Spectaire(US:SPEC)2023-11-14 22:27PART I - FINANCIAL INFORMATION Presents condensed financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Condensed Financial Statements Presents unaudited condensed financial statements for Spectaire Holdings Inc. as of September 30, 2023, detailing financial position, operations, equity, and cash flows Condensed Balance Sheets As of September 30, 2023, total assets were $23.2 million, liabilities $21.5 million, and shareholders' deficit $21.4 million Condensed Balance Sheet Summary (as of Sep 30, 2023 vs Dec 31, 2022) | Metric | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $23,169,377 | $25,629,896 | | Investments held in Trust Account | $23,124,223 | $25,517,987 | | Total Liabilities | $21,534,906 | $11,301,531 | | Accounts payable | $5,478,623 | $783,055 | | Convertible promissory notes - related party | $2,054,516 | $221,631 | | Forward purchase units | $7,050,000 | $0 | | Total shareholders' deficit | ($21,389,752) | ($11,089,622) | | Class A ordinary shares subject to possible redemption | $23,024,223 | $25,417,987 | Condensed Statements of Operations Significant net losses for three and nine months ended September 30, 2023, driven by operating costs and unrealized losses on forward purchase units Statement of Operations Highlights (Unaudited) | Period | Net Loss (2023) | Net Loss (2022) | | :--- | :--- | :--- | | Three months ended Sep 30 | ($3,820,074) | ($1,434) | | Operating and formation costs | $1,349,564 | $615,353 | | Unrealized loss on forward purchase units | ($2,760,000) | $0 | | Nine months ended Sep 30 | ($7,237,691) | ($539,366) | | Operating and formation costs | $4,855,684 | $1,497,328 | | Unrealized loss on forward purchase units | ($3,220,000) | $0 | Net Loss Per Share (Class A & B) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three months ended Sep 30 | ($0.49) | $0.00 | | Nine months ended Sep 30 | ($0.91) | ($0.02) | Condensed Statements of Changes in Shareholders' Deficit Shareholders' deficit increased to $21.4 million by September 30, 2023, due to net loss, stock remeasurement, and forward purchase units - The total shareholders' deficit grew to $21,389,752 as of September 30, 2023, from $11,089,622 at December 31, 202220 - Key drivers for the increased deficit in the first nine months of 2023 include a net loss of $7,237,691, remeasurement of redeemable stock totaling $1,647,439, and an initial measurement of forward purchase units of $3,830,00020 Condensed Statements of Cash Flows Nine months ended September 30, 2023, saw $1.0 million cash used in operations, $3.2 million provided by investing, and $2.2 million used in financing Cash Flow Summary for the Nine Months Ended Sep 30 | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,028,169) | ($619,670) | | Net cash provided by investing activities | $3,231,757 | $0 | | Net cash used in financing activities | ($2,208,318) | ($7,000) | | Net Change in Cash | ($4,730) | ($626,670) | | Cash - End of period | $0 | $192,163 | Notes to Unaudited Condensed Financial Statements Details company formation, IPO, merger agreement, charter extensions, related-party loans, going concern uncertainty, and post-period merger consummation - On January 16, 2023, the Company entered into a Merger Agreement with Spectaire Inc., with the business combination consummated subsequent to the reporting period on October 19, 20235468 - The company extended the deadline to complete a business combination to November 1, 2023, involving two charter extensions resulting in redemptions of 20,542,108 and 376,977 Class A ordinary shares, respectively495053 - As of September 30, 2023, the company had $0 cash outside the Trust Account and negative working capital of $15,854,752, raising substantial doubt about its ability to continue as a going concern7072 - Subsequent to the quarter end, the company consummated the business combination, entered into a $3.5 million PIPE subscription agreement, and amended its underwriting agreement to restructure deferred fee payments148149157 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, and liquidity, covering Spectaire's AireCore technology, recent business combination, and net losses Overview Spectaire's AireCore platform uses patented micro mass spectrometry for real-time, direct measurement of greenhouse gas emissions - Spectaire's core offering, AireCore, is a fully integrated platform that uses mass spectrometry to directly measure CO2e and other greenhouse gas emissions for logistics and supply chain customers159 - The technology, developed over 15 years at MIT, utilizes a proprietary miniaturized and ruggedized analyzer for mobile operation in harsh environments159161 - A pilot study with an anchor customer found that a widely used emissions estimation standard overstated actual emissions by approximately 60%, highlighting the need for Spectaire's direct measurement technology160 Recent Developments Post-period, the company consummated its business combination, changed its name and jurisdiction, and secured $3.5 million in PIPE financing - The business combination with Legacy Spectaire was consummated on October 19, 2023167 - The company changed its jurisdiction of incorporation from the Cayman Islands to Delaware and its name from "Perception Capital Corp. II" to "Spectaire Holdings Inc." on October 16, 2023170171 - A PIPE subscription agreement for $3.5 million was entered into, with an initial closing of $500,000 concurrent with the business combination172 - The deferred underwriting discount was amended, with $1.5 million payable at closing and the remaining $4.135 million payable within 24 months169 Results of Operations No revenue generated; net losses of $3.8 million and $7.2 million for three and nine months ended September 30, 2023, due to costs and unrealized losses Net Loss Comparison | Period | Net Loss (2023) | Net Loss (2022) | | :--- | :--- | :--- | | Three months ended Sep 30 | $3,820,074 | $1,434 | | Nine months ended Sep 30 | $7,237,691 | $539,366 | - The net loss for the nine months ended Sep 30, 2023, was driven by $4,855,684 in operating costs and a $3,220,000 unrealized loss on forward purchase units, partially offset by $837,993 in interest and dividend income178 Liquidity, Going Concern and Capital Resources As of September 30, 2023, the company had no cash outside the trust account, relying on loans, with going concern uncertainty addressed by the business combination - As of September 30, 2023, the company had $0 cash held outside the trust account186 - Liquidity was satisfied through working capital loans, extension loans, and the Spectaire Loan186 - The company's ability to continue as a going concern was uncertain but addressed by the consummation of the business combination on October 19, 2023188 Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable because it is a smaller reporting company201 Item 4. Controls and Procedures Disclosure controls and procedures were ineffective as of September 30, 2023, due to a material weakness in accounting for forward purchase units - As of September 30, 2023, the company's disclosure controls and procedures were deemed not effective203 - The ineffectiveness was due to a material weakness in internal controls over financial reporting concerning the recording of the change in fair value of forward purchase units203 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls204 PART II - OTHER INFORMATION Details legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is not subject to any current or threatened material legal proceedings - The company reports no current or threatened material legal proceedings206 Item 1A. Risk Factors No material changes to previously disclosed risk factors in the Proxy Statement/Prospectus filed September 27, 2023 - The company refers to the risk factors disclosed in its Proxy Statement/Prospectus filed on September 27, 2023, and notes no material changes since that filing207 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported - None reported208 Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - None reported209 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable210 Item 5. Other Information No other information was reported - None reported211 Item 6. Exhibits Lists exhibits filed with the Quarterly Report, including the Merger Agreement, Certificate of Incorporation, Bylaws, and officer certifications - Key exhibits include the Agreement and Plan of Merger, the new Certificate of Incorporation and Bylaws of Spectaire Holdings Inc., and Sarbanes-Oxley Act certifications214