UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
(Mark One)
For the quarterly period ended
For the transition period from ______________ to ______________
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices and zip code)
(Registrant’s telephone number, including area code)
(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 | ||
| The | ||||
| The |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer ☐ | Accelerated filer ☐ |
| 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
As of November 27, 2023, there were
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A for the period ended September 30, 2023 is being filed by Spectaire Holdings Inc. (the “Company”) to correct a scrivener’s error located on the cover page of the Form 10-Q for the period ended September 30, 2023 that was originally filed by the Company on November 14, 2023, which inaccurately stated the number of issued and outstanding shares of the Company’s common stock as of the filing date.
On October 19, 2023, subsequent to the fiscal quarter to which this Quarterly Report on Form 10-Q (this “Quarterly Report”) relates, Spectaire Holdings Inc. (formally known as Perception Capital Corp. II. (“PCCT”), prior to its domestication as a corporation incorporated in the Cayman Islands), consummated the previously announced merger of Perception Spectaire Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of the Company (“Merger Sub”), with and into Spectaire Inc., a Delaware corporation (“Spectaire”), with Spectaire surviving such merger as a direct wholly owned subsidiary of the Company (the “Merger”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated January 16, 2023, by and among PCCT, Merger Sub and Spectaire, is referred to as the Business Combination.
Unless stated otherwise, this Quarterly Report contains information about PCCT prior to the Business Combination. References to the “Company,” “our,” “us” or “we” in this Quarterly Report refer to PCCT before the consummation of the Business Combination and to Spectaire Holdings Inc. after the Business Combination, unless stated otherwise or the context otherwise requires.
For more information regarding the Business Combination, see Spectaire Holdings Inc. Current Report on Form 8-K filed on October 16, 2023.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. In addition, any statements that refer to projections (including EBITDA and cash flow), forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. When used in this Quarterly Report, words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. When the Company discuss strategies or plans, including as they relate to the Business Combination, the Company is making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, the Company’s management.
Forward-looking statements may include, but are not limited to:
| ● | the anticipated benefits of the Business Combination; |
| ● | the financial and business performance of the Company; |
| ● | the Company’s anticipated results from operations in future periods; |
| ● | the products and services offered by the Company and the markets in which it operates; |
| ● | the impact of health epidemics on the Company’s business and the actions the Company may take in response thereto; |
| ● | the future price of metals; |
| ● | the stability of the financial and capital markets; |
| ● | other current estimates and assumptions regarding the Business Combination and its benefits; such expectations and assumptions are inherently subject to uncertainties and contingencies regarding future events and, as such, are subject to change; |
| ● | the risk that the consummation of the Business Combination disrupts the Company’s current plans; |
| ● | the Company’s ability to operate as a going concern; |
| ● | the Company’s requirement of significant additional capital; |
| ● | the Company’s limited operating history; |
| ● | the Company’s history of losses; |
| ● | the Company’s ability to attract qualified management; |
| ● | the Company’s ability to adapt to rapid and significant technological change and respond to introductions of new products in order to remain competitive; |
| ● | the Company receives a significant portion of its revenues from a small number of customers and the loss of, or nonperformance by, one or more significant customers could adversely affect the Company’s business; |
| ● | the Company relies heavily on manufacturing operations, including contract manufacturing, to produce products, and the business could be adversely affected by disruptions of the manufacturing operation; |
| ● | the Company’s future growth depends on a single product line and its associated services; |
| ● | changes in governmental regulations may reduce demand for the Company’s products or increase the Company’s expenses; |
| ● | changes in customers’ sustainability pledges may reduce demand for the Company’s products or increase the Company’s expenses; |
| ● | evolution in carbon markets, including both commercial dynamics and governmental regulation, may have an adverse impact on the Company’s revenue model; |
| ● | changes or disruptions in the securities markets; |
| ● | legislative, political or economic developments; |
| ● | the need to obtain permits and comply with laws and regulations and other regulatory requirements; |
| ● | risks of accidents, equipment breakdowns, and labor disputes or other unanticipated difficulties or interruptions; |
| ● | the possibility of cost overruns or unanticipated expenses in development programs; |
| ● | potential future litigation, including with respect to the Business Combination; and |
| ● | the Company’s lack of insurance covering all of the Company’s operations. |
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this Quarterly Report in Part I., Item 1. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the section titled “Risk Factors” in the final prospectus and definitive proxy statement, filed with the SEC on September 27, 2023 (the “Proxy Statement/Prospectus”), may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included elsewhere in this Quarterly Report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements included elsewhere in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements included elsewhere in this Quarterly Report, they may not be predictive of results or developments in future periods.
Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report.
SPECTAIRE HOLDINGS INC.
TABLE OF CONTENTS
i
SPECTAIRE HOLDINGS INC.
