PureCycle Technologies(PCT) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of PureCycle Technologies, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of comprehensive loss, statements of mezzanine equity and stockholders' equity, and statements of cash flows, along with detailed notes explaining significant accounting policies, liquidity, related party transactions, debt, equity, and fair value measurements Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | (in thousands, except per share data) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $ 284,067 | $ 15,683 | | Total current assets | 314,885 | 53,899 | | TOTAL ASSETS | $ 1,042,472 | $ 798,385 | | LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | 147,108 | 90,877 | | TOTAL LIABILITIES | 649,543 | 617,936 | | MEZZANINE EQUITY | | | | Series B Convertible Perpetual Preferred Stock | 294,058 | — | | TOTAL STOCKHOLDERS' EQUITY | 98,871 | 180,449 | | TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS' EQUITY | $ 1,042,472 | $ 798,385 | - Total assets increased from $798.4 million as of December 31, 2024, to $1,042.5 million as of June 30, 2025, primarily driven by a significant increase in cash and cash equivalents[9] - Cash and cash equivalents surged from $15.7 million at year-end 2024 to $284.1 million by June 30, 2025[9] - Mezzanine equity, specifically Series B Convertible Perpetual Preferred Stock, was introduced with a value of $294.1 million as of June 30, 2025, which was not present at December 31, 2024[9] - Total stockholders' equity decreased from $180.4 million to $98.9 million, largely due to an accumulated deficit of $(768.8) million as of June 30, 2025[9] Condensed Consolidated Statements of Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific reporting periods, highlighting factors impacting profitability | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $ 1,650 | $ — | $ 3,230 | $ — | | Cost of operations | 29,991 | 22,220 | 53,273 | 43,414 | | Research and development | 1,397 | 1,565 | 2,938 | 3,396 | | Selling, general and administrative | 15,860 | 16,137 | 30,338 | 32,094 | | Operating loss | (45,598) | (39,922) | (83,319) | (78,904) | | Interest expense | 17,640 | 12,055 | 32,704 | 27,109 | | Change in fair value of warrants | 82,295 | (4,311) | 25,626 | 9,633 | | Net loss | $ (144,240) | $ (48,212) | $ (135,408) | $ (133,819) | | Basic and Diluted Loss per share | $ (0.81) | $ (0.29) | $ (0.76) | $ (0.81) | - The Company reported revenues of $1.7 million for the three months and $3.2 million for the six months ended June 30, 2025, compared to no revenue in the prior year periods, indicating the start of meaningful operations and sales[10][221] - Net loss significantly increased to $(144.2) million for the three months ended June 30, 2025, from $(48.2) million in the prior year, primarily due to an $82.3 million increase in the change in fair value of warrants[10][231] - For the six months ended June 30, 2025, net loss was $(135.4) million, a slight increase from $(133.8) million in the prior year, with a $16.0 million increase in warrant fair value changes[10][231] Condensed Consolidated Statements of Mezzanine Equity and Stockholder's Equity This section outlines changes in the company's mezzanine equity and stockholders' equity, reflecting financing activities and accumulated losses - Mezzanine Equity saw a significant increase with the issuance of 300,000 shares of Series B Convertible Perpetual Preferred Stock, valued at $293.5 million, and accrued dividends of $0.6 million during the six months ended June 30, 2025[13][101][109] - Stockholders' Equity decreased from $180.4 million at December 31, 2024, to $98.9 million at June 30, 2025, primarily due to a net loss of $(144.2) million for the three months ended June 30, 2025, and $(135.4) million for the six months ended June 30, 2025[13][10] - Additional Paid-in Capital increased by $54.1 million, driven by common stock issuances ($33.1 million), warrants exercised ($14.2 million), and equity-based compensation ($9.8 million) during the six months ended June 30, 2025[13] Condensed Consolidated Statements of Cash Flows This section categorizes cash inflows and outflows from operating, investing, and financing activities, illustrating liquidity changes | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $ (75,590) | $ (79,608) | | Net cash (used in)/provided by investing activities | (23,609) | 23,857 | | Net cash provided by/(used in) financing activities | 355,632 | (223,308) | | Net increase/(decrease) in cash and restricted cash | 256,433 | (279,059) | | Cash and restricted cash, end of period | $ 297,944 | $ 23,455 | - Net cash used in operating activities decreased by $4.0 million to $(75.6) million for the six months ended June 30, 2025, compared to $(79.6) million in the prior year, mainly due to lower construction-related costs for the Ironton Facility[20][244] - Investing activities shifted from providing $23.9 million in cash in 2024 (due