCo common shares, (ii) following the Pubco Share Exchange, ExchangeCo will acquire
the remaining issued and outstanding Starton Shares from the remaining shareholders of Starton in exchange for Exchangeable Shares. The
Exchangeable Shares will be exchangeable, on a one-for-one basis, into shares of Pubco Common Stock, with each share valued at the price
at which the Company redeems Public Shares held by its public stockholders in connection with the Starton Business Combination. As a
result of the foregoing, Starton will become a wholly-owned subsidiary of ExchangeCo and an indirect subsidiary of Pubco.
Each outstanding Starton option will be assumed
by Pubco and automatically converted into an option to purchase shares of Pubco Common Stock in accordance with the Plan of Arrangement
and under an equity incentive plan to be adopted by Pubco prior to the Closing.
Pursuant to the terms of the BCA, the aggregate
base consideration to be delivered to the Starton Shareholders in connection with the Starton Business Combination will be $260.0 million
(including up to $20.0 million of incentive shares provided to potential PIPE investors), subject to adjustments for Starton’s
closing debt (net of cash) and certain other adjustments, which consideration will be payable in newly-issued shares of (i) Pubco Common
Stock or (ii) Exchangeable Shares, each valued at the Redemption Price.
In addition to the shares of Pubco Common Stock
or Exchangeable Shares deliverable at the Closing, the Starton Shareholders will have the contingent right to receive up to an additional
shares 25,000,000 shares of Pubco Common Stock or Exchangeable Shares, as earnout consideration after the Closing. The Earnout Consideration
will be issuable to the Starton Shareholders (as of the date of the Closing) as follows:
| ● | one-third
of the Earnout Shares are issuable upon the VWAP equaling or exceeding $12.00 per share for
any twenty (20) out of any twenty (20) consecutive trading days during the five-year period
after the Closing; |
| | |
| ● | one-third
of the Earnout Shares are issuable upon (i) the VWAP equaling or exceeding $14.00 per share
for any twenty (20) out of any twenty (20) consecutive trading days during the Earnout Period
or (ii) successful completion of a Phase 1B clinical trial for multiple myeloma, meaning
the completion of an interim data analysis which is sufficient to obtain an agreement with
the U.S. Food and Drug Administration (“FDA”) in which the FDA permits Starton
to move forward to a phase 2 clinical study following a Type B End-of-Phase-1 meeting; and |
| | |
| ● | one-third
of the Earnout Shares are issuable upon (i) the VWAP equaling or exceeding $16.00 per share
for any twenty (20) out of any twenty (20) consecutive trading days during the Earnout Period
or (ii) achievement of the successful completion of an FDA required bridging study in healthy
volunteers that proves bio-equivalence between the ambulatory subcutaneous pump and either
a transdermal patch or an on body subcutaneous pump. |
Simultaneously with the execution and delivery
of the BCA, the Company and Starton entered into the Voting Agreements with certain Starton Shareholders required to approve the Starton
Business Combination. Under the Voting Agreements, such Starton Shareholders agreed to vote all of their Starton Shares in favor of the
BCA and the related transactions. Such Starton Shareholders also agreed to take certain other actions in support of the BCA and related
transactions and refrain from taking actions that would adversely affect their ability to perform their obligations under the Voting
Agreements. Such Starton Shareholders also provided a proxy to the Company to vote their Starton Shares in accordance with the foregoing.
The Voting Agreements prevent transfers of the Starton Shares held by such Starton Shareholders between the date of the Voting Agreement
and the date of Closing, except for certain permitted transfers where the recipient also agrees to comply with the Voting Agreement.
Simultaneously with the execution of the BCA,
the Company, Pubco, Starton and the Sponsor also entered into the Sponsor Support Agreement, pursuant to which the Sponsor agreed to
vote all of its shares of the Company’s common stock in favor of the BCA and the Starton Business Combination. The Sponsor also
agreed to waive its anti-dilution rights that would otherwise allow it to maintain ownership of 20% of Pubco. The Sponsor Support Agreement
also prevents transfers of the Company’s securities held by the Sponsor between the date of the Sponsor Support Agreement and the
termination of the Sponsor Support Agreement.
The BCA and related agreements and the First
BCA Amendment are further described in our Current Reports on Form 8-K filed with the SEC on May 3, 2023 and May 15, 2023, respectively
and the Registration Statement on Form S-4 of Pubco, initially filed with the SEC on May 15, 2023 (as amended, the “Registration
Statement”). The foregoing descriptions of each of the BCA, the form of Voting Agreement and the Sponsor Letter Agreement are qualified
in their entirety by reference to such agreement filed as an exhibit to the Quarterly Report filed on May 18, 2023.
On July 21, 2023, the Company issued an aggregate
of 6,249,999 Class A Shares to the Sponsor upon the conversion of an equal number of Class B Shares. The 6,249,999 Class A Shares issued
in the Conversion, approximately 20.0% of the total issued and outstanding Class A Shares after the Conversion, are subject to the same
restrictions as applied to the Class B Shares before the Conversion, including, among others, certain transfer restrictions, waiver of
redemption rights and the obligation to vote in favor of an initial business combination as described in the prospectus for the IPO.