CONDENSED BALANCE SHEETS
| September 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Investments held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Accrued expenses | ||||||||
| Accrued expense - related party | ||||||||
| Accrued offering costs | ||||||||
| Convertible promissory notes - related party | ||||||||
| Forward purchase units | ||||||||
| Total current liabilities | ||||||||
| Deferred underwriting fee payable | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 7) | ||||||||
| Class A ordinary shares subject to possible redemption, | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
SPECTAIRE HOLDINGS INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||||||||
| Operating and formation costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest and dividend income on investments held in Trust Account | ||||||||||||||||
| Unrealized loss on forward purchase units | ( | ) | ( | ) | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||
| $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
SPECTAIRE HOLDINGS INC.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFECIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
| Class A ordinary shares | Class B ordinary shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance - December 31, 2022 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Initial measurement of forward purchase units | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Reduction of deferred underwriting fee payable | — | — | ||||||||||||||||||||||||||
| Balance - March 31, 2023 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - June 30, 2023 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - September 30, 2023 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
SPECTAIRE HOLDINGS INC.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFECIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
| Class A ordinary shares | Class B ordinary shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance - December 31, 2021 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - March 31, 2022 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - June 30, 2022 | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A common stock to redemption amount | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - September 30, 2022 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
SPECTAIRE HOLDINGS INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest and dividend income on investments held in Trust Account | ( | ) | ( | ) | ||||
| Unrealized loss in forward purchase units | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable | ||||||||
| Accounts payable - related party | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Accrued expenses - related party | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Advances to Trust Account | ( | ) | ||||||
| Proceeds from Trust Account for payment to redeeming shareholders | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from convertible promissory notes - related party | ||||||||
| Payment to redeeming shareholders | ( | ) | ||||||
| Payment of offering costs | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Accretion of Class A ordinary shares subject to redemption value | $ | $ | ||||||
| Reduction of deferred underwriting fee payable | $ | $ | ||||||
| Initial measurement of forward purchase units | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND LIQUIDITY
Perception Capital Corp. II (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on January 21, 2021. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).
The Company is not limited to a particular industry or geographic region for purposes of consummating a 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, 2023, the Company had not commenced any operations. All activity for the period from January 21, 2021 (inception) through September 30, 2023 relates to the Company’s formation and initial public offering (“Initial Public Offering”), and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The registration statement for the Company’s Initial
Public Offering was declared effective on October 27, 2021. On November 1, 2021, the Company consummated the Initial Public
Offering of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of
Following the closing of the Initial Public Offering,
an amount of $
Transaction costs related to the issuances described
above amounted to $
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
6
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The Company will provide its holders of Public Shares (the “Public Shareholders”) 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 general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account. 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 will be recorded at redemption value and classified as temporary equity upon the completion of the Initial Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) 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 $
Notwithstanding the above, if the Company seeks
shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and
Restated Memorandum and Articles of Association provides that a Public Shareholder, together with any affiliate of such shareholder or
any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more
than an aggregate of
The Sponsor has agreed to waive (i) redemption
rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (ii)
redemption rights with respect to any Founder Shares and Public Shares held by it in connection with a shareholder vote to amend the Company’s
Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation to allow redemption
in connection with an initial Business Combination or to redeem
7
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The Company will have until November 1, 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 10 business days thereafter, redeem
The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit.
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party 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) $
Amendment to Certificate of Incorporation
On October 28, 2022, the Company held an extraordinary
general meeting (the “general meeting”), at which holders of
8
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On October 28, 2022, the company filed with the Cayman Islands Registrar of Companies an amendment to the amended and restated memorandum and articles of association of the company (the “charter amendment”). The charter amendment extended the date by which the company must (1) consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination (the “initial business combination”), (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and (3) redeem all of the Class A ordinary shares included as part of the units sold in its initial public offering from November 1, 2022, to May 1, 2023 (the “charter extension”).
In connection with the October 28, 2022 charter
extension, a total of 159 shareholders elected to redeem an aggregate of
On October 31, 2022, the Company issued a convertible
promissory note in the aggregate principal amount of up to $
On April 27, 2023, the Company held an extraordinary general meeting of shareholders, at which certain proposed charter amendments were voted on and approved shareholders approved, by special resolution, the proposal to amend the company’s amended and restated memorandum and articles of association (the “charter”) to further extend the date by which the company must either (1) consummate a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination or (2) (i) cease its operations except for the purpose of winding up and (ii) redeem all outstanding Class A ordinary shares included as part of the units sold in its initial public offering, from May 1, 2023 to November 1, 2023.
In connection with the April 27, 2023 charter
extension, a total of 17 shareholders elected to redeem an aggregate of
Business Combination Agreement
On
(i)
9
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(ii) at the Effective Time (after giving effect to the Spectaire Security Conversion):
(a) each share of Spectaire Common Stock (other than shares of Spectaire Common Stock subject to Spectaire Options and Spectaire RSUs (each as defined below), Spectaire Restricted Shares (as defined below), treasury stock and dissenting shares) will convert into the right to receive its pro rata portion (on a fully diluted basis) of the Net Merger Consideration and the Earnout Shares (as defined below);
(b) each outstanding option to purchase Spectaire Common Stock (“Spectaire Option”) will be converted into (x) an option to purchase, upon substantially the same terms and conditions, a whole number of shares of PCCT (“Perception Capital Corp. II) Common Stock (rounded down to the nearest whole share) equal to (1) the number of shares of Spectaire Common Stock subject to such Spectaire Option as of immediately prior to the Effective Time multiplied by (2) the Exchange Ratio (as defined in the Merger Agreement) and (y) the right to receive its pro rata portion of the Earnout Shares;
(c) each outstanding restricted stock unit relating to Spectaire Common Stock (“Spectaire RSU”) will be converted into (x) a restricted stock unit, upon substantially the same terms and conditions, relating to a whole number of shares of PCCT Common Stock (rounded down to the nearest whole share) equal to (1) the number of shares of Spectaire Common Stock subject to such Spectaire RSU as of immediately prior to the Effective Time multiplied by (2) the Exchange Ratio and (y) the right to receive its pro rata portion of the Earnout Shares; and
(d) each outstanding award of restricted shares of Spectaire Common Stock subject to vesting conditions and/or a risk of forfeiture (“Spectaire Restricted Shares”) will be converted into (x) an award, upon substantially the same terms and conditions, of a whole number of restricted shares of PCCT Common Stock equal to (1) the number of shares of Spectaire Common Stock subject to such Spectaire Restricted Share as of immediately prior to the Effective Time multiplied by (2) the Exchange Ratio and (y) the right to receive its pro rata portion of the Earnout Shares.
