10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	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)		(IRS Employer Identification No.)

1001 Green Bay Rd, #227

Winnetka, IL 60093

(Address of principal executive offices and 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 Exchange LLC
Class A common stock, par value $0.0001 per share	HWEL	The Nasdaq Stock Exchange LLC
Redeemable warrants, each warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share	HWELW	The Nasdaq Stock Exchange 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

(Section 232.405 of this chapter) during the preceding 12 months (or 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:

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

November 10

, 2022, there were 25,000,000 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 6,250,000 shares of the registrant’s Class B common stock, par value $0.0001 per share issued and outstanding.

HEALTHWELL ACQUISITION CORP. I

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Condensed Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	1

	Condensed Statements of Operations for the three and nine months ended September 30, 2022, for the three months ended September 30, 2021 and for the period from February 2, 2021 (inception) through September 30, 2021 (unaudited)	2

	Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022, for the three months ended September 30, 2021 and for the period from February 2, 2021 (inception) through September 30, 2021 (unaudited)	3

	Condensed Statements of Cash Flows for the nine months ended September 30, 2022, and for the period from February 2, 2021 (inception) through September 30, 2021 (unaudited)	5

	Notes to Unaudited Condensed Financial Statements	6

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30

Item 4.	CONTROLS AND PROCEDURES	31

PART II - OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	31

Item 1A.	RISK FACTORS	31

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND PROCEEDS	32

Item 3.	DEFAULTS UPON SENIOR SECURITIES	33

Item 4.	MINE SAFETY DISCLOSURES	33

Item 5.	OTHER INFORMATION	33

Item 6.	EXHIBITS	34

SIGNATURES		35

PART 1 - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

HEALTHWELL ACQUISITION CORP. I

CONDENSED BALANCE SHEETS


	September 30, 2022			December 31, 2021
	(Unaudited)
ASSETS:
Current assets:
Cash	$	372,382		$	749,256
Prepaid expenses		434,649			489,708

Total current assets		807,031			1,238,964
Prepaid expenses - noncurrent		—			265,999
Investments held in trust account		251,351,265			250,036,950

TOTAL ASSETS	$	252,158,296		$	251,541,913

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	74,020		$	12,475
Accrued expenses		421,939			82,947
Income tax payable		83,563			—
Franchise tax payable		40,026			182,466

Total current liabilities		619,548			277,888
Warrant liabilities		4,040,000			11,918,000
Derivative liability - forward purchase agreement		172,000			16,000
Deferred underwriting fee payable		8,750,000			8,750,000
Deferred tax liability		199,639			—

Total liabilities		13,781,187			20,961,888
Commitments and Contingencies (Note 6)
Class A common stock, subject to possible redemption, $0.0001 par value; 25,000,000 shares at redemption value		250,913,186			250,000,000
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		(12,536,702	)		(19,420,600	)

Total stockholders’ deficit		(12,536,077	)		(19,419,975	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	252,158,296		$	251,541,913

The accompanying notes are an integral part of these unaudited condensed financial statements.

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HEALTHWELL ACQUISITION CORP. I

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021			Nine Months Ended September 30, 2022			For the Period from February 2, 2021 (inception) Through September 30, 2021
Operating and formation costs	$	554,697		$	156,682		$	1,135,813		$	166,148
Franchise tax expense		50,200			131,148			150,600			131,148

Loss from operations		(604,897	)		(287,830	)		(1,286,413	)		(297,296	)
Expensed offering costs		—			(1,020,874	)		—			(1,020,874	)
Unrealized gains on investments held in Trust Account		669,439			418			931,839			418
Realized gains on investments held in Trust Account		561,022			—			712,860			—
Loss on change in fair value of derivative liability - forward purchase agreement		(388,000	)		(188,000	)		(156,000	)		(188,000	)
(Loss) gain on change in fair value of warrant liabilities		(202,000	)		7,474,000			7,878,000			7,474,000

Income before income taxes		35,564			5,977,714			8,080,286			5,968,248
Income tax expense		(283,202	)		—			(283,202	)		—

Net (loss) income	$	(247,638	)	$	5,977,714		$	7,797,084		$	5,968,248

Basic and diluted weighted average shares outstanding, Class A common stock		25,000,000			15,217,391			25,000,000			5,833,333

Basic and diluted net (loss) income per share, Class A common stock	$	(0.01	)	$	0.28		$	0.25		$	0.50

Basic and diluted weighted average shares outstanding, Class B common stock (1)		6,250,000			6,250,000			6,250,000			6,041,667

Basic and diluted net (loss) income per share, Class B common stock	$	(0.01	)	$	0.28		$	0.25		$	0.50

(1)

The three months ended September 30, 2021 and the period from February 2, 2021 (inception) through September 30, 2021 excludes up to 937,500 shares of Class B common stock subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriter (see Note 5). On September 11, 2021, the over-allotment option expired and 937,500 shares of Class B common stock were forfeited.