Between July 22, 2023 and July 25, 2023, the Company
and the Sponsor, entered into seven voting and non-redemption agreements (the “Non-Redemption Agreements”) with certain unaffiliated
third parties (each, a “Holder,” and collectively, the “Holders”) in exchange for the Holders agreeing either
not to request redemption, or to reverse any previously submitted redemption demand, with respect to an aggregate of 3,889,523 Public
Shares sold in its Initial Public Offering in connection with the special meeting in lieu of an annual meeting of stockholders of the
Company, which was held on July 26, 2023 (the “Extension Meeting”). The Extension Meeting was held to, among other things,
consider a proposal to amend to the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the
Company must consummate a Business Combination from August 5, 2023 to December 5, 2023 (or such earlier date as determined by the Company’s
board of directors) (the “Extension Amendment”). In consideration of the Non-Redemption Agreements, the Sponsor and Starton
have agreed to transfer to the Holders an aggregate of 155,581 Class A Shares for each month beginning on September 5, 2023 and continuing
for each subsequent month thereafter (including partial months) until the consummation of the Company’s Business Combination (the
“Monthly Shares”). The Monthly Shares will be issued to the Holders substantially concurrently with the closing of the Company’s
Business Combination.
As of the date of this Quarterly Report, the Company
and the Sponsor have entered into Non-Redemption Agreements with respect to an aggregate of 3,889,523 Class A Shares, and the Sponsor
has agreed to transfer an aggregate of 155,581 Class A Shares for each month beginning on September 5, 2023 and continuing for each subsequent
month thereafter (including partial months) until the consummation of the Company’s Business Combination.
The Non-Redemption Agreements increased the amount
of funds that remain in the Company’s Trust Account following the Meeting. Pursuant to the Non-Redemption Agreements, each Holder
has also agreed to vote any Class A Shares held by it as of the record date for the Extension Meeting in favor of the Extension Amendment
at the Extension Meeting and cause all such shares to be counted as present at the Extension Meeting for purposes of establishing a quorum.
On July 26, 2023, the Company held the Extension Meeting. At the Extension
Meeting, the Company’s stockholders approved (1) an amendment to the Company’s amended and restated certificate of incorporation
(the “Amended and Restated Certificate of Incorporation”) to extend the date by which the Company must consummate an initial
Business Combination from August 5, 2023 to December 5, 2023 (or such earlier date as determined by the Company’s board of directors);
(2) an amendment to the Amended and Restated Certificate of Incorporation to provide that, subject to the rights of the holders of any
outstanding class of preferred stock, the number of authorized shares of any class of common stock or preferred stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares of the Company’s capital stock entitled to vote thereon, irrespective of the provisions of Section 242(b)(2)
of the Delaware General Corporation Law; (3) an amendment to the Amended and Restated Certificate of Incorporation to eliminate from the
Amended and Restated Certificate of Incorporation the limitation that the Company may not redeem the shares of Class A common stock sold
as part of the units in the IPO to the extent that such redemption would result in the Company having net tangible assets (as determined
in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended) of less than $5,000,001 (the “Redemption
Limitation”) in order to allow the Company to redeem public shares irrespective of whether such redemption would exceed the Redemption
Limitation (all of the aforementioned amendments, collectively the “Amendments”); and (4) a proposal to ratify the selection
by the audit committee of the Board of Marcum LLP to serve as the Company’s independent registered public accounting firm for the
year ending December 31, 2023. The Company filed the Amendments with the Secretary of State of the State of Delaware on July 26, 2023.
The extension of the date by which the Company must consummate an initial Business Combination from August 5, 2023 to December 5, 2023
is subject to making monthly stock transfers to the Holders of 155,581 Class A shares, which will begin payment on September 5, 2023.
The Monthly Shares will be issued to the Holders substantially concurrently with the closing of the Company’s Business Combination.
In connection with the Extension Meeting, stockholders
holding 20,942,619 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account.
As a result, approximately $215,635,294 (approximately $10.30 per public share) will be removed from the Trust Account to pay such holders
and approximately $41,776,749 will remain in the Trust Account. Following redemptions, the Company has 4,057,381 public shares outstanding.
In the event of either the closing of the BCA
or a mandatory liquidation of the Company prior to December 31, 2023, the Company does not expect the redemptions that occurred in connection
with the Extension Meeting to be subject to the Excise Tax under the IR Act.
On August 10, 2023, the Company, Starton, Pubco, Purchaser Merger Sub,
CallCo, ExchangeCo, and the Sponsor entered into the Second Amendment to Business Combination Agreement (the “Second BCA Amendment”),
pursuant to which the the Company, Starton, Pubco, Purchaser Merger Sub, CallCo, ExchangeCo, and the Sponsor agreed to amend the Business
Combination Agreement to (a) increase the size of the option award pool under the Pubco equity plan to fifteen percent (15%) of the aggregate
number of shares of Pubco Common Stock issued and outstanding after the Closing and to provide for an annual “evergreen” increase
of five percent (5%); (b) provide that the Sponsor incentive shares and Company incentive shares to be provided as incentives to support
an equity investment or debt financing will be provided on a pari passu basis; and (c) remove the Closing condition that, upon the Closing,
after giving effect to the redemptions and any equity investment or debt financing, the Company will have net tangible assets of at least
$5,000,001.
Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities for the period from February 2, 2021 (inception) through June 30, 2023 were
organizational activities, our initial public offering and identifying target companies 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 cash and cash equivalents held in our trust account. We incur expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as due diligence expenses in connection with our search
for business combination targets.
For the three months ended June 30, 2023, we had
net loss of $1,245,704, which resulted from a loss on the change in the fair value of warrant liabilities of $2,222,000, a loss on the
change in fair value of derivative liability—forward purchase agreement of $276,000, operating and formation costs of $1,195,181,
income tax expense of $650,442, franchise tax expense of $50,200, and loss on change in fair value of promissory note - related party
of $123, offset in part by unrealized gain on investments held in Trust Account of $232,425, realized gain on investments held in Trust
Account of $2,915,143, and dividend income on investments held in Trust Account of $674.