to debt securities sales) to using $(23.6) million in 2025, primarily for capital expenditures[20][245] - Financing activities provided significant cash of $355.6 million in 2025, a substantial increase from using $(223.3) million in 2024, driven by proceeds from Series B Preferred Stock ($300.0 million) and Common Stock issuance ($33.3 million)[20][246][247] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1 - ORGANIZATION This note describes PureCycle Technologies, Inc.'s business, its patented recycling technology, and its mission to produce sustainable polypropylene resin - PureCycle Technologies, Inc. (PCT) is a Florida-based corporation focused on commercializing a patented purification recycling technology, licensed globally from The Procter & Gamble Company (P&G), to restore waste polypropylene into PureFive™ resin[21] - The Company's objective is to introduce a new product to the global polypropylene market to help multinational corporations achieve sustainability goals, provide sustainable polypropylene products, and reduce waste[21] NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, reflecting all necessary adjustments for fair presentation[22] - Revenue is primarily generated from the sale of finished products or byproducts, recognized when control is transferred to customers[28] - Management operates the Company as a single operating segment, with performance evaluated on a consolidated net income or loss basis[30] - The Company is evaluating the impact of recently issued accounting pronouncements, including ASU 2024-04 (Debt with Conversion and Other Options), ASU 2024-03 (Income Statement – Disaggregation Disclosures), and ASU 2023-09 (Income Taxes Disclosures)[31][33][34] NOTE 3 - LIQUIDITY AND GOING CONCERN This note assesses the company's ability to meet its financial obligations for the foreseeable future, addressing going concern status and mitigating factors - As of August 7, 2025, the Company concluded that the substantial doubt about its ability to continue as a going concern for the next twelve months, previously disclosed in the March 31, 2025 10-Q, has been alleviated[35][38] - This improvement is attributed to raising approximately $300.0 million in gross proceeds from the sale of Series B Convertible Perpetual Preferred Stock in June 2025[36][37] - Longer-term going concern is dependent on continued operational improvement at the Ironton Facility, commercialization of PureFive™ resin, and successful construction and product sales from the Thailand facility[38] NOTE 4 - RELATED PARTY TRANSACTIONS This note details financial dealings and relationships between the company and its principal owners, affiliates, and other related entities - Related party transactions primarily involve financing activities with principal owners and affiliates such as Sylebra Capital Management, Samlyn Capital, LLC, Pure Plastics LLC, Pure Crown LLC, Glockner Family Venture Fund LP, and Milliken & Company[40][41] - PCT purchased $0.5 million of chemicals from Milliken during the six months ended June 30, 2025[42] - The Company borrowed and repaid $10.0 million from the $200.0 million Revolving Credit Facility with Sylebra in May-June 2025, incurring $0.2 million in interest[43] - In June 2025, the Company executed and repaid a $4.9 million promissory note with Pure Plastic, including $0.02 million in interest[44] - PCT LLC sold $11.4 million in aggregate par amount of Series A Bonds to related parties for gross proceeds of $10.1 million during the six months ended June 30, 2025[45] | (dollars in thousands) | Sylebra | Samlyn | Pure Plastic | Pure Crown LLC | Glockner | | :--------------------- | :------ | :----- | :----------- | :------------- | :------- | | Related Party Bonds Payable (June 30, 2025) | $ 785 | $ 3,900 | $ 112,045 | $ — | $ — | | Series B Convertible Perpetual Preferred Stock (shares in thousands, June 30, 2025) | 40 | 50 | — | 5 | — | | Series A Warrants (shares in thousands, June 30, 2025) | 10,250 | 2,857 | — | 1,071 | 714 | NOTE 5 - INVENTORY This note provides a breakdown of the company's inventory components, including raw materials, work in process, and finished goods | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Raw materials | $ 4,442 | $ 4,485 | | Work in process | 769 | 824 | | Finished goods | 5,549 | 2,778 | | Total inventory | $ 10,760 | $ 8,087 | - Total inventory increased by $2.7 million, from $8.1 million at December 31, 2024, to $10.8 million at June 30, 2025, primarily driven by a significant increase in finished goods[49] NOTE 6 – PROPERTY, PLANT AND EQUIPMENT This note details the company's tangible assets, including their cost, accumulated depreciation, and net book value | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Total property, plant and equipment at cost | $ 732,796 | $ 729,852 | | Less: Accumulated depreciation | (73,831) | (55,773) | | Property, plant, and equipment, net | $ 658,965 | $ 674,079 | - Net property, plant, and equipment