pct-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-40234

PureCycle Technologies, Inc.

(Exact name of registrant as specified in its charter)


State						86-2293091
Delaware						(I.R.S. Employer Identification Number)

5950 Hazeltine National Drive, Suite 650

Orlando, Florida 32822

(877) 648-3565

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value $0.001 per share

PCT

The Nasdaq Stock Market LLC

Warrants, each exercisable for one share of common stock, $0.001 par value per share, at an exercise price of $11.50 per share

PCTTW

The Nasdaq Stock Market LLC

Units, each consisting of one share of common stock, $0.001 par value per share, and three quarters of one warrant

PCTTU

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 10, 2021, there were approximately 125,025,204 shares of the registrant's common stock outstanding, par value $0.001 per share, outstanding.

PureCycle Technologies, Inc.

QUARTERLY REPORT on FORM 10-Q

TABLE OF CONTENTS


			Page
PART I - Financial Information

Item 1. Financial Statements			4

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020			6

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine months ended September 30, 2021 and 2020			7

Unaudited Condensed Consolidated Statements of Stockholder’s Equity for the Three and Nine months ended September 30, 2021 and 2020			8

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, 2021 and 2020			10

Notes to the Interim Condensed Consolidated Financial Statements			11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			39

Item 3. Quantitative and Qualitative Disclosures About Market Risk			48

Item 4. Controls and Procedures			49

PART II - Other Information

Item 1. Legal Proceedings			51

Item 1A. Risk Factors			51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			67

Item 3. Defaults Upon Senior Securities			67

Item 4. Mine Safety Disclosures			67

Item 5. Other Information			67

Item 6. Exhibits			67

Signatures			70

PureCycle Technologies, Inc.

PART I - FINANCIAL INFORMATION (CONTINUED)

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the outcome of any legal proceedings to which PCT is, or may become a party, and the financial condition, results of operations, earnings outlook and prospects of PCT. Forward-looking statements generally relate to future events or PCT’s future financial or operating performance and may refer to projections and forecasts. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions (or the negative versions of such words or expressions), but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the management of PCT and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of this Quarterly Report on Form 10-Q. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors,” those discussed and identified in public filings made with the U.S. Securities and Exchange Commission (the “SEC”) by PCT and the following:

• PCT's ability to meet, and to continue to meet, applicable regulatory requirements for the use of PCT’s UPRP (as defined below) in food grade applications (both in the United States and abroad);

• PCT's ability to comply on an ongoing basis with the numerous regulatory requirements applicable to the UPRP and PCT’s facilities (both in the United States and abroad);

• Expectations and changes regarding PCT’s strategies and future financial performance, including its future business plans, expansion plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and PCT’s ability to invest in growth initiatives;

• PCT’s ability to scale and build the Ironton plant in a timely and cost-effective manner;

• PCT’s ability to build its first U.S. cluster facility, located in Augusta, Georgia (the “Augusta Facility”), in a timely and cost-effective manner.

• PCT’s ability to sort and process polypropylene plastic waste at its plastic waste prep (“Feed PreP”) facilities;

• PCT’s ability to maintain exclusivity under the Procter & Gamble Company (“P&G”) license (as described below);

• the implementation, market acceptance and success of PCT’s business model and growth strategy;

• the success or profitability of PCT’s offtake arrangements;

• the ability to source feedstock with a high polypropylene content;

• PCT’s future capital requirements and sources and uses of cash;

• PCT’s ability to obtain funding for its operations and future growth;

PureCycle Technologies, Inc.

PART I - FINANCIAL INFORMATION (CONTINUED)

• developments and projections relating to PCT’s competitors and industry;

• the outcome of any legal or regulatory proceedings to which PCT is, or may become, a party including the recently filed securities class action case and the ongoing SEC investigation;

• the ability to recognize the anticipated benefits of the Business Combination;

• unexpected costs related to the Business Combination;

• geopolitical risk and changes in applicable laws or regulations;

• the possibility that PCT may be adversely affected by other economic, business, and/or competitive factors;

• operational risk; and

• the risk that the COVID-19 pandemic, including any variants and the efficacy and distribution of vaccines, and local, state, federal and international responses to addressing the pandemic may have an adverse effect on PCT’s business operations, as well as PCT’s financial condition and results of operations.