For the three months ended June 30, 2022, we
had net income of $2,644,342, which resulted from a gain on the change in fair value of warrant liabilities of $2,626,000, unrealized
gains on investments held in Trust Account of $189,623, realized gains on investments held in Trust Account of $126,548, and a gain on
the change in fair value of derivative asset - forward purchase agreement of 16,000, offset in part by operating and formation costs
of $263,429 and franchise tax expense of $50,400.
For the six months June 30, 2023, we had net loss
of $869,650, which resulted from a loss on the change in the fair value of warrant liabilities of $3,030,000, a loss on the change in
fair value of derivative liability—forward purchase agreement of $812,000, operating and formation costs of $1,570,476, income tax
expense of $1,207,434, franchise tax expense of $100,450, interest expense of $1,095, and loss on change in fair value of promissory note
- related party of $123, offset in part by unrealized gain on investments held in Trust Account of $386,117, realized gain on investments
held in Trust Account of $5,465,137, and dividend income on investments held in Trust Account of $674.
For the six months ended June 30, 2022, we had
net income of $8,044,722, which resulted from a gain on the change in fair value of warrant liabilities of $8,080,000, unrealized gains
on investments held in Trust Account of $262,400, a gain on the change in fair value of derivative asset—forward purchase agreement
of $232,000, realized gains on investments held in Trust Account of $151,838, offset in part by operating and formation costs of $581,116,
and franchise tax expense of $100,400.
Liquidity, Capital Resources, and Going Concern
On August 5, 2021, we consummated our initial
public offering of 25,000,000 units generating gross proceeds to the Company of $250,000,000. Simultaneously with the consummation of
our initial public offering, we completed the private sale of 7,700,000 private placement warrants to our sponsor at a purchase price
of $1.00 per warrant, generating gross proceeds of $7,700,000. A portion of proceeds from the sale of the private placement warrants
were added to our net proceeds from the initial public offering held in a trust account. If we do not complete an initial business combination
by December 5, 2023 (28 months from the closing of our initial public offering), the proceeds from the sale of the private placement
warrants deposited in the trust account will be used to fund the redemption of the public shares (subject to the requirements of applicable
law) and the private placement warrants will expire worthless.
For the six months June 30, 2023, net cash used
in operating activities was $1,117,575, which was due to a unrealized gain on investments held in the trust account of $386,117, realized
gain on investments held in the trust account of $5,465,137, dividend income on investments held in Trust Account of $674, and our net
loss of $869,650, partially offset by change in fair value of derivative liability-forward purchase agreement of $812,000, change in fair
value of warrant liabilities of $3,030,000, deferred tax expense of $81,085, changes in working capital of $1,680,795, and change in the
fair value of promissory notes – related party of $123.
For the six months ended June 30, 2022, net cash
used in operating activities was $480,958, which was due to a non-cash gain on the change in fair value of warrant liabilities of $8,080,000,
a gain on the change in fair value of derivative asset—forward purchase agreement of $232,000, unrealized gains on investments
in the Trust Account of $262,400 and realized gains on investments in the Trust Account of $151,838, offset in part by our net income
of $8,044,722 and changes in working capital of $200,558.
For the six months June 30, 2023, net cash provided
by investing activities of $626,748 was the proceeds received from the trust account to pay taxes.
For the six months ended June 30, 2022, net cash
provided by investing activities of $263,316 was the result of the amount of proceeds received from the Trust Account to pay franchise
taxes.
For the six months
June 30, 2023, net cash provided by financing activities was $400,000, which was a result of proceeds
from a convertible promissory note.
There were no cash flows from financing activities
for the six months June 30, 2022.
As of June 30, 2023, we had cash of $46,925
held outside 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,
and structure, negotiate and complete a business combination. We also incur expenses as a result of being a public company for legal,
financial reporting, accounting and compliance. We will also have obligations to pay Delaware and California state franchise taxes and
other taxes with the funds held outside of the trust account to the extent that interest earned on the trust account is not sufficient
to cover these taxes. We currently believe that the interest earned on the trust account should be sufficient to cover these taxes.
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 initial business combination. We may withdraw interest to pay
taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding
after the completion of our initial public offering, to be to be $200,000 per year for Delaware, and $800 per year for California, plus
other taxes, including but not limited to federal and state income and excise taxes, which we may pay from funds from the sale of the
private placement warrants held outside of the trust account or from interest earned on the funds held in the trust account and released
to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts
held in the trust account. To the extent that our common stock or debt is used, in whole or in part, as consideration to complete our
initial 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.
The unaudited condensed consolidated financial
statements have been prepared in conformity with GAAP, which contemplates continuation of the Company as a going concern and the realization
of assets and the satisfaction of liabilities in the normal course of business. We have incurred and expect to continue to incur significant
costs in pursuit of our acquisition plans. We anticipate that the cash held outside of the trust account as of June 30, 2023, will
not be sufficient to allow us to operate until December 5, 2023, the date at which we must complete our initial business combination.
Further, if our initial business combination is not consummated December 5, 2023, there will be a mandatory liquidation and subsequent
dissolution of the Company. These conditions raise substantial doubt about our ability to continue as a going concern for the next 12
months after the date that the accompanying financial statements are issued.
We plan to address this uncertainty through our
initial business combination as discussed above. There is no assurance that our plans to consummate our initial business combination
will be successfully completed by December 5, 2023. The financial statements included elsewhere in this Report do not include any
adjustments that might result from the outcome of this uncertainty.
In order to fund working capital deficiencies
or finance transaction costs in connection with an intended initial 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 on a non-interest basis. If
we complete our initial business combination, we would repay such loaned amounts. In the event that our initial 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 the trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post
business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private
placement warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.
Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an
affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all
rights to seek access to funds in the trust account.
