POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 - Description of Organization, Business
Operations and Liquidity
Power & Digital Infrastructure
Acquisition II Corp. (the “Company”) is a blank check company incorporated in Delaware on March 23, 2021. The Company was
formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities (the “Business Combination”). The Company is an emerging growth company
and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of March 31, 2023, the
Company had not commenced any operations. All activity for the period from March 23, 2021 (inception) through March 31, 2023 relates to
the Company’s formation and the initial public offering (“Initial Public Offering”), as described below, and subsequent
to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues
until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the
form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected
December 31 as its fiscal year end.
The Company’s sponsor
is XPDI Sponsor II LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s
Initial Public Offering was declared effective on December 9, 2021. On December 14, 2021, the Company consummated its Initial Public Offering
of 28,750,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public
Shares”), which included the exercise of the underwriters’ option to purchase an additional 3,750,000 Units at the initial
public offering price to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds
of $287.5 million, and incurring offering costs of approximately $20.7 million, of which approximately $10.1 million was for deferred
underwriting fees (see Note 5).
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 11,125,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.00
per Private Placement Warrant to the Sponsor and certain funds and accounts managed by subsidiaries of BlackRock, Inc., an unrelated party
(the “Anchor Investors”), generating proceeds of approximately $11.1 million (Note 4).
Upon the closing of the Initial
Public Offering and the Private Placement, approximately $290.4 million ($10.10 per Unit) of the net proceeds of the sale of the Units
in the Initial Public Offering and of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust
Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only
in U.S. “government securities,” within the meaning of Section 2(a)(16) of the Investment Company Act 1940, as amended (the
“Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described
below.
While the
Company’s management has broad discretion with respect to the specific application of the cash held outside of the Trust
Account, substantially all of the net proceeds from the Initial Public Offering and the sale of the Private Placement Warrants,
which are placed in the Trust Account, are intended to be applied generally toward completing a Business Combination. There is no
assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more
initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account
(excluding the deferred underwriting commissions and taxes payable by us on the income earned on the trust account) at the time of
the agreement to enter into the initial Business Combination. However, the Company only intends to complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or
otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide the
holders (the “Public Stockholders”) of the Company’s Public Shares with the opportunity to redeem all or a portion of
their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve
the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of
a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be
entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially at $10.10 per Public
Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). All of the Public Shares contain a redemption
feature which allows for the redemption of such Public Shares in connection with the liquidation, if there is a stockholder vote or tender
offer in connection with the initial Business Combination and in connection with certain amendments to the Amended and Restated Certificate
of Incorporation (the “Amended and Restated Certificate of Incorporation”). These Public Shares were recorded at a redemption
value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”). The
Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The
Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 immediately
following the Business Combination.
If a stockholder vote is not
required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant
to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities
and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If,
however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business
or legal reasons, the Company will offer to redeem the Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules
and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business
Combination, the initial stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public
Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders
agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a
Business Combination.
The Amended and Restated Certificate
of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such
stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public
Shares, without the prior consent of the Company.
The Company will have
until 18 months from the closing of the Initial Public Offering, or June 14, 2023 (the “Combination Period”), to
complete the initial Business Combination. However, if the Company anticipates that it may not be able to complete the initial
Business Combination within 18 months, the Company may, but is not obligated to, extend the period of time it will have to complete
an initial Business Combination by up to two additional three-month periods (for a total of up to 24 months from the closing of the
Initial Public Offering to complete a Business Combination), subject to the Sponsor or its affiliates or designees contributing, for
each such three-month extension, $0.10 per share of Class A common stock to the Trust Account (or approximately $2.9 million in the
aggregate). In connection with each such additional deposit, the Sponsor or its affiliates or designees will receive an additional
2,875,000 private placement warrants, with the same terms as the original Private Placement Warrants. The Public Stockholders will
not be entitled to vote on, or redeem their shares in connection with, any such extension.