decreased from $674.1 million at December 31, 2024, to $659.0 million at June 30, 2025, mainly due to increased accumulated depreciation[50] | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total depreciation expense | $ 7,263 | $ 7,167 | $ 14,613 | $ 16,423 | - Total depreciation expense for the six months ended June 30, 2025, was $14.6 million, a decrease from $16.4 million in the prior year[50] NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES This note itemizes short-term financial obligations, such as accrued purchases, lease obligations, and employee-related costs | (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Accrued purchases | $ 17,314 | $ 39,078 | | Accrued lease obligations | 3,733 | 3,289 | | Employee-related costs | 2,628 | 698 | | Other | 199 | 194 | | Total other current liabilities | $ 23,874 | $ 43,259 | - Total accrued expenses and other current liabilities decreased by $19.4 million, from $43.3 million at December 31, 2024, to $23.9 million at June 30, 2025, primarily due to a significant reduction in accrued purchases[51] NOTE 8 – LONG-TERM DEBT AND BONDS PAYABLE This note describes the company's long-term financial obligations, including various debt instruments, their terms, and maturity schedules | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | Long-term Debt, less current portion | $ 273,405 | $ 256,886 | | Related party debt, less current portion | $ 76,542 | $ 66,471 | | Sylebra Line of Credit (borrowing capacity $200.0M) | $ — | $ — | - Long-term debt, net of current portion, increased by $16.5 million to $273.4 million as of June 30, 2025, primarily due to increased Revenue Bonds[53] - Related party debt, net of current portion, increased by $10.1 million to $76.5 million as of June 30, 2025[53] - The Company has a $200.0 million Revolving Credit Facility with Sylebra, which was undrawn as of June 30, 2025, but saw a $10.0 million draw and repayment in June 2025[53][68] - Green Convertible Notes total $250.0 million principal amount, bearing 7.25% interest, maturing August 2030, with an initial conversion price of $14.82 per share[69][80][81] - Proceeds from Green Convertible Notes were allocated to Eligible Green Projects, including the Augusta Facility, PreP equipment, and a research and development lab, with plans to re-direct $195 million of long-lead equipment to Antwerp and/or Thailand projects[72][73][74] | Years Ending December 31, | Long-Term Debt (in thousands) | Related Party Bonds Payable (in thousands) | | :------------------------ | :---------------------------- | :----------------------------------------- | | 2025 (July through December) | $ 5,853 | $ 9,820 | | 2026 | 9,027 | 7,570 | | 2027 | 2,735 | 25,105 | | 2028 | 3,299 | 7,710 | | 2029 | 5,600 | 8,220 | | 2030 | 250,000 | 8,760 | | Thereafter | 31,900 | 49,545 | NOTE 9 - INCOME TAXES This note explains the company's income tax position, including deferred tax assets and liabilities, and the impact of valuation allowances - The Company has a full valuation allowance against net deferred tax assets, as their realization is not considered more likely than not[86] - No tax expense was reported for the three and six months ended June 30, 2025, and 2024, due to forecasted income tax losses[86] NOTE 10 - COMMITMENTS AND CONTINGENCIES This note discloses the company's contractual obligations, legal proceedings, and other potential future liabilities or claims - The Company renewed a surety bond for $25.0 million on March 14, 2024, which was increased to $45.9 million on July 1, 2024, and then decreased to $8.1 million on October 4, 2024, due to funding a restricted escrow account[89] - A significant legal proceeding involves an arbitration demand by Denham-Blythe Company, Inc. (DB) seeking approximately $17.0 million for unapproved change orders and payment applications related to the Ironton Facility EPC Contract[93] - PCO (a subsidiary) filed a counterclaim alleging damages in excess of DB's demand due to deficiencies in DB's work[93] - The Company cannot reasonably estimate the potential loss from the Denham-Blythe arbitration at this stage[99] - A shareholder derivative action (Piot v. Bouck, et al.) was dismissed with prejudice on July 23, 2025[100] NOTE 11 - MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY This note provides detailed information on the company's equity structure, including preferred stock, common stock, and equity-based compensation - In June 2025, the Company issued 300,000 shares of Series B Convertible Perpetual Preferred Stock in a private placement, generating $300.0 million in gross proceeds[101] - The Series B Preferred Stock is classified as temporary (mezzanine) equity due to a cash redemption scenario upon events not within the Company's control (change in control)[102] - Holders of Series B Preferred Stock are entitled to cumulative dividends at 7% per annum, payable in kind or cash, and can convert into Common Stock at an initial conversion price