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
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 |
|---|---|---|
| Revenue | No operating revenue | No 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.