The number of Earnout Shares will be equal to
If, during the Earnout Period, (i) any liquidation, dissolution or winding up of Acquiror is initiated, (ii) any bankruptcy, dissolution or liquidation proceeding is instituted by or against Acquiror or (iii) Acquiror makes an assignment for the benefit of creditors or consents to the appointment of a custodian, receiver or trustee for all or substantial part of its assets or properties, then any Earnout Shares that have not been previously issued by Acquiror (whether or not previously earned) shall be deemed earned and due by Acquiror to the Eligible Company Equityholders.
10
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
In connection with the business combination,
the Company also entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Forward
Transaction (the “Forward Purchase Transaction”) with Meteora Special Opportunity Fund I, LP, Meteora Capital Partners,
LP, Meteora Select Trading Opportunities Master, LP (collectively the “Seller”). Pursuant to the terms of the
Forward Purchase Agreement, the Seller intends, but is not obligated, to purchase up to a maximum of
On March 31, 2023, in association with the Merger Agreement, the Company issued an unsecured promissory note to Spectaire, Inc. (“Spectaire Loan”). See Note 6 for further discussion on the convertible promissory note.
On September 29, 2023 the board of directors of the Company, unanimously approved the merger of Perception Spectaire Merger Sub Corp., pursuant to the terms of the Merger Agreement, dated as of January 16, 2023, by and among the Company, Merger Sub and Spectaire. Furthermore, the other transactions contemplated by the Merger Agreement and documents related thereto. In connection with the Business Combination, PCCT will change its name to “Spectaire Holdings Inc.”
Pursuant to the Effective Time of the Merger
(i) Each of the then issued and outstanding
Class A ordinary shares, par value $
(ii) each of the then issued and outstanding redeemable warrants of PCCT (“PCCT Warrants”) will convert automatically into a redeemable warrant to acquire one share of NewCo Common Stock (“NewCo Warrants”); and
(iii) each of the then issued and outstanding units of PCCT that have not been previously separated into the underlying PCCT Class A Ordinary Shares and underlying PCCT Warrants upon the request of the holder thereof (the “PCCT Units”), will be cancelled and will entitle the holder thereof to one share of NewCo Common Stock and one-half of one NewCo Warrant.
As a result of and upon the closing of the Business
Combination (the “Closing”), among other things, all outstanding shares of common stock, par value $
11
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On October 19, 2023 the Company consummated the previously announced business combination of pursuant to the Merger Agreement dated January 16,2023 by and among the Company, Merger Sub, and Spectaire.
Lock-up Agreement
The Merger Agreement contemplates that, at the
Closing, PCCT will enter into lock-up agreements with (i) the Sponsor, (ii) certain of PCCT’s directors and officers and (iii) and
of the Requisite Spectaire Stockholders, restricting the transfer of NewCo Common Stock, Private Placement Warrants and any shares of
NewCo Common Stock underlying the Private Placement Warrants from and after the Closing. The restrictions under the lock-up agreements
(1) with respect to the NewCo Common Stock, begin at the Closing and end on (a) in the case of the Sponsor and certain of PCCT’s
directors and officers, the date that is 365 days after the Closing, or upon the price of NewCo Common Stock reaching $
Going Concern
As of September 30, 2023, the Company had $
As of September 30, 2023, the Company had until November 1, 2023 to complete a Business Combination. On October 19, 2023, the Company consummated the previously announced business combination of pursuant to the Merger Agreement dated January 16, 2023 by and among the Company, Merger Sub, and Spectaire (see Note 10).
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 the accompanying financial statements are issued. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks and Uncertainties
In addition to the risks noted above under Going Concern, the company is also subject to the following:
We deposit substantial funds in financial institutions and may, from time to time, maintain cash balances at such financial institutions in excess of the Federal Deposit Insurance Corporation limit. Recently, there has been significant volatility and instability among banks and financial institutions and on March 10, 2023, Silicon Valley Bank, at SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver, and for a period of time, customers of the bank did not have access to their funds and there was uncertainty as to when, if at all, customers would have access to funds in excess of the FDIC insured amounts. The Company held deposits at SVB at the time of its closure but the deposits were under the FDIC limit and no losses were incurred. Going forward, should one or more of the financial institutions at which our deposits are maintained fail, there is no guarantee as to the extent that we would recover the funds deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise, or the timing of any recovery. The condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
12
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations 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 Form 10-K as filed with the SEC on March 27, 2023. The interim results for three months ended September 30, 2023 are not necessarily indicative of the results to be expected for the period ending December 31, 2023 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
13
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ from those estimates. Items which involve management to exercise significant judgment include determining the fair value of forward purchase units.
Cash
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 September 30, 2023 and December 31, 2022.
Investments Held in Trust Account
As of September 30, 2023 and December 31, 2022, the assets held in the Trust Account were comprised of U.S. government securities, within the meaning set forth in Section 2(a) (16) of the Investment Company Act, with maturities of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are reported in the statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
As of September 30, 2023 and December 31, 2022, the assets held in
the Trust Account were held in money market funds, which were invested in U.S. Treasury securities. The Company had $
Warrants
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 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, 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 statements of operations. The Public Warrants (as defined in Note 3) and Private Placement Warrants are equity classified (see Note 8).