On May 5, 2023, the Company
filed a preliminary proxy statement (the “Proxy Statement”) for the solicitation of proxies in connection with the special
meeting in lieu of Annual Meeting of the Company’s stockholders (the “Special Meeting”) to consider and vote on, among
other proposals, the extension of the date by which the Company must consummate an initial business combination from June 14, 2023 (the
“Current Outside Date”) to December 14, 2023 (such date, the “Extended Date”), and to allow the Company, without
another stockholder vote, by resolution of the Company’s board of directors to elect to further extend the Extended Date in one-month
increments up to three additional times, or a total of up to nine months after the Current Outside Date, until March 14, 2024, unless
the closing of a business combination shall have occurred prior thereto or such earlier date as determined by our board of directors to
be in the best interests of the Company (such proposal, the “Extension Amendment Proposal”), and the amendment of the Company’s
amended and restated certificate of incorporation to remove the limitation that the Company may not redeem public shares to the extent
that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Securities Exchange Act of 1934, as amended (or any successor rule) of less than $5,000,001 (such proposal, the “Redemption Limitation
Amendment Proposal”).
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
If the Company is unable
to complete a Business Combination within the Combination Period, as it may be extended, or such later date as approved by holders of
a majority of the voting power of the Company’s then outstanding shares of common stock that are voted at a meeting to extend such
Combination Period, voting together as a single class, the Company will (1) cease all operations except for the purpose of winding up;
(2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest
to pay dissolution expenses and which interest shall be net of taxes payable by us), divided by the number of then issued and outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to
the approval of the remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject in each case to
the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The holders of the Founder
Shares (the “initial stockholders”) agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation
(A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial Business Combination
or to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within 18 months (or 21 months
or 24 months, as applicable) from the closing of the Initial Public Offering or (B) with respect to any other provisions of the Amended
and Restated Certificate of Incorporation relating to stockholders’ rights or pre-initial Business Combination activity, unless
the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The initial stockholders and
Anchor Investors agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if
the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders and Anchor Investors
acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account
with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters
agreed to waive their rights to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does
not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other
funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution,
it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will
be only $10.10, or $10.20 or $10.30 per Public Share, as applicable, if the Company extends the period of time the Company will have to
complete an initial Business Combination. In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to
the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting
firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering
into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.10 per Public
Share, or $10.20 or $10.30 per public share, as applicable, if the Company extends the period of time it will have to complete an initial
Business Combination, or (ii) the lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust
Account due to reductions in the value of the Trust assets, in each case net of interest which may be withdrawn to pay taxes, provided
that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to seek access
to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In
the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent
of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify
the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent
registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements
with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Liquidity and Capital Resources
As of March 31, 2023, the Company had approximately $1.1 million in
cash and working capital deficit of approximately $0.7 million (not taking into account approximately $1.3 million tax obligations that
may be paid using investment income classified in the Trust Account).
The Company’s liquidity
needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover
certain offering costs on behalf of the Company in exchange for issuance of Founder Shares (as defined in Note 4) and a loan from a related
party of approximately $115,000 under the Note (as defined in Note 4). The Company fully repaid the Note on December 17, 2021. Subsequent
to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the
consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account.
In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor, members of the Company’s founding team or any of their
affiliates may, but are not obligated to, loan the Company funds under the Working Capital Loans (as defined and described in Note 4).
In connection with the Company’s
assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements –
Going Concern,” management has determined that the liquidity needs, mandatory liquidation and subsequent dissolution raises substantial
doubt about the Company’s ability to continue as a going concern, which is considered to be one year from the issuance of these
financial statements. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to
liquidate after June 14, 2023. The financial statements do not include any adjustment that might be necessary if the Company is unable
to continue as a going concern. The Company intends to complete a Business Combination before the mandatory liquidation date, as it may
be extended. Over this time period, the Company will be using the funds outside of the Trust Account for paying existing accounts payable,
identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses,
paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating
the Business Combination.
The Company cannot provide
any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern through one year from the issuance date of these financial statements.