of $14.02[106][109] - Series A Preferred Stock, issued in September 2024, is accounted for as a liability, with a value of $20.7 million as of June 30, 2025, and bears 8% annual dividends[120] - The Put Option liability associated with Series A Preferred Stock decreased to $0 as of June 30, 2025, from $3.4 million at December 31, 2024, due to the adjusted timeline for the Augusta Facility making exercise remote[121][186] - As of June 30, 2025, 179.8 million shares of Common Stock were issued and outstanding, increasing from 173.6 million at December 31, 2024, partly due to a $33.0 million private placement in February 2025[126][127] NOTE 12 - EQUITY-BASED COMPENSATION This note details the company's equity incentive plans, including restricted stock units, stock options, and performance share units, and related expenses - The 2021 Equity Incentive Plan authorizes approximately 27.2 million shares, with 17.6 million remaining available for issuance as of June 30, 2025[132] | RSU Activity (in thousands) | Number of RSUs | Weighted Average Grant Date Fair Value | | :-------------------------- | :------------- | :------------------------------------- | | Non-vested at Dec 31, 2024 | 3,438 | $ 7.90 | | Granted | 850 | $ 9.67 | | Vested | (763) | $ 6.03 | | Forfeited | (107) | $ 6.44 | | Non-vested at June 30, 2025 | 3,418 | $ 8.80 | - A special restricted stock award of 0.2 million shares, valued at $2.3 million, was granted to the CEO in June 2025 and immediately vested[137] | Stock Option Activity (in thousands) | Number of Options | Weighted Average Exercise Price | | :----------------------------------- | :---------------- | :------------------------------ | | Balance, December 31, 2024 | 1,290 | $ 16.75 | | Granted | 223 | $ 10.16 | | Forfeited | (24) | $ 5.73 | | Balance, June 30, 2025 | 1,489 | $ 15.94 | | PSU Activity (in thousands) | Number of PSUs | Weighted Average Grant Date Fair Value | | :-------------------------- | :------------- | :------------------------------------- | | Balance, December 31, 2024 | 1,341 | $ 6.82 | | Granted | 194 | $ 10.15 | | Forfeited | (595) | $ 7.63 | | Balance, June 30, 2025 | 940 | $ 6.99 | | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total equity-based stock compensation expense | $ 6,411 | $ 3,072 | $ 9,765 | $ 5,754 | - Total equity-based compensation expense increased to $9.8 million for the six months ended June 30, 2025, from $5.8 million in the prior year[148] NOTE 13 - WARRANTS This note describes the various types of warrants issued by the company, their classification as equity or liability, and changes in their fair value | Warrant series | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Exercise price | | :------------- | :--------------------------- | :------------------------------- | :------------- | | RTI Warrants | — | 1,511 | $ 5.56 | | Public Warrants | 5,720 | 5,720 | $ 11.50 | | Private Warrants | 199 | 199 | $ 11.50 | | Series A Warrants | 17,857 | 17,857 | $ 11.50 | | Series B Warrants | 3,065 | 3,064 | $ 11.50 | | Series C Warrants | 5,000 | 5,000 | $ 11.50 | | Total warrants, issued and outstanding | 31,841 | 33,351 | | - RTI Warrants were exercised on January 16, 2025, generating $5.4 million in cash and resulting in the issuance of 1.5 million shares of Common Stock[150] - Public Warrants are equity-classified, while Private, Series A, Series B, and Series C Warrants are liability-classified due to specific provisions (e.g., cashless exercise, Black-Scholes value calculation with volatility floor) that prevent equity classification[153][155][159][162][166] | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Change in fair value of warrants | $ 82,295 | $ (4,311) | $ 25,626 | $ 9,633 | - The change in fair value of warrants resulted in an expense of $82.3 million for the three months and $25.6 million for the six months ended June 30, 2025, compared to a benefit of $(4.3) million and an expense of $9.6 million in the prior year periods, respectively[167] NOTE 14 – FAIR VALUE OF FINANCIAL INSTRUMENTS This note explains the valuation methodologies and hierarchy used for financial instruments, including warrant liabilities and convertible notes - The Company classifies financial instruments into a fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[168][169][170] | (in thousands) | Level 1 | Level 2 | Level 3 | Total (June 30, 2025) | | :------------- | :------ | :------ | :------ | :-------------------- | | Put Option Liability | $ — | $ — | $ — | $ — | | Warrant liability: | | | | | | Private Warrants | — | — | 285 | 285 | | Series A Warrants | — | 77,679 | — | 77,679 | | Series B Warrants | — | — | 23,410 | 23,410 | | Series C Warrants | — | — | 45,400 | 45,400 | | Total warrant liability | $ — | $ 77,679 | $ 69,095 | $ 146,774 | - The Put Option liability was valued at $0 as of June 30, 2025, down from $3.4 million at December 31, 2024, due to the reduced likelihood of its exercise[172][186][187] - Series A Warrants are