On March 17, 2023, we issued an unsecured promissory
note in the principal amount of up to $750,000 to the Sponsor (the “March Working Capital Loan”).The March Working Capital
Loan bears no interest and is due and payable upon the earlier to occur of (i) the date on which our initial business combination is
consummated and (ii) the liquidation of the Company on or before December 5, 2023, or such later liquidation date as may be approved
by our stockholders. At the election of the Sponsor, the unpaid principal amount of the March Working Capital Loan may be converted into
warrants of the Company (the “Conversion Warrants”) with the total Conversion Warrants so issued equal to: (x) the portion
of the principal amount of the March Working Capital Loan being converted divided by (y) $1.00, rounded up to the nearest whole number
of warrants. The Company drew $60,000 on March 31, 2023, $125,000 on April 17, 2023, $20,000 on April 26, 2023, and $195,000 on May 8,
2023 from the March Working Capital Loan. The outstanding balance as of June 30, 2023 is $400,000.
The fair value option was elected (see Note 10
of the condensed consolidated financial statements and the notes thereto contained elsewhere in this Report) and, as such, the fair value
of the March Working Capital Loan is shown on the condensed consolidated balance sheets as $276,276 and $0 as of June 30, 2023 and
December 31, 2022, respectively. The difference between the amount of the borrowing of $400,000 and the initial fair value of $276,154
is $123,847 and is recorded as an equity contribution in the Condensed Consolidated Statements of Changes in Stockholders’ Deficit.
These amounts are estimates and may differ materially
from our actual expenses. In addition, we could use a portion of the funds not placed in trust to pay commitment fees for financing,
fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision
(a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors
on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have
any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business,
the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of
the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result
of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with
respect to, prospective target businesses.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements
as of June 30, 2023 and December 31, 2022.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities, other than described below.
Promissory Note—Related Party
On February 10, 2021, the Company issued an unsecured
promissory note, as amended on July 6, 2021, to our sponsor, pursuant to which the Company could borrow up to an aggregate of $350,000
to cover expenses related to our initial public offering. The Promissory Note was non-interest bearing and was payable on the earlier
of (i) June 30, 2022 or (ii) the consummation of our initial public offering. On August 5, 2021, the Company repaid the outstanding balance
under the Promissory Note of $350,000 that was borrowed prior to our initial public offering. As of December 31, 2022, there was no borrowings
outstanding under the Promissory Note. The Company no longer has the ability to borrow under the Promissory Note.
On March 17, 2023, the Company issued an unsecured
promissory note in the principal amount of up to $750,000 to the Sponsor (the “Promissory Note”).The Working Capital Note
bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial business combination
is consummated and (ii) the liquidation of the Company on or before December 5, 2023, or such later liquidation date as may be approved
by the Company’s stockholders. At the election of the Sponsor, the unpaid principal amount of the Working Capital Note may be converted
into warrants of the Company (the “Conversion Warrants”) with the total Conversion Warrants so issued equal to: (x) the portion
of the principal amount of the Working Capital Note being converted divided by (y) $1.00, rounded up to the nearest whole number of warrants.
The Company drew $60,000 on March 31, 2023, $125,000 on April 17, 2023, $20,000 on April 26, 2023, and $195,000 on May 8, 2023 from the
March Working Capital Loan, which has not yet been repaid as of June 30, 2023.
The fair value option was elected (see Note 10
of the condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report) and, as such,
the fair value of the March Working Capital Loan is shown on the condensed consolidated balance sheets as $276,276 and $0 as of June 30,
2023 and December 31, 2022, respectively. The difference between the amount of the borrowing of $400,000 and the initial fair value of
$276,154 is $123,847 and is recorded as an equity contribution in the Condensed Consolidated Statements of Changes in Stockholders’
Deficit.
Underwriting Agreement
The Company granted the underwriters a 45-day
option to purchase up to 3,750,000 additional units to cover over-allotments at the initial public offering price, less the underwriting
discounts and commissions. On September 11, 2021, the over-allotment option expired.
The underwriters were paid a cash underwriting
discount of $0.20 per Unit, or $5,000,000 in the aggregate, upon the closing of our Initial Public Offering. In addition, $0.35 per unit,
or $8,750,000 in the aggregate will be payable to the underwriters as deferred underwriting commissions. The deferred fee will become
payable to the underwriters from the amounts held in the trust account solely in the event that the Company completes an initial business
combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies and Significant
Estimates
The preparation of condensed consolidated financial
statements and related disclosures in conformity with GAAP 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 consolidated 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
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition
of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including
whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment
is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required
to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated
fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statement of operations. The accounting
treatment of derivative financial instruments required that the Company record the warrants as derivative liabilities at fair value upon
the closing of our initial public offering. As of June 30, 2023, the Company estimated the fair value of the warrant derivative
liabilities to be $4,646,000. The public warrants were allocated a portion of the proceeds from the issuance of the units equal to its
fair value.
Class A Common Stock Subject to Possible
Redemption
All of the 25,000,000 shares of Class A common
stock sold as part of the units in our initial public offering contain a redemption feature which allows for the redemption of such public
shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with our initial
business combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation.
In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption
provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent
equity. Therefore, all public shares have been classified outside of permanent equity.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of
each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional
paid-in capital and accumulated deficit.
Net Income Per Share of Common Stock
Net income per common share is computed by dividing
net income by the weighted-average number of shares of common stock outstanding during the period. Remeasurement associated with the
redeemable shares of Class A common stock is excluded from net income per share as the redemption value approximates fair value. Therefore,
the income per share calculation allocates income and losses shared pro rata between Class A and Class B common stock. As a result, the
calculated net income per share is the same for Class A and Class B shares of common stock. The Company has not considered the effect
of the warrants sold in our initial public offering and private placement to purchase an aggregate of 20,200,000 shares in the calculation
of diluted net income per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result,
diluted net income per share is the same as basic net income per share for the periods presented.
