[10-Q] PureCycle Technologies, Inc. Quarterly Earnings Report
PureCycle Technologies (PCT) filed its Q3 2025 10‑Q, reporting first product revenue and stronger liquidity. Revenue reached $2.43 million in the quarter and $5.66 million year‑to‑date as the company began selling output from its recycling operations. The quarterly net loss was $28.37 million, an improvement from a $90.64 million loss a year ago, aided by a favorable $23.75 million change in warrant fair value and higher interest income.
Cash and cash equivalents were $234.36 million as of September 30, 2025, up from $15.68 million at year‑end, largely from financing activities including the June issuance of $300.0 million of Series B Convertible Perpetual Preferred Stock. Total assets were $989.12 million and total liabilities were $621.60 million. The company reported mezzanine equity of $299.30 million related to the Series B and stockholders’ equity of $68.22 million. Management stated that prior substantial doubt about going concern is no longer present based on proceeds from the Series B raise. Common shares outstanding were approximately 180.20 million as of November 4, 2025.
- None.
- None.
Insights
Liquidity improved with $234.36M cash; losses narrowed.
PCT recorded Q3 revenue of
Cash rose to
Management indicated prior going concern doubt is no longer present, citing the preferred financing. Future financial trajectory will depend on operating performance and capital structure costs; subsequent filings may detail production scale and margin trends.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________to ________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 4, 2025, there were approximately
PureCycle Technologies, Inc.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 |
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Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2025 and 2024 (Unaudited) |
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Condensed Consolidated Statements of Mezzanine Equity and Stockholders' Equity for the Three and Nine Months ended September 30, 2025 and 2024 (Unaudited) |
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Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2025 and 2024 (Unaudited) |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. Controls and Procedures |
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PART II - OTHER INFORMATION |
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Item 1. Legal Proceedings |
51 |
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Item 1A. Risk Factors |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
51 |
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Item 5. Other Information |
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Item 6. Exhibits |
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SIGNATURES |
55 |
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PureCycle Technologies, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share data) |
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September 30, 2025 |
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December 31, 2024 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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Restricted cash – current |
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Accounts receivable, net |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted cash – noncurrent |
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Operating lease right-of-use assets |
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Property, plant and equipment, net |
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Prepaid expenses and other noncurrent assets |
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TOTAL ASSETS |
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LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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Accrued expenses and other current liabilities |
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Accrued interest |
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Current portion of warrant liability |
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Current portion of long-term debt |
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Current portion of related party bonds payable |
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Total current liabilities |
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NONCURRENT LIABILITIES |
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Deferred revenue |
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Long-term debt, less current portion |
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Related party bonds payable, less current portion |
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Warrant liability, less current portion |
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Operating lease right-of-use liabilities |
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Series A Preferred Stock liability |
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Other noncurrent liabilities |
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TOTAL LIABILITIES |
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MEZZANINE EQUITY |
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Series B Convertible Perpetual Preferred Stock - $ |
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STOCKHOLDERS' EQUITY |
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Common Stock - $ |
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Additional paid-in capital |
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Accumulated other comprehensive (loss)/income |
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Accumulated deficit |
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TOTAL STOCKHOLDERS' EQUITY |
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TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
PureCycle Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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(in thousands, except per share data) |
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2025 |
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2024 |
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2025 |
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2024 |
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Revenues |
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$ |
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Operating expenses |
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Cost of operations |
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Research and development |
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Selling, general and administrative |
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Total operating costs and expenses |
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Operating loss |
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Other expense/(income): |
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Interest expense |
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Interest income |
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Change in fair value of warrants |
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Loss on extinguishment of debt |
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Other (income)/expense |
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Total other (income)/expense |
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Net loss |
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$ |
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$ |
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$ |
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$ |
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Loss per share |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares |
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Basic |
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Diluted |
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Other comprehensive (loss)/income |
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Cumulative translation adjustment |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Unrealized gain on debt securities available for sale |
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Total comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
PureCycle Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
(Unaudited)
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For the Three and Nine Months Ended September 30, 2025 |
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Mezzanine Equity |
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Stockholders' Equity |
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Series B Convertible Perpetual Preferred Stock |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive Income/(Loss) |
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Accumulated Deficit |
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Total Stockholders' Equity |
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(in thousands) |
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Shares |
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Amount |
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Shares |
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Amount |
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Balance, December 31, 2024 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of Common Stock |
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— |
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— |
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— |
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— |
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Warrants exercised |
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— |
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— |
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— |
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— |
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Share repurchase |
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— |
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— |
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( |
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( |
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— |
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— |
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( |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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Cumulative translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance, March 31, 2025 |
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— |
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Issuance of Series B Convertible |
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— |
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— |
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— |
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— |
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— |
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— |
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Accrued dividends on Series B |
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— |
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— |
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— |
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( |
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— |
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— |
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Issuance of Common Stock |
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Share repurchase |
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— |
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Equity-based compensation |
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— |
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— |
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Reclassification of warrant liability to equity |
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— |
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— |
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— |
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— |
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Cumulative translation adjustment |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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Balance, June 30, 2025 |
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Accrued dividends on Series B |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Series B Convertible Perpetual |
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— |
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( |
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— |