We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

Should one or more of these risks or uncertainties materialize or should any of the assumptions made prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS


ASSETS
	(Unaudited)		(Unaudited)
(in thousands except per share data)	September 30, 2021		December 31, 2020
CURRENT ASSETS
Cash	$	36,672	$	64,492
Debt securities available for sale	184,575		—
Prepaid expenses and other current assets	2,793		446
Total current assets	224,040		64,938
Restricted cash	272,879		266,082
Prepaid expenses and other non-current assets	5,807		2,890
Property, plant and equipment, net	189,222		74,067
TOTAL ASSETS	$	691,948	$	407,977

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,084	$	1,058
Accrued expenses	44,385		26,944
Accrued interest	7,798		4,951
Notes payable – current	—		122
Total current liabilities	54,267		33,075
NON-CURRENT LIABILITIES
Deferred revenue	5,000		—
Notes payable	59,670		26,477
Bonds payable	232,270		235,676
Warrant liability	9,530		—
Other non-current liabilities	1,076		1,000
TOTAL LIABILITIES	$	361,813	$	296,228

COMMITMENT AND CONTINGENCIES	—		—

STOCKHOLDERS' EQUITY
Common shares - $0.001 par value, 250,000 shares authorized; 118,251 and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020	118		—
Class A Units - no par value; 0 and 3,981 units authorized; 0 and 3,612 units issued and outstanding as of September 30, 2021 and December 31, 2020	—		38
Class B Preferred Units - no par value; 0 and 1,938 units authorized; 0 and 1,938 units issued and outstanding as of September 30, 2021 and December 31, 2020	—		21
Class B-1 Preferred Units - no par value; 0 and 1,146 units authorized, 0 and 1,105 units issued and outstanding as of September 30, 2021 and December 31, 2020	—		16
Class C Units – no par value; 0 and 1,069 units authorized, 0 and 865 units issued and 0 and 775 units outstanding as of September 30, 2021 and December 31, 2020	—		7
Additional paid-in capital	468,421		192,381
Accumulated other comprehensive loss	(17)		—
Accumulated deficit	(138,387)		(80,714)
TOTAL STOCKHOLDERS' EQUITY	330,135		111,749
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	691,948	$	407,977

The accompanying notes are an integral part of these financial statements.

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
(in thousands except per share data)
Costs and expenses
Operating costs	$	2,687	$	3,564	$	7,228	$	7,040
Research and development	330		171		1,101		528
Selling, general and administrative	24,489		2,232		39,372		4,518
Total operating costs and expenses	27,506		5,967		47,701		12,086
Interest expense	1,843		642		5,722		1,827
Change in fair value of warrants	(8,369)		—		4,893		1,775
Other income	(3)		—		(206)		(100)
Total other expense	(6,529)		642		10,409		3,502
Net loss	$	(20,977)	$	(6,609)	$	(58,110)	$	(15,588)
Loss per share
Basic and diluted	$	(0.18)	$	(0.28)	$	(0.61)	$	(0.75)
Weighted average common shares
Basic and diluted	118,255		27,156		95,773		27,156

Other comprehensive loss:
Unrealized loss on debt securities available for sale	$	89	$	—	$	(17)	$	—
Total comprehensive loss	$	(20,888)	$	(6,609)	$	(58,127)	$	(15,588)

The accompanying notes are an integral part of these financial statements.