Use of Estimates
The preparation of condensed consolidated 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 condensed consolidated 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 condensed consolidated financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly
from those estimates. Significant estimates included in the condensed consolidated financial statements include warrant liabilities and
derivative financial instruments.
Actual results could materially differ from those
estimates.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
consolidated financial statements.
Factors That May Adversely Affect our Results
of Operations
Our results of operations and our ability to
complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility
in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the
financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of
new variants, and geopolitical instability, such as the military conflict in Ukraine. We cannot at this time fully predict the likelihood
of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our
ability to complete an initial business combination.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information otherwise required under this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under
the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures as of June 30, 2023. Based upon their evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under
the Exchange Act) were effective as of June 30, 2023.
Changes in Internal Control Over Financial
Reporting
During the most recently completed fiscal quarter,
there has been no change in our internal control over financial reporting (as defined in Rules 13a-15 (f) and 15d-15 (f) under the Exchange
Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our management team, there
is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against
any of our property.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2
of the Exchange Act, we are not required to include risk factors in this Report. As of the date of this Report, there have been no material changes with respect to those risk factors previously disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 3, 2023, our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2023, as filed with the SEC on May 18, 2023, and our definitive proxy statement on Schedule 14A, as filed
with the SEC on July 5, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations
or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination.
We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
For risks related to Starton and the Starton
Business Combination, see Pubco’s Registration Statement on Form S-4 filed with the SEC on May 15, 2023 and amendments
thereto.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
On July 21, 2023, we
issued an aggregate of 6,249,999 shares of Class A common stock to the Sponsor, upon the conversion of an equal number of shares of Class
B common stock held by the Sponsor(the “Founder Conversion”). The 6,249,999 shares of Class A common stock issued in connection
with the Founder Conversion are subject to the same restrictions as applied to the Class B common stock before the Founder Conversion,
including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial
business combination as described in the prospectus for the Initial Public Offering. Following the Founder Conversion and the redemptions
in connection with the Extension, there were 10,307,380 shares of Class A common stock issued and outstanding and one share of Class B
common stock issued and outstanding. As a result of the Founder Conversion and the redemptions in connection with the Extension, the Sponsor
held 60.6% of the outstanding Class A common stock.
Use of Proceeds
For a description of the use of proceeds generated
in our initial public offering and private placement, see Part II, Item 5 of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2021, as filed with the SEC on March 28, 2022. There has been no material change in the planned use
of proceeds from the Initial Public Offering and private placement as described in the Registration Statement. The specific investments
in our Trust Account may change from time to time.
Purchases of Equity Securities by the Issuer
and Affiliated Purchasers
On July 26, 2023, the Company held a special
meeting in lieu of an annual meeting of stockholders of the Company, which was held on July 26, 2023 (the “Extension
Meeting”). At the Extension Meeting, the Company’s stockholders approved (1) an amendment to the Company’s amended
and restated certificate of incorporation (the “Charter”) to extend the date by which the Company must consummate an
initial Business Combination from August 5, 2023 to December 5, 2023 (or such earlier date as determined by the Company’s
board of directors); (2) an amendment to the Charter to provide that, subject to the rights of the holders of any outstanding class
of preferred stock, the number of authorized shares of any class of common stock or preferred stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares of the Company’s capital stock entitled to vote thereon, irrespective of the provisions of Section
242(b)(2) of the Delaware General Corporation Law; (3) an amendment to the Charter to eliminate from the Charter the limitation that
the Company may not redeem the shares of Class A common stock sold as part of the units in the IPO to the extent that such
redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Securities Exchange Act of 1934, as amended) of less than $5,000,001 (the “Redemption Limitation”) in order to allow the
Company to redeem public shares irrespective of whether such redemption would exceed the Redemption Limitation (all of the
aforementioned amendments, collectively the “Charter Amendments”); and (4) a proposal to ratify the selection by the
audit committee of the Board of Marcum LLP to serve as the Company’s independent registered public accounting firm for the
year ending December 31, 2023. The Company filed the Charter Amendments with the Secretary of State of the State of Delaware on July
26, 2023.
There were no repurchases of our equity securities
by us or an affiliate during the fiscal quarter covered by the Report.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following documents are filed as part of,
or incorporated by reference into, this Report:
No. |
|
Description of
Exhibit |
|
|
2.1 |
|
Agreement and Plan of Merger,
dated as of April 27, 2023, by and among Healthwell Acquisition Corp. I, Starton Therapeutics, Inc., HWEL Holdings Corp., HWEL Merger
Sub Corp., 1412384 B.C. Unlimited Liability Company, 1412388 B.C. Ltd, Healthwell Acquisition Corp. I Sponsor LLC, and Kiriakos Charlie
Perperidis.(1) |
|
|
|
2.2 |
|
First Amendment to Business Combination
Agreement, dated as of May 15, 2023, by and among Healthwell Acquisition Corp. I, Healthwell Acquisition Corp. I Sponsor LLC, HWEL
Holdings Corp., HWEL Merger Sub Corp., 1412384 B.C. Unlimited Liability Company, 1412388 B.C. Ltd, Starton Therapeutics, Inc. and
Kiriakos Charlie Perperidis.(2) |
|
|
|
2.3 |
|
Second
Amendment to Business Combination Agreement, dated as of August 10, 2023, by and among Healthwell Acquisition Corp. I, Healthwell
Acquisition Corp. I Sponsor LLC, HWEL Holdings Corp., HWEL Merger Sub Corp., 1412384 B.C. Unlimited Liability Company, 1412388 B.C.
