| Delivery Requirement: | Submission Compliance | ||||
| Interim Financial Statements (Guarantor) | See Form 10-Q for the period ended 6/30/2023 as filed with the SEC. | ||||
| Interim Financial Statements (Company) | Included herein | ||||
| Compliance Certificates | Included herein for Guarantor and Company | ||||
Operating Statements a) Budget to Actual for the period b) Total product sold c) Amount of Product sold under offtake contracts (in total) and amount of other products sold (with information about sale/purchaser) d) Production Yield and values by weight/value e) Supplied waste processed by weight / values f) IHS/Chemical Data indices used g) Terms/ extensions / replacements of Offtake or Feedstock contracts h) Additional production capacity under development i) hours of operation for the Project | a) Refer to budget to actual b) Not applicable for Q2. There has been no product sold. c) Not applicable for Q2. There has been no product sold under Offtake Contracts or of other Products which require disclosure. d) Not applicable as only one production run executed at the end of Q2. e) Not applicable for Q2. f) IHS Average Price for Q2 = $0.6033/lb Chemical Market Data Q2 = $0.6033/lb g) None other than those previously disclosed. h) Not applicable. There have been no changes to production capacity. i) Not applicable for Q2; only one production run in June | ||||
| Reconciliation Statements (Operating Revenue Fund) | Not applicable for Q2. | ||||
| Page | |||||
Unaudited Consolidated Financial Statements | |||||
Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022 | 4 | ||||
Unaudited Statements of Operations for the Three Months Ended June 30, 2023 and 2022 | |||||
Unaudited Statements of Member's Equity for the Six months ended June 30, 2023 and 2022 | 6 | ||||
Unaudited Statements of Cash Flows for for the Six months ended June 30, 2023 and 2022 | |||||
Comparison of Actual to Budgeted Results for the Three Months Ended June 30, 2023 and 2022 | |||||
Covenant Compliance for the Three Months Ended June 30, 2023 | |||||
| (Unaudited) | |||||||||||
| (in thousands) | June 30, 2023 | December 31, 2022 | |||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ 1,480 | $ 50,928 | |||||||||
| Restricted cash - current | 19,827 | 29,389 | |||||||||
| Prepaid expense and other current assets | 5,276 | 1,612 | |||||||||
| Total current assets | 26,583 | 81,929 | |||||||||
| Restricted cash - noncurrent | 147,777 | 93,415 | |||||||||
| Property, plant and equipment, net | 431,719 | 373,848 | |||||||||
| Operating lease right-of-use assets | 5,008 | 5,042 | |||||||||
| Other long term assets | 4,322 | 4,206 | |||||||||
| TOTAL ASSETS | $ 615,409 | $ 558,440 | |||||||||
| LIABILITIES AND MEMBER'S EQUITY | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Accounts payable | $ 3,736 | $ 816 | |||||||||
| Accrued expenses | 21,799 | 26,715 | |||||||||
| Accrued interest | 1,532 | 1,532 | |||||||||
| Current portion of long-term debt | 3,425 | — | |||||||||
| Total current liabilities | 30,492 | 29,063 | |||||||||
| Deferred revenue | 5,000 | 5,000 | |||||||||
| Bonds payable | 230,624 | 233,513 | |||||||||
| Operating lease right-of-use liabilities | 3,876 | 3,956 | |||||||||
| Other Liabilities | 1,072 | 1,117 | |||||||||
| Due to parent | 267,157 | 188,989 | |||||||||
| TOTAL LIABILITIES | $ 538,221 | $ 461,638 | |||||||||
| MEMBER'S EQUITY | |||||||||||
| LLC Member Interest | 223,387 | 223,387 | |||||||||
| Accumulated deficit | (146,199) | (126,585) | |||||||||
| TOTAL MEMBERS' EQUITY | $ 77,188 | $ 96,802 | |||||||||
| TOTAL LIABILITIES AND MEMBERS' EQUITY | $ 615,409 | $ 558,440 | |||||||||
| Three months ended June 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| (in thousands) | |||||||||||
| Costs and expenses | |||||||||||
| Operating costs | $ 10,026 | $ 3,265 | |||||||||
| Research and development | 47 | 483 | |||||||||
| Selling, general and administrative | 2,318 | 3,335 | |||||||||
| Total operating costs and expenses | 12,391 | 7,083 | |||||||||
| Interest expense (income), net | $ 525 | $ 908 | |||||||||
| Other expense | 13 | 32 | |||||||||
Total other expense | $ 538 | $ 940 | |||||||||
| Net loss | $ (12,929) | $ (8,023) | |||||||||
| For the six months ended June 30, 2023 | ||||||||||||||||||||
| (in thousands) | LLC Member Interest | Accumulated deficit | Total Member's Equity | |||||||||||||||||
| Balance, December 31, 2022 | $ 223,387 | $ (126,585) | $ 96,802 | |||||||||||||||||
| Net Loss | — | (19,614) | (6,685) | |||||||||||||||||
| Balance, March 31, 2023 | $ 223,387 | $ (133,270) | $ 90,117 | |||||||||||||||||
| Net Loss | — | $ (12,929) | (12,929) | |||||||||||||||||
| Balance, June 30, 2023 | $ 223,387 | $ (146,199) | $ 77,188 | |||||||||||||||||