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Three and Nine Months Ended September 30, 2021
	Common stock			Class A			Class B Preferred			Class B-1 Preferred			Class C
(in thousands)	Shares	Amount		Units	Amount		Units	Amount		Units	Amount		Units	Amount		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
Balance, December 31, 2020	—	$	—	3,612	$	88,081	1,938	$	20,071	1,105	$	41,162	775	$	11,967	$	31,182	$	—	$	(80,714)	$	111,749
Conversion of stock	—	—		34,386	(88,043)		18,690	(20,050)		15,217	(41,146)		5,936	(11,960)		161,199		—		—		$	—
Balance at December 31, 2020, effect of reverse recapitalization conversion	—	$	—	37,998	$	38	20,628	$	21	16,322	$	16	6,711	$	7	$	192,381	$	—	$	(80,714)	$	111,749
Issuance of units upon vesting of Legacy PCT profits interests	—	—		—	—		—	—		—	—		116	—		239		—		—		239
Redemption of vested profit units	—	—		—	—		—	—		—	—		(5)	—		(36)		—		—		(36)
Removal of beneficial conversion feature upon adoption of ASU 2020-06	—	—		—	—		—	—		—	—		—	—		(31,075)		—		437		(30,638)
Merger Recapitalization	81,754	82		(37,998)	(38)		(20,628)	(21)		(16,322)	(16)		(6,822)	(7)		—		—		—		—
ROCH Shares Recapitalized, Net of Redemptions, Warrant Liability and Issuance Costs of $27.9 million	34,823	35		—	—		—	—		—	—		—	—		293,931		—		—		293,966
Issuance of restricted stock awards	775	1		—	—		—	—		—	—		—	—		(1)		—		—		—
Forfeiture of restricted stock	(3)	(1)		—	—		—	—		—	—		—	—		1		—		—		—
Reclassification of redeemable warrant to liability	—	—		—	—		—	—		—	—		—	—		(33)		—		—		(33)
Equity based compensation	—	—		—	—		—	—		—	—		—	—		68		—		—		68
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(26,074)		(26,074)
Balance, March 31, 2021	117,349	$	117	—	$	—	—	$	—	—	$	—	—	$	—	$	455,475	$	—	$	(106,351)	$	349,241
Forfeiture of restricted stock	(10)	—		—	—		—	—		—	—		—	—		—		—		—		—
Equity based compensation	—	—		—	—		—	—		—	—		—	—		835		—		—		835
Unrealized loss on available for sale debt securities	—	—		—	—		—	—		—	—		—	—		—		(106)		—		(106)
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(11,059)		(11,059)
Balance, June 30, 2021	117,339	$	117	—	$	—	—	$	—	—	$	—	—	$	—	$	456,310	$	(106)	$	(117,410)	$	338,911
Exercise of warrants	17	—		—	—		—	—		—	—		—	—		196		—		—		196
Issuance of restricted stock awards	1,000	1		—	—		—	—		—	—		—	—		(1)		—		—		—
Equity based compensation	26	—		—	—		—	—		—	—		—	—		13,611		—		—		13,611
Share repurchase	(131)	—		—	—		—	—		—	—		—	—		(1,695)		—		—		(1,695)
Unrealized gain on available for sale debt securities	—	—		—	—		—	—		—	—		—	—		—		89		—		89
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(20,977)		(20,977)
Balance, September 30, 2021	118,251	$	118	—	$	—	—	$	—	—	$	—	—	$	—	$	468,421	$	(17)	$	(138,387)	$	330,135

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	For the Three and Nine Months Ended September 30, 2020
	Common stock			Class A			Class B Preferred			Class B-1 Preferred			Class C
(in thousands)	Shares	Amount		Units	Amount		Units	Amount		Units	Amount		Units	Amount		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
Balance, December 31, 2019	—	$	—	2,581	$	387	1,728	$	1,898	630	$	23,656	436	$	4,054	$	107	$	—	$	(27,722)	$	2,380
Conversion of stock	—	—		24,575	(360)		16,660	(1,880)		8,670	(23,647)		3,625	(4,050)		29,937		—		—		—
Balance at December 31, 2019, effect of reverse recapitalization conversion	—	—		27,156	$	27	18,388	$	18	9,300	$	9	4,061	$	4	$	30,044	$	—	$	(27,722)	$	2,380
Issuance of units	—	—		—	—		—	—		4,578	5		—	—		11,569		—		—		11,574
Issuance of units upon vesting of Legacy PCT profits interests	—	—		—	—		—	—		—	—		362	—		417		—		—		417
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(4,564)		(4,564)
Balance, March 31, 2020	—	$	—	27,156	$	27	18,388	$	18	13,878	$	14	4,423	$	4	$	42,030	$	—	$	(32,286)	$	9,807
Issuance of units	—	—		—	—		—	—		393	—		—	—		920		—		—		920
Issuance of units upon vesting of Legacy PCT profits interests	—	—		—	—		—	—		—	—		147	1		172		—		—		173
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(4,415)		(4,415)
Balance, June 30, 2020	—	$	—	27,156	$	27	18,388	$	18	14,271	$	14	4,570	$	5	$	43,122	$	—	$	(36,701)	$	6,485
Issuance of units	—	—		—	—		—	—		2,045	2		—	—		5,010		—		—		5,012
Issuance of units upon vesting of Legacy PCT profits interests	—	—		—	—		—	—		—	—		1,256	1		1,962		—		—		1,963
Redemption of vested profit units	—	—		—	—		—	—		—	—		(8)	—		(16)		—		—		(16)
Net loss	—	—		—	—		—	—		—	—		—	—		—		—		(6,609)		(6,609)
Balance, September 30, 2020	—	$	—	27,156	$	27	18,388	$	18	16,316	$	16	5,818	$	6	$	50,078	$	—	$	(43,310)	$	6,835

