Airjoule Technologies Corp. quarterly report, Q2 FY2023

Business context and reporting period

The supplied filing is Power & Digital Infrastructure Acquisition II Corp.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2023—not a filing under the name Airjoule Technologies Corp. The company is a SPAC with no operating revenue; its activity was pursuing a business combination. It signed a merger agreement with Montana Technologies LLC on June 5, 2023. The filing says the combined company would be renamed Montana Technologies Corporation.

Financial highlights

MetricThree months ended June 30, 2023Six months ended June 30, 2023
RevenueNo operating revenueNo operating revenue
Net income (loss)$(152,009)$1,149,440
Operating expenses$2,809,219$4,206,923
Trust investment income$3,144,991$6,268,883
Operating cash flow$(2,416,547) for the six-month period

At June 30, cash outside the trust was $494,804; trust investments were $110,909,232; current liabilities were $6,497,453; and total liabilities were $12,534,953, including $6,037,500 of deferred underwriting commissions. Working capital deficit was approximately $5.6 million. The company reported no working-capital loan borrowings. No operating margin is meaningful because the SPAC had no operating revenue.

Material changes versus prior comparable periods

  • Second-quarter net results shifted from $40,433 income in 2022 to a $152,009 loss in 2023. Six-month results shifted from a $385,356 loss in 2022 to $1,149,440 income in 2023, largely reflecting higher trust investment income.
  • Second-quarter general and administrative expense rose to $2.70 million from $188,470; six-month expense rose to $3.99 million from $531,866.
  • At the June 2023 extension vote, holders redeemed 18,141,822 Class A shares for approximately $188.1 million, leaving 10,608,178 Class A shares outstanding. Cash fell from $1.29 million at year-end 2022 to $494,804.
  • BofA Securities waived $4.025 million of deferred underwriting fees; approximately $6.0 million remained payable at quarter-end.

Outlook, risks and unusual items

  • Stockholders extended the business-combination deadline to December 14, 2023, with board-authorized monthly extensions potentially through March 14, 2024. The company expected the Montana transaction to close in the fourth quarter of 2023, subject to stockholder approval and other conditions.
  • Montana equity holders are to receive approximately $421.9 million of consideration, subject to adjustment. Up to $200 million in additional equity consideration may be issued for specified production-capacity and anticipated annualized EBITDA milestones.
  • Management stated that the deadline for completing a transaction and limited liquidity raise substantial doubt about the company’s ability to continue as a going concern. Failure to complete a business combination within the extended period could require liquidation; warrants could then expire worthless.
  • The company recorded a $1,881,321 excise-tax payable related to the June redemptions. The filing also identifies potential risks from transaction costs, financing availability, COVID-19 and geopolitical uncertainty.
  • Disclosure controls were deemed ineffective because of a material weakness in accounting for accrued general and administrative expenses and the tax provision. Management said it performed additional analysis; no material control changes were reported during the quarter.

Most important facts for investors to verify

  • Confirm the issuer identity: this filing names Power & Digital Infrastructure Acquisition II Corp., while the request names Airjoule Technologies Corp.
  • Check the merger’s current status, required approvals, closing conditions, final consideration and any changes to the stated timeline or earnout terms.
  • Verify available operating cash, ongoing expenses, extension deposits, deferred underwriting commissions and potential additional financing.
  • Assess the going-concern warning, liquidation deadline and possible effects of redemptions and the excise tax on transaction funding.
  • Monitor remediation of the disclosed material weakness and the accuracy of accrued expense and tax reporting.