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— |
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— |
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— |
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— |
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Issuance of Common Stock |
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— |
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— |
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— |
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Warrants exercised |
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— |
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Share repurchase |
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Equity-based compensation |
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Cumulative translation adjustment |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance, September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
PureCycle Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
(Unaudited)
|
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For the Three and Nine Months Ended September 30, 2024 |
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Mezzanine Equity |
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Stockholders' Equity |
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Series B Convertible Perpetual Preferred Stock |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated Other Comprehensive (Loss)/Income |
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Accumulated Deficit |
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Total Stockholders' Equity |
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(in thousands) |
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Shares |
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Amount |
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Shares |
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Amount |
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|
|
||||||||
Balance, December 31, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of Common Stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share repurchase |
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Unrealized gain on available for |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Cumulative translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, March 31, 2024 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Share repurchase |
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Cumulative translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, June 30, 2024 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Issuance of Common Stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Share repurchase |
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Cumulative translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, September 30, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
PureCycle Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
||
|
|
Nine Months Ended September 30, |
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
||
Equity-based compensation |
|
|
|
|
|
|
||
Change in fair value of warrants |
|
|
|
|
|
|
||
Change in fair value of derivative |
|
|
( |
) |
|
|
|
|
Depreciation expense |
|
|
|
|
|
|
||
Amortization of debt issuance costs and debt discounts |
|
|
|
|
|
|
||
Accretion of discount on debt securities |
|
|
|
|
|
( |
) |
|
Operating lease amortization expense |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Loss on disposal of equipment |
|
|
|
|
|
|
||
Impairment of operating right-of-use asset |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
|
|
Inventory |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other noncurrent assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
( |
) |
|
|
( |
) |
Accrued interest |
|
|
|
|
|
( |
) |
|
Other noncurrent liabilities |
|
|
|
|
|
|
||
Operating lease right-of-use liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities |
|
|
|
|
|
|
||
Purchase of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Purchase of debt securities, available for sale |
|
|
|
|
|
( |
) |
|
Sale and maturity of debt securities, available for sale |
|
|
|
|
|
|
||
Net cash (used in)/provided by investing activities |
|
|
( |
) |
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from issuance of Series B Convertible Perpetual Preferred Stock |
|
|
|
|
|
|
||
Proceeds from issuance of Series A Preferred shares, inclusive of put option |
|
|
|
|
|
|
||
Proceeds from issuance of Common Stock |
|
|
|
|
|
|
||
Proceeds from issuance of revenue bonds to third parties |
|
|
|
|
|
|
||
Proceeds from issuance of revenue bonds to related parties |
|
|
|
|
|
|
||
Payments on related party revenue bonds |
|
|
( |
) |
|
|
( |
) |
Payment to purchase revenue bonds |
|
|
|
|
|
( |
) |
|
Proceeds from revolving credit facility and related party note payable |
|
|
|
|
|
|
||
Payments on revolving credit facility and related party note payable |
|
|
( |
) |
|
|
|
|
Proceeds from exercise and issuance of warrants |
|
|
|
|
|
|
||
Proceeds from equipment lease financing |
|
|
|
|
|
|
||
Payments on equipment financing |
|
|
( |
) |
|
|
( |
) |
Preferred stock and debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Payments to repurchase shares |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
|
|
|
|
||
Net cash provided by/(used in) financing activities |
|
|
|
|
|
( |
) |
|
Net increase/(decrease) in cash and restricted cash |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
Operating activities |
|
|
|
|
|
|
||
Interest paid during the period |
|
$ |
|
|
$ |
|
||
Non-cash investing activities |
|
|
|
|
|
|
||
Additions to property, plant, and equipment in accounts payable and accrued expenses |
|
|
|
|
|
|
||
Non-cash financing activities |
|
|
|
|
|
|
||
PIK dividends on Series B Convertible Perpetual Preferred Stock |
|
|
|
|
|
|
||
PIK interest on Series A Preferred Stock |
|
|
|
|
|
|
||
Carrying value of shareholder loan exchanged for revenue bonds payable to related parties |
|
|
|
|
|
|
||
Initial fair value of warrant liability issued to satisfy shareholder loan prepayment penalty |
|
|
|
|
|
|
||
PIK interest on related party note payable |
|
|
|
|
|
|
||
Reconciliation of cash and cash equivalents and restricted cash reported in the consolidated balance sheet |
|
|||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash - current |
|
|
|
|
|
|
||
Restricted cash - noncurrent |
|
|
|
|
|
|
||
Total cash and cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ORGANIZATION
PureCycle Technologies, Inc. and its consolidated subsidiaries (“PCT” or the “Company”) is a Florida-based corporation focused on commercializing a patented purification recycling technology (the “Technology”), originally developed by The Procter & Gamble Company (“P&G”), for restoring waste polypropylene into resin, called PureFive™ resin, which has similar properties and applicability for reuse as virgin polypropylene. PCT has a global license for the Technology from P&G. PCT’s goal is to introduce an important new product to the global polypropylene market that will assist multinational corporations in meeting their sustainability goals as well as federal and state regulations and mandates, providing consumers with polypropylene-based products that are sustainable, and reducing overall polypropylene waste in the world’s landfills and oceans.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. The condensed consolidated financial statements are presented in U.S. Dollars. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States of America (“U.S. GAAP”). Intercompany balances and transactions were eliminated upon consolidation. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented.
The unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2025.
Reclassifications
Certain amounts in prior periods have been reclassified to conform with the current year presentation.
Restricted Cash
Cash pledged as collateral for future capital purchases and leased properties is deemed restricted and included within this definition. Restricted cash that is expected to be spent or released from restriction within twelve months is classified as current on the Condensed Consolidated Balance Sheets. Restricted cash that is expected to be spent or released from restriction after twelve months is classified as noncurrent on the Condensed Consolidated Balance Sheets.
8
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Revenue Recognition
The Company’s revenue is primarily generated from the sale of finished products or byproducts to customers. Those sales predominantly contain a single performance obligation and revenue is recognized at the point in time when control of the product is transferred to customers, along with the title, risk of loss and rewards of ownership. Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered to the destination specified in the agreement with the customer. Sales revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for that finished product. Amounts billed to customers related to freight are included in revenues and freight costs are included in cost of operations in the accompanying Condensed Consolidated Statements of Comprehensive Loss.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses for the period presented. The Company's most significant estimates and judgments involve valuation of the Company's liability-classified warrants and the related fair value assumptions. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from these estimates.
Segment Information
Under Accounting Standards Codification ("ASC") 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker ("CODM"), in deciding how to allocate resources and in assessing performance. Therefore, the Company's Chief Executive Officer, who is also the CODM, makes decisions and manages the Company's operations as a single operating segment, which encompasses integrated business activities related to the recycling of polypropylene into resins. To date, the Company has limited operations and measures performance on a consolidated basis. Management has determined that the measure of segment performance determined most in accordance with U.S. GAAP is consolidated net income or loss, as applicable. The Company’s Condensed Consolidated Statements of Comprehensive Loss include the significant expense categories provided to the CODM on a consolidated basis, and the CODM does not review significant classifications of expenses outside of those shown on the Condensed Consolidated Statements of Comprehensive Loss. The CODM primarily reviews certain operating key performance indicators for evaluating performance and allocating resources.
Recently Issued Accounting Pronouncements
In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2025-06 - Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendment simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendments to this update are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption of this update is permitted. The Company does not expect this guidance to have a material impact on its financial statements and disclosures.
9
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
In November 2024, the FASB issued ASU No. 2024-04 – Debt – Debt with Conversion and Other Options: Induced Conversions of Convertible Debt Instruments, which improves the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt-Debt with Conversion and Other Options. Specifically, the guidance is intended to clarify how to determine whether a settlement of convertible debt (particularly cash convertible instruments) at terms that differ from the original conversion terms should be accounted for under the induced conversion or extinguishment guidance. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. The Company is currently evaluating the impact that the updated standard will have on its financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Disaggregation Disclosures. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This guidance requires more detailed disclosure about the types of expenses presented within the expense captions of the financial statements. Specifically, disclosure of purchases of inventory, employee compensation, depreciation, and intangible asset amortization are required on both an interim and annual basis. In addition, a qualitative description of remaining amounts in relevant expense captions that have not separately been disaggregated will be required on an interim and annual basis. On an annual basis, disclosure of an entity’s definition of selling expenses and the amount of selling expenses is required. The amendments to this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption of this update is permitted. The Company is currently evaluating the impact that the updated standard will have on its financial statements.
In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The updated standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company will adopt this guidance for its annual period ending December 31, 2025, which will include the expanded disclosures.
NOTE 3 - LIQUIDITY AND GOING CONCERN
The Company has determined that the going concern conclusion as previously disclosed in Note 2 to the condensed consolidated financial statements included in its quarterly filing on Form 10-Q for the period ended March 31, 2025 is no longer applicable for at least the twelve-month period from the issuance date of these financial statements. In the Form 10-Q filing for the period ended March 31, 2025, the Company disclosed there were conditions that raised substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements were issued. Those conditions were alleviated by management’s plans, as outlined in that Form 10-Q filing.
The improvement in the Company's financial condition is attributable to the Company raising proceeds from the sale of the Series B Convertible Perpetual Preferred Stock, as described below and in more detail in Note 11 - Mezzanine Equity and Stockholders' Equity.
10
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
In June 2025, the Company entered into binding subscription agreements with certain investors, including related parties, to which the Company agreed to sell to the investors, in a private placement transaction, an aggregate of
This development has led management to conclude that the previous substantial doubt about the Company's ability to continue as a going concern for a twelve-month period following the date that these financial statements were available to be issued is no longer present. The Company's current financial projections support the Company's ability to meet its obligations as they become due for at least one year from the issuance of these financial statements. The Company’s ability to continue as a going concern longer term is dependent on continued improvement in operations at the Company's first commercial-scale recycling facility in Lawrence County, Ohio (the "Ironton Facility"), the commercialization of its PureFiveTM resin product, and the successful construction and sale of product from its future Thailand and Antwerp facilities. Management continues to evaluate different strategies and may pursue additional actions to further increase its liquidity position.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company identifies and discloses transactions with related parties in accordance with ASC 850, Related Party Disclosures. The Company's related party transactions are primarily related to financing activities.
The Company’s condensed consolidated financial statements reflect transactions with certain principal owners of PCT and their affiliates, including Sylebra Capital Management (“Sylebra”), Samlyn Capital, LLC (“Samlyn”), Pure Plastic LLC (“Pure Plastic”), and Pure Crown LLC ("Pure Crown"). The Company's condensed consolidated financial statements also reflect transactions with companies affiliated with PCT, including Glockner Family Venture Fund LP, Glockner Enterprises, and Glockner Oil (collectively, "Glockner"), as well as Milliken & Company ("Milliken").
PCT purchased $
PCT currently has a $
During June 2025, the Company executed a 30-day promissory note with Pure Plastic for $
During the nine months ended September 30, 2025, the Company sold $
11
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
During June 2025, the Company entered into binding subscription agreements with certain investors, including investment entities affiliated with Sylebra, Samlyn, and Pure Crown, pursuant to which the Company agreed to sell in a private placement transaction shares of the Company’s Series B Convertible Perpetual Preferred Stock, as further described in Note 11 - Mezzanine Equity and Stockholders' Equity.
During the three and nine months ended September 30, 2025, the Company issued
On July 28, 2025, Glockner, a related party of the Company, exercised
The table below summarizes the related party balances and transactions reflected in the condensed consolidated financial statements as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||||||||||||||||||
|
|
Sylebra |
|
|
Samlyn |
|
|
Pure Plastic |
|
|
Pure Crown LLC |
|
|
Glockner |
|
|
Sylebra |
|
|
Samlyn |
|
|
Pure Plastic |
|
|
Pure Crown LLC |
|
|
Glockner |
|
||||||||||
Debt Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Related Party Bonds Payable (Note 8) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Preferred stock and warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Series A Preferred Stock (Note 11) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||||
Series B Convertible Perpetual Preferred Stock (Note 11) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|||
Series A Warrants (Note 13) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||||||
Series B Warrants (Note 13) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Series C Warrants (Note 13) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||||
NOTE 5 - INVENTORY
The Company's inventory is as follows:
(in thousands) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
||
12
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
NOTE 6 – PROPERTY, PLANT AND EQUIPMENT
Presented in the table below are the major classes of property, plant and equipment by category as of the below dates:
(dollars in thousands) |
|
Estimated Useful Life (Years) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Building |
|
|
$ |
|
|
$ |
|
|||
Machinery and equipment |
|
|
|
|
|
|
|
|||
Leasehold improvements |
|
|
|
|
|
|
|
|||
Fixtures and furnishings |
|
|
|
|
|
|
|
|||
Land improvements |
|
|
|
|
|
|
|
|||
Land |
|
|
|
|
|
|
|
|||
Construction in process |
|
N/A |
|
|
|
|
|
|
||
Total property, plant and equipment at cost |
|
|
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
|
|
( |
) |
|
|
( |
) |
Property, plant, and equipment, net |
|
|
|
$ |
|
|
$ |
|
||
Depreciation expense is recorded in the Condensed Consolidated Statements of Comprehensive Loss as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Cost of operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total depreciation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The Company's accrued expenses and other current liabilities are as follows:
|
|
|
|
|
|
|
||
(in thousands) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Accrued purchases |
|
$ |
|
|
$ |
|
||
Accrued lease obligations |
|
|
|
|
|
|
||
Employee-related costs |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
13
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
NOTE 8 – LONG-TERM DEBT AND BONDS PAYABLE
The Company’s debt balances, including related party debt, consist of the following at September 30, 2025 and December 31, 2024:
(in thousands) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Long-term Debt |
|
|
|
|
|
|
||
Green Convertible Notes, interest at |
|
$ |
|
|
$ |
|
||
CSC Equipment Financing Payable, currently bearing interest at a monthly charge of |
|
|
|
|
|
|
||
Revenue Bonds, interest at |
|
|
|
|
|
|
||
Other Debt |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Original issue discount and debt issuance costs classified as a reduction to long-term debt |
|
|
( |
) |
|
|
( |
) |
Less: Current portion |
|
|
( |
) |
|
|
( |
) |
Long-term debt, less current portion |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Related Party Bonds Payable |
|
|
|
|
|
|
||
Revenue Bonds due to related party, interest rates between |
|
|
|
|
|
|
||
Less: Original issue discount and debt issuance costs classified as a reduction to note payable |
|
|
( |
) |
|
|
( |
) |
Less: Current portion |
|
|
( |
) |
|
|
( |
) |
Related party debt, less current portion |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Sylebra Line of Credit, $ |
|
$ |
|
|
$ |
|
||
__________
(1)
Revenue Bonds
In October 2020, the Southern Ohio Port Authority (“SOPA”) issued certain Revenue Bonds (as defined below) pursuant to an Indenture of Trust dated as of October 1, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture of Trust”), between SOPA and UMB Bank, N.A., as trustee, and loaned the proceeds from their sale to PureCycle: Ohio LLC (“PCO”), an Ohio limited liability company and indirect wholly-owned subsidiary of the Company, pursuant to a Loan Agreement dated as of October 1, 2020, between SOPA and PCO (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) to be used, among other things, to acquire, construct and equip a portion of the Company’s first commercial-scale recycling facility in Ironton, Ohio. Capitalized terms used but not defined herein have the meanings ascribed thereto in the Indenture of Trust or the Loan Agreement.
14
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The Revenue Bonds were offered in
Bond Series |
|
Term |
|
Principal Amount |
|
|
Outstanding as of September 30, 2025 |
|
|
Interest Rate |
|
|
Maturity Date |
|||
2020A |
|
A1 |
|
$ |
|
|
$ |
|
|
|
% |
|
||||
2020A |
|
A2 |
|
|
|
|
|
|
|
|
% |
|
||||
2020A |
|
A3 |
|
|
|
|
|
|
|
|
% |
|
||||
2020B |
|
B1 |
|
|
|
|
|
|
|
|
% |
|
||||
2020B |
|
B2 |
|
|
|
|
|
|
|
|
% |
|
||||
2020C |
|
C1 |
|
|
|
|
|
|
|
|
% |
|
||||
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|||
In March 2024, PureCycle Technologies LLC ("PCT LLC"), a subsidiary of the Company, purchased
During the nine months ended September 30, 2025, PCT LLC sold approximately $
As of September 30, 2025, PCT LLC held $
Revenue Bonds Sold to Related Parties
During the nine months ended September 30, 2025, PCT LLC sold $
Sylebra Credit Facility
PCT currently has a $
Amounts outstanding under the Revolving Credit Agreement bear interest at a variable annual rate equal to Term SOFR (as defined in the Revolving Credit Agreement) in effect for such period plus
15
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The Revolving Credit Agreement contains representations, covenants and events of default that are customary for financing transactions of this nature. Events of default in the Revolving Credit Agreement include, among others: (a) non-payment of principal, interest, fees or other amounts; (b) default of specific covenants; (c) breach of representations and warranties; (d) cross-defaults to other indebtedness in an amount greater than $
Amounts outstanding under the Revolving Credit Agreement are guaranteed by the Guarantors, and are secured by a security interest in substantially all of the assets of PCT. Any majority-owned direct or indirect subsidiaries of PCT are required to guaranty the obligations under the Revolving Credit Agreement and grant security interests in substantially all of their respective assets.
On February 5, 2025, in conjunction with a private placement offering of the Company's Common Stock, the Company, the Guarantors, the Administrative Agent, the Security Agent and the Lenders executed a Limited Consent and Seventh Amendment to the Credit Agreement to, among other things, permit the offering and the transactions contemplated thereby. The lenders and their affiliates are greater than
On April 11, 2025, the Company entered into the Eighth Amendment to the Revolving Credit Agreement, which extended the maturity date of the Revolving Credit Facility from March 31, 2026 to
On June 16, 2025, in conjunction with a private placement offering of the Company's Series B Convertible Perpetual Preferred Stock, the Company, the Guarantors, the Administrative Agent, the Security Agent and the Lenders executed a Ninth Amendment to the Credit Agreement to, among other things, (i) permit the offering of the Company's Series B Convertible Perpetual Preferred Stock, and (ii) amend the indebtedness covenant to add a basket for unsecured indebtedness of the Company in an aggregate principal amount not to exceed $
During June 2025, the Company drew a total of $
On November 4, 2025, the Company entered into the Tenth Amendment to the Revolving Credit Agreement, which extended the maturity date of the Revolving Credit Facility from September 30, 2026 to
There were
Green Convertible Notes
On August 21, 2023, the Company priced its private offering of $
16
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
greater than
On August 24, 2023, the Company completed the private offering of the Green Convertible Notes. Each $
The net proceeds from the Green Convertible Notes, excluding any offering expenses, were approximately $
This allocation included historical spend from January 1, 2022, through December 31, 2024, related to the Augusta Facility, as well as the PreP facilities in process that will provide feedstock for both the Augusta Facility and also the Ironton Facility.
In June 2025, the Company announced its intent to re-direct and re-purpose certain previously purchased long-lead equipment valued at $
“Eligible Green Projects” means: investments in (i) acquisitions of buildings; (ii) building developments or redevelopments; (iii) renovations in existing buildings; and (iv) tenant improvement projects, in each case, that have received, or are expected to receive, in the
The Augusta Facility is currently in the front-end engineering and design validation phase and is incorporating the operational optimization and efficiency opportunities identified during the Ironton Facility commissioning. The Company identified “Building Design and Construction” as the appropriate LEED rating system for the Augusta Facility project though the Company believes it is premature to register the Augusta Facility project with the LEED on-line platform at this time.
17
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
In connection with the issuance of the Green Convertible Notes, the Company entered into an Indenture, dated August 24, 2023 (the “Indenture”), with U.S. Bank Trust Company, National Association, as trustee. The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the Notes become automatically due and payable. The events of default, as set forth in the Indenture and subject in certain cases to customary grace and cure periods, include customary events including a default in the payment of principal or interest, failure to comply with the obligation to deliver amounts due upon conversion, failure to give certain notices, failure to comply with the obligations in respect of certain merger transactions, defaults under certain other indebtedness and certain events of bankruptcy and insolvency.
The Green Convertible Notes will mature on August 15, 2030 (the “Maturity Date”), unless earlier repurchased, redeemed or converted. The Green Convertible Notes will bear interest at a rate of
Holders of the Green Convertible Notes may convert all or any portion of the Green Convertible Notes at their option at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its Common Stock or a combination of cash and shares of its Common Stock, at the Company’s election. The conversion rate will initially be
Holders of the Green Convertible Notes have the right to require the Company to repurchase for cash all or any portion of their Green Convertible Notes on August 15, 2027 at a repurchase price equal to
The Company may not redeem the Green Convertible Notes prior to August 20, 2025. The Company may redeem for cash all or any portion of the Green Convertible Notes (subject to certain exceptions and restrictions specified in the Indenture), at its option, on or after August 20, 2025 and on or before the 40th scheduled trading day immediately before the Maturity Date, at a cash redemption price equal to
18
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The following provides a summary of the interest expense of the Company's Green Convertible Notes:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands, except interest rate) |
|
|
2025 |
|
|
|
2024 |
|
|
|
2025 |
|
|
|
2024 |
|
Contractual interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization of deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of original issue discount |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
The following provides a summary of the Company's Green Convertible Notes:
|
|
|
|
|
|
|||||
(in thousands) |
|
|
|
September 30, |
|
|
December 31, |
|
||
Unamortized deferred issuance costs |
|
|
|
$ |
|
|
$ |
|
||
Net carrying amount |
|
|
|
|
|
|
|
|
||
Principal repayments due on long-term debt and related party bonds payable over the next five years are as follows (in thousands):
Years Ending December 31, |
|
Long-Term Debt |
|
|
Related Party Bonds Payable |
|
||
2025 (October through December) |
|
$ |
|
|
$ |
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
2029 |
|
|
|
|
|
|
||
2030 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Original issue discount and debt issuance costs classified as a reduction to long-term debt |
|
|
( |
) |
|
|
( |
) |
Less: Current portion |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
NOTE 9 - INCOME TAXES
The Company has determined that any net deferred tax assets are not more likely than not to be realized in the future, and a full valuation allowance is required. In addition, the Company has determined that any current forecasted operations would result in federal and state income tax losses that are also not more likely than not to be realized. As a result, the Company has
Management has evaluated the Company’s tax positions and has determined that the Company has taken
19
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Financial Assurance
The Company holds a surety bond in the amount of $
Legal Proceedings
The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss or a range of such losses is estimable, often involves significant judgment about future events, and the outcome of litigation is inherently uncertain. Other than as described below, there is no material pending or threatened litigation against the Company that remains outstanding as of September 30, 2025.
Denham-Blythe Arbitration
On October 7, 2020, PCO, a subsidiary of the Company, and Denham-Blythe Company, Inc. (“DB”), executed an Engineering, Procurement, and Construction Agreement for certain construction activities associated with the Ironton Facility (“EPC Contract”).
On June 16, 2023, following unsuccessful efforts at mediating various disputes over certain unapproved change orders and payment applications, DB filed a demand for binding arbitration (“Arbitration Demand”) with the American Arbitration Association (“AAA”), seeking approximately $
On August 30, 2023, DB filed a breach of contract claim against PCO and others in Lawrence County Ohio, alleging the same facts contained in its Arbitration Demand, as well as an action to foreclose on a lien filed in Lawrence County, Ohio. Concurrently DB requested the complaint be stayed pending the resolution of all issues in the arbitration.
On September 14, 2023, DB filed a motion with the AAA seeking to join ThermalTech Engineering, Inc., and ThermalTech Turnkey Solutions LLC, a subcontractor engaged by DB to provide engineering services and equipment procurement and installation for the Ironton Project. In an order dated December 7, 2023, the AAA granted DB’s request to join ThermalTech Engineering, Inc., and ThermalTech Turnkey Solutions LLC (collectively, “TT”). Thereafter, TT filed an answer and counterclaim alleging DB failed to pay them approximately $
On March 8, 2024, ISC Constructors, a DB subcontractor ("ISC"), filed an action in equity for unjust enrichment against PCO in Lawrence Co. Ohio Case # 240C000171. The lawsuit alleges $
20
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Constructors in the AAA against DB. That arbitration action has been consolidated with the AAA arbitration between PCO and DB listed above. Recently, at ISC’s request, the AAA separated the claims of ISC for a later hearing after the completion of the arbitration involving TT, DB and PCO.
PCO intends to vigorously defend itself against DB’s claims and to pursue recovery of damages resulting from DB’s failure to perform adequately under the EPC Contract. The arbitration hearing concluded in August 2025, and the parties await the decision of the arbitration panel; accordingly, PCT cannot reasonably estimate at this time whether there will be any loss, or if there is a loss, the possible range of loss, that may result from the Arbitration Demand.
Other Matters
On April 25, 2024, the Company received a litigation demand letter from a purported shareholder, Selim Piot, requesting that the Board of Directors (“Board”) of the Company take action against certain officers and directors. On May 6, 2024, Mr. Piot served a books and records demand and initiated a derivative action in the Chancery Court of Delaware captioned Piot v. Bouck, et al., No. 2024 0475 NAC (Del. Ch.). On May 21, 2024, Mr. Piot served another books and records demand. The claims asserted in Mr. Piot’s demand letters and derivative action are substantially similar to those asserted in the now resolved derivative lawsuits and other parties’ books and records demand letters pursuant to Section 220 of the Delaware General Corporation laws. The parties agreed to a stipulation dismissing the Piot derivative action, and on July 23, 2025, the Court issued an order dismissing the Piot derivative action with prejudice.
NOTE 11 - MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
Mezzanine Equity
Series B Convertible Perpetual Preferred Stock
On June 16, 2025, the Company entered into binding subscription agreements (the "Series B Subscription Agreements") with certain investors (collectively, the “Series B Investors”), including investment entities affiliated with Pure Crown, Sylebra, Daniel Gibson, and Samlyn, pursuant to which the Company agreed to sell to the Series B Investors, in a private placement transaction (the “Series B Offering”), an aggregate of
In accordance with ASC 480, Distinguishing Liabilities from Equity, the Company has classified the Series B Convertible Perpetual Preferred Stock in temporary (mezzanine) equity because the Company can be forced into a cash redemption scenario upon events not within its control pursuant to a change in control redemption provision. The Company initially measured the Series B Convertible Perpetual Preferred Stock at the amount of total proceeds less offering costs. Because the Series B Convertible Perpetual Preferred Stock is neither currently redeemable nor probable of becoming redeemable in the future, no subsequent measurement is required at this time. The Company will continue to monitor the probability of the Series B Convertible Perpetual Preferred Stock becoming redeemable at each reporting period.
The Series B Convertible Perpetual Preferred Stock was issued pursuant to a Series B Certificate of Designations (the “Series B Certificate of Designations”) filed with the Secretary of State of the State of Delaware, establishing the preferences, limitations and relative rights of the Series B Convertible Perpetual Preferred Stock. The Series B Certificate of Designations amended the Company’s Certificate of Incorporation and was effective immediately on filing.
21
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The Series B Convertible Perpetual Preferred Stock ranks, with respect to dividend rights and rights upon any liquidation, dissolution or winding up of the Company (a “Liquidation Event”): (a) senior to the Company’s Common Stock and other capital stock of the Company, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series B Convertible Perpetual Preferred Stock other than the Company’s Series A Preferred Stock, as to divided rights and rights upon Liquidation Events; (b) on a parity with any other class or series of capital stock of the Company, the terms of which expressly provide that such class or series ranks on a parity with the Series B Convertible Perpetual Preferred Stock as to dividend rights and rights upon Liquidation Events; (c) junior to the Series A Preferred Stock and any other class or series of capital stock of the Company, the terms of which expressly provide that such class or series ranks senior to the Series B Convertible Perpetual Preferred Stock as to dividend rights and rights upon Liquidation Events; and (d) junior to all existing and future indebtedness of the Company.
A holder of the Series B Convertible Perpetual Preferred Stock may elect to convert their holdings into shares of the Company's Common Stock at any time. In addition, on or after the dividend payment date following the fourth anniversary of the Closing Date, if at any time the closing price of the Company's Common Stock has been at least
If requisite stockholder approval is required for certain conversions, then until such approval is obtained, no shares of the Company's Common Stock will be issued or delivered upon conversion of Series B Convertible Perpetual Preferred Stock if doing so would cause the holder (or any related person/group) to own more than
Holders of the Series B Convertible Perpetual Preferred Stock are entitled to receive cumulative dividends at a rate equal to
In the event of any Liquidation Event, each holder of the Series B Convertible Perpetual Preferred Stock will be entitled to receive a per share amount equal to the greater of (i) the per share purchase price of the Series B Convertible Perpetual Preferred Stock (as adjusted for any in-kind dividends paid thereon) plus all accrued and unpaid dividends thereon (the “Series B Accrued Value”) and (ii) the amount that such Series B Convertible Perpetual Preferred Stock would have been entitled to receive if they had converted into the Company's Common Stock immediately prior to such Liquidation Event.
22
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The Company may not take any of the following actions unless otherwise approved by the holders of a majority of the then-outstanding Series B Convertible Perpetual Preferred Stock: (a) amend or waive any provision in the Certificate of Incorporation in any way that materially, adversely and disproportionately affects the rights, preferences, and privileges or power of the Series B Convertible Perpetual Preferred Stock; (b) increase the authorized number of shares of Series A Preferred Stock unless such increase is required pursuant to the existing terms of the Certificate of Designations of Series A Preferred Stock, as modified by the waivers entered into by all of the holders of the Series A Preferred Stock on September 17, 2024; (c) other than in connection with the Series A Preferred Stock, issue any equity securities of the Company containing rights, preferences or privileges with respect to distributions or liquidation superior to or on parity with the Series B Convertible Perpetual Preferred Stock; or (d) repurchase or redeem any of the Company's issued and outstanding Common Stock other than any such repurchases or redemptions (i) undertaken in connection with any equity incentive agreements approved by the Board, (ii) undertaken to satisfy obligations of the Company existing on the date of the Certificate of Designations or (iii) that do not result in payments by the Company in an aggregate amount, together with all prior payments made pursuant to this clause (iii), in excess of $
Except in the case of a change in control, the Series B Convertible Perpetual Preferred Stock may not be redeemed or repurchased upon the election of the holders of the Series B Convertible Perpetual Preferred Stock.
Upon certain change in control events involving the Company, (i) the holders of the Series B Convertible Perpetual Preferred Stock will have the right to require the Company to redeem any or all of their Series B Convertible Perpetual Preferred Stock and (ii) the Company will have the option to redeem all (but not less than all) of the then-outstanding Series B Convertible Perpetual Preferred Stock, in each case, for a cash amount equal to the Series B Accrued Value, on a per share basis. In connection with the Company delivering a Series B Conversion Notice or in connection with a change in control, the Company will, in certain circumstances, be required to increase the conversion rate for shares of Series B Convertible Perpetual Preferred Stock converting in connection therewith (a “Make-Whole Change”). Such Make-Whole Change will be calculated using a make-whole table calculated over a 10-year period. In no event will the conversion rate be increased to an amount that exceeds
In conjunction with the Series B Offering, the Company entered into the Ninth Amendment to the Company's Revolving Credit Facility, to, among other things, (i) permit the Series B Offering and (ii) amend the indebtedness covenant to add a basket for unsecured indebtedness of the Company in an aggregate principal amount not to exceed $
23
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Stockholders' Equity
Preferred Transactions
On September 11, 2024, the Company entered into subscription agreements (the “Series A Subscription Agreements”) with certain investors (the “Series A Investors”), including affiliates of Sylebra and Samlyn, both related parties, pursuant to which the Company agreed to sell to the Series A Investors, in a private placement, an aggregate of (i)
Series A Preferred Stock
The shares of Series A Preferred Stock were issued pursuant to a Certificate of Designations (the “Series A Certificate of Designations”) filed on September 13, 2024, as amended on September 17, 2024 (as described below), and rank senior to the Company's Common Stock with respect to the payment of dividends and distributions upon liquidation, dissolution or winding-up. Holders of the Series A Preferred Stock are entitled to receive dividend payments at a return equal to
The holders of the Series A Preferred Stock have a contingent put right (the “Put Option”), which was bifurcated and recognized separately at fair value through earnings pursuant to ASC 815-15, Embedded Derivatives. The Put Option is contingent upon the Company incurring any indebtedness after the initial issue date that is senior to the Series A Preferred Stock and/or secured by the assets of PureCycle Augusta, LLC. As of September 30, 2025, there was
24
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Condensed Consolidated Statements of Comprehensive Loss. During the three and nine months ended September 30, 2024, the Company recognized expense of $
The shares of Series A Preferred Stock will be redeemed in cash at a price equal to $
On September 17, 2024, the holders of all of the shares of Series A Preferred Stock entered into waivers to irrevocably and unconditionally waive (and consent to such waivers for purposes of Section 12 of the Series A Certificate of Designations) the rights of the holders of shares of Series A Preferred Stock, (i) pursuant to the Series A Certificate of Designations, (a) to elect to receive shares of the Company's Common Stock or pre-funded warrants to purchase the Company's Common Stock in connection with redemption events under the Series A Certificate of Designations, (b) to elect to receive additional shares of Series A Preferred Stock on return payment dates, and (c) to receive
Refer to Note 13 - Warrants for further information.
Common Stock
Holders of the Company's Common Stock are entitled to
On February 5, 2025, the Company entered into subscription agreements with certain investors (the “Investors”), including affiliates of Sylebra, Pleiad Asia Master Fund, Pleiad Asia Equity Master Fund and affiliates of Samlyn, pursuant to which the Company agreed to sell to the Investors, in a private placement an aggregate of
25
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Preferred Stock
As of September 30, 2025 and December 31, 2024, the Company is authorized to issue
NOTE 12 - EQUITY-BASED COMPENSATION
2021 Equity Incentive Plan
On March 17, 2021, the Company's stockholders approved the PureCycle Technologies, Inc. 2021 Equity and Incentive Compensation Plan (the “Plan”).
The Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance shares, performance units ("PSUs"), dividend equivalents, and certain other awards. In general, the amount of shares issuable under the Plan will be automatically increased on the first day of each fiscal year, beginning in 2022 and ending in 2031, by an amount equal to the lesser of (a)
As of September 30, 2025, approximately
Restricted Stock Agreements
RSUs issued pursuant to the Plan are time-based and vest over the period defined in each individual grant agreement or upon a change of control event as defined in the Plan. The Company recognizes compensation expense for the awards equal to the fair value on the date of grant of the awards on a straight-line basis over the vesting period of such awards. The grant-date fair value of the awards is equal to the closing price of the Company’s Common Stock one day prior to the date of grant. The Company has the option to repurchase all vested shares upon a stockholder’s termination of employment or service with the Company.
A summary of RSU activity for the nine months ended September 30, 2025 is as follows:
|
|
Number of RSUs |
|
|
Weighted Average Grant |
|
|
Weighted Average Remaining Recognition |
|
|||
Non-vested at December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
( |
) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Non-vested at September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
26
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
On December 31, 2024, the Company entered into an agreement with the Company's former Chief Financial Officer, whereby his restricted stock award set to expire on
On June 16, 2025, the Company and the Company's Chief Executive Officer entered into an employment agreement, pursuant to which he was entitled to receive a restricted stock award of
As of September 30, 2025, there were $
Stock Options
The stock options issued pursuant to the Plan are time-based and vest over the period defined in each individual grant agreement or upon a change of control event as defined in the Plan.
The Company recognizes compensation expense for the stock option awards based on the fair value at the date of grant on a straight-line basis over the vesting period of such awards.
|
|
For the Three and Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Expected annual dividend yield |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
|
|
% |
|||
Risk-free rate of return |
|
|
|
|
% |
|||
Expected option term (years) |
|
|
|
|
|
|
||
The expected term of the shares granted is determined based on the period of time the shares are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the Company’s capital structure and volatility of similar entities referred to as guideline companies. In determining similar entities, the Company considered industry, stage of life cycle, size and financial leverage. The dividend yield on the Company’s shares is assumed to be zero as the Company has not historically paid dividends on its Common Stock. The fair value of the underlying Company's Common Stock is determined using the closing stock price of the Company's Common Stock on the grant date.
27
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
A summary of stock option activity for the nine months ended September 30, 2025 is as follows:
|
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term |
|
|||
Balance, December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Balance, September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
Exercisable |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Weighted average grant date fair values |
|
$ |
|
|
|
|
|
|
|
|||
As of September 30, 2025, there were $
Performance-Based Restricted Stock Awards
The shares issued pursuant to the Performance-Based Restricted Stock Agreements vest depending on if the performance obligations are met. In general, the PSUs will be earned based on achievement of pre-established financial and operational performance objectives and will vest on the date the attainment of such performance objectives as determined by the Compensation Committee of the Board, subject to the participant’s continued employment with the Company. These grants allow for the right to receive a variable number of shares, between
The Company recognizes compensation expense for the PSUs equal to the grant-date fair value of the equity-based compensation awards on a straight-line basis over the vesting period of such awards as the Company has concluded the performance condition is probable to be met. The fair value of the awards is equal to the fair value of the Company's Common Stock one day prior to the date of grant.
A summary of the PSU activity for the nine months ended September 30, 2025 is as follows:
|
|
Number of PSUs |
|
|
Weighted Average Grant |
|
|
Weighted Average Remaining Recognition Period |
|
|||
Balance, December 31, 2024 |
|
|
|
|
$ |
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
( |
) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Balance, September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|||
As of September 30, 2025, there were $
28
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Equity-based compensation cost is recorded within the cost of operations and selling, general and administrative expenses within the Condensed Consolidated Statements of Comprehensive Loss.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Total equity-based compensation for RSUs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total equity-based compensation for Restricted stock award |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total equity-based compensation for stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total equity-based compensation for PSUs |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total equity-based stock compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 13 - WARRANTS
The Company has the following series of warrants outstanding (in thousands, except per-share values) as of September 30, 2025 and December 31, 2024, all of which are exercisable:
Warrant series |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
|
Exercise price |
|
|
Expiration date |
|||
RTI Global ("RTI") Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Public Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Private Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Series A Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Series B Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Series C Warrants |
|
|
|
|
|
|
|
$ |
|
|
||||
Total warrants, issued and outstanding |
|
|
|
|
|
|
|
|
|
|
|
|||
RTI Warrants
On
Public Warrants and Private Warrants
The Company has outstanding public and private warrants that entitle each holder to exercise its warrants for a whole number of shares of the Company's Common Stock at a price of $
The Company may redeem the outstanding warrants in whole, but not in part, at a price of $
29
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The public warrants are accounted for as equity-classified warrants as they were determined to be indexed to the Company’s stock and meet the requirements for equity classification. The private warrants are accounted for as liability-classified as there is a provision within the warrant agreement that allows for private warrants to be exercised via a cashless exercise while held by the holder and affiliates of the original holder, but would not be exercisable at any time on a cashless basis if transferred and held by another investor. Therefore, the Company classifies the private warrants as a liability pursuant to ASC 815, Derivatives and Hedging Activities, until the private warrants are transferred from the initial purchasers or any of their permitted transferees. As of September 30, 2025, approximately
During the three and nine months ended September 30, 2025,
Refer to Note 14 - Fair Value of Financial Instruments for further information.
Series A Warrants
On March 7, 2022, the Company issued approximately
On April 11, 2025, the Company entered into a side letter agreement with certain holders of the Series A Warrants to forbear the Company's exercise of its redemption rights with respect to those certain holders' Series A Warrants. As a consequence of such side letter, the Company is unable to redeem the Series A Warrants for any holder of the Series A Warrants prior to the expiration of the Series A Warrants.
The agreements governing the Series A Warrants provide for a Black-Scholes value calculation in the event of certain transactions, which includes a floor on volatility utilized in the value calculation at
On July 28, 2025, Glockner, a related party of the Company, exercised
Refer to Note 14 - Fair Value of Financial Instruments for further information.
Series B Warrants
On May 10, 2024, the Company issued Series B Warrants to Pure Plastic to purchase an aggregate of
The Series B Warrant Agreement provides for a Black-Scholes value calculation in the event of certain transactions, which includes a floor on volatility utilized in the value calculation at
30
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Refer to Note 14 - Fair Value of Financial Instruments for further information.