The accompanying notes are an integral part of these financial statements.

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended September 30,
(in thousands)	2021		2020
Cash flows from operating activities
Net loss	$	(58,110)	$	(15,588)
Adjustments to reconcile net loss to net cash used in operating activities
Equity-based compensation	14,753		2,886
Fair value change of warrants	4,893		1,775
Depreciation expense	1,507		1,409
Accretion of debt instrument discounts	167		—
Amortization of debt issuance costs	2,040		—
Issuance costs attributable to warrants	109		—
Amortization of premium on debt securities	395		—
Gain on extinguishment of secured term loan	(314)		—
Changes in operating assets and liabilities
Prepaid expenses and other current assets	(2,347)		(128)
Prepaid expenses and other non-current assets	(2,917)		(100)
Accounts payable	(399)		(587)
Accrued expenses	(9,554)		288
Accrued interest	2,819		(739)
Deferred revenue	5,000		—
Net cash used in operating activities	$	(41,958)	$	(10,784)
Cash flows from investing activities
Construction of plant	(88,153)		(2,423)
Purchase of debt securities, available for sale	(229,183)		—
Sale and maturity of debt securities, available for sale	44,197		—
Net cash used in investing activities	$	(273,139)	$	(2,423)
Cash flows from financing activities
Proceeds from secured term loan	—		314
Proceeds from promissory note	91		—
Payments on promissory note from related parties	—		(600)
Payments on advances from related parties	—		(2,704)
Payments on promissory notes	(91)		(863)
Proceeds for exercise of warrants	196		—
Proceeds from ROCH and PIPE financing, net of issuance costs	298,461		—
Convertible notes issuance costs	(480)		—
Bond issuance costs	(4,067)		(155)
Proceeds from issuance of units	—		17,173
Payments on redemption of vested Legacy PCT profit interests	(36)		—
Net cash provided by financing activities	$	294,074	$	13,165
Net decrease in cash and restricted cash	(21,023)		(42)
Cash and restricted cash, beginning of period	330,574		150
Cash and restricted cash, end of period	$	309,551	$	108
Supplemental disclosure of cash flow information
Non-cash operating activities
Interest paid during the period, net of capitalized interest	$	845	$	1,581
Non-cash investing activities
Additions to property, plant, and equipment in accrued expenses	$	25,300	$	—

PureCycle Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Additions to property, plant, and equipment in accounts payable	$	1,425	$	1,319
Additions to property, plant, and equipment in accrued interest	$	1,708	$	39
Non-cash financing activities
Share repurchase — additions to accrued expense	$	1,695	$	—
PIK interest on convertible notes	$	1,680	$	—
Initial fair value of acquired warrant liability	$	4,604	$	—
Capitalization of bond issuance costs — additions to accrued expenses	$	—	$	1,961
Conversion of accounts payable to promissory notes	$	—	$	1,247

The accompanying notes are an integral part of these financial statements.