These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management is currently evaluating
the impact of the COVID-19 pandemic on the Company and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations and/or search for a Target, the specific impact is
not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In February 2022, the Russian
Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including
the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and
related sanctions on the world economy are not determinable as of the date of these financial statements.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On August 16, 2022, the Inflation
Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation
itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value
of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations
are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the
same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”)
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension
vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection
with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the
redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination,
(iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise
issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content
of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the
redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction
in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Note 2 - Basis of Presentation and Summary
of Significant Accounting Policies
Basis of Presentation
The accompanying
condensed financial statements of the Company have been prepared in U.S. dollars in accordance with United States generally accepted
accounting principles (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, certain
disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are
not required for interim financial statements. In the opinion of management, all adjustments (consisting of normal accruals)
considered for a fair presentation have been included. Operating results for the three months ended March 31, 2023 are not
necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December
31, 2022, as filed with the SEC on April 17, 2023, which contains the audited financial statements and notes thereto. The financial information
as of December 31, 2022, is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2022, as filed with the SEC on April 17, 2023.
Emerging Growth Company
The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the
independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that
apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt
the new or revised standard. This may make comparison of the Company’s condensed financial statements with another public company
that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Use of Estimates
The preparation of financial
statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements.
Actual results could differ from those estimates.
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times,
may exceed the Federal Depository Insurance Corporation coverage of $250,000. The Company has not experienced losses on this account and
management believes the Company is not exposed to significant risks on such account.
Cash and Cash Equivalents
The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash
equivalents as of March 31, 2023 and December 31, 2022.
Investments Held in Trust Account
The Company’s portfolio
of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally
have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised
of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the
Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in
money market funds are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting
from the change in fair value of these securities is included in income from investments held in Trust Account in the accompanying statement
of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the condensed balance sheets, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as the
price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants
at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in
active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly
observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets
that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs
or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Derivative Financial Instruments
The Company does not use derivative
instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments,
including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives, pursuant to ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting
period.
The warrants issued in the
Initial Public Offering (“Public Warrants”) and the Private Placement Warrants are not precluded from equity classification,
based on the guidance in ASC 480 and ASC 815. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent
changes in fair value are not recognized as long as the contracts continue to be classified in equity.
Offering Costs Associated with the
Initial Public Offering
Offering costs consisted of
legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Upon completion
of the Initial Public Offering, offering costs were allocated to the separable financial instruments issued in the Initial Public Offering
on a relative fair value basis, compared to total proceeds received. Offering costs associated with the Class A common stock were charged
to the carrying value of Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. Offering
costs associated with the Public Warrants and the Private Placement Warrants were recognized net in equity.
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its
Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares of Class A common stock subject
to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable shares
of Class A common stock (including shares of Class A common stock that feature redemption rights that are either within the control of
the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified
as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. Shares of Class
A common stock of the Company feature certain redemption rights that are considered to be outside of the Company’s control and subject
to the occurrence of uncertain future events. Accordingly, as of March 31, 2023 and December 31, 2022, 28,750,000 shares of Class A common
stock subject to possible redemption were presented as temporary equity, outside of the stockholders’ equity section of the Company’s
condensed balance sheets.
Under ASC 480, the Company
has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal
the redemption value at the end of the reporting period. This method would view the end of the reporting period as if it were also the
redemption date of the security. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from
initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated
deficit.
Income Taxes
The Company complies with
the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an
asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC Topic 740 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For
those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There
were no unrecognized tax benefits as of March 31, 2023 and December 31, 2022. The Company recognizes accrued interest and penalties related
to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31,
2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company’s effective tax rate was 24.6% and 0.00% for the three months ended March 31, 2023 and 2022, respectively. The effective
tax rate differs from the statutory tax rate of 21% for the three months ended March 31, 2023 due to the increase in the valuation allowance.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Income (Loss) per Common Share
The Company complies with
accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares,
which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of common
stock outstanding for the respective period.
The calculation of diluted
net income (loss) does not consider the effect of the Public Warrants and the Private Placement Warrants to purchase an aggregate of 25,500,000
Class A common stock in the calculation of diluted income (loss) per share, because their exercise is contingent upon future events and
their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as
basic net income (loss) per share for the three months ended March 31, 2023 and 2022. Accretion associated with the redeemable Class A
common stock is excluded from earnings per share as the redemption value approximates fair value.
| |
For The Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per common stock | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
$ | 1,041,159 | | |
| 260,290 | | |
| (340,631 | ) | |
| (85,158 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common stock outstanding | |
| 28,750,000 | | |
| 7,187,500 | | |
| 28,750,000 | | |
| 7,187,500 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net income (loss) per common stock | |
| 0.04 | | |
| 0.04 | | |
| (0.01 | ) | |
| (0.01 | ) |
Recent Accounting Pronouncements
Management does not believe
that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s
condensed financial statements.
