HCM IV Acquisition Corp. Releases Audited Financial Statement: Key Highlights and Investor Insights

Overview of Financial Statement and Recent Developments

HCM IV Acquisition Corp., a Cayman Islands-incorporated blank check company, has published its audited balance sheet as of February 13, 2026. The company, newly renamed from Mercator I Acquisition Corp., has yet to identify or initiate substantive discussions with any business combination target. Its primary focus is on pursuing a merger, share exchange, asset acquisition, or similar business combination, particularly in industries that align with its management team’s expertise.

Key Financial Highlights

• Total Assets: \$290.75 million, with \$287.5 million held in a U.S. trust account intended for a future business combination.
• Current Assets: \$3.25 million, mainly due from sponsor and prepaid expenses.
• Liabilities: \$18.98 million, including accrued offering costs, advisory and legal fees, and a promissory note to a related party.
• Class A Ordinary Shares Subject to Redemption: \$287.5 million (28.75 million shares at \$10.00 per share).
• Shareholders’ Deficit: \$(15.74) million, driven by accumulated deficit and offering costs.

Going Concern Uncertainty

A critical aspect for investors is the auditor’s note on substantial doubt regarding the company’s ability to continue as a going concern. As of the balance sheet date, HCM IV Acquisition Corp. did not possess sufficient cash or working capital to sustain operations for a year. Management’s plan is to consummate a business combination within the statutory 24-month window—failure to do so will trigger a mandatory redemption of public shares at \$10.00 per share, using the funds held in trust.

Initial Public Offering (IPO) and Trust Structure

On February 13, 2026, HCM IV Acquisition Corp. completed its IPO, raising \$287.5 million through the sale of 28.75 million units at \$10.00 each (including the full exercise of the underwriters’ over-allotment option). Each unit consists of one Class A ordinary share and one-quarter of a redeemable warrant (exercisable at \$11.50). Simultaneously, the company raised \$7 million from the sale of 4.67 million private placement warrants at \$1.50 each to its sponsor and Cantor Fitzgerald & Co.

Transaction costs totaled \$19.59 million, including a \$5 million cash underwriting fee, \$13.69 million in deferred underwriting fees, and \$0.9 million in other offering costs.

Redemption Structure and Shareholder Protections

• Redemption Feature: Shareholders can redeem their public shares for cash upon completion of a business combination or if the combination is not consummated within 24 months. The anticipated redemption price is \$10.00 per share (plus interest, net of taxes, but excluding 1% U.S. excise tax on stock repurchases).
• Waiver by Insiders: Sponsors, officers, and directors have agreed to waive their redemption and liquidation rights concerning founder shares.
• Priority of Claims: Funds in the trust may be used to satisfy creditor claims, which could impact the amount available for redemption by public shareholders.

Warrants and Founder Shares

• Warrants: As of February 13, 2026, there are 11.85 million warrants outstanding (7.19 million public, 4.67 million private). Public warrants become exercisable 30 days after the business combination and expire five years later. Notably, warrant holders can only exercise if a registration statement is effective; otherwise, only cashless exercise is permitted in certain cases.
• Founder Shares: The sponsor holds 8.63 million Class B founder shares, purchased for \$25,000 (about \$0.003 per share). These will convert to Class A shares upon a business combination, ensuring sponsor alignment with public shareholders.
• Lock-up: Founder shares are subject to a one-year post-business combination lock-up, with possible early release if share price exceeds \$12.00 for 20 out of 30 consecutive trading days after 150 days, or upon certain transactions.
• Director Compensation: 75,000 founder shares were granted to independent directors, subject to vesting upon the successful completion of a business combination. As of the reporting date, no compensation expense is recognized as the business combination is not yet probable.

Related Party Transactions and Advisory Fees

• Promissory Note: The sponsor loaned \$371,062 to the company, repaid after the IPO.
• Administrative Services: The company pays \$35,000 per month to an affiliate of the sponsor for office and support services.
• Advisory Agreement: Zenith Securities LLC, affiliated with a passive sponsor member, is engaged as an independent advisor. Zenith earned a \$4.31 million advisory IPO fee (1.5% of IPO proceeds, split between IPO closing and business combination) plus a \$2.5 million advisory fee upon business combination completion. As of the reporting date, \$1.25 million is payable, with \$3.06 million deferred.

Potential Share Price Sensitivities

• Uncertainty of Business Combination: The company’s value is largely tied to its ability to consummate a business combination within 24 months. Failure to do so will result in liquidation at \$10.00 per share, which may be below market price and could trigger significant share price declines as the deadline approaches.
• Redemption Value and Temporary Equity Classification: Class A shares are presented as temporary equity at redemption value, which may impact reported equity and financial ratios.
• Low Volatility and Interest Rates: The fair value of public warrants is based on a relatively low stock price volatility (9.4%) and a risk-free rate of 3.43%. Changes in market conditions or deal prospects could significantly affect warrant values.
• Going Concern Risk: The company’s auditor noted substantial doubt about its ability to continue as a going concern unless it completes a business combination. Investors should monitor updates on deal progress closely.
• Geopolitical and Market Risks: The company notes that factors such as economic downturns, inflation, interest rate fluctuations, supply chain disruptions, public health concerns, and geopolitical instability (e.g., Ukraine, Middle East) could impede its ability to complete a business combination.

Other Notable Points

• Registration Rights: Holders of founder shares, private warrants, and working capital loan warrants are entitled to demand registration of their securities after the business combination, which could add to post-merger float and affect share price stability.
• Emerging Growth Company Status: HCM IV is an EGC under the JOBS Act, meaning it can delay adoption of new or revised accounting standards applicable to public companies, possibly making future comparisons to other SPACs or operating companies more challenging.
• No Operations to Date: All activities to date relate to formation and IPO; no revenue has been or will be generated until a business combination is completed.
• No Cash or Cash Equivalents Outside Trust: As of the balance sheet date, the company had no cash or equivalents outside the trust account; subsequent to February 13, 2026, \$2.47 million was received from the sponsor for operating purposes.
• Subsequent Events: No other material events occurred between the balance sheet date and the date the financial statement was issued.

Investor Takeaways

HCM IV Acquisition Corp. is at a critical juncture. Investors should closely watch the company’s progress toward identifying and completing a business combination within the mandated 24-month window. The substantial funds held in trust provide downside protection but also cap upside unless a lucrative deal is announced. The company’s complex capital structure, related party arrangements, and advisory fees may impact future dilution and post-merger performance. The “going concern” warning and reliance on the sponsor for working capital highlight the risks if a deal is delayed or market conditions deteriorate.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with their financial advisors before making investment decisions. The information is based on the latest available audited financial statement as of February 13, 2026, and subsequent events through February 23, 2026. Future events could materially impact the company’s financial position and prospects.

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