PureCycle Technologies LLC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - ORGANIZATION

Formation and Organization

PureCycle Technologies, Inc. (“PureCycle,” “PCT” or the “Company”) is headquartered in Orlando, Florida, and its planned principal operation is to conduct business as a plastics recycler using PureCycle’s patented recycling process. Developed and licensed by The Procter & Gamble Company (“P&G”), the patented recycling process separates color, odor and other contaminants from plastic waste feedstock to transform it into virgin-like resin. The Company is currently constructing its first planned facility and conducting research and development activities to operationalize the licensed technology.

PureCycle Technologies LLC was formed as a Delaware limited liability company on September 15, 2015 as Advanced Resin Technologies, LLC. In November 2016, Advanced Resin Technologies, LLC changed its name to PureCycle Technologies LLC.

Business Combination

On March 17, 2021, PureCycle consummated the previously announced business combination (“Business Combination”) by and among Roth CH Acquisition I Co., a Delaware corporation (“ROCH”), Roth CH Acquisition I Co. Parent Corp., a Delaware corporation and wholly owned direct subsidiary of ROCH (“ParentCo”), Roth CH Merger Sub LLC, a Delaware limited liability company and wholly owned direct subsidiary of Parent Co, Roth CH Merger Sub Corp., a Delaware corporation and wholly owned direct subsidiary of ParentCo and PureCycle Technologies LLC (“PCT LLC” or “Legacy PCT”) pursuant to the Agreement and Plan of Merger dated as of November 16, 2020, as amended from time to time (the “Merger Agreement”).

Upon the completion of the Business Combination and the other transactions contemplated by the Merger Agreement (the “Transactions”, and such completion, the “Closing”), ROCH changed its name to PureCycle Technologies Holdings Corp. and became a wholly owned direct subsidiary of ParentCo, PCT LLC became a wholly owned direct subsidiary of PureCycle Technologies Holdings Corp. and a wholly owned indirect subsidiary of ParentCo, and ParentCo changed its name to PureCycle Technologies, Inc. The Company’s common stock, units and warrants are now listed on the Nasdaq Capital Market (“NASDAQ”) under the symbols “PCT,” “PCTTU” and “PCTTW,” respectively.

In connection with the Business Combination, ROCH entered into subscription agreements with certain investors (the “PIPE Investors”), whereby it issued 25.0 million shares of common stock at $10.00 per share (the “PIPE Shares”) for an aggregate purchase price of $250.0 million (the “PIPE Financing”), which closed simultaneously with the consummation of the Business Combination. Upon the Closing of the Business Combination, the PIPE Investors were issued shares of the Company’s common stock.

Legacy PCT unitholders will be issued up to 4.0 million additional shares of the Company’s common stock if certain conditions are met (“the Earnout”). The Legacy PCT unitholders will be entitled to 2.0 million shares if after six months after the Closing and prior to or as of the third anniversary of the Closing, the closing price of the common stock is greater than or equal to $18.00 over any 20 trading days within any 30-trading day period. The Legacy PCT unitholders will be entitled to 2.0 million shares upon the commercial-scale plant in Ironton, Ohio (the “Ohio Phase II Facility”) becoming operational, as certified by Leidos Engineering, LLC (“Leidos”), an independent engineering firm, in accordance with criteria established in agreements in connection with construction of the plant.

In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $27.9 million related to the equity issuance, consisting primarily of investment banking and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds.

The Company incurred approximately $5.2 million of expenses primarily related to advisory, legal, and accounting fees in conjunction with the Business Combination. Of this, $3.2 million was recorded in general and administrative expenses on the consolidated statement of comprehensive loss for the nine months ended September 30, 2021.

Unless the context otherwise requires, “Registrant,” “PureCycle,” “Company,” “PCT,” “we,” “us,” and “our” refer to PureCycle Technologies, Inc., and its subsidiaries at and after the Closing and give effect to the Closing. “Legacy

PureCycle Technologies, Inc.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

(Unaudited)

PCT”, “ROCH” and “ParentCo” refer to PureCycle Technologies LLC, ROCH and ParentCo, respectively, prior to the Closing.

The aggregate consideration for the Business Combination was $1,156.9 million, payable in the form of shares of the ParentCo Common Stock and assumed indebtedness.

The following summarizes the merger consideration (in thousands except per share information):


Total shares transferred