Note 3 - Initial Public Offering
On December 14, 2021, the
Company consummated its Initial Public Offering of 28,750,000 Units, which included the exercise of the underwriters’ option to
purchase an additional 3,750,000 Over-Allotment Units at the initial public offering price, generating gross proceeds of $287.5 million,
and incurring offering costs of approximately $20.7 million, of which approximately $10.1 million was for deferred underwriting fees.
Each Unit consists of one
share of Class A common stock, and one-half of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles
the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 4 - Related Party Transactions
Founder Shares
On March 30, 2021, the Sponsor
paid $25,000 to cover for certain offering costs on behalf of the Company in exchange for issuance of 5,750,000 shares of the Company’s
Class B common stock, par value $0.0001 per share, (the “Founder Shares”). In November 2021, the Company effected a stock
dividend of 1,437,500 shares of Class B common stock, resulting in there being an aggregate of 7,187,500 shares of Class B common stock
outstanding. All shares and associated amounts have been retroactively restated to reflect the stock dividend. The initial stockholders
agreed to forfeit up to an aggregate of 937,500 Founder Shares, so that the Founder Shares would represent 20.0% of the Company’s
issued and outstanding shares after the Initial Public Offering. The underwriters exercised their over-allotment option in full on December
14, 2021; thus, these 937,500 Founder Shares were no longer subject to forfeiture.
In July 2021, the Sponsor
transferred 30,000 Founder Shares to each of the four independent director nominees, a total of 120,000 Founder Shares. In November 2021,
the Sponsor repurchased 30,000 shares of Class B common stock from a former independent director nominee at a price of $120. The transfer
of the Founder Shares is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under
ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founders
Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related
to the Founders Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature
in this circumstance. As of March 31, 2023 and December 31, 2022, the Company determined that a Business Combination is not considered
probable, and, therefore, no stock-based compensation expense has been recognized. As of March 31, 2023 and December 31, 2022, stock-based
compensation of approximately $516,000 will be recognized at the date a Business Combination is considered probable (i.e., upon completion
of a Business Combination).
In exchange for the Anchor
Investors participating in the Initial Public Offering and the Private Placement, the Company agreed to sell 1,078,125 Founder Shares
to the Anchor Investors, and the Anchor Investors agreed to purchase from the Company on the date of the initial Business Combination
such Founder Shares. The Sponsor also agreed that in the event of such purchase by the Anchor Investors, the Sponsor will forfeit to
the Company for no consideration a number of Founder Shares equal to the number of Founder Shares purchased by the Anchor Investors.
Further, the Anchor Investors agreed that, if they do not own an aggregate of at least certain amount of Public Shares (such amount,
the “Anchor Threshold”) at the time of any stockholder vote with respect to an initial Business Combination or the business
day immediately prior to the completion of the initial Business Combination, the number of Founder Shares to be purchased by such Anchor
Investors from the Company will be reduced pro rata by a fraction, the numerator of which will equal the Anchor Threshold less the number
of Public Shares held by such Anchor Investors after giving effect to any redemptions of the Public Shares by such Anchor Investors and
their affiliates, and the denominator of which will equal the Anchor Threshold; provided, however, in no event will such pro rata reduction
in the number of Founder Shares to be purchased by the Anchor Investors reduce the number of Founder Shares to be purchased by more than
75%. The Company determined that the excess of the fair value of the Founder Shares to be acquired by the Anchor Investors upon the closing
of the initial Business Combination (in which case the Sponsor also agreed to forfeit to the Company for no consideration a number of
Founder Shares equal to the number of Founder Shares purchased by the Anchor Investors) should be recognized as an offering cost by the
Company in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 5A, “Expenses of Offerings.” The Company
estimated the aggregate fair value of the Sponsor’s agreement to sell Founder Shares to the Anchor Investors to be approximately
$4.7 million using a Monte Carlo simulation. Accordingly, the additional offering cost is allocated to the separable financial instruments
issued in the Initial Public Offering on a relative fair value basis, compared to total proceeds received. The allocated portion of the
additional offering cost associated with the Class A common stock was charged to the carrying value of Class A common stock subject to
possible redemption upon the completion of the Initial Public Offering.