| For the six months ended June 30, 2022 | ||||||||||||||||||||
| (in thousands) | LLC Member Interest | Accumulated deficit | Total Member's Equity | |||||||||||||||||
| Balance, December 31, 2021 | $ 223,387 | $ (104,276) | $ 119,111 | |||||||||||||||||
| Net Loss | — | (10,939) | (5,480) | |||||||||||||||||
| Balance, March 31, 2022 | $ 223,387 | $ (109,756) | $ 113,631 | |||||||||||||||||
| Net Loss | — | (8,023) | (8,023) | |||||||||||||||||
| Balance, June 30, 2022 | $ 223,387 | $ (117,779) | $ 105,608 | |||||||||||||||||
| Six months ended June 30, | ||||||||||||||
| 2023 | 2022 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||
Net loss | $ | (19,614) | $ | (10,939) | ||||||||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||
| Depreciation expense | 4,361 | 1,385 | ||||||||||||
| Accretion of debt instrument discounts | 126 | 116 | ||||||||||||
| Amortization of debt issuance costs | 409 | 375 | ||||||||||||
| Operating lease amortization | 611 | 35 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Prepaid expenses and other current assets | (3,664) | (1,132) | ||||||||||||
| Prepaid expenses and other non-current assets | (116) | (65) | ||||||||||||
| Accounts payable | 1,482 | 1,145 | ||||||||||||
Accrued expenses | 555 | 1,430 | ||||||||||||
| Operating right-of-use liabilities | (448) | (40) | ||||||||||||
| Net cash used in operating activities | $ | (16,298) | $ | (7,690) | ||||||||||
| Cash flows from investing activities | ||||||||||||||
| Purchases of property, plant and equipment | (66,480) | (80,200) | ||||||||||||
| Net cash used in investing activities | $ | (66,480) | $ | (80,200) | ||||||||||
| Cash flows from financing activities | ||||||||||||||
Due to Parent | 78,168 | 97,620 | ||||||||||||
Payments on capital leases | (38) | (21) | ||||||||||||
| Net cash used in financing activities | $ | 78,130 | $ | 97,599 | ||||||||||
| Net (decrease) increase in cash and restricted cash | (4,648) | 9,709 | ||||||||||||
| Cash and restricted cash, beginning of year | 173,732 | 229,561 | ||||||||||||
| Cash and restricted cash, end of year | $ | 169,084 | $ | 239,270 | ||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||
| Non-cash operating activities: | ||||||||||||||
| Interest paid during the period, net of capitalized interest | $ | 650 | $ | — | ||||||||||
| Non-cash investing activities: | ||||||||||||||
| Additions to property, plant, and equipment in accounts payable | $ | 1,953 | $ | 1,598 | ||||||||||
Additions to property, plant, and equipment in accrued expenses | $ | 19,241 | $ | 19,743 | ||||||||||
| For the Quarter Ended June 30, 2023 | |||||||||||||||||||||||||||||
| Actual | Budget | $ Variance | % Variance | Explanations | |||||||||||||||||||||||||
| (in thousands) | favorable / (unfavorable) | ||||||||||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||||||||
| Operating costs | $ | 10,026 | $ | 12,461 | $ | 2,435 | 20 % | Favorable due to variable costs tied to production lower due to construction delays (e.g. water, electricity, transportation, etc.) and items in inventory not expensed through COGS, partially offset by unbudgeted post-construction engineering services commissioning costs | |||||||||||||||||||||
| Research and development | 47 | 40 | (7) | (18) % | immaterial for review | ||||||||||||||||||||||||
| Selling, general and administrative | 2,318 | 925 | (1,393) | (151) % | ~$1.5MM in corporate overhead allocation for shared services (allocation of some corporate costs is required under GAAP) | ||||||||||||||||||||||||
| Total operating costs and expenses | 12,391 | 13,426 | 1,035 | 8 % | |||||||||||||||||||||||||
| Interest expense, net | $ | 525 | $ | 4,866 | $ | 4,341 | 89 % | 1 month of interest expense beginning in June, offset by interest income for the quarter | |||||||||||||||||||||
| Other expense | 13 | — | (13) | 100 % | immaterial for review | ||||||||||||||||||||||||
| Total other expense, net | $ | 538 | $ | 4,866 | $ | 4,328 | 89 % | ||||||||||||||||||||||
| Net loss | $ | (12,929) | $ | (18,292) | $ | 5,363 | 29 % | ||||||||||||||||||||||
| Days Cash on Hand: >75 | As of June 30, 2023 | |||||||
| Cash on Hand1 | $ 51,903 | |||||||
| Operating Expenses2 | (8,857) | |||||||
| Debt Service for Period3 | — | |||||||
| Total Operating Expenses + Debt Service | $ (8,857) | |||||||
| Daily Cash Required4 | 97 | |||||||
| Days Cash on Hand | 533 | pass | ||||||
| Minimum Cash Required (at least $100M) | As of June 30, 2023 | |||||||
| Cash & cash equivalents | $ 1,480 | |||||||
| Liquidity Escrow Reserve | 50,972 | |||||||
| PureCycle Trustee Account | 50,423 | |||||||
| Operating Revenue Escrow Fund | 3 | |||||||
| Total Cash | $ 102,878 | pass | ||||||