Ltd, Starton Therapeutics, Inc. and Kiriakos Charlie Perperidis.(5) |
|
|
|
3.1 |
|
Amendment to Amended and Restated Certificate of Incorporation. (4) |
|
|
|
10.1 |
|
Form of Voting Agreement, dated
as of April 27, 2023, by and among Healthwell Acquisition Corp. I, Starton Therapeutics, Inc., and certain shareholders of Starton
Therapeutics, Inc., party thereto.(1) |
|
|
|
10.2 |
|
Sponsor Support Agreement, dated
as of April 27, 2023, by and among Healthwell Acquisition Corp. I, Healthwell Acquisition Corp. I Sponsor LLC, HWEL Holdings Corp.
and Starton Therapeutics, Inc.(1) |
|
|
|
10.3 |
|
Form of Voting and Non-Redemption
Agreement.(3) |
|
|
31.1 |
|
Certification of the Principal
Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
31.2 |
|
Certification of the Principal
Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
32.1 |
|
Certification of the Principal
Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
32.2 |
|
Certification of the Principal
Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
101.INS |
|
Inline XBRL Instance Document.* |
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension
Schema Document.* |
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension
Calculation Linkbase Document.* |
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension
Definition Linkbase Document.* |
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension
Label Linkbase Document.* |
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension
Presentation Linkbase Document.* |
|
|
104 |
|
Cover Page Interactive Data File
(Embedded as Inline XBRL document and contained in Exhibit 101).* |
(1) |
Incorporated by reference to the Company’s Current Report on
Form 8-K as filed with the SEC on May 3, 2023. |
(2) |
Incorporated by reference to the Company’s Current Report on
Form 8-K as filed with the SEC on May 15, 2023. |
(3) |
Incorporated by reference to the Company’s Current Report on
Form 8-K as filed with the SEC on July 25, 2023. |
(4) |
Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on August 1, 2023. |
(5) |
Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on August 11, 2023. |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Healthwell Acquisition Corp. I |
|
|
|
Date: August 18, 2023 |
By: |
/s/ Alyssa Rapp |
|
|
Alyssa Rapp |
|
|
Chief Executive Officer |
|
|
|
Healthwell Acquisition Corp. I |
|
|
|
Date: August 18, 2023 |
By: |
/s/ Tracy Wan |
|
|
Tracy Wan |
|
|
President and Chief Financial Officer |
25000000
25000000
25000000
25000000
0.03
0.04
0.08
0.26
6250000
6250000
6250000
6250000
0.03
0.04
0.08
0.26
25000000
25000000
25000000
25000000
6250000
6250000
6250000
6250000
0.03
0.03
0.04
0.04
0.08
0.08
0.26
0.26
false
--12-31
Q2
0001845013
0001845013
2023-01-01
2023-06-30
0001845013
hwelu:UnitsEachConsistingOfOneShareOfClassACommonStockAndOnehalfOfOneRedeemableWarrantMember
2023-01-01
2023-06-30
0001845013
hwelu:ClassACommonStockParValue00001PerShareMember
2023-01-01
2023-06-30
0001845013
hwelu:RedeemableWarrantsEachWarrantExercisableForOneShareOfClassACommonStockFor1150PerShareMember
2023-01-01
2023-06-30
0001845013
us-gaap:CommonClassAMember
2023-08-18
0001845013
us-gaap:CommonClassBMember
2023-08-18
0001845013
2023-06-30
0001845013
2022-12-31
0001845013
us-gaap:CommonClassAMember
2023-06-30
0001845013
us-gaap:CommonClassAMember
2022-12-31
0001845013
us-gaap:CommonClassBMember
2023-06-30
0001845013
us-gaap:CommonClassBMember
2022-12-31
0001845013
2023-04-01
2023-06-30
0001845013
2022-04-01
2022-06-30
0001845013
2022-01-01
2022-06-30
0001845013
us-gaap:CommonClassAMember
2023-04-01
2023-06-30
0001845013
us-gaap:CommonClassAMember
2022-04-01
2022-06-30
0001845013
us-gaap:CommonClassAMember
2023-01-01
2023-06-30
0001845013
us-gaap:CommonClassAMember
2022-01-01
2022-06-30
0001845013
us-gaap:CommonClassBMember
2023-04-01
2023-06-30
0001845013
us-gaap:CommonClassBMember
2022-04-01
2022-06-30
0001845013
us-gaap:CommonClassBMember
2023-01-01
2023-06-30
0001845013
us-gaap:CommonClassBMember
2022-01-01
2022-06-30
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2022-12-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2022-12-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2022-12-31
0001845013
us-gaap:RetainedEarningsMember
2022-12-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2023-01-01
2023-03-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2023-01-01
2023-03-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2023-01-01
2023-03-31
0001845013
us-gaap:RetainedEarningsMember
2023-01-01
2023-03-31
0001845013
2023-01-01
2023-03-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2023-03-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2023-03-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2023-03-31
0001845013
us-gaap:RetainedEarningsMember
2023-03-31
0001845013
2023-03-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2023-04-01