classified as Level 2, valued at $77.7 million, while Private, Series B, and Series C Warrants are Level 3, valued using Black-Scholes or Monte Carlo simulations with unobservable inputs like expected volatility and option term[172][173][178][180][182][184] | (in thousands) | Level 1 | Level 2 | Level 3 | Total (June 30, 2025) | | :------------- | :------ | :------ | :------ | :-------------------- | | Green Convertible Notes | $ — | $ — | $ 305,691 | $ 305,691 | | Revenue bonds: | | | | | | Related party bonds | — | — | 116,785 | 116,785 | | Third-party bonds | — | — | 31,275 | 31,275 | | Total bonds | $ — | $ — | $ 148,060 | $ 148,060 | - Green Convertible Notes and Revenue Bonds are classified as Level 3, with fair values derived from thinly traded public bonds, indicating significant unobservable inputs[172] NOTE 15 – NET LOSS PER SHARE This note details the calculation of basic and diluted net loss per common share, considering the impact of participating and anti-dilutive securities - The Company uses the two-class method for computing net loss per common share, allocating income (but not losses) between common and participating securities[191] | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders, basic and diluted | $ (144,823) | $ (48,212) | $ (135,991) | $ (133,819) | | Weighted average common shares outstanding, basic and diluted | 179,666 | 164,691 | 178,493 | 164,524 | | Net loss per share attributable to common stockholders, basic and diluted | $ (0.81) | $ (0.29) | $ (0.76) | $ (0.81) | - Basic and diluted loss per share for the three months ended June 30, 2025, was $(0.81), compared to $(0.29) in the prior year[192] - Basic and diluted loss per share for the six months ended June 30, 2025, was $(0.76), compared to $(0.81) in the prior year[192] - Anti-dilutive shares, including warrants, stock options, RSUs, PSUs, contingently-issuable shares, and shares from Green Convertible Notes and Series B Preferred Stock, totaled 77.9 million for the six months ended June 30, 2025[192] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on PureCycle Technologies, Inc.'s financial condition and results of operations, including an overview of its business, recent developments, detailed analysis of revenue and expenses, liquidity, and cash flows. It highlights the commercialization of its recycling technology, expansion plans, and the impact of financing activities on its financial performance CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS This report contains forward-looking statements regarding PCT's financial condition, operations, and prospects, which are subject to inherent uncertainties and changes in circumstances - This report contains forward-looking statements regarding PCT's financial condition, operations, and prospects, which are subject to inherent uncertainties and changes in circumstances[195] - Key risks include PCT's ability to obtain funding, meet regulatory requirements for PureFive™ resin, commence full-scale commercial operations at the Ironton Facility, complete construction of new facilities (Thailand, Belgium, Augusta), and execute its growth plan[196][200] - PCT undertakes no obligation to update forward-looking statements, and actual results may differ materially from projections[199][202] Overview This section provides a general description of PureCycle Technologies, Inc.'s business model and operational processes - PureCycle Technologies, Inc. commercializes a patented dissolution recycling technology, licensed from P&G, to transform waste polypropylene into PureFive™ resin, which has properties similar to virgin polypropylene[206] - The Ironton Facility was certified as mechanically complete in April 2023, with an expected capacity of 107 million pounds per year when fully operational, though commissioning activities are ongoing[206] - The recycling process involves Feed PreP (collecting, sorting, preparing waste), Purification (dissolution recycling using supercritical fluids to extract and filter contaminants), and optional Compounding (modifying resin to meet end-user qualifications)[207] Recent Developments This section highlights significant events and strategic initiatives undertaken by the company in the recent period - In June 2025, the Company raised approximately $300.0 million in gross proceeds from a private placement of Series B Convertible Perpetual Preferred Stock[209] - In July 2025, PCT received an additional FDA Letter of No Objection (LNO), expanding the range of process conditions for PureFive™ resin to be used in food contact articles, allowing for greater flexibility and reduced energy usage[211] - The Company announced plans to construct a 130.0 million pound polypropylene recycling facility in Rayong, Thailand, with construction beginning in H2 2025 and expected operation by mid-2027[213] - Plans also include a 130.0 million pound facility in Antwerp, Belgium, projected to be operational in 2028, and a 300.0 million pound multi-line purification