The initial stockholders and
the Anchor Investors agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier
to occur of: (A) one year after the completion of the initial Business Combination; and (B) subsequent to the initial Business Combination
(x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20-trading days within any 30-trading day period commencing at least
150 days after the initial Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their
shares of common stock for cash, securities or other property. Any permitted transferees would be subject to the same restrictions and
other agreements of the initial stockholders and the Anchor Investors with respect to any Founder Shares.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Private Placement Warrants
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the Private Placement of 11,125,000 Private Placement Warrants, at a price of
$1.00 per Private Placement Warrant to the Sponsor and the Anchor Investors, generating proceeds of approximately $11.1 million.
Each Private Placement Warrant
is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of
the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does
not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
The purchasers of the Private
Placement Warrants agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except
to permitted transferees) until 30 days after the completion of the initial Business Combination.
Related Party Loans
On March 30, 2021, the Sponsor
agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory
note (as amended and restated on July 1, 2021, the “Note”). This loan was non-interest bearing and payable upon the completion
of the Initial Public Offering. As of December 14, 2021, the Company borrowed approximately $115,000 under the Note. The Company fully
repaid the Note on December 17, 2021.
In addition, in order to
finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held
outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held
outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans. The Working Capital Loans would either be repaid upon completion of a Business Combination or, at the
lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business
Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for
the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with
respect to such loans. As of March 31, 2023 and December 31, 2022, the Company had no borrowings under the Working Capital
Loans.
Administrative Services Agreement
Commencing on December 9,
2021 through the earlier of consummation of the initial Business Combination and the Company’s liquidation, the Company agreed to
pay affiliates of the Sponsor a total of $20,000 per month for office space, administrative and support services. During the three months
ended March 31, 2023 and 2022, the Company incurred $60,000 and $60,000 of such fees, respectively, which are recognized in general and
administrative expenses – related party, in the accompanying condensed statements of operations. As of March 31, 2023 and December
31, 2022, the Company had $320,000 and $260,000, respectively, payable in connection with such agreement, included as accrued expenses
in the accompanying condensed balance sheets.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5 - Commitments and Contingencies
Registration Rights
The holders of Founder Shares,
Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of common
stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and
upon conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement to be signed
prior to the consummation of the Initial Public Offering. These holders are entitled to certain demand and “piggyback” registration
rights. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration
or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled
to an underwriting discount of $0.20 per Unit on all Units sold in the Initial Public Offering, except for the Units purchased by the
Anchor Investors, or approximately $5.3 million in the aggregate, paid upon the closing of the Initial Public Offering.
An additional fee of $0.35
per Unit, or approximately $10.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The
deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Note 6 - Class A Common Stock Subject to
Possible Redemption
The Company’s Class
A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the
occurrence of future events. The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001
per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of March 31, 2023 and December
31, 2022, there were 28,750,000 shares of Class A common stock outstanding, which were all subject to possible redemption and classified
outside of permanent equity in the accompanying condensed balance sheets.
The Class A common stock subject
to possible redemption reflected on the condensed balance sheets is reconciled on the following table:
Gross proceeds | |
$ | 287,500,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (14,662,500 | ) |
Issuance costs allocated to Class A common stock | |
| (19,627,833 | ) |
Plus: | |
| | |
Adjust carrying value to initial redemption value | |
| 40,083,762 | |
Class A common stock subject to possible redemption as of December 31, 2022 | |
| 293,293,429 | |
Plus: | |
| | |
Remeasurement of carrying value to initial redemption value | |
| 2,649,152 | |
Class A common stock subject to possible redemption as of March 31, 2023 | |
$ | 295,942,581 | |
Note 7 - Stockholders’ Deficit
Preferred Stock
- The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting
and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2023
and December 31, 2022, there were no shares of preferred stock issued or outstanding.
Class A Common Stock
- The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of March 31,
2023 and December 31, 2022, there were 28,750,000 shares of Class A common stock issued and outstanding, all of which were subject to
possible redemption and were classified outside of permanent equity in the accompanying condensed balance sheets (see Note 6).
POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Class B Common Stock
- The Company is authorized to issue 50,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of March 31,
2023 and December 31, 2022, there were 7,187,500 shares of Class B common stock issued and outstanding.
Common stockholders of record
are entitled to one vote for each share held on all matters to be voted on by stockholders and vote together as a single class, except
as required by law; provided, that, prior to the Company’s initial Business Combination, holders of the Class B common stock will
have the right to appoint all of the Company’s directors and remove members of the board of directors for any reason, and holders
of the Class A common stock will not be entitled to vote on the appointment of directors during such time.
The Class B common stock
will automatically convert into Class A common stock at the time of the initial Business Combination, or earlier at the option of
the holder, on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and
the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or
equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to
the closing of the initial Business Combination, the ratio at which the shares of Class B common stock will convert into shares of
Class A common stock will be adjusted (unless the holders of a majority of the issued and outstanding shares of the Class B common
stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of
shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an
as-converted basis, 20% of the sum of all shares of common stock issued and outstanding upon the completion of the Initial Public
Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial
Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial
Business Combination.
Warrants -
As of March 31, 2023 and December 31, 2022, the Company has 14,375,000 and 11,125,000 Public Warrants and Private Placement Warrants
outstanding, respectively. Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be
issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later
of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common
stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders
to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act).
The Company agreed that as soon as practicable, but in no event later than 20 business days after the closing of its initial Business
Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement
covering the shares of Class A common stock issuable upon exercise of the warrants and will use its commercially reasonable efforts to
cause the same to become effective within 60 business days after the closing of the Company’s initial Business Combination and
to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If the shares
issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, the Company
will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or
on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder,
or an exemption from registration is available. Notwithstanding the above, if the Company’s shares of Class A common stock are
at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who
exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company
so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect,
it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available.
The warrants have an
exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common
stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at
an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective
issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the
Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the
date of the completion of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price
of the Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company
completes the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise
price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly
Issued Price, the $18.00 per share redemption trigger prices described below under “Redemption of warrants when the price per
share of Class A common stock equals or exceeds $18.00” to be equal to 180% of the higher of the Market Value and the Newly
Issued Price described below under “Redemption of warrants when the price per share of Class A common stock equals or exceeds
$18.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
POWER & DIGITAL INFRASTRUCTURE ACQUISITION
II CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Private Placement Warrants
will be non-redeemable and will be exercisable on a cashless basis at the option of the holder.
Redemption of Public Warrants
when the price per share of Class A common stock equals or exceeds $18.00:
Once the warrants become exercisable,
the Company may call the outstanding warrants for redemption (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the last reported sale price of Class A common stock for any 20 trading days within a
30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant
holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted). |
Unless the Company has elected
to require Public Warrant holders to exercise such warrants on a cashless basis, the Company will not redeem the Public Warrants as described
above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon
exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available throughout
the 30-day redemption period. If and when the Public Warrants become redeemable by the Company, the Company may exercise its redemption
right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company is unable to
complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders
of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 8 - Fair Value Measurements
The following table presents
information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2023 and December 31,
2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
Description | |
Level 1 | | |
Level 2 | | |
Level 3 | |
March 31, 2023 - Assets | |
| | |
| | |
| |
Investments held in Trust Account | |
$ | 297,519,738 | | |
| — | | |
| — | |
December 31, 2022 - Assets | |
| | | |
| | | |
| | |
Investments held in Trust Account | |
$ | 294,395,846 | | |
| — | | |
| — | |
Transfers to/from Levels 1,
2, and 3 are recognized at the beginning of the reporting period. There were no transfers between levels for the period from March 23,
2021 (inception) through March 31, 2023.
Level 1 assets include investments
in money market funds or U.S. Treasury securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market
prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
Note 9 - Subsequent Events
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued.
Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in
the condensed financial statements.
On May 5, 2023, the Company
filed a Proxy Statement for the solicitation of proxies in connection with the Special Meeting to consider and vote on, among other proposals,
the Extension Amendment Proposal and the Redemption Limitation Amendment Proposal.