2023-06-30
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2023-04-01
2023-06-30
0001845013
us-gaap:AdditionalPaidInCapitalMember
2023-04-01
2023-06-30
0001845013
us-gaap:RetainedEarningsMember
2023-04-01
2023-06-30
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2023-06-30
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2023-06-30
0001845013
us-gaap:AdditionalPaidInCapitalMember
2023-06-30
0001845013
us-gaap:RetainedEarningsMember
2023-06-30
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2021-12-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2021-12-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2021-12-31
0001845013
us-gaap:RetainedEarningsMember
2021-12-31
0001845013
2021-12-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2022-01-01
2022-03-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2022-01-01
2022-03-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2022-01-01
2022-03-31
0001845013
us-gaap:RetainedEarningsMember
2022-01-01
2022-03-31
0001845013
2022-01-01
2022-03-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2022-03-31
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2022-03-31
0001845013
us-gaap:AdditionalPaidInCapitalMember
2022-03-31
0001845013
us-gaap:RetainedEarningsMember
2022-03-31
0001845013
2022-03-31
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2022-04-01
2022-06-30
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2022-04-01
2022-06-30
0001845013
us-gaap:AdditionalPaidInCapitalMember
2022-04-01
2022-06-30
0001845013
us-gaap:RetainedEarningsMember
2022-04-01
2022-06-30
0001845013
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2022-06-30
0001845013
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2022-06-30
0001845013
us-gaap:AdditionalPaidInCapitalMember
2022-06-30
0001845013
us-gaap:RetainedEarningsMember
2022-06-30
0001845013
2022-06-30
0001845013
us-gaap:CommonClassAMember
us-gaap:IPOMember
2021-08-05
2021-08-05
0001845013
us-gaap:CommonClassAMember
2021-08-05
0001845013
us-gaap:CommonClassAMember
2021-08-05
2021-08-05
0001845013
hwelu:SponsorMember
us-gaap:PrivatePlacementMember
2023-01-01
2023-06-30
0001845013
hwelu:SponsorMember
us-gaap:PrivatePlacementMember
2023-06-30
0001845013
us-gaap:IPOMember
2023-01-01
2023-06-30
0001845013
us-gaap:IPOMember
2023-06-30
0001845013
2021-08-05
2021-08-05
0001845013
us-gaap:IPOMember
2021-08-05
0001845013
us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember
2023-06-30
0001845013
2023-12-05
0001845013
2023-04-27
2023-04-27
0001845013
hwelu:PubcoCommonStockMember
2023-06-30
0001845013
hwelu:SponsorMember
2023-01-01
2023-06-30
0001845013
2022-08-01
2022-08-16
0001845013
2022-01-01
2022-12-31
0001845013
hwelu:ForwardPurchaseAgreementMember
2023-01-01
2023-06-30
0001845013
us-gaap:WarrantMember
2023-06-30
0001845013
us-gaap:IPOMember
2021-08-05
2021-08-05
0001845013
hwelu:PublicWarrantsMember
2021-08-05
2021-08-05
0001845013
us-gaap:PrivatePlacementMember
2023-06-30
0001845013
2021-02-01
2021-02-10
0001845013
us-gaap:CommonClassBMember
hwelu:FounderSharesMember
2021-02-10
0001845013
us-gaap:CommonClassBMember
2021-02-01
2021-02-10
0001845013
us-gaap:CommonClassBMember
2021-02-10
0001845013
us-gaap:CommonClassBMember
2021-09-01
2021-09-11
0001845013
hwelu:SponsorMember
us-gaap:CommonClassAMember
2023-06-30
0001845013
hwelu:AnchorInvestorsMember
us-gaap:IPOMember
2023-01-01
2023-06-30
0001845013
hwelu:AnchorInvestorsMember
us-gaap:IPOMember
2023-06-30
0001845013
hwelu:OriginalAnchorInvestorsMember
us-gaap:IPOMember
2023-01-01
2023-06-30
0001845013
hwelu:OriginalAnchorInvestorsMember
us-gaap:IPOMember
2023-06-30
0001845013
hwelu:OriginalAnchorInvestorsMember
2023-06-30
0001845013
hwelu:SubscriptionAgreementMember
hwelu:SponsorMember
hwelu:FounderSharesMember
2023-01-01
2023-06-30
0001845013
hwelu:FounderSharesMember
2023-06-30
0001845013
hwelu:FounderSharesMember
2023-01-01
2023-06-30
0001845013
hwelu:AdditionalAnchorInvestorsMember
2021-07-20
0001845013
hwelu:SponsorMember
2023-01-01
2023-06-30
0001845013
hwelu:SponsorMember
hwelu:WorkingCapitalLoansMember
2023-06-30
0001845013
hwelu:WorkingCapitalLoansMember
hwelu:SponsorMember
2023-06-30
0001845013
2023-03-01
2023-03-17
0001845013
hwelu:RelatedPartyLoansMember
2023-06-30
0001845013
hwelu:UnderwritingAgreementMember
us-gaap:OverAllotmentOptionMember
2023-01-01
2023-06-30
0001845013
hwelu:UnderwritingAgreementMember
2023-01-01
2023-06-30
0001845013
hwelu:UnderwritingAgreementMember
2023-06-30
0001845013
2023-04-07
0001845013
us-gaap:OtherAssetsMember
2023-01-01
2023-06-30
0001845013
hwelu:PrivatePlacementWarrantsMember
2023-06-30
0001845013
hwelu:PrivatePlacementWarrantsMember
2022-12-31
0001845013
hwelu:PublicWarrantsMember
2023-06-30
0001845013
hwelu:PublicWarrantsMember
2022-12-31
0001845013
hwelu:SharePriceEqualsOrExceedsEighteenRupeesPerDollarMember