14
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Class A Ordinary Shares Subject to Possible Redemption
All of the
Under ASC 480, the Company has elected to recognize
changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption
value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by
charges against additional paid-in capital (to the extent available) and accumulated deficit. The redemption value of the redeemable ordinary
shares as of September 30, 2023, increased as the income earned on the Trust Account exceeds $
| Class A ordinary shares subject to possible redemption as of December 31, 2022 | $ | |||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Class A ordinary shares subject to possible redemption as of March 31, 2023 | ||||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Initial Pre-Extension Redemption | ( | ) | ||
| Class A ordinary shares subject to possible redemption as of June 30, 2023 | ||||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Class A ordinary shares subject to possible redemption as of September 30, 2023 | $ |
Offering Costs associated with the Initial Public Offering
15
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. 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 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 as income tax expense. There were
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Loss Per Ordinary Share
Net loss per ordinary share is computed by dividing
net loss by the weighted-average number of ordinary shares outstanding during the period. Accretion associated with the redeemable Class
A ordinary shares is excluded from net loss per share as the redemption value approximates fair value. Therefore, the earnings per share
calculation allocates income and losses shared pro rata between Class A and Class B ordinary shares. As a result, the calculated net loss
per share is the same for Class A and Class B ordinary shares. The Company has not considered the effect of the Public Warrants and Private
Placement Warrants to purchase an aggregate of
| For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | $ | |||||||||
16
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
| For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average shares outstanding | ||||||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
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 $
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 9 for additional information on assets and liabilities measured at fair value.
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 financial statements.
17
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3. INITIAL PUBLIC OFFERING
The registration statement for the Company’s
Initial Public Offering was declared effective on October 27, 2021. On November 1, 2021, the Company consummated the Initial
Public Offering of
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of
NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| September 30, 2023 | December 31, 2022 | |||||||
| Accrued expenses: | ||||||||
| Accrued legal fees | $ | $ | ||||||
| Accrued printing costs related to S-4 filing | ||||||||
| Accrued accounting fees | ||||||||
| Total accrued expenses | $ | $ | ||||||
At September 30, 2023 and December 31, 2022, accounts
payable was $
18
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
On January 25, 2021, the Sponsor paid an aggregate
of $
The Sponsor has agreed that, subject to certain
limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (a)
On April 7, 2021, the Sponsor transferred
Under ASC 718, compensation associated with equity-classified
awards is measured at fair value upon the grant date. The Founders Shares were granted subject to a performance condition (i.e., the occurrence
of a Business Combination). 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 Founders Shares that ultimately vest multiplied times
the grant date fair value per share of $
Administrative Support Agreement
The Company entered into an agreement, commencing
on the effective date of the Initial Public Offering, to pay the Sponsor a total of up to $
19
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the initial shareholders or an affiliate of the initial shareholders 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 $
On October 31, 2022, the Company issued a convertible promissory note in the aggregate
principal amount of up to $
On March 31, 2023, in association with the Merger Agreement, the Company issued the Spectaire Loan. The Spectaire Loan is non-interest bearing and payable on the date of any termination
of the Merger Agreement (the “Maturity Date”), unless accelerated upon the occurrence of an event of default (as defined
within the Spectaire Loan). As of September 30, 2023, $
20
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Reimbursed Expenses - Related Party
The Company’s Sponsor, directors and officers, or any of their respective
affiliates, are reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying
potential target businesses and performing due diligence on suitable business combinations. For the three and nine months ended September
30, 2023, a $
NOTE 7. COMMITMENTS
Registration and Shareholder Rights Agreement
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 ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement signed prior to the effective date of the Initial Public Offering. 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 the consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
Simultaneously with the Initial Public Offering,
the underwriters fully exercised the over-allotment option to purchase an additional
The underwriters were paid a cash
underwriting discount of $
21
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8. SHAREHOLDERS’ DEFICIT
Preference shares — The Company
is authorized to issue
Class A ordinary shares — The
Company is authorized to issue
Class B ordinary shares — The
Company is authorized to issue
Class A ordinary shareholders and Class B ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and vote together as a single class, except as required by law; provided that, prior to an initial Business Combination, holders of the Company’s Class B ordinary shares will have the right to appoint all of the Company’s directors and remove members of the board of directors for any reason, and holders of the Company’s Class A ordinary shares will not be entitled to vote on the appointment of directors during such time.
The Class B ordinary shares will automatically
convert into Class A ordinary shares 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 for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations
and other similar transactions, and subject to further adjustment. In the case that additional Class A ordinary shares, or equity-linked
securities, 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 Class B ordinary shares will convert into Class A ordinary shares will be adjusted
(unless the holders of a majority of the issued and outstanding Class B ordinary shares agree to waive such anti-dilution adjustment with
respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B
ordinary shares will equal, in the aggregate, on an as-converted basis,
Warrants — A warrant holder
may exercise its warrants only for a whole number of Class A ordinary share. 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
The Company will not be obligated to deliver any Class A ordinary shares 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 Class A ordinary shares 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 Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares 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.
22
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial business combination, the Company will use the commercially reasonable efforts to file with the SEC a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use the commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the initial business combination and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed; provided that if the Class A ordinary shares 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 Public Warrants. Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants:
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon not less than | |
| ● | if, and only if, the reported last reported sale price of the Class A ordinary shares 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 $ |
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 ordinary shares issuable upon
exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout
the
The Private Placement Warrants are identical to the Public Warrants except that: (1) they will not be redeemable; (2) they (including the Class A ordinary shares 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 the initial business combination, as described below; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the ordinary shares issuable upon exercise of these warrants) are entitled to registration rights.