facility at the Augusta, Georgia, location, with construction starting mid-2026 and the first purification line operational in 2029[213] Components of Results of Operations This section breaks down the key revenue and expense categories that contribute to the company's financial performance - Revenue is primarily from finished product or byproduct sales, recognized when control transfers to customers[215] - Cost of operations includes personnel, feedstock, rent, depreciation, repairs, maintenance, utilities, and supplies, expected to increase with scaling operations[216] - Research and development expenses cover Technology development, facility/equipment purification processes, and feedstock preparation, including evaluation of new mechanical separators and increased in-house analytical capabilities[217] - Selling, general and administrative expenses consist of corporate personnel, professional services (legal, audit, accounting), and are expected to increase with business growth[218] Results of Operations This section analyzes the company's financial performance over the reporting periods, detailing changes in revenues, expenses, and net loss | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $ 1,650 | $ — | $ 3,230 | $ — | | Cost of operations | 29,991 | 22,220 | 53,273 | 43,414 | | Research and development | 1,397 | 1,565 | 2,938 | 3,396 | | Selling, general and administrative | 15,860 | 16,137 | 30,338 | 32,094 | | Operating loss | (45,598) | (39,922) | (83,319) | (78,904) | | Interest expense | 17,640 | 12,055 | 32,704 | 27,109 | | Interest income | (621) | (514) | (1,000) | (4,116) | | Change in fair value of warrants | 82,295 | (4,311) | 25,626 | 9,633 | | Net loss | $ (144,240) | $ (48,212) | $ (135,408) | $ (133,819) | - Revenues for the three and six months ended June 30, 2025, were $1.7 million and $3.2 million, respectively, marking the first meaningful sales, with anticipated growth from customer application trials[221] - Cost of operations increased by $7.8 million (3 months) and $9.9 million (6 months) YoY, driven by a $3.7 million loss on fixed asset disposal and higher production-related and employee expenses due to ramp-up[222][223] - Research and development expenses decreased by $0.2 million (3 months) and $0.5 million (6 months) YoY, mainly due to lower employee and operational site costs[224][226] - Selling, general and administrative expenses decreased by $0.3 million (3 months) and $1.8 million (6 months) YoY, primarily due to lower legal costs from prior year settlements, partially offset by higher equity-based compensation and employee-related expenses[227][228] - Interest expense increased by $5.6 million for both three and six months YoY, attributed to increased outstanding debt from Revenue Bonds sales and interest on the Sylebra line of credit[229] - Change in fair value of warrants resulted in an $86.6 million increase in expense for the three months and a $16.0 million increase for the six months YoY, mainly due to an increase in the underlying common stock value[231] - Other (income)/expense for the six months ended June 30, 2025, was $5.2 million in income, primarily from a $3.4 million decrease in the Series A Preferred Stock put option fair value and $1.3 million net gain from insurance proceeds[236] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash to meet its financial obligations and fund operations - Operations are funded by equity financing (common and preferred stock) and various debt instruments[237] - Current financial projections indicate the Company can meet obligations for at least 12 months from the financial statements' issuance date[237] - Longer-term liquidity depends on continued improvement at the Ironton Facility, commercialization of PureFive™ resin, and successful construction and sales from the Thailand facility[237] | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Cash | $ 284,067 | $ 15,683 | | Restricted cash (current and noncurrent) | 13,877 | 25,828 | | Gross long-term debt and related party bonds payable | $ 375,555 | $ 346,644 | - As of June 30, 2025, the Company had $284.1 million in cash and cash equivalents and $13.9 million in restricted cash[239] - The Company has an undrawn $200.0 million revolving credit facility with Sylebra Capital, expiring September 30, 2026[239] - No off-balance sheet arrangements are material to investors[240][242] Cash Flows This section analyzes the company's cash generation and usage across operating, investing, and financing activities | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $ (75,590) | $ (79,608) | | Net cash (used in)/provided by investing activities | (23,609) | 23,857 | | Net cash provided by/(used in) financing activities | 355,632 | (223,308) | | Net increase/(decrease) in cash and cash equivalents and restricted cash | 256,433 | (279,059) | - Net cash used in operating activities decreased by $4.0 million YoY to $(75.6) million, mainly due to lower construction costs for