Filing summary
Registrant and period: This filing is for Power & Digital Infrastructure Acquisition II Corp., a blank-check company, for the quarter ended September 30, 2023; it is not a filing under the name Airjoule Technologies Corp. The company had no operating business or revenue and was seeking a business combination.
Financial results and position
| Metric | Three months ended September 30, 2023 | Nine months ended September 30, 2023 | Comparable 2022 period |
|---|---|---|---|
| Operating revenue | None | None | None |
| Net income | $47,550 | $1.20 million | $781,344 and $395,988, respectively |
| Income from Trust investments | $1.45 million | $7.72 million | $1.32 million and $1.73 million, respectively |
| Operating expenses | $1.11 million | $5.32 million | $271,483 and $1.04 million, respectively |
| Operating cash flow | Not separately presented | $(1.93) million | $(1.58) million for nine months |
At September 30, cash outside the Trust Account was $294,222, Trust Account investments were $113.05 million, and total assets were $113.42 million. Current liabilities were $8.27 million, including a $1.88 million excise-tax payable; working capital deficit was approximately $7.9 million. Total liabilities were $14.31 million, including $6.04 million of deferred underwriting commissions. The filing reports no working-capital-loan borrowings. Stockholders’ deficit was $13.41 million. Profitability and operating margins are not meaningful for this pre-combination shell.
Material changes and transactions
- In June 2023, shareholders approved an extension and related charter amendment. Holders redeemed 18,141,822 Class A shares for approximately $188.13 million, leaving 10,608,178 Class A shares outstanding. The Trust balance fell from $294.40 million at December 31, 2022 to $113.05 million at September 30, 2023.
- Operating expenses rose materially: general and administrative expense was $4.99 million for the first nine months of 2023 versus $693,349 in 2022. The filing attributes the increase primarily to costs associated with the proposed transaction and public-company activities.
- On June 20, BofA waived $4.03 million of deferred underwriting fees; approximately $6.04 million remained payable, contingent on completing a business combination.
- The company recorded $1.88 million in excise-tax liability related to the June share redemptions.
Business combination, outlook, and risks
- The company had signed a June 5, 2023 merger agreement with Montana Technologies LLC. Proposed consideration to Montana equity holders was approximately $421.9 million, subject to adjustment. Additional earnout equity, capped at $200 million, depends on qualifying production capacity and associated expected annualized EBITDA milestones. The filing expected the transaction to close in the fourth quarter of 2023, subject to shareholder approval and customary conditions.
- An agreement dated September 29 with CATL and affiliates includes a 9.8% ownership limit in the post-combination company, restrictions on board representation and access to certain confidential information, and provisions relating to a potential pre-combination sale of Montana units.
- The approved extension set the deadline at December 14, 2023, with possible board-approved monthly extensions through March 14, 2024. The Sponsor or company made extension deposits; the Sponsor also deposited $300,000 on October 10 and November 9, 2023, after the reporting date.
- Management stated that the approaching mandatory liquidation, limited cash outside the Trust, and need to complete a transaction create substantial doubt about the company’s ability to continue as a going concern for one year from issuance. There is no assurance of additional financing or successful transaction completion. Failure to complete a combination by the applicable deadline would lead to liquidation; warrants could expire worthless.
- Disclosure controls were deemed ineffective due to a material weakness involving accrued general and administrative expenses and the tax provision. Management performed additional analysis and stated the statements fairly present the company’s position, but remediation remained under evaluation.
- Purported shareholders sent demand letters alleging disclosure deficiencies in the merger registration statement; the company considered the allegations meritless. The filing also cites uncertainty from COVID-19 and geopolitical conflicts, and possible effects of the excise tax on transaction cash.
Investor verification priorities
- Confirm the filing entity and its relationship, if any, to Airjoule Technologies Corp.; this report names Power & Digital Infrastructure Acquisition II Corp.
- Verify the status, final terms, approvals, financing, redemptions, and closing outcome of the Montana merger, including treatment of the earnout and CATL arrangements.
- Check the remaining Trust Account balance, extension funding, liquidation deadline, and cash available outside the Trust for operating and transaction costs.
- Assess the final excise-tax exposure and payment, the deferred underwriting fee balance, and any other transaction-related liabilities.
- Review remediation of the disclosed material weakness and any subsequent developments in the shareholder demands.