The Company accounts for the
23
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 9. FAIR VALUE MEASUREMENTS
Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| September 30, 2023 (unaudited) | ||||||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account: | ||||||||||||||||
| U.S. Treasury Securities | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Forward Purchase Units | $ | $ | $ | $ | ||||||||||||
| December 31, 2022 | ||||||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account: | ||||||||||||||||
| U.S. Treasury Securities | $ | $ | $ | $ | ||||||||||||
The Company utilizes a Black-Scholes model to value the Forward Purchase Agreement at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the forward purchase agreement liability is determined using Level 3 inputs. Inherent in a Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free rate and dividend yield. The Company estimates the volatility which is based on a weighted-average of the expected pre-merger and post-merger volatilities, where pre-merger volatility is based on the historic volatility exhibited by the Company and post-merger volatility is estimated based on historic volatilities exhibited by companies operating in the industry of the Company’s expected target. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Forward Purchase Agreement. The expected life of the Forward Purchase Agreement is assumed to be equivalent to their remaining contractual term.
| At January 14, 2023 (inception) | At September 30, 2023 | |||||||
| Equity value | $ | $ | ||||||
| Strike Price | $ | $ | ||||||
| Remaining Life (years) | ||||||||
| Risk-free rate | % | % | ||||||
| Volatility | % | % | ||||||
24
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
| Level 3 | ||||
| Fair value as of January 14, 2023 (inception) | $ | |||
| Change in fair value of Forward Purchase Agreement | ||||
| Fair value as of September 30, 2023 | $ | |||
For the three and nine months ended September
30, 2023, the Company recognized an unrealized loss in connection with changes in the fair value of the Forward Purchase Agreement liability
of $
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
The Company entered into a subscription agreement
on
On October 4, 2023 the Company entered into an agreement
with it's Sponsor to facilitate the Company's fundraising efforts. Pursuant to the agreement, the Sponsor agreed to forfeit for cancellation
On October 13, 2023, the Company received approval of the Merger Agreement from a majority shareholder vote.
The Company entered into a private placement
subscription agreement for newly issued shares of common stock with a par value of $
On October 16, 2023, PCCT and Jefferies LLC (“Jefferies”)
entered into the second amendment (the “Second Underwriting Agreement Amendment”) to that certain underwriting agreement (as
amended, the “Underwriting Agreement”), dated October 27, 2021 and first amended as of March 23, 2023, by and between PCCT
and Jefferies, as representative of the several underwriters listed on Schedule A thereto (the “IPO Underwriters”). Pursuant
to the Second Underwriting Agreement Amendment, PCCT and Jefferies agreed, among other things, that upon the closing of the Business Combination
(the “Closing), $
On October 18, 2023, PCCT and Jefferies entered
into the third amendment (the “Third Underwriting Agreement Amendment”) to the Underwriting Agreement. Pursuant to the Third
Underwriting Agreement Amendment, PCCT and Jefferies agreed that the Closing Deferred Cash Obligation will be due and payable to Jefferies
no later than six (6) months following the Closing. However, if the Company raises $
25
SPECTAIRE HOLDINGS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
On October 16, 2023, PCCT and Polar Multi-Strategy
Master Fund, a Cayman Islands exempted entity (“Polar”), entered into an agreement (the “Polar Forward Purchase
Agreement”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Polar Forward Purchase Agreement, Polar
purchased
The Polar Forward Purchase Agreement provides that
not later than one local business day following the Closing (the “Prepayment Date”), PCCT will transfer to an account designated
in writing by Polar, out of funds held in the Trust Account, a cash amount (the “Prepayment Amount”) equal to the product
of the number of Recycled Shares and the Initial Price, less an amount equal to
From time to time following the Closing and prior
to the earliest to occur of (a) the first anniversary of the Closing (or, upon the mutual written agreement of PCCT and Polar, eighteen
(18) months following the Closing) and (b) the date specified by Polar in a written notice to be delivered to PCCT at Polar’s
discretion after the occurrence of a Seller Price Trigger Event, a Delisting Event or a Registration Failure (each as defined in the Polar
Forward Purchase Agreement) (in each case, the “Maturity Date”), Polar may, in its sole discretion, sell some or all of the
Recycled Shares. On the last trading day of each calendar month following the Business Combination, in the event that Polar has sold any
Recycled Shares (other than sales to recover the Shortfall Amount), PCCT will be entitled to an amount equal to the product of the number
of Recycled Shares sold multiplied by the Reset Price and Polar will be entitled to an amount equal to the excess of the Initial Price
over the Reset Price for each sold Recycled Share. The “Reset Price” shall be set on the first scheduled trading day of each
month, commencing with the first calendar month following the Closing, to be the lowest of the (b) Initial Price and (c) volume
weighted average price of the Company Common Stock during the last ten (10) trading days during the prior calendar month, but not
lower than $
As previously disclosed on March 27, 2023 and April 12, 2023, respectively, PCCT issued to Perception Capital Partners II LLC (the “Sponsor”) a convertible promissory note, dated as of January 10, 2023 and effective as of December 7, 2022 (the “Working Capital Note”) and an amended and restated convertible promissory note dated as of April 10, 2023 (the “Second Extension Note”).
On October 17, 2023, PCCT and the Sponsor amended and restated the Working Capital Note (the “A&R Working Capital Note”) to, among other things, extend the date by which the unpaid principal balance thereunder becomes due and payable by the Company to the Sponsor (the “Maturity Date”) to the later of (i) the date by which PCCT must complete an initial business combination and (ii) a date that is one hundred eighty (180) days following the consummation of an initial business combination.
On October 17, 2023, PCCT and the Sponsor amended
and restated the A&R Extension Note (the “Second A&R Extension Note”), to (A) extend the date by which the unpaid
principal balance thereunder becomes due and payable by the Company to the Sponsor (the “Maturity Date”) to the later of (i)
the date by which PCCT must complete an initial business combination and (ii) a date that is one year following the consummation of an
initial business combination, and (B) allow the Company to convert up to $
On October 19, 2023 the Company consummated the previously announced business combination of pursuant to the Merger Agreement dated January 16, 2023 by and among the Company, Merger Sub, and Spectaire.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report (the “Quarterly Report”) to “we,” “us,” the “Company” or “PCCT” refer to Perception Capital Corp. II prior to the consummation of the Business Combination and to Spectaire as of and following the consummation of the Business Combination. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Perception Capital Partners II 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 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.
Overview
Spectaire is an industrial technology company whose core offering allows its customers to measure, manage, and potentially reduce carbon dioxide equivalent (CO2e) and other greenhouse gas emissions. Spectaire’s core offering, AireCore™, is a fully integrated hardware, software, and data platform for logistics and supply chain players that uses mass spectrometry to directly measure their emissions. The research and development for AireCore™’s mass spectrometry technology began more than 15 years ago at MIT, led by Spectaire’s Chief Technology Officer, Dr. Brian Hemond, and Spectaire’s co-founder, Professor Ian Hunter. Spectaire’s asset-light business model delivers a win-win-win for Spectaire, its customers, and the environment.
Companies are coming under increasing pressure from governments, customers and the public to account for and reduce their emissions. Spectaire believes that, prior to the introduction of AireCore™, there was no practical way to directly measure real-time transportation emissions. Instead of directly measuring their emissions, Spectaire’s existing and potential customers have historically estimated their emissions using emissions estimation calculators for transport and logistics that estimate based on fuel consumption, mileage, and vehicle weight. These estimates cannot accommodate the minute-to-minute, mile-to-mile variations that often drive significant differences between these estimates and actual emissions. As a result, these estimates have come under criticism for being inaccurate, simplistic, and—until now—impossible to verify. A pilot study conducted with Spectaire’s anchor customer, Mosolf SE & Co. KG, found that their emissions estimate calculated using CSN EN 16258, a publicly available and widely used emissions estimation standard, overstated their actual emissions by approximately 60%.
Spectaire’s AireCore™ patented micro mass spectrometer (MMS) is expected to solve this problem. Unlike conventional mass spectrometers, which typically have significant cost, size, power, and environmental requirements, the AireCore™ uses a proprietary miniaturized and ruggedized analyzer combined with solid state pump technology to address mobile operation in harsh environments.
AireCore™ is cloud-connected through mobile phone networks, enabling a continuous feed of emissions data. AireCore™ software can also be upgraded over-the-air (OTA) smartphone-style, enabling continuous roll-out of features and improvements.
AireCore™ is protected by a robust patent portfolio and a lengthy research and development timeline, with significant time and resources invested by MIT in developing technology relating to the AireCore. MIT has granted Spectaire an exclusive license for all of the intellectual property owned by MIT that underlies the AireCore™ and is a minority shareholder in Spectaire.
Companies face a “technology gap” between emissions requirements and access to emissions management capabilities, creating a no-win scenario. Spectaire believes that AireCore™ is the world’s first and only device able to address this technology gap by delivering real-time, accurate, and verifiable emissions measurements, and through its flagship AireCore™ product, Spectaire provides a fully integrated hardware, software and data solution for logistics and supply chain players to directly measure their emissions.
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Recent Developments
Prior to the closing of the Business Combination, we were a blank check company incorporated as a Cayman Islands exempted company on January 21, 2021, formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.
As previously announced, the Company previously entered into that certain Agreement and Plan of Merger, dated as of January 16, 2023 (the “Merger Agreement”), with Perception Spectaire Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of PCCT (“Merger Sub”), and Spectaire Inc., a Delaware corporation (“Legacy Spectaire”), pursuant to which, on October 19, 2023, Merger Sub merged with and into Legacy Spectaire, with Legacy Spectaire surviving the merger as a wholly owned subsidiary of New Spectaire (the “Business Combination” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”).
On October 18, 2023, the Company and Jefferies LLC (“Jefferies”) entered into that certain third amendment (the “Third Underwriting Agreement Amendment”) to that certain underwriting agreement (as amended, the “Underwriting Agreement”), dated October 27, 2021 and first amended as of March 23, 2023, by and between the Company and Jefferies, as representative of the several underwriters listed on Schedule A thereto (the “IPO Underwriters”). Pursuant to the Third Underwriting Agreement Amendment, the Company and Jefferies agreed that the Closing Deferred Cash Obligation (as defined below) will be due and payable to Jefferies no later than six (6) months following the Closing. However, if the Company raises $10.0 million in additional capital (whether debt or equity), excluding certain transactions set forth on Schedule A thereto, following the Closing and before the six-month anniversary of the Closing, the Company must pay the Closing Deferred Cash Obligation simultaneously with the closing of such additional capital raise.
On October 16, 2023, the Company and Jefferies entered into the second amendment (the “Second Underwriting Agreement Amendment”) to the Underwriting Agreement. Pursuant to the Second Underwriting Agreement Amendment, the Company and Jefferies agreed, among other things, that upon the closing of the Business Combination, $1,500,000 (the “Closing Deferred Cash Obligation”) of the deferred underwriting discount of $5,635,000 (the “Deferred Discount”) will be due and payable in cash to Jefferies, individually and not as representative and for the accounts of the IPO Underwriters, thereby reducing the amount of the Closing Deferred Cash Obligation from $2,000,000 to $1,500,000, with the remaining $4,135,000 of the Deferred Discount (the “Deferred Cash Obligation”) being due and payable to Jefferies, individually and not as representative and for the account of the IPO Underwriters no later than twenty-four (24) months following the Closing, thereby extending the date on which payment of the Deferred Cash Obligation is due from eighteen (18) months to twenty-four (24) months.