us-gaap:CommonClassAMember
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsEighteenRupeesPerDollarMember
us-gaap:CommonClassAMember
2023-01-01
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsEighteenRupeesPerDollarMember
2023-01-01
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsUsdTenPerShareMember
us-gaap:CommonClassAMember
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsUsdTenPerShareMember
us-gaap:CommonClassAMember
2023-01-01
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsUsdTenPerShareMember
hwelu:PrivatePlacementWarrantsMember
us-gaap:CommonClassAMember
2023-06-30
0001845013
hwelu:SharePriceLessThanUsdNinePointTwoPerShareMember
2023-06-30
0001845013
hwelu:SharePriceLessThanUsdNinePointTwoPerShareMember
us-gaap:CommonClassAMember
2023-06-30
0001845013
hwelu:SharePriceEqualsOrExceedsUsdTenPerShareMember
2023-06-30
0001845013
hwelu:ForwardPurchaseWarrantsMember
us-gaap:IPOMember
2023-01-01
2023-06-30
0001845013
hwelu:ForwardPurchaseWarrantsMember
2023-01-01
2023-06-30
0001845013
hwelu:PublicWarrantsMember
2023-01-01
2023-06-30
0001845013
hwelu:PrivatePlacementWarrantsMember
2023-01-01
2023-06-30
0001845013
us-gaap:CommonClassBMember
2021-09-11
2021-09-11
0001845013
us-gaap:WarrantMember
2023-01-01
2023-06-30
0001845013
us-gaap:FairValueInputsLevel1Member
2023-01-01
2023-06-30
0001845013
us-gaap:FairValueInputsLevel2Member
2023-01-01
2023-06-30
0001845013
hwelu:ForwardPurchaseAgreementsMember
2023-01-01
2023-06-30
0001845013
us-gaap:FairValueInputsLevel1Member
hwelu:WarrantsLiabilitiesMember
2023-04-01
2023-06-30
0001845013
hwelu:PublicWarrantsMember
us-gaap:FairValueInputsLevel2Member
2023-04-01
2023-06-30
0001845013
hwelu:PrivatePlacementWarrantsMember
us-gaap:FairValueInputsLevel2Member
2023-04-01
2023-06-30
0001845013
hwelu:ForwardPurchaseAgreementsMember
2023-04-01
2023-06-30
0001845013
hwelu:WarrantsLiabilitiesMember
2023-04-01
2023-06-30
0001845013
us-gaap:FairValueInputsLevel1Member
us-gaap:NoteWarrantMember
2022-01-01
2022-06-30
0001845013
us-gaap:FairValueInputsLevel3Member
2022-01-01
2022-06-30
0001845013
hwelu:ForwardPurchaseAgreementsMember
2022-01-01
2022-06-30
0001845013
hwelu:WarrantsLiabilitiesMember
2022-04-01
2022-06-30
0001845013
hwelu:PublicWarrantsMember
us-gaap:FairValueInputsLevel1Member
2022-04-01
2022-06-30
0001845013
hwelu:PrivatePlacementWarrantsMember
us-gaap:FairValueInputsLevel3Member
2022-04-01
2022-06-30
0001845013
hwelu:ForwardPurchaseAgreementsMember
2022-04-01
2022-06-30
0001845013
us-gaap:FairValueInputsLevel1Member
2023-06-30
0001845013
us-gaap:FairValueInputsLevel2Member
2023-06-30
0001845013
us-gaap:FairValueInputsLevel3Member
2023-06-30
0001845013
us-gaap:FairValueInputsLevel3Member
2023-01-01
2023-06-30
0001845013
us-gaap:FairValueInputsLevel1Member
2022-12-31
0001845013
us-gaap:FairValueInputsLevel2Member
2022-12-31
0001845013
us-gaap:FairValueInputsLevel3Member
2022-12-31
0001845013
us-gaap:FairValueInputsLevel1Member
2022-01-01
2022-12-31
0001845013
us-gaap:FairValueInputsLevel2Member
2022-01-01
2022-12-31
0001845013
us-gaap:FairValueInputsLevel3Member
2022-01-01
2022-12-31
0001845013
srt:MaximumMember
2023-01-01
2023-06-30
0001845013
srt:MinimumMember
2023-01-01
2023-06-30
0001845013
srt:MaximumMember
2022-01-01
2022-12-31
0001845013
srt:MinimumMember
2022-01-01
2022-12-31
0001845013
2023-06-30
2023-06-30
0001845013
2023-05-04
2023-05-04
0001845013
2023-04-26
2023-04-26
0001845013
2023-04-17
2023-04-17
0001845013
us-gaap:CommonClassAMember
us-gaap:SubsequentEventMember
2023-07-21
0001845013
us-gaap:CommonClassBMember
us-gaap:SubsequentEventMember
2023-07-21
0001845013
us-gaap:SubsequentEventMember
2023-07-21
0001845013
us-gaap:SubsequentEventMember
hwelu:PublicOfferingMember
2023-07-26
0001845013
us-gaap:SubsequentEventMember
hwelu:SponsorMember
2023-09-05
0001845013
us-gaap:CommonClassAMember
us-gaap:SubsequentEventMember
2023-09-05
0001845013
us-gaap:SubsequentEventMember
2023-09-05
2023-09-05
0001845013
hwelu:PublicOfferingMember
2023-06-30
0001845013
srt:ScenarioForecastMember
hwelu:PublicOfferingMember
2023-08-01
2023-08-10
0001845013
srt:ScenarioForecastMember
2023-08-01
2023-08-10
0001845013
srt:ScenarioForecastMember
2023-08-10
xbrli:shares
iso4217:USD
iso4217:USD
xbrli:shares
xbrli:pure
I, Alyssa J. Rapp, certify that:
In connection with the Quarterly
Report on Form 10-Q of Healthwell Acquisition Corp. I (the “Company”) for the quarterly period ended June 30, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alyssa J. Rapp, Chief Executive Officer
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that to my knowledge:
In connection with the Quarterly
Report on Form 10-Q of Healthwell Acquisition Corp. I (the “Company”) for the quarterly period ended June 30, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tracy Wan, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that
to my knowledge: