PCCTU Perception Capital Corporation II

As filed with the Securities and Exchange Commission on June 21, 2024

Registration No. 333-                      

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1

TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Spectaire Holdings Inc.
(Exact name of registrant as specified in its charter)

155 Arlington Street
Watertown, MA 02472
(508) 213-8991
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Brian Semkiw
Chief Executive Officer
155 Arlington Street
Watertown, MA 02472
(508) 213-8991
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Amy Bowler

Holland & Hart LLP

555 17th Street, Suite 3200

Denver, CO 80202

(303) 290-1086

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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.

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. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant will file a further amendment which specifically states that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement will become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus dated June 21, 2024.

PROSPECTUS

Spectaire Holdings Inc.

10,000,000 Shares of Common Stock

This prospectus relates to the resale of up to 10,000,000 shares of our common stock, par value $0.0001 per share (the “Common Stock”), of Spectaire Holdings Inc. (the “Company”), by YA II PN, LTD, (“Yorkville” or the “Selling Stockholder”).

The shares of Common Stock to which this prospectus relates have been or may be issued by us to Yorkville pursuant to a standby equity purchase agreement, dated as of May 17, 2024, by and between the Company and Yorkville (the “SEPA”). Such shares of Common Stock (the “Purchase Shares”) include (i) up to 9,766,356 shares of Common Stock that may be issued to Yorkville pursuant to the SEPA, and (ii) 233,644 shares of Common Stock we issued Yorkville, upon our execution of the SEPA, as partial consideration for its commitment to purchase shares of our Common Stock in one or more purchases that we may, in our sole discretion, direct them to make, from time to time.

We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of our Common Stock by the Selling Stockholder. However, we may receive up to $25,000,000 aggregate gross proceeds from sales of Common Stock we may elect to make to Yorkville pursuant to the SEPA prior to or after the date of this prospectus. See “The Standby Equity Facility” for a description of the SEPA and “Selling Stockholder” for additional information regarding Yorkville.

Yorkville may sell or otherwise dispose of the Common Stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution (Conflict of Interest)” for more information about how Yorkville may sell or otherwise dispose of the Common Stock pursuant to this prospectus. Yorkville is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”).

We will pay the expenses incurred in registering under the Securities Act the offer and sale of the shares of Common Stock to which this prospectus relates by the Selling Stockholder, including legal and accounting fees. See section titled “Plan of Distribution” beginning on page 85 of this prospectus.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), and are subject to reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

Our Common Stock and Warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “SPEC” and “SPECW,” respectively. On June 3, 2024, the closing price of our Common Stock was $0.350 and the closing price for our Warrants was $0.0340.

Our business and investment in our securities involves significant risks. These risks are described in the section titled “Risk Factors” beginning on page 9 of this prospectus.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is June 21, 2024.

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the SEC to register the securities described in this prospectus for resale by the Selling Stockholder who may, from time to time, sell the securities described in this prospectus. We will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholder pursuant to this prospectus.

We may also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these offerings. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Before purchasing any securities, you should carefully read this prospectus, any post-effective amendment, and any applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information.”

Neither we, nor the Selling Stockholder, have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any post-effective amendment, or any applicable prospectus supplement prepared by or on behalf of us or to which we have referred you. We and the Selling Stockholder take no responsibility for and can provide no assurance as to the reliability of any other information that others may give you. We and the Selling Stockholder will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate only as of the date on its respective cover. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus contains, and any post-effective amendment or any prospectus supplement may contain, market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included in this prospectus, any post-effective amendment or any prospectus supplement may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” contained in this prospectus, any post-effective amendment and the applicable prospectus supplement. Accordingly, investors should not place undue reliance on this information.

We own or have rights to trademarks, trade names and service marks that we use in connection with the operation of our business. In addition, our name, logos and website name and address are our trademarks or service marks. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this prospectus are listed without the applicable ®, ™ and SM symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, trade names and service marks. Other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

As used in this prospectus, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “Company,” “Registrant,” “NewCo,” and “Spectaire” refer to the consolidated operations of Spectaire Holdings Inc. and its subsidiaries. References to “PCCT” refer to the Company prior to the consummation of the Business Combination and references to “Legacy Spectaire” refer to Spectaire Inc. prior to the consummation of the Business Combination.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this prospectus, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the section in this prospectus titled “Risk Factors.” These forward-looking statements are subject to numerous risks, including, without limitation, the following:

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise.

You should read this prospectus completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

RISK FACTORS

Investing in our securities involves risks. Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described in this prospectus or any prospectus supplement are not the only risks and uncertainties that we face. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business, prospects, financial condition or operating results. The following discussion should be read in conjunction with our financial statements and the financial statements of the Company and notes to the financial statements included herein.

Unless the context otherwise requires, all references in this section to “we,” “us,” or “our” refers to the Company and its subsidiaries.

Risks Related to the SEPA

It is not possible to predict the actual number of shares we will sell under the SEPA to Yorkville, or the actual gross proceeds resulting from those sales.

On May 17, 2024, we entered into the SEPA with Yorkville, pursuant to which Yorkville has committed to purchase up to $25.0 million of shares of our Common Stock, subject to certain limitations and conditions set forth in the SEPA. The shares of our Common Stock that may be issued under the SEPA may be sold by us to Yorkville at our discretion from time to time for a period of up to 36 months, unless the SEPA is earlier terminated.

We generally have the right to control the timing and amount of any sales of our shares of Common Stock to Yorkville under the SEPA. Sales of our Common Stock, if any, to Yorkville under the SEPA will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Yorkville all, some or none of the shares of our Common Stock that may be available for us to sell to Yorkville pursuant to the SEPA.

Because the per share purchase price that Yorkville will pay for the Purchase Shares in any transaction that we may elect to effect pursuant to the SEPA will be determined by reference to the VWAP during the applicable period, respectively, on the applicable Purchase Date, as of the date of this prospectus, it is not possible for us to predict the number of shares of Common Stock that we will sell to Yorkville under the SEPA, the purchase price per share that Yorkville will pay for shares purchased from us under the SEPA, or the actual aggregate gross proceeds that we will receive from those purchases by Yorkville under the SEPA.

Although the SEPA provides that we may sell up to an aggregate of $25.0 million of our Common Stock to Yorkville, only 10,000,000 shares of our Common Stock are being registered under the Securities Act for resale by Yorkville under the registration statement that includes this prospectus. If it becomes necessary for us to issue and sell to Yorkville under the SEPA more than the 10,000,000 Purchase Shares being registered in order to receive aggregate gross proceeds equal to $25.0 million under the SEPA, we must first file with the SEC one or more additional registration statements to register such additional shares of our Common Stock, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our Common Stock to Yorkville under the SEPA. Any issuance and sale by us under the SEPA of a substantial amount of shares of Common Stock could cause additional substantial dilution to our stockholders. The number of shares of our Common Stock ultimately offered for sale by Yorkville is dependent upon the number of shares of Common Stock, if any, we ultimately elect to sell to Yorkville under the SEPA.

Investors who buy shares at different times will likely pay different prices.

Pursuant to the SEPA, we will have discretion, subject to market demand, to vary the timing, prices and numbers of shares sold to Yorkville. If and when we do elect to sell shares of our Common Stock to Yorkville pursuant to the SEPA, after Yorkville has acquired such shares, Yorkville may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from Yorkville in this offering at different times will likely pay different prices for those shares and so may experience different levels of dilution, and in some cases substantial dilution, and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase from Yorkville in this offering as a result of future sales made by us to Yorkville at prices lower than the prices such investors paid for their shares in this offering. In addition, if we sell a substantial number of shares to Yorkville under the SEPA, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Yorkville may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales.

We are engaged in multiple transactions and offerings of our securities. Future resales and/or issuances of shares of Common Stock, including pursuant to this prospectus, may cause the market price of our shares to drop significantly and may dilute stockholders.

If all of the 10,000,000 shares offered for resale by Yorkville under this prospectus were issued and outstanding as of the date hereof (without taking into account the 19.99% Exchange Cap limitation), such shares would represent approximately 35.0% of the total number of outstanding shares of Common Stock and approximately 61.7% of the total number of outstanding shares of Common Stock held by non-affiliates of our company, in each case as of June 3, 2024.

Sales of a substantial number of our shares of Common Stock in the public market by Yorkville or by our other existing stockholders, or the perception that those sales might occur, could depress the market price of our shares of Common Stock and could impair our ability to raise capital through the sale of additional equity securities.

In addition to the shares being registered with this prospectus, Spectaire filed a registration statement with the SEC for purposes of registering the resale from time to time of up to 24,469,671 shares of Common Stock (representing approximately 61.9% of our issued and outstanding shares of Common Stock and approximately 70.4% of our issued and outstanding shares of Common Stock held by non-affiliates (in each case, assuming the exercise of all of our warrants)), which consists of (a) 6,133,344 shares of Common Stock issued in connection with the Business Combination, (b) 5,165,000 shares of Common Stock originally issued to the Sponsor, (c) 10,050,000 shares of Common Stock that are issuable upon the exercise of the Private Placement Warrants, (d) 670,874 shares of Common Stock issued to Polar pursuant to the Amended and Restated Polar Subscription Agreement, (e) 206,000 shares of Common Stock issued to Polar in connection with the Polar Forward Purchase Agreement, (f) 50,000 shares of Common Stock issued in the PIPE Investment, and (g) 2,194,453 shares of Common Stock that are issuable upon the exercise of the Arosa Warrant. Further, up to 11,500,000 shares of Common Stock are issuable upon the exercise of 11,500,000 warrants (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”) originally issued in the initial public offering of PCCT. Spectaire has also filed a registration statement with the SEC for purposes of registering the resale from time to time by Keystone Capital Partners, LLC, a Delaware limited liability company (“Keystone”) of up to 3,067,438 shares of Common Stock.

In addition, shares of our Common Stock issuable upon exercise or vesting of incentive awards under our incentive plans are, once issued, eligible for sale in the public market, subject to any lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144. Furthermore, shares of our Common Stock reserved for future issuance under our incentive plan may become available for sale in future.

The market price of shares of our Common Stock could drop significantly if the holders of the shares of Common Stock described above sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of shares of our Common Stock or other securities.

We may use proceeds from sales of shares of our Common Stock made pursuant to the SEPA in ways with which you may not agree or in ways which may not yield a significant return.

We have broad discretion over the use of proceeds from sales of shares of our Common Stock made pursuant to the SEPA, as described in the section entitled “Use of Proceeds,” and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. In addition, the ultimate use of the net proceeds may vary from the currently intended uses. The net proceeds may be used for corporate purposes that do not increase our operating results or enhance the value of our Common Stock.

Sales of a substantial number of our securities in the public market by our existing securityholders could cause the price of our shares of Common Stock and Warrants to fall.

Sales of a substantial number of our shares of Common Stock or Warrants in the public market by our existing securityholders, or the perception that those sales might occur, could depress the market price of our shares of Common Stock and Warrants and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our shares of Common Stock and Warrants.

Our Warrants are exercisable for shares of our Common Stock, which exercises will increase the number of shares of Common Stock eligible for future resale in the public market and result in dilution to our existing stockholders.

The outstanding Warrants to purchase an aggregate of 21,550,000 shares of our Common Stock became exercisable on December 22, 2022. Each Warrant entitles the holder thereof to purchase one share of our Common Stock at a price of $11.50 per whole share. The Arosa Warrant to purchase an aggregate of 2,194,453 shares of our Common Stock became exercisable upon its issuance. The Arosa Warrant entitles the holder thereof to purchase up to 2,194,453 shares of Common Stock at an exercise price of $0.01 per share. Warrants may be exercised only for a whole number of shares of Common Stock. To the extent such warrants are exercised, additional shares of our Common Stock will be issued, which will result in dilution to the then existing holders of our Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Common Stock.

On June 3, 2024, the closing price for our Common Stock was $0.350. If the price of our Common Stock remains below $11.50 per share, we believe Warrant holders will be unlikely to cash exercise their Warrants, resulting in little or no cash proceeds to us.

Risks Related to Our Business

The success of our business is dependent on our ability to keep pace with technological changes and competitive conditions in our industry, and our ability to effectively adapt our services as our customers react to technological changes and competitive conditions in their respective industries. We may not timely and effectively scale and adapt its existing technology, processes and infrastructure to meet the needs of its business.

The success of Spectaire’s business is dependent on our ability to keep pace with technological changes and competitive conditions in its industry, and our ability to effectively adapt our services as its customers react to technological changes and competitive conditions in their respective industries. Spectaire may not timely and effectively scale and adapt its existing technology, processes and infrastructure to meet the needs of its business. If we are unable to offer technologically advanced, high quality, quick turnaround, cost-effective manufacturing services that are differentiated from its competition, or if we are unable to adapt those services as its customers’ requirements change, demand for our services may decline.

Our operating results and financial condition may fluctuate from period to period and may fall below expectations in any particular period, which could adversely affect the market price of our Common Stock.

Spectaire’s operating results and financial condition have historically fluctuated, and our operating results and financial condition are expected to continue to fluctuate, from quarter-to-quarter and year-to-year due to a number of factors, many of which will not be within our control. Both Spectaire’s business and the air quality measurement systems industry are changing and evolving rapidly, and our historical operating results may not be useful in predicting our future operating results. If our operating results do not meet the guidance that it provides to the marketplace or the expectations of securities analysts or investors, the market price of Common Stock will likely decline. Fluctuations in Spectaire’s operating results and financial condition may be due to a number of factors, including:

In addition, our revenues and operating results may fluctuate from quarter-to-quarter and year-to-year due to its sales cycle and seasonality among its customers. Generally, we expect the air quality measurement systems market to be subject to the adoption and capital expenditure cycles of its customers. As a result, we expect to conduct a larger portion of its business during the first and fourth quarters of its fiscal year relative to the second and third quarters. Additionally, for more complex solutions, which may require additional facilities investment, potential customers may spend a substantial amount of time performing internal assessments prior to making a purchase decision. This may cause us to devote significant effort in advance of a potential sale without any guarantee of receiving any related revenues. As a result, revenues and operating results for future periods are difficult to predict with any significant degree of certainty, which could lead to adverse effects on our inventory levels and overall financial condition.

Due to the foregoing factors, and the other risks discussed in this prospectus, you should not rely on Spectaire’s historical operating results as an indicator of our future performance.

The air quality measurement systems market is competitive. Spectaire expects to face increasing competition in many aspects of its business, which could cause its operating results to suffer.

The air quality measurement systems market in which Spectaire operates, and in which we will operate, is fragmented and competitive. Spectaire competes for customers with a wide variety of producers of air quality measurement systems equipment that includes emissions measurement devices, as well as with providers of materials and services for this equipment. Some of Spectaire’s existing and potential competitors are researching, designing, developing and marketing other types of products and services that may render Spectaire’s existing or future products obsolete, uneconomical or less competitive. Existing and potential competitors may also have substantially greater financial, technical, marketing and sales, manufacturing, distribution and other resources than Spectaire, including name recognition, as well as experience and expertise in intellectual property rights and operating within certain international markets, any of which may enable them to compete effectively against Spectaire.

Future competition may arise from the development of allied or related techniques for equipment, materials and services that are not encompassed by Spectaire’s patents, from the issuance of patents to other companies that may inhibit Spectaire’s ability to develop certain products and from improvements to existing technologies.

Spectaire intends to continue its strategy of product development and distribution network expansion to enhance its competitive position to the extent practicable. But Spectaire cannot assure you that we will be able to maintain our current position or continue to compete successfully against current and future sources of competition. If Spectaire does not keep pace with technological change and introduce new products and technologies, demand for its products may decline, and its operating results may suffer.

Customer relationships with emerging companies may present more risks than with established companies.

Customer relationships with emerging companies present special risks because Spectaire does not have an extensive services or customer relationship history. Spectaire’s credit risk on these customers, especially in trade accounts receivable and inventories, and the risk that these customers will be unable to fulfill indemnification obligations to Spectaire, is potentially increased. Although it has not yet done so, Spectaire has the option to offer these customers extended payment terms and other support and financial accommodations which may increase Spectaire’s financial exposure.

Spectaire may be adversely affected by supply chain issues, including shortages of required electronic components and raw materials.

Strategic and efficient component and materials purchasing is an aspect of Spectaire’s strategy. When prices rise, they may impact Spectaire’s margins and results of operations if we are not able to pass the price increases through to Spectaire’s customers or otherwise offset them. Some of the products Spectaire manufactures require one or more components that are only available from a single source. Some of these components or materials are subject to supply shortages from time to time. In some cases, supply shortages will substantially curtail production of all assemblies using a particular component. A supply shortage can also increase Spectaire’s cost of goods sold if Spectaire has to pay higher prices for components or materials in limited supply or cause Spectaire to have to reconfigure products to accommodate a substitute component or material. In the past there have been industry-wide conditions, natural disasters and global events that have caused component and material shortages. Spectaire’s production of a product could be negatively impacted by any quality, reliability or availability issues with any of our components and material suppliers. The financial condition of our suppliers could affect their ability to supply components or materials and their ability to satisfy any warranty obligations they may have, which could have a material adverse effect on Spectaire’s results of operations.

If a component or material shortage is threatened or anticipated, Spectaire may purchase its components or materials early to avoid a delay or interruption in its operations. Purchasing components or materials early may materially increase inventory carrying costs and may result in inventory obsolescence, which could materially adversely affect Spectaire’s results of operations. A component shortage may also require the use of second-tier vendors or the procurement of components or materials through new and untested brokers. These components or materials may be of lesser quality than those Spectaire has historically purchased and could result in material costs to bring such components or materials up to necessary quality levels or to replace defective ones.

Fluctuations in the cost and availability of raw materials, equipment, labor and transportation could cause manufacturing delays or increase Spectaire’s costs.

The price and availability of key raw materials and components used to offer our services may fluctuate significantly. Additionally, the cost of logistics and transportation fluctuates in large part due to the price of oil, currency fluctuations, and global demand trends. Any fluctuations in the cost and availability of any of Spectaire’s raw materials or other sourcing or transportation costs related to Spectaire’s raw materials or services could harm Spectaire’s gross margins and its ability to meet customer demand. If Spectaire is unable to successfully mitigate a significant portion of these service cost increases or fluctuations, Spectaire’s results of operations could be harmed.

Spectaire may experience significant delays in the design, production and launch of its air quality measurement solutions, and may be unable to successfully commercialize products on its planned timelines.

Several of Spectaire’s air quality measurement solutions are still under development. There are often delays in the design, testing, manufacture and commercial release of new products, and any delay in the launch of Spectaire’s products could materially damage its brand, business, growth prospects, financial condition and operating results. Even if we successfully complete the design, testing and manufacture for one or all of its products under development, it may fail to develop a commercially successful product on the timeline it expects for a number of reasons, including:

Spectaire’s success in the market for the products it develops will depend largely on its ability to prove its products’ capabilities in a timely manner. Upon demonstration, Spectaire’s customers may not believe that its products and/or technology have the capabilities they were designed to have or that we believe they have. Furthermore, even if Spectaire successfully demonstrates its products’ capabilities, potential customers may be more comfortable doing business with another larger and more established company or may take longer than expected to make the decision to order Spectaire’s products. Significant revenue from new product investments may not be achieved for a number of years, if at all. If the timing of Spectaire’s launch of new products or of its customers’ acceptance of such products is different than our assumptions, Spectaire’s revenue and results of operations may be adversely affected.

If demand for Spectaire’s services does not grow as expected, or develops more slowly than expected, Spectaire’s revenues may stagnate or decline, and Spectaire’s business may be adversely affected.

Spectaire may not be able to develop effective strategies to raise awareness among potential customers of the benefits of its air quality measurement systems or Spectaire’s services may not address the specific needs or provide the level of functionality or economics required by potential customers. If mass spectrometry air quality measurement technology does not gain broader market acceptance as an alternative to conventional air quality monitoring, or does so more slowly than anticipated, or if the marketplace adopts air quality measurement technologies that differ from Spectaire’s technologies, Spectaire may not be able to increase or sustain the level of sales of Spectaire’s services, and its operating results would be adversely affected as a result.

Spectaire’s failure to meet its customers’ price expectations would adversely affect its business and results of operations.

Demand for Spectaire’s product lines is sensitive to price. Changes in Spectaire’s pricing strategies can have a significant impact on its business and ability to generate revenue. Many factors, including Spectaire’s production and personnel costs and its competitors’ pricing and marketing strategies, can significantly impact Spectaire’s pricing strategies. If Spectaire fails to meet its customers’ price expectations in any given period, demand for its products and product lines could be negatively impacted and its business and results of operations could suffer.

Spectaire has considered different pricing models for different products. For example, Spectaire may charge premium pricing based on delivery timelines and customizations. Such pricing models are still relatively new to some of Spectaire’s customers and may not be attractive to them, especially in regions where they are less common. If customers resist such pricing models, Spectaire’s revenue may be adversely affected and Spectaire may need to restructure the way in which it charges customers for its products.

Spectaire depends on a limited number of third-party contract manufacturers for substantially all of its manufacturing needs. If these third-party manufacturers experience any delay, disruption or quality control problems in their operations, Spectaire could lose market share and its brand may suffer.

Spectaire depends on third-party contract manufacturers for the production of its air quality measurement systems. While there are several potential manufacturers for most of these products, all of Spectaire’s products are, and all of Spectaire’s products will be, manufactured, assembled, tested and generally packaged by a limited number of third-party manufacturers. In most cases, Spectaire relies, and Spectaire will rely, on these manufacturers to procure components and, in some cases, subcontract engineering work. Such reliance on a limited number of contract manufacturers involves a number of risks, including:

If any of Spectaire’s third-party contract manufacturers experience a delay, disruption or quality control problems in their operations, including due to the COVID-19 or similar pandemic, or if a primary third-party contract manufacturer does not renew its agreement with Spectaire, Spectaire’s operations could be significantly disrupted and its product shipments could be delayed. Qualifying a new manufacturer and commencing volume production is expensive and time consuming. In addition, there is no assurance that a contract manufacturer can scale its production of Spectaire’s products at the volumes and in the quality that Spectaire will require. If a contract manufacturer is unable to do these things, Spectaire may have to move production for the products to a new or existing third-party manufacturer, which would take significant effort, and Spectaire’s business, results of operations and financial condition could be materially adversely affected.

As Spectaire contemplates moving manufacturing into different jurisdictions, it may be subject to additional significant challenges in ensuring that quality, processes and costs, among other issues, are consistent with its expectations. For example, while Spectaire expects its third-party contract manufacturers to be responsible for penalties assessed on Spectaire because of excessive failures of the products, there is no assurance that Spectaire will be able to collect such reimbursements from these manufacturers, which causes Spectaire to take on additional risk for potential failures of its products.

In addition, because Spectaire will use a limited number of third-party contract manufacturers, increases in the prices charged may have an adverse effect on its results of operations, as Spectaire may be unable to find a contract manufacturer who can supply it at a lower price. As a result, the loss of a limited source supplier could adversely affect Spectaire’s relationships with its customers and its results of operations and financial condition.

All of Spectaire’s products must satisfy safety and regulatory standards and some of its products must also receive government certifications. Spectaire’s third-party contract manufacturers will be primarily responsible for conducting the tests that support its applications for most regulatory approvals for its products. If Spectaire’s third-party contract manufacturers fail to timely and accurately conduct these tests, Spectaire may be unable to obtain the necessary domestic or foreign regulatory approvals or certifications to sell its products in certain jurisdictions. As a result, Spectaire would be unable to sell its products and its sales and profitability could be reduced, its relationships with its sales channel could be harmed and its reputation and brand would suffer.

Defects in shipped products that give rise to returns or warranty or other claims could result in material expenses, diversion of management time and attention, adversely affected customer relationships and damage to Spectaire’s reputation.

Spectaire’s air quality measurement devices are complex and may contain undetected defects or errors. This could result in delayed market acceptance of services Spectaire offers or claims from customers or others, which may result in litigation, increased end user warranty, support and repair or replacement costs, damage to Spectaire’s reputation and business, or significant costs and diversion of support and engineering personnel to correct the defect or error. Spectaire may from time to time become subject to warranty claims related to product quality issues that could lead Spectaire to incur significant expenses.

Spectaire attempts to include provisions in its agreements with customers that are designed to limit Spectaire’s exposure to potential liability for damages arising from defects or errors in its products. However, it is possible that these limitations may not be effective as a result of unfavorable judicial decisions or laws enacted in the future.

The sale and support of Spectaire’s products entails the risk of product liability claims. Any product liability claim brought against Spectaire, regardless of its merit, could result in material expense, diversion of management time and attention, damage to Spectaire’s business and reputation and brand, and cause Spectaire to fail to retain existing customers or to fail to attract new customers.

Spectaire may be involved in legal proceedings, including intellectual property, anti-competition and securities litigation, employee-related claims and regulatory investigations, which could, among other things, divert efforts of management and result in significant expense and loss of Spectaire’s intellectual property rights.

Spectaire may be involved in legal proceedings, including cases involving Spectaire’s intellectual property rights and those of others, anti-competition and commercial matters, acquisition-related suits, securities class action suits, employee-related claims and other actions. From time to time, Spectaire may also be involved or required to participate in regulatory investigations or inquiries which may evolve into legal or other administrative proceedings. Litigation or settlement of such actions, regardless of their merit, or involvement in regulatory investigations or inquiries, can be costly, lengthy, complex and time consuming, diverting the attention and energies of Spectaire’s management and technical personnel.

From time to time, third parties may assert against Spectaire and Spectaire’s customers their intellectual property rights to technologies that are important to Spectaire’s business.

Many of Spectaire’s customer agreements and/or the laws of certain jurisdictions may require Spectaire to indemnify its customers or purchasers for third-party intellectual property infringement claims, including costs to defend those claims, and payment of damages in the case of adverse rulings. However, Spectaire’s suppliers may or may not be required to indemnify Spectaire should Spectaire or its customers be subject to such third-party claims. Claims of this sort could also harm Spectaire’s relationships with its customers and might deter future customers from doing business with Spectaire. If any pending or future proceedings result in an adverse outcome, Spectaire could be required to:

Any of the foregoing results could have a material adverse effect on Spectaire’s business, financial condition and results of operations.

In addition, Spectaire may be obligated to indemnify Spectaire’s current or former directors or employees, or former directors or employees of companies that Spectaire has acquired, in connection with litigation or regulatory investigations. These liabilities could be substantial and may include, among other things, the cost of defending lawsuits against these individuals, as well as stockholder derivative suits; the cost of government, law enforcement or regulatory investigations; civil or criminal fines and penalties; legal and other expenses; and expenses associated with the remedial measure, if any, which may be imposed.

The projected financial and other information in this prospectus is forward looking and reflects numerous estimates, beliefs and assumptions, all of which are difficult to predict and many of which are beyond Spectaire’s control. If these assumptions prove to be incorrect, Spectaire’s actual operating results may be materially different from the forecasted results.

This registration statement contains projected financial and other information of Spectaire. The projected information in this prospectus is forward looking and reflects numerous estimates, beliefs and assumptions, including, but not limited to, general business, economic, regulatory, market and financial conditions, as well as assumptions about competition, future performance, and matters specific to Spectaire’s business, all of which are difficult to predict and many of which are beyond Spectaire’s control. Important factors that may affect actual results and results of Spectaire’s operations following the Business Combination, or could lead to such projections not being achieved include, but are not limited to: inability to grow sales of the AireCore^™ MMS in Europe and North America, an evolving competitive landscape, rapid technological change, emissions regulation changes, successful management and retention of key personnel, unexpected expenses, and other risks and uncertainties relating to our business, industry, and general business and economic conditions as described in this “Risk Factors” section.

There can be no assurance that the projected financial and other information appearing elsewhere in this prospectus will be realized, and actual results may differ, and may differ materially, from those shown. The inclusion of the projected financial and other information in this prospectus should not be regarded as an indication that Spectaire, or any of its affiliates, officers, directors, advisors or other representatives considered or consider such projected information necessarily predictive of actual future events, and such projected information should not be relied upon as such. None of Spectaire or any of its affiliates, officers, directors, advisors or other representatives can give any assurance that actual results will not differ from such projections. None of Spectaire or any of its affiliates, officers, directors, advisors or other representatives has made or makes any representation to any stockholder or other person regarding the ultimate performance of Spectaire compared to the projected information or that forecasted results will be achieved. Accordingly, there can be no assurance that our financial condition or results of operations will be consistent with those set forth in the projected information, which could have an adverse impact on the market price of Common Stock or Spectaire’s financial position.

In addition, the projected financial and other information herein has not been independently verified or confirmed by any third party. In particular, such financial information has not been audited, reviewed, or examined by our auditors.

If Spectaire is unable to adequately protect or enforce its intellectual property rights, such information may be used by others to compete against Spectaire.

Spectaire has devoted substantial resources to the development of its technology and related intellectual property rights. Spectaire’s success and future revenue growth will depend, in part, on its ability to protect its intellectual property. Spectaire relies on a combination of registered and unregistered intellectual property. Spectaire protects its proprietary rights using patents, licenses, trademarks, trade secrets, confidentiality and assignment of invention agreements and other methods.

Despite Spectaire’s efforts to protect its proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose Spectaire’s technologies, inventions, processes or improvements. Spectaire cannot assure you that any of Spectaire’s existing or future patents or other intellectual property rights will not be challenged, invalidated or circumvented, or will otherwise provide Spectaire with meaningful protection. Spectaire’s pending patent applications may not be granted, and Spectaire may not be able to obtain foreign patents or pending applications corresponding to Spectaire’s U.S. patents. Even if foreign patents are granted, effective enforcement in foreign countries may not be available.

Spectaire’s trade secrets, know-how and other unregistered proprietary rights are a key aspect of its intellectual property portfolio. While Spectaire takes reasonable steps to protect its trade secrets and confidential information and enters into confidentiality and invention assignment agreements intended to protect such rights, such agreements can be difficult and costly to enforce or may not provide adequate remedies if violated, and Spectaire may not have entered into such agreements with all relevant parties. Such agreements may be breached, and trade secrets or confidential information may be willfully or unintentionally disclosed, including by employees who may leave Spectaire and join one of its competitors, or Spectaire’s competitors or other parties may learn of the information in some other way. The disclosure to, or independent development by, a competitor of any of Spectaire’s trade secrets, know-how or other technology not protected by a patent or other intellectual property system could materially reduce or eliminate any competitive advantage that Spectaire may have over such competitor.

If Spectaire’s patents and other intellectual property do not adequately protect its technology, Spectaire’s competitors may be able to offer services similar to those offered by Spectaire. Spectaire’s competitors may also be able to develop similar technology independently or design around Spectaire’s patents and other intellectual property. Any of the foregoing events would lead to increased competition and reduce Spectaire’s revenue or gross margin, which would adversely affect Spectaire’s operating results.

If Spectaire attempts enforcement of its intellectual property rights, Spectaire may be subject or party to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation, regardless of merit, can be costly and disruptive to Spectaire’s business operations by diverting attention and energies of management and key technical personnel and by increasing Spectaire’s costs of doing business. Any of the foregoing could adversely affect Spectaire’s business and financial condition.

As part of any settlement or other compromise to avoid complex, protracted litigation, Spectaire may agree not to pursue future claims against a third party, including related to alleged infringement of Spectaire’s intellectual property rights. Part of any settlement or other compromise with another party may resolve a potentially costly dispute but may also have future repercussions on Spectaire’s ability to defend and protect its intellectual property rights, which in turn could adversely affect Spectaire’s business.

Certain software Spectaire uses is from open-source code sources, which, under certain circumstances, could materially adversely affect Spectaire’s business, financial condition and operating results.

Some of the software used to execute Spectaire’s services contains code from open-source sources, the use of which may subject Spectaire to certain conditions, including the obligation to offer such services for no cost or to make the proprietary source code involved in delivering those services publicly available. Further, although some open-source vendors provide warranty and support agreements, it is common for such software to be available “as-is” with no warranty, indemnity or support. Although Spectaire monitors its use of such open-source code to avoid subjecting its services to unintended conditions, such use, under certain circumstances, could materially adversely affect Spectaire’s business, financial condition and operating results and cash flow, including if Spectaire is required to take remedial action that may divert resources away from Spectaire’s development efforts.

If Spectaire fails to grow its business as anticipated, its operating results will be adversely affected. If Spectaire grows as anticipated but fails to manage its operations and costs accordingly, its business may be harmed and its results of operations may suffer.

Spectaire is expected to grow its business substantially. To this end, Spectaire has made significant investments in its business, including investments in infrastructure, technology, marketing and sales efforts. These investments include dedicated facilities expansion and increased staffing, both domestic and international. If Spectaire’s business does not generate the level of revenue required to support its investment, Spectaire’s net sales and profitability will be adversely affected.

Spectaire’s ability to effectively manage its anticipated growth and expansion of its operations will also require Spectaire to enhance its operational, financial and management controls and infrastructure, as well as its human resources policies and reporting systems. These enhancements and improvements will require significant capital expenditures, investments in additional headcount and other operating expenditures and allocation of valuable management and employee resources. Spectaire’s future financial performance and its ability to execute on its business plan will depend, in part, on Spectaire’s ability to effectively manage any future growth and expansion. There are no guarantees that Spectaire will be able to do so in an efficient or timely manner, or at all.

Spectaire continues to implement strategic initiatives designed to grow its business. These initiatives may prove more costly than Spectaire currently anticipates and Spectaire may not succeed in increasing its revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.

Spectaire continues to make investments and implement initiatives designed to grow its business, including:

These initiatives may prove more expensive than Spectaire currently anticipates, and Spectaire may not succeed in increasing its revenue, if at all, in an amount sufficient to offset these higher expenses and to achieve and maintain profitability. Certain of the market opportunities Spectaire is pursuing are at an early stage of development, and it may be many years before the end markets it expects to serve generate demand for its products at scale. Spectaire’s revenue may be adversely affected for a number of reasons, including the development and market acceptance of new technology that competes with its AireCore™ and other air quality measurement offerings; its inability to create, validate, and manufacture at high volume, and ship product to customers; its inability to effectively manage its inventory or manufacture products at scale; its inability to enter new markets or help its customers adapt its products for new applications; or its failure to attract new customers or expand orders from existing customers or increasing competition. Furthermore, it is difficult to predict the size and growth rate of Spectaire’s target markets, customer demand for its products, commercialization timelines, the entry of competitive products or the success of existing competitive products and services. If Spectaire’s revenue does not grow, its ability to achieve and maintain profitability may be adversely affected, and the value of its business may significantly decrease.

As Spectaire acquires and invests in companies or technologies, it may not realize expected business or cost synergies or expected technological or financial benefits. Such acquisitions or investments could prove difficult to integrate, disrupt Spectaire’s business, dilute stockholder value and adversely affect Spectaire’s business, results of operations and financial condition.

Acquisitions involve numerous risks, any of which could harm Spectaire’s business and negatively affect its financial condition and results of operations. The success of acquisitions, including the success of Legacy Spectaire’s recent acquisition of microMS, Inc. (“microMS”), will depend in part on our ability to realize the anticipated business opportunities from combining the operations of acquired companies with Spectaire’s existing business in an efficient and effective manner. These integration processes could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect Spectaire’s ability to maintain relationships with customers, employees or other third parties, or Spectaire’s ability to achieve the anticipated benefits of any acquisition, and could harm Spectaire’s financial performance. If Spectaire is unable to successfully or timely integrate the operations of an acquired company, including microMS, with Spectaire’s existing business, Spectaire may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the acquisition, and Spectaire’s business, results of operations and financial condition could be materially and adversely affected.

Developments in alternative technologies may adversely affect the demand for Spectaire’s technology.

Significant developments in alternative technologies may materially and adversely affect Spectaire’s business, prospects, financial condition, and operating results in ways it does not currently anticipate. Existing and future air quality measurement or mass spectrometry technologies may emerge as customers’ preferred alternative to our solutions. Any failure by Spectaire to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay Spectaire’s development and introduction of new and enhanced products in the industries it serves, which could result in the loss of competitiveness of its solutions, decreased revenue and a loss of market share to competitors (or a failure to increase revenue and/or market share). Spectaire’s research and development efforts may not be sufficient to adapt to changes in technology. As technologies change, Spectaire’s plans to upgrade or adapt its solutions with the latest technology. However, Spectaire’s solutions may not compete effectively with alternative systems if Spectaire is not able to source and integrate the latest technology into its existing products.

Spectaire competes against established market participants that have substantially greater resources than it and against known and unknown market entrants who may disrupt its target markets.

Spectaire’s target markets are highly competitive and it may not be able to compete effectively in the market against these competitors. Competitors may offer products at lower prices than Spectaire’s products, including pricing that Spectaire believes is below its cost, or may offer superior performing products. These companies will also compete with Spectaire indirectly by attempting to solve some of the same challenges with different technology. Established competitors in the market for these devices have significantly greater resources and more experience than Spectaire does. These competitors have commercialized technology that has achieved market adoption, strong brand recognition and may continue to improve in both anticipated and unanticipated ways. They may also have entered into commercial relationships with key customers and have built relationships and dependencies between themselves and those key customers.

In addition to the established market competitors, new competitors may be preparing to enter or are entering the market in which Spectaire competes, and in which Spectaire will compete, that may disrupt the commercial landscape of target markets in ways that Spectaire may not be able to prepare for, including customers of Spectaire’s products who may be developing their own competitive solutions. Spectaire does not know how close any of its current and potential competitors are to commercializing their similar products and services, if at all, nor what they intend to develop as part of their product roadmaps. The already competitive landscape of the air quality measurement systems market, along with both foreseeable and unforeseeable entries of competitors and similar technology from those competitors in Spectaire’s target markets, may result in pricing pressure, reduced margins and may impede its ability to increase the sales of its products or cause Spectaire to lose market share, any of which will adversely affect its business, results of operations and financial condition.

Spectaire’s manufacturing costs may increase and result in a market price for its products above the price that customers are willing to pay.

If the cost of manufacturing Spectaire’s products increases, Spectaire will be forced to charge its customers a higher price for the products in order to cover its costs and earn a profit. While Spectaire expects its products will benefit from continued cost reduction over time from scale and planned redesigns, there is no guarantee that these efforts will be successful, or that these savings would not be offset by additional required content. If the price of Spectaire’s products is too high, customers may be reluctant to purchase its products, especially if lower priced alternative products are available, and Spectaire may not be able to sell its products in sufficient volumes to recover its costs of development and manufacture or to earn a profit.

Spectaire purchases a significant amount of the materials and components it uses from a limited number of suppliers, and if such suppliers become unavailable or inadequate, its customer relationships, results of operations and financial condition may be adversely affected.

Spectaire’s manufacturing processes rely on many materials. Spectaire purchases a significant portion of its materials, components and finished goods used in its production facilities from a few suppliers, some of which are single-source suppliers. As certain materials are highly specialized, the lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source. Spectaire does not generally have long-term contracts with its suppliers and substantially all of Spectaire’s purchases are on a purchase order basis. Suppliers may extend lead times, limit supplies, place products on allocation or increase prices due to commodity price increases, capacity constraints or other factors and could lead to interruption of supply or increased demand in the industry. Additionally, the supply of these materials may be negatively impacted by increased trade tensions between the U.S. and its trading partners, particularly China. In the event that Spectaire cannot obtain sufficient quantities of materials in a timely manner, at reasonable prices or of sufficient quality, or if Spectaire is not able to pass on higher materials costs to its customers, Spectaire’s business, financial condition and results of operations could be adversely impacted.

Spectaire, its contract manufacturers and its suppliers may rely on complex machinery for production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

Spectaire, its contract manufacturers and its suppliers may rely on complex machinery for the production, assembly and installation of Spectaire’s products, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Spectaire’s production facilities and the facilities of its contract manufacturers and suppliers may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of these components may significantly affect the intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of Spectaire’s control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on its business, prospects, financial condition or operating results.

Spectaire’s facilities, and its suppliers’ facilities and customers’ facilities, will be vulnerable to disruption due to natural or other disasters, public health crises, strikes and other events beyond Spectaire’s control.

A major earthquake, fire, tsunami, hurricane, cyclone or other disaster, such as a pandemic, major flood, seasonal storms, nuclear event or terrorist attack affecting Spectaire’s facilities or the areas in which they are located, or affecting those of Spectaire’s customers or third-party manufacturers or suppliers, could significantly disrupt Spectaire’s or its customers’ or suppliers’ operations and delay or prevent product shipment or installation during the time required to repair, rebuild or replace Spectaire’s damaged manufacturing facilities. These delays could be lengthy and costly. Additionally, customers may delay purchases until operations return to normal. Even if Spectaire is able to respond quickly to a disaster, the continued effects of the disaster could create uncertainty in Spectaire’s business operations. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, labor strikes, war or the outbreak of epidemic diseases (including the outbreak of COVID-19 or similar pandemics) could have a negative effect on Spectaire’s operations and sales.

If Spectaire does not maintain the correct level of inventory or if it does not adequately manage its inventory, Spectaire could lose sales or incur higher inventory-related expenses, which could negatively affect its operating results.

To ensure the correct level of inventory supply, Spectaire will forecast inventory needs and expenses, place orders sufficiently in advance with its suppliers and manufacturing partners and manufacture products based on its estimates of future demand. Fluctuations in the adoption of its products may affect Spectaire’s ability to forecast its future operating results, including revenue, gross margins, cash flows and profitability. Spectaire’s ability to accurately forecast demand for its products could be affected by many factors, including the rapidly changing nature of its current target markets, the uncertainty surrounding the market acceptance and commercialization of its technology, the emergence of new markets, an increase or decrease in customer demand for its products or for products and services of its competitors, product introductions by competitors, the global COVID-19 pandemic, other health epidemics and outbreaks, and any associated work stoppages or interruptions, unanticipated changes in general market conditions and the weakening of economic conditions or consumer confidence in future economic conditions. Spectaire may face challenges acquiring adequate supplies to manufacture its products and Spectaire and its partners may not be able to manufacture its products at a rate necessary to satisfy the levels of demand, which would negatively affect Spectaire’s short-term and long-term growth. This risk may be exacerbated by the fact that Spectaire may not carry or be able to obtain from its suppliers a significant amount of inventory to satisfy short-term demand increases. If Spectaire fails to accurately forecast customer demand, Spectaire may experience excess inventory levels or a shortage of products available for sale.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect Spectaire’s financial results, including its gross margin, and have a negative effect on its brand. Conversely, if Spectaire underestimates customer demand for its products, Spectaire may not be able to deliver products to meet its requirements, and this could result in damage to its brand and customer relationships and adversely affect its revenue and operating results.

Spectaire’s operations could suffer if Spectaire is unable to attract and retain key management or other key employees.

Spectaire believes its success has depended, and Spectaire’s success will continue to depend, on the efforts and talents of senior management and other key personnel. Spectaire’s executive team is critical to the management of Spectaire’s business and operations and will continue to be critical to the development of Spectaire’s strategy. Members of Spectaire’s existing senior management team may resign at any time. The loss of the services of any members of Spectaire’s senior management team could delay or prevent the successful implementation of Spectaire’s strategy or Spectaire’s commercialization of new services, or could otherwise adversely affect Spectaire’s ability to carry out its business plan. There is no assurance that if any senior executive leaves in the future, Spectaire will be able to rapidly replace him, her or them and transition smoothly towards his, her or their successor, without any adverse impact on Spectaire’s operations.

To support the continued growth of Spectaire’s business, Spectaire will also be required to effectively recruit, hire, integrate, develop, motivate, and retain additional new employees. High demand exists for senior management and other key personnel (including scientific, technical, engineering, financial, manufacturing, and sales personnel) in Spectaire’s industry, and there can be no assurance that Spectaire will be able to retain its current key personnel. Spectaire experiences intense competition for qualified personnel. While Spectaire intends to provide competitive compensation packages to attract and retain key personnel, some of its competitors for these employees have greater resources and more experience, which may make it difficult for Spectaire to compete successfully for key personnel. All of Spectaire’s U.S. employees are at-will employees, meaning that they may terminate their employment relationship with Spectaire at any time, and their knowledge of Spectaire’s business and industry would be extremely difficult to replace. It may be difficult for Spectaire to restrict its competitors from benefiting from the expertise that Spectaire’s former employees or consultants developed while working for Spectaire.

Spectaire will require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.

Historically, Spectaire’s primary sources of liquidity have been contributions from founders or other investors. Spectaire reported an operating loss of $2.0 million for the three months ended March 31, 2024 and $4.3 million for the three months ended March 31, 2023. Spectaire reported negative cash flows from operations of $2.7 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, Spectaire had an aggregate unrestricted cash balance of $31 thousand, a net working capital deficit of $27.9 million, and an accumulated deficit of $29.7 million. For the year ended December 31, 2023, Spectaire reported an operating loss of $16.7 million and negative cash flows from operations of $7.4 million. As of December 31, 2023, Spectaire had an aggregate unrestricted cash balance of $0.3 million, a net working capital deficit of $25.4 million, and accumulated deficit of $27.2 million.

While the Company will continue to evaluate potential sources of funding, the Company may not be able to raise additional capital on terms acceptable to it or at all. If the Company is unable to raise additional capital when desired, the Company may be required to modify, delay or abandon some of its planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on the Company’s business, operating results, financial condition and ability to achieve its intended business objectives.

Compliance or the failure to comply with current and future environmental, health and safety, product stewardship and producer responsibility laws or regulations could cause Spectaire significant expense.

Spectaire will be subject to a variety of federal, state, local and foreign environmental, health and safety, product stewardship and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge and disposal of hazardous chemicals used during its manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments and those relating to the recycling or reuse of products it manufactures. If Spectaire fails to comply with any present or future regulations or obtain in a timely manner any needed permits, Spectaire could become subject to liabilities, and could face fines or penalties, the suspension of production, or prohibitions on services it provides. In addition, such regulations could restrict Spectaire’s ability to expand its facilities or could require it to acquire costly equipment, or to incur other significant expenses, including expenses associated with the recall of any non-compliant product or with changes in Spectaire’s operational, procurement and inventory management activities.

Certain environmental laws impose liability for the costs of investigation, removal and remediation of hazardous or toxic substances on an owner, occupier or operator of real estate, or on parties who arranged for hazardous substance treatment or disposal, even if such person or company was unaware of, or not responsible for, contamination at the affected site. Soil and groundwater contamination may have occurred at or near, or may have arisen from, some of Spectaire’s facilities. In certain instances where contamination existed prior to Spectaire’s ownership or occupation of a site, landlords or former owners have retained some contractual responsibility for contamination and remediation. However, failure of such persons to perform those obligations could result in Spectaire being required to address such contamination. As a result, Spectaire may incur clean-up costs in such potential removal or remediation efforts. In other instances, Spectaire may be responsible for clean-up costs and other liabilities, including the possibility of claims due to health risks by both employees and non-employees, as well as other third-party claims in connection with contaminated sites.

In addition, there is an increasing governmental focus around the world on global warming and environmental impact issues, which may result in new environmental, health and safety regulations that may affect Spectaire, its suppliers or its customers. This could cause Spectaire to incur additional direct costs for compliance, as well as increased indirect costs resulting from its customers, suppliers or both incurring additional compliance costs that get passed on to Spectaire. These costs may adversely impact Spectaire’s operations and financial condition.

An inability to successfully manage the procurement, development, implementation or execution of IT systems, or to adequately maintain these systems and their security, as well as to protect data and other confidential information, may adversely affect Spectaire’s business and reputation.

As a complex company, Spectaire is heavily dependent on its IT systems to support its customers’ requirements and to successfully manage its business. Any inability to successfully manage the procurement, development, implementation, execution, or maintenance of such systems, including matters related to system and data security, cybersecurity, privacy, reliability, compliance, performance and access, as well as any inability of these systems to fulfill their intended purpose, could have an adverse effect on Spectaire’s business. See “If Spectaire experiences a cybersecurity breach or disruption in its information systems, Spectaire’s business could be adversely affected.” below.

Spectaire is subject to increasing expectations and data security requirements from its customers, including those related to the U.S. Federal Acquisition Regulation, U.S. Defense Federal Acquisition Regulation Supplement, and U.S. Cybersecurity Maturity Model Certification. In addition, Spectaire will be required to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in various jurisdictions. For example, the European Union’s General Data Protection Regulation, and similar legislation in other jurisdictions in which Spectaire will operate, imposes additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored. Compliance with customer expectations and existing, proposed and recently enacted laws and regulations can be costly; any failure to comply with these expectations and regulatory standards could subject Spectaire to legal and reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against Spectaire by governmental entities or others, fines and penalties, damage to Spectaire’s reputation and credibility and could have a negative impact on Spectaire’s business and results of operations.

If Spectaire experiences a cybersecurity breach or disruption in its information systems, Spectaire’s business could be adversely affected.

Malicious actors may be able to penetrate Spectaire’s network and misappropriate or compromise Spectaire’s confidential information or that of third parties, create system disruptions or cause shutdowns. Malicious actors also may be able to develop and deploy viruses, worms and other malicious software programs that attack Spectaire’s platform or otherwise exploit any security vulnerabilities of Spectaire’s platform. While Spectaire will employ a number of protective measures, including firewalls, network infrastructure vulnerability scanning, anti-virus and endpoint detection and response technologies, these measures may fail to prevent or detect attacks on Spectaire’s systems due at least in part to the frequent evolving nature of cybersecurity attacks. Although these measures are designed to maintain the confidentiality, integrity and availability of Spectaire’s information and technology systems, there is no assurance that these measures will detect all threats or prevent a cybersecurity attack in the future, which could adversely affect Spectaire’s business, reputation, operations or services.

In addition, the costs to Spectaire to eliminate or mitigate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant and, if Spectaire’s efforts to address these problems are not successful, could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede Spectaire’s sales, manufacturing, distribution or other critical functions.

Spectaire relies on its information technology systems to manage numerous aspects of its business and a disruption of these systems could adversely affect its business.

Spectaire relies on its information technology systems to manage numerous aspects of its business, including purchasing products from its suppliers, providing procurement and logistic services, shipping products to its customers, managing its accounting and financial functions (including its internal controls) and maintaining its research and development data. Spectaire’s information technology systems are an essential component of its business and any disruption could significantly limit its ability to manage and operate its business efficiently. A failure of Spectaire’s information technology systems to perform properly could disrupt Spectaire’s supply chain, product development and customer experience, which may lead to increased overhead costs and decreased sales and have an adverse effect on Spectaire’s reputation and its financial condition. The hardware and software that Spectaire utilizes in Spectaire’s services may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation or security of the services.

In addition, a substantial portion of Spectaire’s employees have conducted work remotely, making Spectaire more dependent on potentially vulnerable communications systems and making Spectaire more vulnerable to cyberattacks. Although Spectaire takes steps and incurs significant costs to secure its information technology systems, including its computer systems, intranet and internet sites, email and other telecommunications and data networks, such security measures may not be effective and its systems may be vulnerable to damage or interruption. Disruption to Spectaire’s information technology systems could result from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war and terrorism.

Spectaire’s current levels of insurance may not be adequate for Spectaire’s potential liabilities.

Spectaire maintains insurance to cover potential exposure for most claims and losses, including potential product and non-product related claims, lawsuits and administrative proceedings seeking damages or other remedies arising out of its commercial operations. However, Spectaire’s current insurance coverage is subject to various exclusions, self-retentions and deductibles. Spectaire may be faced with types of liabilities that are not covered under Spectaire’s current insurance policies, such as environmental contamination or terrorist attacks, or that exceed Spectaire’s current or future policy limits. Even a partially uninsured claim of significant size, if successful, could have an adverse effect on Spectaire’s financial condition.

In addition, Spectaire may not be able to continue to obtain insurance coverage on commercially reasonable terms, or at all, Spectaire’s existing policies may be cancelled or otherwise terminated by the insurer, or the companies that Spectaire acquires may not be eligible for certain types or limits of insurance. Maintaining adequate insurance and successfully accessing insurance coverage that may be due for a claim can require a significant amount of Spectaire’s management’s time, and Spectaire may be forced to spend a substantial amount of money in that process.

Because Spectaire’s industry is and will continue to be rapidly evolving, forecasts of market growth may not be accurate, and even if these markets achieve the forecasted growth, there can be no assurance that Spectaire’s business will grow at similar rates, or at all.

Market opportunity estimates and growth forecasts included in this prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts and estimates in this prospectus relating to the expected size and growth of the markets for air quality measurement systems technology may prove to be inaccurate. Even if these markets experience the forecasted growth described in this prospectus, Spectaire may not grow its business at similar rates, or at all. Spectaire’s future growth is subject to many factors, including market adoption of Spectaire’s products and services, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this prospectus, including the estimate that Spectaire’s total addressable market size exceeds $95 billion based on a bottom-up build of fleet sizes in the United States and Europe, should not be taken as indicative of Spectaire’s future growth.

Global economic, political and social conditions and uncertainties in the markets that Spectaire will serve may adversely impact Spectaire’s business.

Spectaire’s performance will depend on the financial health and strength of its customers, which in turn will be dependent on the economic conditions of the markets in which Spectaire and its customers operate. A decline in the global economy, difficulties in the financial services sector and credit markets, continuing geopolitical uncertainties and other macroeconomic factors all affect the spending behavior of potential customers.

Spectaire may also face risks from financial difficulties or other uncertainties experienced by its suppliers, distributors or other third parties on which it relies. If third parties are unable to supply Spectaire with required materials or components or otherwise assist Spectaire in operating its business, Spectaire’s business could be harmed.

Spectaire’s industry routinely experiences cyclical market patterns and Spectaire’s services are used across different end markets. A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for Spectaire’s services and harm its operating results.

The air quality measurement systems industry is cyclical and Spectaire’s financial performance may be affected by downturns in the industry. Down cycles are generally characterized by price erosion and weaker demand for Spectaire’s services. Spectaire attempts to identify changes in market conditions as soon as possible; however, the dynamics of the market in which Spectaire operates make prediction of and timely reaction to such events difficult. Due to these and other factors, Spectaire’s past results are not reliable predictors of Spectaire’s future results. Furthermore, any significant upturn in the air quality measurement systems industry could result in increased competition for access to raw materials and third-party service providers.

Additionally, Spectaire’s services are used across different end markets, and demand for Spectaire’s products is difficult to predict and may vary within or among the various industries it serves. Spectaire’s target markets may not grow or develop as it currently expects, and demand may change in one or more of Spectaire’s end markets, which may reduce Spectaire’s revenue, lower Spectaire’s gross margin or affect Spectaire’s operating results. Spectaire has experienced concentrations of revenue at certain customers and within certain end markets. Any deterioration in these end markets, reductions in the magnitude of revenue streams, Spectaire’s inability to meet requirements, or volatility in demand for Spectaire’s services could lead to a reduction in Spectaire’s revenue and adversely affect Spectaire’s operating results. Spectaire’s success in its end markets depends on many factors, including the strength or financial performance of the customers in such end markets, Spectaire’s ability to timely meet rapidly changing requirements, market needs, and its ability to maintain program wins across different markets and customers to dampen the effects of market volatility. The dynamics of the markets in which Spectaire operates make prediction of and timely reaction to such events difficult.

If Spectaire is unable to accomplish any of the foregoing, or to offset the volatility of cyclical changes in the air quality measurement systems industry or its end markets through diversification into other markets, such inability could harm its business, financial condition, and operating results.

Spectaire’s limited operating history makes evaluating Spectaire’s current business and future prospects difficult and may increase the risk to investors.

Spectaire’s limited operating history may make it difficult for investors to evaluate Spectaire’s current business and future prospects as Spectaire continues to grow its business. Spectaire’s ability to forecast future operating results is subject to a number of uncertainties, including Spectaire’s ability to plan for and model future growth. Spectaire has encountered risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, and Spectaire will encounter such risks and uncertainties as it continues to grow Spectaire’s business. If Spectaire’s assumptions regarding these uncertainties are incorrect or change in reaction to changes in its markets, or if Spectaire does not address these risks successfully, Spectaire’s operating and financial results could differ materially from its expectations, Spectaire’s business could suffer, and the trading price of Spectaire’s stock may decline.

Spectaire expects to be dependent on a limited number of customers and end markets. A decline in revenue from, or the loss of, any significant customer, could have a material adverse effect on Spectaire’s financial condition and operating results.

As of June 3, 2024, Spectaire only has five anticipated customers in its initial pilot program, and Spectaire expects to depend upon a small number of customers for a substantial portion of its future revenue. Accordingly, a decline in revenue from, or the loss of, any significant customer could have a material adverse effect on Spectaire’s financial condition and operating results. Spectaire cannot assure that (i) orders that may be completed, delayed, cancelled or reduced will be replaced with new business; (ii) the pilot customers will ultimately utilize Spectaire’s products and services; or (iii) the pilot customers will enter into additional contracts with Spectaire on acceptable terms or at all.

There can also be no assurance that Spectaire’s efforts to secure new customers and programs in Spectaire’s traditional or new markets, including through acquisitions, will succeed in reducing Spectaire’s customer concentration. Acquisitions are also subject to integration risk, and revenues and margins could be lower than Spectaire anticipates. Failure to secure business from existing or new customers in any of Spectaire’s end markets would adversely impact Spectaire’s operating results.

The market price of shares of Common Stock may be volatile or may decline, regardless of Spectaire’s operating performance, and investors may lose some or all of their investment.

The trading price of Common Stock may be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. Investors may not be able to resell shares at an attractive price due to a number of factors such as the following:

These broad market and industry factors may materially reduce the market price of Common Stock, regardless of Spectaire’s operating performance. In addition, price volatility may be greater if the public float and trading volume of Common Stock is low. As a result, you may suffer a loss on your investment.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If Spectaire was involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from Spectaire’s business regardless of the outcome of such litigation.

Spectaire does not intend to pay dividends on Common Stock for the foreseeable future.

Spectaire currently intends to retain all available funds and any future earnings to fund the development and growth of its business. As a result, Spectaire does not anticipate declaring or paying any cash dividends on Common Stock in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, Spectaire’s business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to Spectaire indebtedness, industry trends and other factors that the Board may deem relevant. Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing Spectaire’s current and future indebtedness. In addition, Spectaire may incur additional indebtedness, the terms of which may further restrict or prevent it from paying dividends on Common Stock. As a result, you may have to sell some or all of your Common Stock after price appreciation in order to generate cash flow from your investment, which you may not be able to do. Spectaire’s inability or decision not to pay dividends could also adversely affect the market price of Common Stock.

If securities or industry analysts do not publish research or reports about Spectaire’s business or the Business Combination or publish negative reports, the market price of Common Stock could decline.

The trading market for Common Stock is influenced by the research and reports that industry or securities analysts publish about Spectaire, Spectaire’s business. Spectaire may be unable or slow to attract research coverage and if one or more analysts cease coverage of Spectaire, the price and trading volume of Spectaire’s securities would likely be negatively impacted. If any of the analysts that may cover Spectaire change their recommendation regarding Spectaire’s securities adversely, or provide more favorable relative recommendations about Spectaire’s competitors, the price of Spectaire’s securities would likely decline. If any analyst that may cover Spectaire ceases covering Spectaire or fails to regularly publish reports on Spectaire, it could lose visibility in the financial markets, which could cause the price or trading volume of Spectaire’s securities to decline. If one or more of the analysts who cover Spectaire downgrades Common Stock or if Spectaire’s reporting results do not meet their expectations, the market price of Common Stock could decline. Moreover, the market price of Common Stock may decline if Spectaire does not achieve the perceived benefits of the Business Combination as rapidly or to the extent anticipated by financial analysts, or the effect of the Business Combination on Spectaire’s financial results is not consistent with the expectations of financial analysts. Accordingly, holders of Common Stock may experience a loss as a result of a decline in the market price of such common stock. In addition, a decline in the market price of Common Stock would likely adversely affect Spectaire’s ability to issue additional securities and to obtain additional financing in the future.

Spectaire’s ability to timely raise capital in the future may be limited, or such capital may be unavailable on acceptable terms, if at all. Spectaire’s failure to raise capital when needed could harm its business, operating results and financial condition. Debt issued to raise additional capital may reduce the value of Common Stock.

Spectaire has funded its operations since inception primarily through its operations and private capital raises with existing securityholders. Spectaire cannot be certain when or if its operations will generate sufficient cash to fund its ongoing operations or the growth of its business.

Spectaire intends to continue to make investments to support Spectaire’s business and may require additional funds. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, Spectaire may be unable to invest in future growth opportunities, which could harm Spectaire’s business, operating results and financial condition. If Spectaire incurs debt, the debt holders could have rights senior to holders of Common Stock to make claims on Spectaire’s assets. The terms of any debt could restrict Spectaire’s operations, including its ability to pay dividends on Common Stock. As a result, Spectaire stockholders bear the risk of future issuances of debt securities reducing the value of Common Stock.

The issuance of additional shares of Common Stock or convertible securities could make it difficult for another company to acquire Spectaire, may dilute your ownership of Spectaire and could adversely affect the price of Common Stock.

Spectaire expects to pursue financing, including issuing additional shares of Common Stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock. Issuing additional shares of Common Stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of Spectaire’s existing stockholders, reduce the market price of outstanding Common Stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Spectaire Preferred Stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit Spectaire’s ability to pay dividends to the holders of Common Stock. Spectaire’s decision to issue securities in any future offering will depend on market conditions and other factors beyond its control, which may adversely affect the amount, timing or nature of its future offerings. As a result, holders of Common Stock bear the risk that Spectaire’s future offerings may reduce the market price of Common Stock and dilute their percentage ownership. See the section entitled “Description of Securities of Spectaire.”

Future resales of Common Stock may cause the market price of Spectaire’s securities to drop significantly, even if Spectaire’s business is doing well.

Pursuant to the Lock-Up Agreement, after the consummation of the Business Combination and subject to certain exceptions, the Sponsor, certain directors and officers of PCCT and certain Legacy Spectaire stockholders will be contractually restricted from selling or transferring any of their shares of Common Stock. Such restrictions begin at Closing and end on the earlier of (i) the date that is 180 days or 365 days (depending on the relevant holder) after Closing, (ii) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the Closing date of the Merger that results in all of the public stockholders of Spectaire having the right to exchange their shares of Common Stock for cash securities or other property, (iii) the day after the date on which the closing price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any twenty trading days within any thirty-trading day period commencing at least 150 days after the closing date of the Merger or (iv) the liquidation of Spectaire.

However, following the expiration of such lockup, such parties will no longer be restricted from selling shares of Common Stock held by them, other than by applicable securities laws. As of immediately following the completion of the Business Combination such parties collectively beneficially owned approximately 69.5% of the outstanding shares of Common Stock. As restrictions on resale end and registration statements are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in Spectaire’s share price or the market price of Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

Spectaire is an “emerging growth company.” The reduced public company reporting requirements applicable to emerging growth companies may make Common Stock less attractive to investors.

Spectaire qualifies as an “emerging growth company,” as defined in the JOBS Act. While Spectaire remains an emerging growth company, it is permitted to and plans to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include: (1) an exemption from compliance with the auditor attestation requirement in the assessment of Spectaire’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (2) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, (3) reduced disclosure obligations regarding executive compensation arrangements in Spectaire’s periodic reports, registration statements, and proxy statements, and (4) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information Spectaire provides will be different than the information that is available with respect to other public companies that are not emerging growth companies.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as Spectaire is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a 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 election to opt out is irrevocable.

Spectaire cannot predict whether investors will find Common Stock less attractive if it relies on these exemptions. If some investors find Common Stock less attractive as a result, there may be a less active trading market for Common Stock. The market price of Common Stock may be more volatile.

Spectaire’s management has limited experience in operating a public company.

Spectaire executive officers have limited experience in the management of a U.S. publicly traded company. Spectaire’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of Spectaire. Spectaire may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for Spectaire to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that Spectaire will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase its operating costs in future periods.

Spectaire may be required to take write-downs or write-offs, or Spectaire may be subject to restructuring, impairment or other charges that could have a significant negative effect on Spectaire’s financial condition, results of operations and the price of Spectaire’s securities, which could cause you to lose some or all of your investment.

Factors outside of Spectaire’s control may, at any time, arise. As a result of these factors, Spectaire may be forced to write down or write off assets, restructure its operations, or incur impairment or other charges that could result in Spectaire reporting losses. Even though these charges may be non-cash items and therefore not have an immediate impact on Spectaire’s liquidity, the fact that Spectaire reports charges of this nature could contribute to negative market perceptions about Spectaire or its securities. In addition, charges of this nature may cause Spectaire to be unable to obtain future financing on favorable terms or at all.

Delaware law and Spectaire’s organizational documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

Spectaire’s organizational documents and the Delaware General Corporation Law (“DGCL”) contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of Common Stock, and therefore depress the trading price of Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the Board or taking other corporate actions, including effecting changes in Spectaire’s management. Among other things, Spectaire’s organizational documents include provisions:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management.

THE STANDBY EQUITY PURCHASE AGREEMENT

On May 17, 2024, we entered into the SEPA and the Registration Rights Agreement with Yorkville. Upon the terms and subject to the satisfaction of the conditions contained in the SEPA, we will have the right, in our sold discretion, to sell to Yorkville up to $25.0 million of shares of our Common Stock, subject to certain limitations set forth in the SEPA, from time to time. Sales of Common Stock by us to Yorkville under the SEPA, and the timing of any such sales, are solely at our option, and we are under no obligation to sell any securities to Yorkville under the SEPA. In accordance with our obligations under the Registration Rights Agreement, we have filed the registration statement that includes this prospectus with the SEC to register under the Securities Act the resale by Yorkville of up to 10,000,000 shares of Common Stock, consisting of (i) up to 9,766,356 Purchase Shares that we may, in our sole discretion, elect to sell to Yorkville, from time to time, and (ii) the 233,644 commitment shares (“Commitment Shares”) we issued to Yorkville upon our execution of the SEPA, together with our payment of the cash commitment fee to Yorkville, as consideration for its commitment to purchase shares of our Common Stock.

Upon the satisfaction of the conditions to Yorkville’s purchase obligation set forth in the SEPA, including having a registration statement registering the resale of the shares of Common Stock issuable under the SEPA declared effective by the SEC pursuant to the Registration Rights Agreement, the Company will have the right, but not the obligation, from time to time at its discretion until the SEPA is terminated to direct Yorkville to purchase an Advance by delivering an Advance Notice. While there is no mandatory minimum amount for any Advance, it may not exceed the greater of (i) an amount equal to 100% of the average of the daily traded amount during the five consecutive trading days immediately preceding an Advance Notice, and (ii) 500,000 shares of Common Stock.

The shares of Common Stock purchased pursuant to an Advance delivered by the Company will be purchased at a price equal to 97% of the lowest daily VWAP of the shares of common stock during the three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which the daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject trading day. The Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to Yorkville.

Under the applicable Nasdaq rules and the terms of the SEPA, in no event may we issue to Yorkville under the SEPA shares that exceed the Exchange Cap (or greater than 19.9% of the outstanding Common Stock immediately prior to the execution of the SEPA) unless (i) we obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average price per share paid by Yorkville for all of the shares of Common Stock that we direct Yorkville to purchase from us pursuant to the SEPA, if any, equals or exceeds (a) the official closing price of our Common Stock on Nasdaq immediately preceding the execution of the SEPA and (b) the average official closing price of our Common Stock on Nasdaq for the five consecutive Trading Days immediately preceding the execution of the SEPA, adjusted as required by Nasdaq to take into account our issuance of the Commitment Shares, to Yorkville as consideration), so that the Exchange Cap limitation will not apply to issuances and sales of Common Stock pursuant to the SEPA.

Moreover, we may not issue or sell any shares of Common Stock to Yorkville under the SEPA which, when aggregated with all other shares of Common Stock then beneficially owned by Yorkville and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act, would result in Yorkville beneficially owning more than 4.99% of the outstanding shares of our Common Stock).

The net proceeds to us from sales that we elect to make to Yorkville under the SEPA, if any, will depend on the frequency and prices at which we sell shares of our Common Stock to Yorkville. We expect that any proceeds received by us from such sales to Yorkville will be used primarily for investment in growth, debt repayment, working capital and general corporate purposes.

Neither we nor Yorkville may assign or transfer our respective rights and obligations under the SEPA, and no provision of the SEPA may be modified or waived by us or Yorkville, without the written consent of the other party.

As consideration for Yorkville’s commitment to purchase shares of Common Stock pursuant to the SEPA, upon our execution of the SEPA, we (i) issued the Commitment Shares, which have a total aggregate value equal to 0.5% of Yorkville’s $25.0 million total aggregate purchase commitment under the SEPA (each Commitment Share valued at $0.535 per share, representing the official closing price of the Common Stock on Nasdaq immediately preceding the execution of the SEPA) and (ii) agreed to pay Yorkville a cash commitment fee in the amount of $125,000, which is equal to 0.5% of Yorkville’s $25.0 million total aggregate purchase commitment under the SEPA, on the three-month anniversary of the SEPA. In addition, we paid Yorkville a structuring fee in the amount of $25,000.

The SEPA and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnification obligations of the parties and have been filed with the SEC.

Purchases of Common Stock Under the SEPA

Advance Notice

Pursuant to the SEPA, we will have the right, but not the obligation, from time to time at our sole discretion for a period of up to 36 months, unless the SEPA is earlier terminated, to direct Yorkville to purchase a specified number of shares of Common Stock, not to exceed the Maximum Advance Amount (as defined below), by timely delivering an Advance Notice to Yorkville by 9:00 a.m. New York City time on any Trading Day we select as the purchase date (the “Purchase Date”) for such purchase.

The “Maximum Advance Amount” applicable to such Advance will be equal to the greater of:

The actual number of shares of Common Stock that Yorkville will be required to purchase in an Advance, which we refer to as the Advance Amount, will be equal to the number of shares that we specify in the applicable Advance Notice, subject to adjustment to the extent necessary to give effect to the applicable Maximum Advance Amount and other applicable limitations set forth in the SEPA, including the Beneficial Ownership Limitation and, if then applicable, the Exchange Cap.

The per share purchase price that Yorkville will be required to pay will be equal to the VWAP of our Common Stock for the applicable Pricing Period, less a fixed 3% discount to the VWAP for such Pricing Period. The “Pricing Period” for an Advance is defined in the SEPA as the three consecutive Trading Days commencing on the date of the Advance Notice.

In the case of an Advance Notice effected under the SEPA, if any, all share and dollar amounts used in determining the purchase price per share of Common Stock to be purchased by Yorkville in an Advance, or in determining the applicable maximum purchase share amounts or applicable volume or price amounts in connection with any such Advance, in each case, will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during any period used to calculate such per share purchase price, maximum purchase share amounts or applicable volume or price amounts.

Conditions Precedent to the Right of the Company to Deliver an Advance Notice

Yorkville’s obligation to accept Advance Notices that are timely delivered by us under the SEPA and to purchase shares of our Common Stock in Advances under the SEPA, are subject to satisfaction of the conditions precedent thereto set forth in the SEPA, all of which are entirely outside of Yorkville’s control, which conditions include the following:

Termination of the SEPA

Unless earlier terminated as provided in the SEPA, the SEPA will terminate automatically on the earliest to occur of:

We have the right to terminate the SEPA at any time after the Effective Date, at no cost or penalty, upon five Trading Days’ prior written notice to Yorkville; provided that (i) there are no outstanding Advance Notices under which shares of Common Stock have yet to be issued and (ii) the Company has paid all amounts owed to Yorkville pursuant to the SEPA. We and Yorkville may also terminate the SEPA at any time by mutual written consent.

No Short-Selling or Hedging by Yorkville

Yorkville has agreed that none of Yorkville, its sole member, any of their respective officers, or any entity managed or controlled by Yorkville or its sole member will engage in or effect, directly or indirectly, for its own account or for the account of any other of such persons or entities, any short sales of the Common Stock or hedging transaction that establishes a net short position in the Common Stock during the term of the SEPA.

Prohibition on Dilutive Issuances and Similar Transactions

There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the SEPA or Registration Rights Agreement, other than a prohibition on repaying any loans to any executives or employees of the Company or payments in respect of any related party debt, and a prohibition on effecting or entering into an agreement to effect an “equity line of credit” or other substantially similar continuous offering with a third party, in which we may offer, issue or sell Common Stock or any securities exercisable, exchangeable or convertible into Common Stock at a future determined price.

Effect of Sales of our Common Stock under the SEPA on our Stockholders

The Commitment Shares that we issued, and the Purchase Shares to be issued or sold by us, to Yorkville under the SEPA that are being registered under the Securities Act for resale by Yorkville in this offering are expected to be freely tradable. The resale by Yorkville of a significant amount of shares registered for resale in this offering at any given time, or the perception that these sales may occur, could cause the market price of our Common Stock to decline and to be highly volatile. Sales of our Common Stock, if any, to Yorkville under the SEPA will depend upon market conditions and other factors to be determined by us.

If and when we do sell shares of our Common Stock to Yorkville pursuant to the SEPA, after Yorkville has acquired such shares, Yorkville may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from Yorkville in this offering at different times will likely pay different prices for those shares, and so may experience different levels of dilution, and in some cases substantial dilution, and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase from Yorkville in this offering as a result of future sales made by us to Yorkville at prices lower than the prices such investors paid for their shares in this offering. In addition, if we sell a substantial number of shares of our Common Stock to Yorkville under the SEPA, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Yorkville may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales.

Because the per share purchase price that Yorkville will pay for Purchase Shares in any Advance that we may elect to effect pursuant to the SEPA will be determined by reference to the VWAP during the applicable Pricing Period on the applicable Purchase Date for such Advance, as of the date of this prospectus, it is not possible for us to predict the number of shares of Common Stock that we will sell to Yorkville under the SEPA, the actual purchase price per share to be paid by Yorkville for those shares, or the actual gross proceeds to be raised by us from those sales, if any.

As of June 3, 2024, there were 18,547,201 shares of our Common Stock outstanding. If all of the 10,000,000 shares offered for resale by Yorkville under this prospectus were issued and outstanding, such shares would represent approximately 35.0% of the total number of outstanding shares of Common Stock and approximately 61.7% of the total number of outstanding shares of Common Stock held by non-affiliates of our company, in each case as of June 3, 2024.

Although the SEPA provides that we may sell up to $25.0 million of our Common Stock to Yorkville, only 10,000,000 shares (which includes the 233,644 Commitment Shares, for which we have not and will not receive any cash consideration) are being registered under the Securities Act for resale by Yorkville under the registration statement that includes this prospectus. If we were to issue and sell all of such 10,000,000 shares to Yorkville at an assumed purchase price per share of $0.350 (without taking into account the 19.99% Exchange Cap limitation), representing the closing sale price of our Common Stock on Nasdaq on June 3, 2024, we would only receive approximately $3.5 million35 in aggregate gross proceeds from the sale of such Purchase Shares to Yorkville under the SEPA. Depending on the market prices of our Common Stock on the Purchase Dates on which we elect to sell such Purchase Shares to Yorkville under the SEPA, we may need to register under the Securities Act additional shares of our Common Stock for resale by Yorkville in order for us to receive aggregate proceeds equal to Yorkville’s $25.0 million maximum aggregate purchase commitment available to us under the SEPA.

If we elect to issue and sell to Yorkville more Common Stock than the amount being registered, we must file with the SEC one or more additional registration statements to register such additional shares, which the SEC must declare effective, in each case before we may elect to sell any additional shares to Yorkville.

The issuance of our Common Stock to Yorkville pursuant to the SEPA will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted. Although the number of shares of our Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock owned by our existing stockholders will represent a smaller percentage of our total outstanding shares of our Common Stock after any such issuance.

The following table sets forth the amount of gross proceeds we would receive from Yorkville from our sale of shares of Common Stock to Yorkville under the SEPA at varying purchase prices and subject to the limitation of the number of shares being registered at this time:

USE OF PROCEEDS

Any sales of Common Stock by Yorkville pursuant to this prospectus will be solely for Yorkville’s accounts. The Company will not receive any proceeds from any such sales.

We may receive up to $25.0 million aggregate gross proceeds under the SEPA from any sales we make to Yorkville pursuant to the SEPA. The net proceeds from sales, if any, under the SEPA, will depend on the frequency and prices at which we sell our Common Stock to Yorkville after the date of this prospectus. See the section titled “Plan of Distribution” in this prospectus for more information.

We expect to use any proceeds that we receive under the SEPA primarily for investment in growth, debt repayment, working capital and general corporate purposes. As of the date of this prospectus, we cannot specify with certainty all of the particular uses, and the respective amounts we may allocate to those uses, for any net proceeds we receive. Accordingly, we will retain broad discretion over the use of these proceeds.

The Selling Stockholder will pay any underwriting discounts, selling commissions and stock transfer taxes and fees incurred by the Selling Stockholder in connection with any sale of their shares of Common Stock. The Company will generally bear all other costs, fees and expenses incurred in effecting the registration of the shares of Common Stock covered by this prospectus, including, without limitation, all registration and filing fees, Nasdaq listing fees and fees and expenses of Company counsel and independent registered public accountants.

DETERMINATION OF OFFERING PRICE

We cannot currently determine the price or prices at which shares of Common Stock may be sold by the Selling Stockholder under this prospectus.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and future earnings, if any, to fund the development and growth of the business, and therefore, do not anticipate declaring or paying any cash dividends on our Common Stock in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors (our “Board”) after considering our business prospects, results of operations, financial condition, cash requirements and availability, debt repayment obligations, capital expenditure needs, contractual restrictions, covenants in the agreements governing current and future indebtedness, industry trends, the provisions of Delaware law affecting the payment of dividends and distributions to stockholders and any other factors or considerations the Board deems relevant.

MARKET INFORMATION

Our Common Stock and Warrants are listed on Nasdaq under the symbols “SPEC” and “SPECW,” respectively. Prior to the consummation of the Business Combination, the Common Stock, units and warrants were listed on Nasdaq under the symbols “PCCT,” “PCCTU” and “PCCTW,” respectively. As of June 3, 2024, there were 31 holders of record of our Common Stock and two holders of record of our Warrants. The actual number of stockholders of our Common Stock and the actual number of holders of our Warrants is greater than the number of record holders and includes holders of our Common Stock or Warrants whose shares of Common Stock or Warrants are held in street name by brokers and other nominees.

KEY TRANSACTIONS

Business Combination

On January 16, 2023, PCCT entered into that certain Agreement and Plan of Merger, dated as of January 16, 2023 (the “Merger Agreement”), with Perception Spectaire Merger Sub Corp., a Delaware corporation and a direct wholly owned subsidiary of PCCT (the “merger subsidiary”), and Legacy Spectaire, pursuant to which, on October 19, 2023, the merger subsidiary merged with and into Legacy Spectaire, with Legacy Spectaire surviving the merger as a wholly owned subsidiary of the Company (together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the consummation of the Business Combination, the Company changed its name from “Perception Capital Corp. II” to “Spectaire Holdings Inc.”

During the five-year period following the closing of the Business Combination (the “Earnout Period”), the Company will issue up to 7,500,000 shares of Common Stock in three equal tranches to certain Legacy Spectaire equityholders upon the occurrence of the following triggering events:

Acquisition of MicroMS

Prior to the Business Combinations, on December 13, 2022, Legacy Spectaire engaged in a group corporate reorganization in which the owners of MicroMS, Inc. (“MicroMS”) contributed their equity interests in MicroMS to Legacy Spectaire in exchange for equity in Legacy Spectaire. As part of this reorganization, the ownership of MicroMS was transferred to Legacy Spectaire.

MIT License Agreement

Spectaire is party to that certain Exclusive Patent License Agreement, dated as of September 1, 2018, by and between MIT and microMS, as modified by that certain Common Stock Issuance Agreement, dated as of January 10, 2023, by and between MIT and Spectaire (the “MIT License Agreement”). Pursuant to the terms of the MIT License Agreement, MIT grants an exclusive license to Spectaire to incorporate certain intellectual property into its products, and Spectaire agreed to issue shares of Spectaire common stock to MIT upon the occurrence of certain triggering events. Spectaire satisfied all obligations to issue shares of Spectaire common stock to MIT pursuant to the MIT License Agreement prior to the consummation of the Business Combination.

Joint Venture

On December 22, 2023, the Company entered into a joint venture agreement (the “Joint Venture”) with MLab Capital GmbH (“MLab”) and Spectaire Europe GmbH (“JVC”), a wholly owned subsidiary of MLab and Dr. Jörg Mosolf, an affiliate of a director of the Company. Under the Joint Venture, JVC is responsible for the marketing, sale and manufacture of the Company’s AirCore technology in Europe, the Middle East and South America. In accordance with the Joint Venture, the Company will grant JVC an exclusive, non-sublicensable license to conduct such activities upon closing. In consideration for the rights granted by the Company to JVC, JVC agreed to pay to the Company an amount of $1.5 million. Pursuant to the Joint Venture’s payment schedule, JVC has paid the Company $500,000 as of December 31, 2023. The remaining $1.0 million in payments to the Company are contingent upon a third party’s approval of the AirCore technology’s effectiveness and the delivery of units specified thereunder.

Corsario Agreement

Spectaire was party to that certain Contract for Services, dated as of August 1, 2022 (the “Corsario Agreement”), by and between Spectaire and Corsario Ltd., a Limited corporation with offices in Mississauga Ontario that is wholly owned by Brian Semkiw (“Corsario”), pursuant to which Spectaire engaged Corsario as a contractor for certain administrative and other services. Pursuant to the Corsario Agreement, Corsario’s employees, including Brian Semkiw, Rui Mendes and Chris Grossman, provided any and all services required by Spectaire on a full-time basis in exchange for the payment by Spectaire of a monthly rate, plus certain housing and technology expenses, totaling, in the aggregate, approximately $122,500 per month. The Corsario Agreement was on a month-by-month basis until terminated by Spectaire. Under the terms of the Corsario Agreement, any intellectual property developed by Corsario or its employees during the term of the Corsario Agreement is the exclusive property of Spectaire.  The Corsario Agreement was terminated on May 31, 2024.

Yorkville Standby Equity Purchase Agreement (SEPA)

On May 17, 2024, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with Yorkville pursuant to which the Company has the right to sell to Yorkville up to $25.0 million of its shares of Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. Sales of shares of Common Stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell any shares of Common Stock to Yorkville under the SEPA. While there is no mandatory minimum amount, the Company may not sell at any time the greater of (i) an amount equal to 100% of the average of the daily traded amount during the five consecutive trading days immediately preceding a sale notice, and (ii) 500,000 shares of Common Stock. The shares of Common Stock delivered by the Company will be purchased at a price equal to 97% of the lowest daily VWAP of the shares of Common Stock during the three consecutive trading days commencing on the date of the delivery of the sale notice, other than the daily VWAP on a day in which the daily VWAP is less than a minimum acceptable price as stated by the Company in the notice or there is no VWAP on the subject trading day. The Company may establish a minimum acceptable price in each notice below which the Company will not be obligated to make any sales to Yorkville. The net proceeds to the Company will depend on the frequency and prices at which the Company sells Common Stock to Yorkville.

Under applicable Nasdaq rules, in no event may the Company issue to Yorkville under the SEPA shares equal to greater than 19.99% of the shares of Common Stock outstanding immediately prior to the execution of the SEPA (the “Exchange Cap”), unless (i) the Company obtains stockholder approval to issue shares of Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average price per share paid by Yorkville for all of the shares of Common Stock that the Company directs Yorkville to purchase from the Company pursuant to the SEPA, if any, equals or exceeds the lower of (a) the official closing price of the Common Stock on Nasdaq immediately preceding the execution of the SEPA and (b) the average official closing price of the Common Stock on Nasdaq for the five consecutive trading days immediately preceding the execution of the SEPA, adjusted as required by Nasdaq so that the Exchange Cap limitation will not apply to issuances and sales of Common Stock pursuant to the SEPA. In addition, the Company may not issue or sell any shares of Common Stock to Yorkville under the SEPA which, when aggregated with all other shares of Common Stock then beneficially owned by Yorkville and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act, and Rule 13d-3 thereunder), would result in Yorkville beneficially owning more than 4.99% of the outstanding shares of Common Stock.

The SEPA will automatically terminate on the earliest to occur of (i) the 36-month anniversary of the date of the SEPA or (ii) the date on which it has been fully performed. The Company has the right to terminate the SEPA at no cost or penalty upon five (5) trading days’ prior written notice to Yorkville, provided that there are no outstanding notices for which shares of common stock need to be issued. The Company and Yorkville may also agree to terminate the SEPA by mutual written consent.

PIPE Financing

On October 11, 2023, the Company entered into a private placement subscription agreement (the “PIPE Subscription Agreement”) with Dr. Jörg Mosolf (the “PIPE Investor”), pursuant to which the PIPE Investor agreed to subscribe for newly issued shares of Common Stock (the “PIPE Shares”), with an aggregate purchase price of up to $3,500,000. On October 19, 2023, concurrently with the closing of the Business Combination, the PIPE Investor closed on the purchase of 50,000 PIPE Shares at a price of $10.00 per share, for an aggregate purchase price of $500,000 (the “PIPE Investment”). Pursuant to the PIPE Subscription Agreement, within two years following the Closing, the PIPE Investor may purchase additional PIPE Shares in one or multiple subsequent closings for a purchase price per share of $10.00 for an aggregate purchase price of $3,000,000 (the “Additional Investments”). The purchase and sale of the PIPE Shares pursuant to the Additional Investments is conditioned on typical conditions for transactions of this type. The PIPE Shares issued and sold in the PIPE Investment and to be issued and sold in the Additional Investments, in any, pursuant to the PIPE Subscription Agreement have not been and will not be registered under the Securities Act and have been and will be issued in reliance on an exemption from such registration.

2024 Private Placement

On March 18, 2024, the Company entered into a subscription agreement with an investor for the sale and issuance by the Company of (i) an aggregate of 1,538,461 shares of the Company’s common stock and (ii) an accompanying warrant to purchase up to 1,538,461 shares of common stock at an exercise price of $1.30 per share, for aggregate gross proceeds of approximately $2.0 million, before deducting related expenses. The warrant is immediately exercisable, may be exercised at any time until March 18, 2027, and would result in proceeds of approximately $2.0 million if exercised for cash. $2,000,000 has been received under this agreement and reported as investor deposit; however, there no shares have yet been issued under this agreement. These securities will be issued pursuant to Section 4(a)(2) of the Securities Act.

Arosa Loan

On March 31, 2023, Legacy Spectaire, as borrower, entered into the Arosa Loan Agreement with Arosa Multi-Strategy Fund LP (“Arosa”), as lender, providing for a term loan (the “Arosa Loan”) in a principal amount not to exceed $6.5 million (the “Loan Agreement”). On October 13, 2023, the Company requested an additional advance in the aggregate principal amount of $650,000 (the “Additional Advance”) under the Arosa Loan Agreement. The Additional Advance together with the original loan amount results in an aggregate outstanding principal amount under the Loan of $7,150,000.

Legacy Spectaire, its subsidiaries, and Arosa also entered into a Guarantee and Collateral Agreement providing that Legacy Spectaire’s obligations to Arosa are secured by substantially all of Legacy Spectaire’s assets and all of Legacy Spectaire’s stockholders entered into a pledge agreement with Arosa pursuant to which such stockholders pledged all of their equity interests in Spectaire to Arosa as collateral under the Arosa Loan, which obligations continue to apply following the Business Combination.

In connection with the Business Combination, Spectaire issued to Arosa a warrant to purchase 2,194,453 shares of Common Stock, subject to adjustment as described therein (the “Arosa Warrant”), and cancelled an existing warrant issued by Legacy Spectaire to Arosa. The shares of Common Stock underlying the Arosa Warrant represent approximately 11.8% of the number of shares of Common Stock outstanding on a fully diluted basis.

Pursuant to the Arosa Loan Agreement, Spectaire is obligated to pay certain expenses incurred by Arosa relating to the Arosa Loan, during the continuance of an event of default under the Arosa Loan Agreement, all outstanding obligations under the Loan Agreement bear interest at a rate per annum that is 5.0% greater than the rate that would otherwise be applicable, and while the Arosa Loan remains outstanding, Arosa will, subject to certain limitations, have the right to participate in any capital raise by Spectaire or any of its subsidiaries consummated on or prior to the Maturity Date.

Following the payment of additional interest of $500,000, the parties agreed to an extension whereby the Arosa Loan has a maturity date of June 1, 2024 (the “Maturity Date”) and bears interest at a rate of 20%. The Arosa Loan is currently due upon demand, however, the parties are in the process of finalizing an additional extension to the Maturity Date.

Sponsor Transactions

Sponsor Promissory Notes

Working Capital Note. On January 10, 2023, PCCT issued to the Sponsor a Working Capital Note, effective as of December 7, 2022, pursuant to which the Sponsor agreed to provide PCCT up to an aggregate of $2,500,000 in loans for working capital purposes (the “Working Capital Note”). On October 17, 2023 and on April 14, 2024, PCCT and the Sponsor amended and restated the Working Capital Note, resulting in, among other things, the Working Capital Note having a maturity date of April 14, 2025.

Extension Note. On October 31, 2022, in connection with PCCT seeking an extension of the business combination deadline, PCCT issued to the Sponsor an Extension Note in the aggregate principal amount of up to $720,000 (the “Extension Note”). On April 10, 2023, the Extension Note was amended and restated to, among other things, increase the aggregate principal amount available thereunder from $720,000 to $1,200,000 (the “A&R Extension Note”). Pursuant to the Extension Note, as amended, the Sponsor agreed that it would continue to contribute to the Trust Account $0.04 for each outstanding public share each month (or pro rata portion thereof if less than a month) until the earlier of (i) the date of the meeting held in connection with the stockholder vote to approve an initial business combination and (ii) the Sponsor having made aggregate Contributions of $1,200,000. On October 17, 2023, PCCT and the Sponsor amended and restated the A&R Extension Note (the “Second A&R Extension Note”) resulting in, among other things, (A) a maturity date that is one year following the consummation of an initial business combination, and (B) provisions that allow the Company to convert up to $1,200,000 of the unpaid principal amount into a number of shares of Common Stock calculated based on a 10-day volume weighted average price of the Common Stock over a period ending on the day the Company provides the Sponsor notice of such conversion.

Sponsor Shares

On January 25, 2021, the Sponsor paid an aggregate of $25,000 to cover certain expenses on behalf of PCCT in exchange for the issuance of 7,187,500 PCCT Class B Ordinary Shares. In August 2021, the Sponsor surrendered 1,437,500 PCCT Class B Ordinary Shares for no consideration, resulting in an aggregate of 5,750,000 PCCT Class B Ordinary Shares outstanding (the “Founder Shares”). The Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (a) one year after the completion of a business combination or (b) (i) if last reported sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination, or (ii) the date on which the Company completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of public stockholders having the right to exchange their Common Stock for cash, securities or other property.

Sponsor Private Placement Warrants

Simultaneously with the closing of the PCCT IPO, PCCT consummated the sale of 10,050,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant (the “Private Placement Warrants”) in a private placement to the Sponsor, generating gross proceeds of $10,050,000. Each Private Placement Warrant is exercisable to purchase one share of Common Stock at a price of $11.50 per share.

Legacy Spectaire Transactions

Legacy Spectaire Convertible Promissory Notes

Prior to the consummation of the Business Combination, Legacy Spectaire issued convertible promissory notes in a combined aggregate principal amount of approximately $2.0 million, including to related persons and their affiliated entities. In connection with the consummation of the Business Combination, each holder of outstanding convertible promissory notes converted the aggregate outstanding amounts under their respective convertible promissory notes, including all outstanding principal and interest accrued thereon at the time of the conversion, into shares of Common Stock. The following table summarizes issuances of Legacy Spectaire convertible notes to related persons and their affiliated entities.

Legacy Spectaire Seed Preferred Stock Financing

In November 2022, Legacy Spectaire issued an aggregate of 5,100,000 shares of Legacy Spectaire Series Seed preferred stock for an aggregate purchase price of $455,359. The following table summarizes purchases of shares of Legacy Spectaire Series Seed preferred stock by related persons and their affiliated entities.

Registration Rights

In connection with the Business Combination, PCCT, the Sponsor, and certain of PCCT’s directors and officers and Legacy Spectaire stockholders entered into an Amended and Restated Registration Rights Agreement, pursuant to which the Company agreed to register for resale certain shares of Common Stock and other equity securities of the Company that are held by the parties thereto from time to time and all of such shares are currently registered.

Polar Financing

Polar Subscription Agreement

On October 4, 2023, PCCT entered into a subscription agreement with Polar Multi-Strategy Master Fund (“Polar”) to cover working capital requirements of PCCT prior to the consummation of the Business Combination (the “Polar Subscription Agreement”). Pursuant to the terms and subject to the conditions of the Polar Subscription Agreement, Polar agreed to contribute up to $650,000 (the “Capital Contribution”). In consideration for the Capital Contribution, PCCT agreed to issue 0.9 shares of Common Stock for each dollar of the Capital Contribution. Accordingly, at the closing of the Business Combination, the Company issued 585,000 shares of Common Stock to Polar. Upon certain events of default under the Polar Subscription Agreement, Polar would receive 0.1 shares of Common Stock (“Default Shares”) for each dollar of the Capital Contribution funded as of the date of such default, and for each month thereafter until such default is cured, subject to certain limitations provided for therein. In connection with the Polar Subscription Agreement, the Sponsor delivered to PCCT a letter agreement to facilitate PCCT’s fundraising efforts (the “Sponsor Letter Agreement”). Pursuant to the Sponsor Letter Agreement, the Sponsor agreed to forfeit for cancellation (i) 585,000 Class B Ordinary Shares concurrently with the closing of the Business Combination and (ii) following the closing of the Business Combination, the number of shares of Common Stock equal to the number of Default Shares, if any, issued by the Company to Polar in accordance with the Subscription Agreement. Subsequent to the closing of the Business Combination, Polar and the Company agreed to amend and restate the subscription agreement (the “Amended and Restated Polar Subscription Agreement”) to provide for, among other things, the delayed repayment of the remainder of the Capital Contribution, and in consideration of the delay in the repayment of the Capital Contribution, the Company agreed to issue 42,937 shares of Common Stock to Polar each month until the date on which the Company has repaid Polar the Capital Contribution, which shares constitute the shares forfeit by the Sponsor.

Polar Forward Purchase Agreement

On October 16, 2023, PCCT and Polar entered into an agreement, which was subsequently amended on October 26, 2023 (as amended, the “Polar Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of the Polar Forward Purchase Agreement, Polar purchased 206,000 PCCT Class A Ordinary Shares from holders (other than PCCT or its affiliates) who elected to redeem such shares in connection with the Business Combination. Purchases by Polar were made through brokers in the open market after the redemption deadline in connection with the Business Combination at a price no higher than the redemption price to be paid by PCCT in connection with the Business Combination (the “Polar Initial Price”). The shares purchased by Polar, other than the Share Consideration Shares (as defined below) are referred to herein as the “Polar Recycled Shares.”

Pursuant to the Polar Forward Purchase Agreement, in connection with the closing of the Business Combination, the Company transferred to an account designated by Polar a cash amount (the “Polar Prepayment Amount”) equal to the product of the number of Polar Recycled Shares and the Polar Initial Price, less an amount equal to 1% of the product of the number of Polar Recycled Shares and the Polar Initial Price (the “Polar Shortfall Amount”). In addition to the Polar Prepayment Amount, the Company paid Polar an amount equal to the product of 45,000 PCCT Class A Ordinary Shares (the “Share Consideration Shares”) and the Polar Initial Price. Polar agreed to waive any redemption rights in connection with the Business Combination with respect to the Polar Recycled Shares.

From time to time following the closing of the Business Combination and prior to the earliest to occur of (a) the first anniversary of the closing of the Business Combination (or, upon the mutual agreement of the Company and Polar, eighteen (18) months following the closing of the Business Combination) and (b) the date specified by Polar in a notice to be delivered to the Company at Polar’s discretion after the occurrence of a Seller Price Trigger Event, a Delisting Event or a Registration Failure (each as defined in the Polar Forward Purchase Agreement) (in each case, the “Polar Maturity Date”), Polar may, in its sole discretion, sell some or all of the Polar Recycled Shares. On the last trading day of each calendar month following the Business Combination, in the event that Polar has sold any Polar Recycled Shares (other than sales to recover the Polar Shortfall Amount), the Company will be entitled to an amount equal to the product of the number of Polar Recycled Shares sold multiplied by the Polar Reset Price and Polar will be entitled to an amount equal to the excess of the Polar Initial Price over the Polar Reset Price for each sold Polar Recycled Share. The “Reset Price” will be set on the first scheduled trading day of each month, commencing with the first calendar month following the closing of the Business Combination, to be the lowest of the (b) Polar Initial Price and (c) volume weighted average price of the Common Stock during the last ten (10) trading days during the prior calendar month, but not lower than $7.50; provided that to the extent that the Company offers and sells any Common Stock or securities convertible into Common Stock at a price lower than the existing Polar Reset Price, the Polar Reset Price will be modified to equal such reduced price.

At the Polar Maturity Date, Polar will transfer the Polar Recycled Shares that are still held by Polar (the “Polar Matured Shares”) to the Company. Additionally, at the Polar Maturity Date, the Company will pay to Polar an amount equal to $1.25 (or $1.75, if the Polar Maturity Date has been extended by the mutual agreement of the Company and Polar) for each Polar Matured Share, which may be paid in cash or in shares of Common Stock at the 10-day volume weighted average price of the Common Stock.

A break-up fee equal to (i) up to $50,000 of Polar’s reasonable and documented fees and expenses relating to the Polar Forward Purchase Agreement plus (ii) $250,000 (the “Polar Break-up Fee”), is payable by the Company to Polar in the event that, prior to the Polar Maturity Date, (x) the Polar Forward Purchase Agreement is terminated by the Company or (y) the Common Stock ceases to be listed on a national securities exchange or a Form 25 is filed with the SEC.

Keystone Equity Line of Credit

On November 17, 2023, the Company entered into a common stock purchase agreement (the “Keystone Purchase Agreement”) with Keystone Capital Partners, LLC, a Delaware limited liability company establishing a committed equity facility, including up to 300,000 shares of Common Stock that were issuable to Keystone upon the conversion of that certain convertible promissory note, dated as of November 17, 2023, issued by the Company to Keystone in connection with the execution of the Keystone Purchase Agreement. Under the Keystone Purchase Agreement, subject to certain pricing, volume, and ownership limitations, the Company had the right, but not the obligation, to sell to Keystone, and Keystone was obligated to purchase, up to the lesser of (i) an aggregate of $20 million of newly issued shares of Common Stock and (ii) the 19.9% exchange cap as defined in the Keystone Purchase Agreement. The Company sold 3,067,438 shares under the Keystone Purchase Agreement, representing the maximum amount permitted, taking into account the pricing and volume limitations, and has registered such shares for resale. The Company has provided notice of termination to Keystone and does not anticipate any further sales pursuant to the Keystone Purchase Agreement.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with our unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023, our audited financial statements as of and for the years ended December 31, 2023 and 2022, and other information included herein. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included herein. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period. Amounts are presented in U.S. dollars.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Spectaire,” “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination (as defined below), the business and operations of Spectaire Holdings Inc. (formerly Spectaire Inc.) and its consolidated subsidiaries (“Spectaire”), and (ii) prior to the Business Combination, Spectaire (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiary.

Company Overview

Spectaire is an industrial technology company whose core offering, AireCore^™, allows its customers to measure, manage, and potentially reduce carbon dioxide equivalent (CO₂e) and other greenhouse gas emissions. AireCore^™ is a fully integrated hardware, software, and data platform designed primarily for logistics and supply chain operators that uses mass spectrometry to directly measure and report emissions in real time. Companies currently face a “technology gap” between increasing requirements with respect to reporting and reducing emissions and lack of available technology to accurately measure and manage such emissions, which creates a no-win scenario. Spectaire’s asset-light, reasonably priced solution delivers a win-win-win for Spectaire, for its customers, and for the environment.

The research and development for AireCore^™’s mass spectrometry technology began more than 15 years ago at MIT, led by Spectaire’s Chief Technology Officer, Dr. Brian Hemond, and co-founder, Professor Ian Hunter. AireCore^™ is protected by a robust patent portfolio and a lengthy research and development process. MIT has granted Spectaire an exclusive license for all of the intellectual property owned by MIT that underlies the AireCore^™ and is a minority stockholder in Spectaire.

Companies are coming under increasing pressure from governments, customers, and the public to account for and reduce their emissions. We believe that, prior to our introduction of AireCore^™, there was no practical way to directly measure real-time transportation emissions. Instead of directly measuring their emissions, our potential customers currently estimate their emissions using emissions estimation calculators for transport and logistics that estimate based on fuel consumption, mileage, and vehicle weight. These estimates cannot accommodate the minute-to-minute, mile-to-mile variations that often drive significant differences between these estimates and actual emissions. As a result, these estimates have come under criticism for being inaccurate, simplistic, and - until now - impossible to verify. A pilot study conducted with our anchor customer, Mosolf, found that Mosolf’s emissions estimate calculated using CSN EN 16258, a publicly available and widely used emissions estimation standard, overstated its actual emissions by approximately 60%.

Spectaire’s AireCore^™ patented micro mass spectrometer (MMS) solves this problem. Unlike conventional mass spectrometers, which typically have significant cost, size, power, and environmental requirements, AireCore^™ uses a proprietary miniaturized and ruggedized analyzer, combined with solid state pump technology, to address mobile operation in harsh environments.

AireCore^™ is cloud-connected through mobile phone networks, enabling a continuous feed of emissions data. AireCore^™ core software can also be upgraded over-the-air (OTA) smartphone-style, enabling a continuous roll-out of features and improvements.

We believe that AireCore^™ is the world’s first and only device capable of addressing the technology gap between emissions requirements and emissions management technology by delivering real-time, accurate, and verifiable emissions measurements.

Financing Requirements

As an early-stage company bringing new technology to market, we have yet to generate meaningful revenue from our business operations and have funded capital expenditures and working capital requirements through debt and equity financing. The further development of our products and expansion of our business will require a significant amount of cash. Our ability to successfully grow will depend on many factors, including our working capital needs, the availability of debt or equity financing and, over time, our ability to generate positive cash flows from operations. We anticipate incurring net losses for the foreseeable future and continuing to depend on debt and equity financing in the near term.

The period between initial discussions with a potential customer and the sale of our products typically depends on a number of factors, including the potential customer’s attitude towards innovative products and the potential customer’s budget. Prospective customers often undertake a significant evaluation process, which may further extend the sales cycle. While customers are evaluating our products, we may incur substantial sales, marketing, and research and development expenses in exploring and demonstrating the suitability of our products to a customer’s needs. This lengthy sales cycle is subject to a number of significant risks over which we have little or no control.

Spectaire’s Business Model

Our business model is based on asset-light production and focuses on three high-margin revenue streams through our AireCore^TM MMS product line.

Margin Profile Evolution

We believe we will benefit from unique characteristics of our business model, such that our margin profile will structurally improve over time, as we shift among our three revenue streams. Our revenues will initially be weighted towards unit sales. As the AireCore^TM MMS installed base grows and scales, we will be able to realize an increasing share of revenues from data subscriptions (at a higher margin versus unit sales). Subsequently, we expect that we will begin deriving significant revenues from carbon credits. As the installed base grows, the center of gravity for revenue sources is expected to shift to progressively higher-margin revenue streams, which we believe will allow us to grow and increase profitability over the long term.

Key Financial Definitions/Components of Results

Revenue

Spectaire anticipates earning revenue based on three high-margin revenue streams from: product sales, data subscription and services, and carbon credits.

Operating Expenses

Selling, general and administrative expense

Selling, general and administrative expense consists primarily of personnel-related expenses for our executives. These expenses also include non-personnel costs, such as rent, legal, audit and accounting services, share-based compensation expense and other professional fees.

Depreciation expense

Depreciation expense consists of depreciation of Spectaire’s lab equipment.

Research and development expense

Research and development expense includes internal personnel and third-party consulting costs related to preliminary research and development of Spectaire’s products and platforms and share-based compensation expense.

Year ended December 31, 2023 compared to year ended December 31, 2022

Sales and marketing

Sales and marketing increased by $527,330, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily related to an increase in personnel costs as Spectaire continues to develop and market its products and technology.

General and administrative expenses

General and administrative expenses increased by $12,562,936 or 9,124%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily related to share-based compensation expense ($6,847,393), audit and accounting fees ($1,631,766), personnel costs ($1,757,714) and legal expenses ($1,608,736).

Research and development

Research and development increased by $2,512,905 or 260%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily related to an increase in personnel costs as Spectaire continues to develop its products and technology.

Depreciation expense

Depreciation expense increased by $10,708 or 103% for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily related to depreciation on Spectaire’s lab equipment.

Interest Expense

For the year ended December 31, 2023, Spectaire incurred $6,321,665 of interest expense primarily related to the Arosa loan ($1,014,361) and amortization of discount relating to the warrants issued to Arosa ($5,200,000).

Gain on extinguishment of debt

During the year ended December 31, 2022, Spectaire recognized a gain on the extinguishment of debt of $700,000. During 2021 and 2022, a lender loaned money to MicroMS with the intention of becoming a shareholder once an initial capital commitment was met. This capital commitment was never met as the lender experienced liquidity issues. In September 2022, Spectaire and the lender entered into a termination and mutual release agreement which terminated any obligations of Spectaire for repayment. As such the total amount owed, $700,000, was recognized into income as an extinguishment of debt for the year ended December 31, 2022.

Fair value of forward purchase agreements

Upon consummation of the Business Combination, Spectaire assumed $965,000 in liabilities in connection with Forward Purchase Agreements. The change in fair value of $248,000 during the year ended December 31, 2023 is recognized into earnings for the year ended December 31, 2023.

Fair value of earnout liabilities

Upon consummation of the Business Combination, Spectaire assumed $49,894,000 of earnout liabilities. The change in fair value of $47,930,000 is recognized into earnings for the year ended December 31, 2023.

Loss on initial issuance of warrants

During the year ended December 31, 2023, Spectaire recorded $15,919,501 of loss related to the initial issuance of warrants issued to Arosa.

Net income (loss)

Net income was $8,952,082 for the year ended December 31, 2023 compared to the net loss of $415,907 for the year ended December 31, 2022. The change primarily relates to changes in the fair value of earnout liabilities partially offset by the increase in interest expense, loss on initial issuance of warrants and operating expenses, as discussed above.

Three months ended March 31, 2024 compared to three months ended March 31, 2023

NM* - Percentage change not meaningful

Sales and marketing

Sales and marketing increased by $26,291 or 25%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily related to an increase in personnel costs, as Spectaire continues to develop and market its products and technology.

General and administrative expenses

General and administrative expenses decreased by $2,691,881 or 75%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily related to share-based compensation expense ($1,637,330), personnel costs ($1,010,062) and legal expenses ($832,462).

Research and development

Research and development increased by $345,898 or 58%, three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily related to the inventory mark -to- market adjustment loss, as Spectaire continues to develop its products and technology.

Depreciation expense

Depreciation expense increased by $5,523 or 184% three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily related to depreciation on Spectaire’s lab equipment.

Interest Expense

Interest expense increased by $2,341,666 or 6219% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily related to the Arosa loan ($350,274) and amortization of the discount relating to the warrants issued to Arosa ($1,950,000).

Fair value of forward purchase agreements

Upon consummation of the Business Combination, Spectaire assumed $965,000 in liabilities in connection with Forward Purchase Agreements. The change in fair value of $515,750 during the three months ended March 31, 2024 is recognized into earnings for the year ended December 31, 2023.

Fair value of earnout liabilities

Upon consummation of the Business Combination, Spectaire assumed $49,894,000 of earnout liabilities. The change in fair value of $1,353,000 is recognized into earnings for the three months ended March 31, 2024.

Other Income

During the three months ended March 31, 2024, Spectaire redeemed $11,128 of credit card cash rewards.

Net loss

Net loss was $2,504,174 for the three months ended March 31, 2024 compared to the net loss of $4,356,555 for the three months ended March 31, 2023. The change primarily relates to the decrease in share-based compensation expense, personnel costs and interest expense, partially offset by changes in the fair value of earnout liabilities as discussed above.

Liquidity and capital resources

Historically, Spectaire’s primary sources of liquidity have been contributions from founders or other investors. Spectaire reported an operating loss of $2.0 million for the three months ended March 31, 2024 and $4.3 million for the three months ended March 31, 2023. Spectaire reported negative cash flows from operations of $2.7 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, Spectaire had an aggregate unrestricted cash balance of $31 thousand, a net working capital deficit of $27.9 million, and an accumulated deficit of $29.7  million. For the year ended December 31, 2023, Spectaire reported an operating loss of $16.7 million and negative cash flows from operations of $7.4 million. As of December 31, 2023, Spectaire had an aggregate unrestricted cash balance of $0.3 million, a net working capital deficit of $25.4 million, and accumulated deficit of $27.2 million. In order to fund planned operations while meeting obligations as they come due, the Company will need to secure additional capital. The Company’s future capital requirements will depend on many factors, including its revenue growth rate, the timing and extent of spending to support further sales and marketing and research and development efforts. In order to finance these opportunities, Spectaire will need to raise additional financing. While there can be no assurances, the Company intends to raise such capital through additional debt or equity financing transactions, including the sale of shares of Common Stock to Yorkville pursuant to the SEPA, subject to the terms and conditions therein.

SEPA

Although the SEPA provides that the Company may, in its sole discretion, from time to time during the term of the SEPA, and on the terms and subject to the conditions set forth therein, direct Yorkville to purchase shares of Common Stock from the Company in one or more purchases under the SEPA for a maximum aggregate purchase price of up to $25.0 million, the Company may not issue or sell any shares of Common Stock under the SEPA if such issuance or sale would breach any applicable Nasdaq rules or limitations provided in the SEPA. Under applicable Nasdaq rules, in no event may the Company issue to Yorkville shares exceeding the Exchange Cap (representing 19.99% of the total number of our shares of Common Stock issued and outstanding immediately prior to the execution of the SEPA), unless the Company obtains stockholder approval to issue shares of Common Stock in excess of the Exchange Cap or unless sales of Common Stock are made at a price equal to or greater than the SEPA Floor Price. The SEPA also prohibits the Company from directing Yorkville to purchase any shares of our Common Stock if those shares, when aggregated with all other shares of our Common Stock then beneficially owned by Yorkville (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 thereunder), would result in Yorkville beneficially owning more than 4.99% of the outstanding Common Stock.

2024 Private Placement

The description of the 2024 Private Placement included in the section titled “Key Transactions” is incorporated by reference.

Warrants

If the price of our Common Stock increases above $11.50, and holders of the Warrants determine to exercise such Warrants for cash, we could potentially receive up to approximately $247.8 million from such exercise. Each Warrant entitles the holder thereof to purchase one share of our Common Stock at a price of $11.50 per share. The Arosa Warrant entitles the holder thereof to purchase up to 2,194,453 shares of Common Stock at an exercise price of $0.01 per share. On June 3, 2024, the closing price for our Common Stock was $0.350 and, as a result, we believe our warrant holders would be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us.

Arosa Loan

The description of the Arosa Loan included in the section titled “Key Transactions” is incorporated by reference.

Sponsor Promissory Notes

The description of the Sponsor Promissory Notes included in the section titled “Key Transactions” is incorporated by reference.

Going Concern

While the Company will continue to evaluate potential sources of funding, the Company may not be able to raise additional capital on terms acceptable to it or at all. If the Company is unable to raise additional capital when desired, the Company may be required to modify, delay, or abandon some of its planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on the Company’s business, operating results, financial condition, and ability to achieve its intended business objectives. As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern.

Cash flows for the years ended December 31, 2023 and 2022

The following table summarizes Spectaire’s cash flows from operating, investing and financing activities for the years ended December 31, 2023 and 2022:

Cash flows from operating activities

Net cash used in operating activities for the year ended December 31, 2023 was $(7,374,497), primarily related to Spectaire’s non-cash items such as change in value of earnout liabilities partially offset by share-based compensation, loss on initial issuance of warrants and non-cash interest expense as well as an increase in accounts payable.

Cash flows from investing activities

Net cash used in investing activities during the year ended December 31, 2023 was $(24,696), driven by the purchases of lab equipment. Net cash provided by investing activities during the year ended December 31, 2022 was $42,190, driven by cash acquired in the acquisition of MicroMS.

Cash flows from financing activities

Net cash provided by financing activities during the years ended December 31, 2023 was $7,723,303, consisting primarily of the proceeds received from the issuance of the Convertible Promissory Notes and common stock and entering into the Arosa Loan Agreement partially offset by disbursement from the issuance of note receivable.

Cash flows for the three months ended March 31, 2024 and 2023.

The following table summarizes Spectaire’s cash flows from operating, investing and financing activities for the three months ended March 31, 2024 and 2023:

Cash flows from operating activities

Net cash used in operating activities for the three months ended March 31, 2024 was $(2,671,164), primarily related to the change in value of earnout liabilities, changes in value of forward purchase agreements liability and decrease in accounts payable and accrued expenses.

Net cash used in operating activities for the three months ended March 31, 2023 was $(1,467,435), primarily related to net loss for the year , partially offset by stock- based compensation expense and an increase in accounts payable and accrued expenses.

Cash flows from investing activities

Net cash used in investing activities during the three months ended March 31, 2024 and 2023 was $(2,256) and $(10,761), respectively, driven by the purchases of lab equipment.

Cash flows from financing activities

Net cash provided by financing activities during the three months ended March 31, 2024 was $2,361,838, consisting primarily of the proceeds received from the issuance of common stock, proceeds from forward purchase agreement s and deposit from investor under a subscription agreement.

Net cash provided by financing activities during the three months ended March 31, 2023 was $6,594,980, consisting primarily of the proceeds received from the Arosa Loan and issuance of the convertible promissory notes.

Contractual Obligations and Commitments

AirCore Mass Spectrometer Program

On June 30, 2023, the Company entered into an agreement with a Contract Manufacturer in which the vendor will support the Company with a co-build of 5 AireCore Mass Spectrometers at the Company’s facilities followed by documentation and assembly of 50 AireCore Mass Spectrometers at the vendor’s facility. The co-build, documentation and assembly is estimated to cost $276,834.

Off balance sheet arrangements

Spectaire does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Currently Spectaire does not engage in off-balance sheet financing arrangements.

Emerging Growth Company Status

We are an emerging growth company (“EGC”), as defined in the JOBS Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an EGC, we intend to rely on such exemptions, we are not required to, among other things: (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

We will remain an EGC under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of the Initial Public Offering, (ii) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three-years.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Interest Rate Risk

The Company maintains its cash in checking and savings accounts. The Company held investment securities in mutual funds primarily in U.S. government securities We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and marketable securities. Bank deposits are held by accredited financial institutions and these deposits may at times be in excess of federally insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions that it believes are of high quality. The Company has not experienced any losses on its deposits of cash or cash equivalents. As of March 31, 2024 and December 31, 2023, our cash were maintained with one financial institution in the United States in checking and savings accounts.

At March 31, 2024, the Company held investment securities in mutual funds primarily in U.S. government securities. Since all of the Company’s permitted investments consist of treasury securities, fair values of its investments are determined by Level 1 inputs utilizing quoted market prices (unadjusted) in active markets for identical assets. These securities are presented on the condensed consolidated balance sheet at fair value at the end of the reporting period. Earnings on these securities are included in interest income on marketable securities in the condensed consolidated statement of operations and are automatically reinvested. The fair value of these securities is determined using quoted market prices in active markets for identical assets.

Critical Accounting Policies and Significant Management Estimates

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, expressed in U.S. dollars. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with GAAP. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. References to GAAP issued by the FASB in these accompanying notes to the condensed consolidated financial statements are to the FASB Accounting Standards Codification (“ASC”). All significant intercompany balances and transactions have been eliminated in consolidation. The December 31, 2023 condensed consolidated balance sheet herein was derived from the audited consolidated financial statements at that date, but does not include all disclosures including notes required by U.S. GAAP for complete financial statements.

Spectaire also has other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding its results, which are described in Note 3 to Spectaire’s condensed consolidated financial statements as of and for the three months ended March 31, 2024.

Preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could materially differ from these estimates. On an ongoing basis the Company evaluates its estimates including those relating to fair values, income taxes, and contingent liabilities among others. The Company bases its estimates on assumptions both historical and forward looking that are believed to be reasonable, the results of which form the basis for making judgements about the carrying values of assets and liabilities.

In addition, management monitors the effects of the global macroeconomic environment, including increasing inflationary pressures; social and political issues; regulatory matters, geopolitical tensions; and global security issues. The Company is also mindful of inflationary pressures on its cost base and is monitoring the impact on customer preferences.

Fair Value Measurements

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels:

The carrying amounts of certain financial instruments, such as cash equivalents, marketable securities, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The fair value of debt instruments for which the Company has not elected fair value accounting is based on the present value of expected future cash flows and assumptions about the then-current market interest rates as of the reporting period and the creditworthiness of the Company. All of the Company’s debt is carried on the condensed consolidated balance sheet on a historical cost basis net of unamortized discounts and premiums because the Company has not elected the fair value option of accounting.

Warrants

The Company reviews the terms of warrants to purchase its common stock to determine whether warrants should be classified as liabilities or stockholders’ deficit in its condensed consolidated balance sheets. In order for a warrant to be classified in stockholders’ deficit, the warrant must be (i) indexed to the Company’s equity and (ii) meet the conditions for equity classification.

If a warrant does not meet the conditions for stockholders’ deficit classification, it is carried on the condensed consolidated balance sheets as a warrant liability measured at fair value, with subsequent changes in the fair value of the warrant recorded in other non-operating losses (gains) in the condensed consolidated statements of operations. If a warrant meets both conditions for equity classification, the warrant is initially recorded, at its relative fair value on the date of issuance, in stockholders’ deficit in the condensed consolidated balance sheets, and the amount initially recorded is not subsequently remeasured at fair value.

Share-Based Compensation

The Company accounts for share-based compensation arrangements granted to employees in accordance with ASC 718, “Compensation: Stock Compensation”, by measuring the grant date fair value of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange for the award. Equity-based compensation expense is only recognized for awards subject to performance conditions if it is probable that the performance condition will be achieved. The Company accounts for forfeitures when they occur.

Research and development costs

Costs related to preliminary research and development of internal use software are expensed as incurred as a component of operating expenses.

Net loss Per Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including preferred stock and convertible notes, to the extent dilutive. For the three months ended March 31, 2024, the preferred shares, unvested restricted stock awards, and potential shares from convertible notes were not included in the calculation of diluted net loss per share as their effect would be anti-dilutive. There were no potential dilutive common stock equivalents for the three months ended March 31, 2023.

Recent Accounting Pronouncements

See Note 3, “Summary of Significant Accounting Policies,” to Spectaire’s unaudited condensed consolidated interim financial statements.

BUSINESS

Company Overview

Spectaire is an industrial technology company whose core offering, AireCore^™, allows its customers to measure, manage, and potentially reduce carbon dioxide equivalent (CO₂e) and other greenhouse gas emissions. AireCore^™ is a fully integrated hardware, software, and data platform designed primarily for logistics and supply chain operators that uses mass spectrometry to directly measure and report emissions in real time. Companies currently face a “technology gap” between increasing requirements with respect to reporting and reducing emissions and lack of available technology to accurately measure and manage such emissions, which creates a no-win scenario. Spectaire’s asset-light, reasonably priced solution delivers a win-win-win for Spectaire, for its customers, and for the environment.

The research and development for AireCore^™’s mass spectrometry technology began more than 15 years ago at MIT, led by Spectaire’s Chief Technology Officer, Dr. Brian Hemond, and co-founder, Professor Ian Hunter. AireCore^™ is protected by a robust patent portfolio and a lengthy research and development process. MIT has granted Spectaire an exclusive license for all of the intellectual property owned by MIT that underlies the AireCore^™ and is a minority stockholder in Spectaire.

The Science Behind Spectaire

Companies are coming under increasing pressure from governments, customers, and the public to account for and reduce their emissions. We believe that, prior to our introduction of AireCore^™, there was no practical way to directly measure real-time transportation emissions. As we describe below, conventional mass spectrometers, the only technology that could directly measure transportation emissions in real-time, are large, expensive, and required stable lab environments. Even ostensibly “mobile” mass spectrometers are impractical and require being towed separately behind an emitting vehicle. As a result of these impractical options, instead of directly measuring their emissions, our potential customers currently estimate their emissions using emissions estimation calculators for transport and logistics that estimate based on fuel consumption, mileage, and vehicle weight. These estimates cannot accommodate the minute-to-minute, mile-to-mile variations that often drive significant differences between these estimates and actual emissions. As a result, these estimates have come under criticism for being inaccurate, simplistic, and - until now - impossible to verify. A pilot study conducted with our anchor customer, Mosolf, found that Mosolf’s emissions estimate calculated using CSN EN 16258, a publicly available and widely used emissions estimation standard, overstated its actual emissions by approximately 60%.

The most practical way to directly measure emissions at the source is through mass spectrometry. Mass spectrometry is a chemical analytical technique used to confirm both the identity and the relative quantity of molecules in a sample. In a typical mass spectrometry measurement, a gas sample is ionized and the resultant ions are separated by their mass-to-charge ratios (m/z). The specific sample molecules can then be identified by the atomic masses of the ions and ion fragmentation pattern.

A mass spectrometer attached to a vehicle can precisely measure the CO₂e emitted while the engine is running. However, most commercially available mass spectrometers are industrial-scale equipment, roughly the size and weight of a refrigerator, can cost hundreds of thousands of dollars, and typically require stable lab environments to operate. Companies today incur real costs in emissions offsets or carbon tax payments due to inaccurate estimates, while simultaneously lacking the technology to deliver an accurate accounting of their actual emissions. As a result, our potential customers currently face a no-win situation, as public policy and corporate commitments outpace available technology.

Spectaire’s AireCore^™ Solution

Our AireCore^™ patented micro mass spectrometer (MMS) solves this problem. Unlike conventional mass spectrometers, which typically have significant cost, size, power, and environmental requirements, the AireCore^™ uses a proprietary miniaturized and ruggedized analyzer, combined with solid state pump technology, to address mobile operation in harsh environments.

AireCore^™ is cloud-connected through mobile phone networks, enabling a continuous feed of emissions data. AireCore^™ core software can also be upgraded over-the-air (OTA) smartphone-style, enabling continuous roll-out of features and improvements.

AireCore^™ is protected by a robust patent portfolio and a lengthy research and development process, with significant time and resources invested by MIT in developing this technology. MIT has granted us an exclusive license for all of the intellectual property owned by MIT that underlies the AireCore^™ and is a minority stockholder in Spectaire.

We believe that AireCore^™ is the world’s first and only device capable of addressing the technology gap between emissions requirements and emissions management technology by delivering real-time, accurate, and verifiable emissions measurements. Through our flagship AireCore^™ product, we provide a fully integrated hardware, software, and data solution designed primarily for logistics and supply chain operators to directly measure their emissions. We are aware of no other commercially available device that can be directly integrated into a vehicle, thus providing real-time emissions measurement while the vehicle is in everyday operation - yet reporting standards for emissions from industry, government, or other entities implicitly presume exactly such a technological capability.

Hardware

Software

Data

Patent portfolio

The following table sets forth certain information related to each of the issued patents related to AireCore’s MMS technology, including the relevant jurisdiction of each and corresponding expiration date.

Our Industry and Opportunity

We estimate a market opportunity exceeding $95 billion, derived bottom-up from logistics provider fleet sizes in the United States and Europe, and explicitly excluding several major sources of potential revenues. We believe our market is growing, and that we are well-positioned at the center of three converging forces: the evolution of the regulatory environment, changes in customer expectations, and the growth and development of carbon credit markets.

We Address a $95 Billion¹ Market