On October 16, 2023, the Company effected a deregistration under the Companies Act (As Revised) of the Cayman Islands and a domestication under the General Corporation Law of the State of Delaware (the “DGCL”), as amended, pursuant to which the Company’s jurisdiction of incorporation changed from the Cayman Islands to the State of Delaware (the “Domestication”). In connection with the Domestication, (i) each issued and outstanding Class A ordinary share, par value $0.0001 per share, of the Company (the “Class A Ordinary Shares”) and each then issued and outstanding Class B ordinary share, par value $0.0001 per share, of the Company (the “Class B Ordinary Shares” and together with the Class A Ordinary Shares, the “Ordinary Shares”), converted automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of the Company (“Common Stock”), (ii) each issued and outstanding warrant to purchase one Class A Ordinary Share (“Cayman Warrant”) converted automatically into a warrant to acquire one share of Common Stock (“Warrant”) pursuant to the Warrant Agreement, dated as of October 27, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent, and (iii) each issued and outstanding unit of the Company, consisting of one Class A Ordinary Share and one-half of one Cayman Warrant, was cancelled and entitled the holder thereof to one share of Company Common Stock and one-half of one Warrant.
Upon effectiveness of the Domestication, the Company changed its name from “Perception Capital Corp. II” to “Spectaire Holdings Inc.”, filed a certificate of incorporation (the “Company Charter”) with the Secretary of State of Delaware and adopted bylaws (the “Company Bylaws” and, together with the Company Charter, the “Company Organizational Documents”) under the DGCL. The material terms of each of the Company Organizational Documents and the general effect upon the rights of holders of the Company Common Stock and Company Warrants are included in the Proxy Statement/Prospectus under the sections entitled “Proposal No. 3—The Organizational Documents Proposal” beginning on page 109, “Comparison of Corporate Governance and Shareholder Rights” beginning on page 249 and “Description of Securities of NewCo” beginning on page 251, which are incorporated herein by reference.
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As previously announced, on October 11, 2023, the Company entered into a private placement subscription agreement (the “PIPE Subscription Agreement”) with Dr. Jörg Mosolf (the “PIPE Investor”), pursuant to which the PIPE Investor agreed to subscribe for newly-issued shares of Common Stock (the “PIPE Shares”), with an aggregate purchase price of $3,500,000. On October 19, 2023, concurrently with the closing of the Business Combination, the PIPE Investor closed on the purchase of 50,000 PIPE Shares at a price of $10.00 per share, for an aggregate purchase price of $500,000 (the “PIPE Investment”). Pursuant to the PIPE Subscription Agreement, within two years following the Closing, the PIPE Investor will purchase additional PIPE Shares in one or multiple subsequent closings for a purchase price per share of $10.00 (subject to as described in the PIPE Subscription Agreement) for an aggregate purchase price of $3,000,000 (the “Additional Investments”). The purchase and sale of the PIPE Shares in the Additional Investments is conditioned upon typical conditions for transactions of this type. The PIPE Shares issued and sold in the PIPE Investment and to be issued and sold in the Additional Investments pursuant to the PIPE Subscription Agreement have not been and will not be registered under the Securities Act of 1933 (the “Securities Act”) and have been and will be issued in reliance on the availability of an exemption from such registration.
As previously announced, on October 4, 2023, the Company entered into a subscription agreement with Polar Multi-Strategy Master Fund (“Polar”) to cover working capital requirements of the Company prior to the consummation of the Business Combination (the “Polar Subscription Agreement”). Pursuant to the terms and subject to the conditions of the Polar Subscription Agreement, Polar agreed to contribute up to $650,000 to the Company (the “Capital Contribution”). In consideration of the Capital Contribution, the Company agreed to issue 0.9 shares of Common Stock for each dollar of the Capital Contribution. Accordingly, at closing of the Business Combination, the Company issued 585,000 shares of Common Stock to Polar. Upon certain events of default under the Subscription Agreement, PCCT shall issue to Polar 0.1 shares of Common Stock (“Default Shares”) for each dollar of the Capital Contribution funded as of the date of such default, and for each month thereafter until such default is cured, subject to certain limitations provided for therein.
In connection with the Company’s entry into the Polar Subscription Agreement, Perception Capital Partners II LLC (the “Sponsor”) delivered to the Company a letter agreement to facilitate the Company’s fundraising efforts (the “Sponsor Letter Agreement”). Pursuant to the Sponsor Letter Agreement, the Sponsor agreed to forfeit for cancellation (i) 585,000 Class B Ordinary Shares concurrently with the closing of the Business Combination and (ii) following the closing of the Business Combination, the number of shares of Common Stock equal to the number of Default Shares, if any, issued by the Surviving Entity to Polar in accordance with the Subscription Agreement.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities for the period from January 21, 2021 (inception) through September 30, 2023 were organizational activities, those necessary to prepare for our initial public offering described above, and, since the closing of our initial public offering, the search for a prospective initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We will generate non-operating income in the form of interest income and dividends on investments held in our trust account after our initial public offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2023, we had a net loss of $3,820,074, which resulted from interest and dividend income on investments held in the in trust account of $289,490, offset by operating and formation costs of $1,349,564 and an unrealized loss in the forward purchase units of $2,760,000.
For the three months ended September 30, 2022, we had a net loss of $1,434, which resulted from interest and dividend income on investments held in the in trust account of $613,919, offset by operating and formation costs of $615,353.
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For the nine months ended September 30, 2023, we had a net loss of $7,237,691, which resulted from interest and dividend income on investments held in the in trust account of $837,993, offset by operating and formation costs of $4,855,684 and an unrealized loss on the fair value of the forward purchase units of $3,220,000.
For the nine months ended September 30, 2022, we had a net loss of $539,366, which resulted from interest and dividend income on investments held in the in trust account of $957,962, offset by operating and formation costs of $1,497,328.