the Ironton Facility[244] - Investing activities shifted from providing $23.9 million in 2024 (from debt securities sales) to using $(23.6) million in 2025 (for capital expenditures)[245] - Net cash provided by financing activities was $355.6 million in 2025, a significant increase from net cash used of $(223.3) million in 2024, primarily driven by proceeds from Series B Preferred Stock ($300.0 million) and Common Stock issuance ($33.3 million)[246][247] Indebtedness This section provides an overview of the company's debt obligations and any significant changes during the reporting period - No material changes to indebtedness from the most recent Annual Report on Form 10-K, except for details provided in Note 8[250] - The Company sold $30.5 million par value in Revenue Bonds during the six months ended June 30, 2025[250] Critical Accounting Policies and Estimates This section discusses the accounting policies and estimates that require significant judgment and can materially impact financial reporting - There have been no significant changes in critical accounting policies and estimates since the most recent Annual Report on Form 10-K[252] Recent Accounting Pronouncements This section outlines recently issued accounting standards and their potential impact on the company's financial statements - Information on recent accounting pronouncements, their adoption timing, and potential impact is detailed in Note 2 to the condensed consolidated financial statements[253] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes in market risks as of June 30, 2025, compared to the information provided in the most recent Annual Report on Form 10-K - Market risks as of June 30, 2025, do not differ materially from those disclosed in the most recent Annual Report on Form 10-K[255] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, and reports no material changes in internal control over financial reporting during the period - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[256] - There have been no changes that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period[257] PART II - OTHER INFORMATION This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to Note 10 for a description of pending legal proceedings and states that, based on currently available facts, the ultimate resolution of these matters is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows - Legal proceedings are described in Note 10 - Commitments and Contingencies[260] - The Company does not believe that the ultimate resolution of pending or future legal matters will have a material adverse effect on its overall financial position, results of operations, or cash flows[261] Item 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the Company's most recent Annual Report on Form 10-K - No material changes from risk factors previously disclosed in the most recent Annual Report on Form 10-K[262] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides a table summarizing the Company's purchases of its Common Stock during the second quarter of 2025, which were primarily shares withheld to cover tax withholding obligations upon the vesting of restricted stock units | Period | (a) Total number of shares (or units) purchased* | (b) Average price paid per share (or unit)* | | :---------------- | :----------------------------------------------- | :------------------------------------------ | | April 1 to April 30 | 8,957 | $ 5.99 | | May 1 to May 31 | 16,843 | $ 8.28 | | June 1 to June 30 | 78,700 | $ 11.87 | | Total | 104,500 | $ 10.79 | - The Company purchased 104,500 shares of Common Stock during the second quarter of 2025 at an average price of $10.79 per share[263] - These purchases represent shares withheld to cover tax withholding obligations under the net settlement provision upon vesting of restricted stock units[263] Item 5. Other Information This section states that none of the Company's directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[266] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including merger agreements, certificates of incorporation, bylaws, credit agreements, subscription agreements, employment agreements, and certifications - The exhibits include various corporate governance documents, financing agreements, and certifications[269][271][273][274] - Key exhibits include the Certificate of Designations for Series B Convertible Perpetual Stock (3.6), the Eighth and Ninth Amendments to the Credit Agreement (10.1, 10.3), and the Executive Employment Agreement for Dustin Olson (10.4)[269] - Financial statements are provided in Inline XBRL format as Exhibit 101.1[271] SIGNATURES This section contains the duly authorized signatures of PureCycle Technologies, Inc.'s Chief Executive Officer, Dustin Olson, and Chief Financial Officer, Jaime Vasquez, certifying the report as of August 7, 2025 - The report is signed by Dustin Olson, Chief Executive Officer, and Jaime Vasquez, Chief Financial Officer, on August 7, 2025[277]