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

HEALTHWELL ACQUISITION CORP. I

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

	Common Stock
	Class A				Class B				Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
	Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ 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	)

Remeasurement of Class A common stock to redemption amount		—		—		—		—		—		(913,186	)		(913,186	)
Net loss		—		—		—		—		—		(247,638	)		(247,638	)

Balance at September 30, 2022		—	$	—	$	6,250,000	$	625	$	—	$	(12,536,702	)	$	(12,536,077	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

HEALTHWELL ACQUISITION CORP. I

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND FOR THE PERIOD FROM FEBRUARY 2, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021


	Common Stock
	Class A				Class B						Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Balance at February 2, 2021 (inception)		—	$	—		—		$	—		$	—		$	—			—
Issuance of Class B Common Stock to Sponsor (1)		—		—		7,187,500			719			24,281			—			25,000
Net loss		—		—		—			—			—			(3,037	)		(3,037	)

Balance at March 31, 2021		—		—		7,187,500			719			24,281			(3,037	)		21,963
Net loss		—		—		—			—			—			(6,429	)		(6,429	)

Balance at June 30, 2021		—		—		7,187,500			719			24,281			(9,466	)		15,534
Excess of cash received over fair value of Private Placement Warrants		—		—		—			—			616,000			—			616,000
Record fair value of initial derivative asset - forward purchase agreement		—		—		—			—			440,000			—			440,000
Fair value of Founders Shares transferred to Anchor Investor		—		—		—			—			7,207,313			—			7,207,313
Remeasurement of Class A common stock to redemption amount		—		—		—			—			(8,287,594	)		(23,911,671	)		(32,199,265	)
Forfeiture of Class B common stock		—		—		(937,500	)		(94	)		—			94			—
Net income		—		—		—			—			—			5,977,714			5,977,714

Balance at September 30, 2021		—	$	—		6,250,000		$	625		$	—		$	(17,943,329	)	$	(17,942,704	)

(1)

The period from February 2, 2021 (inception) through June 30, 2021 includes up to 937,500 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter (see Note 5). On September 11, 2021, the over-allotment option expired and 937,500 shares of Class B common stock were forfeited.

The accompanying notes are an integral part of these unaudited condensed financial statements.

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HEALTHWELL ACQUISITION CORP. I

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30, 2022			For the Period from February 2, 2021 (inception) Through September 30, 2021
Cash Flows from Operating Activities:
Net income	$	7,797,084		$	5,968,248
Adjustments to reconcile net income to net cash used in operating activities:
Expensed offering costs		—			1,020,874
Unrealized gains on investments held in Trust Account		(931,839	)		(418	)
Realized gains on investments held in Trust Account		(712,860	)		—
Loss on change in fair value of derivative liability - forward purchase agreement		156,000			188,000
Gain on change in fair value of warrant liabilities		(7,878,000	)		(7,474,000	)
Deferred tax expense		199,639			—
Changes in operating assets and liabilities:
Prepaid expenses		321,058			(848,870	)
Accounts payable		61,545			—
Accrued expenses		338,992			36,503
Income tax payable		83,563			—
Franchise tax payable		(142,440	)		131,148

Net cash used in operating activities		(707,258	)		(978,515	)

Cash Flows from Investing Activities:
Investment of cash into Trust Account		—			(250,000,000	)
Proceeds from Trust Account to pay taxes		330,384			—

Net cash provided by (used in) investing activities		330,384			(250,000,000	)

Cash Flows from Financing Activities:
Proceeds from sale of Class B common stock to Sponsor		—			25,000
Proceeds from initial public offering, net of underwriter’s discount paid		—			245,000,000
Proceeds from sale of private placement warrants		—			7,700,000
Proceeds from promissory note - related party		—			350,000
Repayment from promissory note - related party		—			(350,000	)
Payment of offering costs		—			(762,826	)

Net cash provided by financing activities		—			251,962,174

Net Change in Cash		(376,874	)		983,659
Cash - Beginning of Period		749,256			—

Cash - End of Period	$	372,382		$	983,659

Supplemental disclosure of noncash investing and financing activities:
Deferred underwriting fee payable	$	—		$	8,750,000

Initial classification of derivative asset—forward purchase agreement	$	—		$	440,000

Remeasurement of Class A common stock subject to redemption to redemption value	$	913,186		$	32,199,265

Fair value of Founders Shares transferred to Anchor Investors	$	—		$	7,207,313

Forfeiture of Class B common stock	$	—		$	94

The accompanying notes are an integral part of these unaudited condensed financial statements.

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HEALTHWELL ACQUISITION CORP. I

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND LIQUIDITY

Healthwell Acquisition Corp. I (the “Company” or “Healthwell”) is a blank check company incorporated in Delaware on February 2, 2021. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock 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.

As of September 30, 2022, the Company had not commenced any operations. All activity for the period from February 2, 2021 (inception) through September 30, 2022 relates to the Company’s formation, the initial public offering (“Initial Public Offering”) as described below, and since the closing of the Initial Public Offering, the 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 a trust account from the proceeds derived from the 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 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 Warrants in a private placement to Healthwell Acquisition Corp. I Sponsor LLC (the “Sponsor”), generating gross proceeds of $7,700,000 (see Note 4).

Transaction costs 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”), 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.

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.

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HEALTHWELL ACQUISITION CORP. I

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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 anticipated to be $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 Accounting Standards Codification (“ASC”) Topic 480,

Distinguishing Liabilities from Equity

(“ASC 480”).

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. A quorum for such meeting 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 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 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.

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).

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HEALTHWELL ACQUISITION CORP. I

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company will have until August 5, 2023 to complete a Business Combination (the “Combination Period”). 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, 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

SEC Form 10-Q filed by Healthwell Acquisition Corp. I