Liquidity, Going Concern and Capital Resources
The registration statement for our initial public offering was declared effective on October 27, 2021. On November 1, 2021, we consummated our initial public offering of 23,000,000 units, (the “units” and, with respect to the Class A ordinary shares included in the units sold, the “public shares”), including 3,000,000 units issued pursuant to the exercise of the underwriters’ over-allotment option in full, generating gross proceeds of $230,000,000.
Simultaneously with the closing of our initial public offering, we consummated the sale of 10,050,000 warrants (the “private placement warrants”) at a price of $1.00 per private placement warrant in a private placement to Perception Capital Partners II LLC (the “sponsor”), including 1,050,000 private placement warrants issued pursuant to the exercise of the underwriters’ over-allotment option in full, generating gross proceeds of $10,050,000.
For the nine months ended September 30, 2023, net cash used in operating activities was $1,028,169 which was due to the net loss of $7,237,691 and interest income on investments held in Trust Account of $837,993, offset in part by changes in working capital of $3,827,515 and an unrealized loss on the change in fair value of forward purchase units of $3,220,000.
For the nine months ended September 30, 2022, net cash used in operating activities was $619,670, which was due to the net loss of $539,366 and interest income on investments held in Trust Account of $957,962, offset in part by changes in working capital of $877,658.
For the nine months ended September 30, 2023, net cash provided by investing activities was $3,231,757, which was due to proceeds from Trust Account for payment to redeeming shareholders of $4,041,203 offset by advances into the trust account of $809,446.
For the nine months ended September 30, 2022, there were no cash flows from investing activities.
For the nine months ended September 30, 2023, net cash used in financing activities was $2,208,318, which was due to payment to redeeming shareholders of $4,041,203, offset by proceeds from convertible promissory notes - related party of $1,832,885.
For the nine months ended September 30, 2022, net cash used in financing activities was $7,000, which was due to payments of offering costs of $7,000.
As of September 30, 2023, we had cash of $0 held outside the trust account.
Our liquidity will be satisfied through the proceeds made available to the Company under working capital loans, extension loans, and the Spectaire Loan. In addition, the non-interest bearing promissory note was repaid in full with the proceeds from the private placement.
During the year ended December 31, 2022, the sponsor exercised the extension option, depositing into the trust account $0.04 per share, monthly (a total of $196,631 in 2022 and an additional $726,209 in 2023), extending the deadline to complete our initial business combination to May 1, 2023, which subsequently in April 2023 was extended to November 1, 2023. On January 16, 2023, we entered into an Agreement and Plan of Merger with Perception Spectaire Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of PCCT (“Merger Sub”), and Spectaire Inc., a Delaware corporation (“Spectaire”).
We plan to address this uncertainty through our initial business combination as discussed above. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2023 or December 31, 2022.
Contractual Obligations
Registration and Shareholder Rights Agreement
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 ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement signed prior to the effective date of our initial public offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require that we register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
Simultaneously with our initial public offering, the IPO Underwriters fully exercised the over-allotment option to purchase an additional 3,000,000 units at an offering price of $10.00 per Unit for an aggregate purchase price of $30,000,000.
The IPO Underwriters were paid a cash underwriting discount of $0.20 per Unit, or $4,600,000 in the aggregate, upon the closing of our initial public offering. In addition, $0.35 per unit, or $8,050,000 in the aggregate will be payable to the underwriters for deferred underwriting commissions.
The deferred fee will become payable to the IPO Underwriters from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the Underwriting Agreement. On March 23, 2023, the IPO Underwriters agreed to reduce the amount of such deferred underwriting discount from $8,050,000 to $5,635,000.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the 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:
Net Loss Per Ordinary Share
Net loss per ordinary share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period. Accretion associated with the redeemable Class A ordinary shares is excluded from net loss per share as the redemption value approximates fair value. Therefore, the earnings per share calculation allocates income and losses shared pro rata between Class A and Class B ordinary shares. As a result, the calculated net loss per share is the same for Class A and Class B ordinary shares. We have not considered the effect of the public warrants and private placement warrants to purchase an aggregate of 21,550,000 shares in the calculation of diluted net loss per share, since the exercise of the warrants are contingent upon the occurrence of future events.
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Derivative Financial Instruments
Class A Ordinary Shares Subject to Possible Redemption
All of the 23,000,000 Class A ordinary shares 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 our liquidation, if there is a shareholder vote or tender offer in connection with our initial business combination and in connection with certain amendments to our amended and restated memorandum and articles of association. In accordance with ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. Therefore, all public shares have been classified outside of permanent equity.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.
Fair Value of Forward Purchase Agreement
The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company uses judgment to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the values attributed to each component of a transaction at the time of their issuance; (b) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market.
Recent Accounting Standards
Our management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable as we are a smaller reporting company.
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 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 company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our 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 September 30, 2023. Based upon this evaluation, our certifying officers concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective due to a material weakness in our internal controls over financial reporting related to the recording of the change in fair value of forward purchase units during the preparation of our quarterly report on Form 10-Q as of and for the period ended September 30, 2023. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with US GAAP. Management believes that the financial statements included in this report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
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.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Company’s Proxy Statement/Prospectus, filed with the SEC on September 27, 2023 (File No. 333-272880). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except as described below, as of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Company’s Proxy Statement/Prospectus, filed with the SEC on September 27, 2023 (File No. 333-272880).
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
| † | The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request. |
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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.
|
SPECTAIRE HOLDINGS INC. | |
| Date: December 1, 2023 | By: | /s/ Brian Semkiw |
| Brian Semkiw | ||
| Chief Executive Officer | ||
| SPECTAIRE HOLDINGS INC. | ||
| Date: December 1, 2023 | By: | /s/ Leonardo Fernandes |
| Leonardo Fernandes | ||
| Chief Financial Officer | ||
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