Series C Warrants
On September 13, 2024, pursuant to the Series A Subscription Agreements, the Company issued Series C Warrants to purchase an aggregate of
The Series C Warrant Agreement provides for a Black-Scholes value calculation in the event of certain transactions, which includes a floor on volatility utilized in the value calculation at
Refer to Note 14 - Fair Value of Financial Instruments for further information.
Warrant (benefit)/expense recognized during the three and nine months ended September 30, 2025 and 2024 is presented in the following table:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
RTI Warrants |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Private Warrants |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Series A Warrants |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Series B Warrants |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Series C Warrants |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of warrants |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
NOTE 14 – FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies.
Level 3 - Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation.
31
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The Company records cash and cash equivalents, restricted cash, accounts receivable and accounts payable at cost, which approximates fair value due to their short-term nature or stated rates. The Company records debt at cost less any discounts and issuance costs.
Financial Instruments Measured and Recorded at Fair Value on a Recurring Basis
As of September 30, 2025 and December 31, 2024, the Company’s financial liabilities measured and recorded at fair value on a recurring basis were classified within the fair value hierarchy as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Put Option Liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Warrant liability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
RTI Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Private Warrants - liability classified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series A Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series B Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series C Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total warrant liability |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
As of September 30, 2025 and December 31, 2024, the estimated fair value of the Company's financial instruments not remeasured at fair value on a recurring basis within the fair value hierarchy are as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||||||||||||||||||
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
Green Convertible Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Revenue bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Related party bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Third-party bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue bonds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
For the instruments classified as Level 3, significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The fair value of the liabilities above is derived from the trading price of the Company's publicly traded bonds on the last trading day of the fiscal quarter. The Company's publicly traded bonds are thinly traded and, as such, the Company has deemed the input as an unobservable input. Since each of the instruments classified as Level 3 are being valued using similar inputs, a significant change that would impact expected volatility or the market price of PCT's Common Stock could result in a material change to the total combined value of these instruments. An increase in one or both of these inputs would result in a higher assessed value for each instrument.
Measurement of the Private Warrants
The private warrants are measured at fair value on a recurring basis using a Black-Scholes model. The private warrants are classified as Level 3 and were valued using the following assumptions:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Expected annual dividend yield |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free rate of return |
|
|
% |
|
|
% |
||
Expected option term (years) |
|
|
|
|
|
|
||
32
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The expected term of the private warrants is determined based on the duration of time the warrants are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of issuance. The expected volatility is based on the implied volatility calculated for the Company’s public warrants, which have similar characteristics to the private warrants. The dividend yield on the Company’s private warrants is assumed to be
A summary of the private warrants activity from December 31, 2024 to September 30, 2025 is as follows:
(in thousands) |
|
Fair Value |
|
|
Balance, December 31, 2024 |
|
$ |
|
|
Warrants transferred from initial purchaser |
|
|
( |
) |
Change in fair value |
|
|
|
|
Balance, September 30, 2025 |
|
$ |
|
|
Refer to Note 13 - Warrants for further information.
Measurement of the RTI Warrants
On January 16, 2025, RTI exercised its outstanding warrants. The Company received $
|
|
December 31, 2024 |
|
|
Expected annual dividend yield |
|
|
% |
|
Expected volatility |
|
|
% |
|
Risk-free rate of return |
|
|
% |
|
Expected option term (years) |
|
|
|
|
The expected term of the RTI Warrants was determined based on the duration of time the warrants were expected to be outstanding. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility was calculated based on the specific volatility of PCT’s publicly-traded Common Stock. The dividend yield on the Company’s warrants was assumed to be
A summary of the RTI Warrants activity from December 31, 2024 to September 30, 2025 is as follows:
(in thousands) |
|
Fair Value |
|
|
Balance, December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Exercise of warrants |
|
|
( |
) |
Balance, September 30, 2025 |
|
$ |
|
|
33
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Measurement of the Series A Warrants
The Series A Warrants meet the definition of derivative instruments and are measured at fair value on a recurring basis using the market price of the Company’s publicly traded warrants, with changes in fair value recorded in current earnings. The Company has determined the publicly traded warrants to be an appropriate proxy to value the Series A Warrants as both warrants have similar redemption features and the same exercise price. The Series A Warrants are classified as Level 2 for both initial measurement at issuance and subsequent measurement each period.
Measurement of the Series B Warrants
The Series B Warrants meet the definition of derivative instruments and are measured at fair value on a recurring basis.
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Expected annual dividend yield |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free rate of return |
|
|
% |
|
|
% |
||
Expected option term (years) |
|
|
|
|
|
|
||
The expected term of the Series B Warrants is determined based on the duration of time the warrants are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the valuation date. The expected volatility is based on the implied volatility calculated for the Company’s public warrants, which have similar characteristics to the Series B Warrants. The dividend yield on the Company’s warrants is assumed to be
A summary of the Series B Warrants activity from December 31, 2024 to September 30, 2025 are as follows:
(in thousands) |
|
Fair Value |
|
|
Balance, December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
|
|
Balance, September 30, 2025 |
|
$ |
|
|
Measurement of the Series C Warrants
The Series C Warrants meet the definition of derivative instruments and are measured at fair value on a recurring basis.
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Expected annual dividend yield |
|
|
% |
|
|
% |
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free rate of return |
|
|
% |
|
|
% |
||
Expected option term (years) |
|
|
|
|
|
|
||
34
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
The expected term of the Series C Warrants granted is determined based on the duration of time the warrants are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the valuation date. The expected volatility is based on the implied volatility calculated for the Company’s public warrants, which have similar characteristics to the Series B Warrants. The dividend yield on the Company’s warrants is assumed to be
A summary of the Series C Warrants activity from December 31, 2024 to September 30, 2025 are as follows:
(in thousands) |
|
Fair Value |
|
|
Balance, December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
|
|
Balance, September 30, 2025 |
|
$ |
|
|
Measurement of the Put Option Liability
The Put Option liability meets the definition of a derivative instrument and is measured at fair value on a recurring basis.
|
|
September 30, |
|
|
December 31, 2024 |
|
||
Risk-free rate of return |
|
|
% |
|
|
% |
||
Credit spread |
|
|
% |
|
|
% |
||
__________
(1)
A summary of the Put Option activity from December 31, 2024 to September 30, 2025 are as follows:
(in thousands) |
|
Fair Value |
|
|
Balance, December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Balance, September 30, 2025 |
|
$ |
|
|
In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to fair value measurements.
35
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
NOTE 15 – NET LOSS PER SHARE
The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The two-class method also requires losses for the period to be allocated between common and participating securities based on their respective rights if the participating security contractually participates in losses. As holders of participating securities do not have a contractual obligation to fund losses, undistributed net losses are not allocated to nonvested restricted stock for purposes of the loss per share calculation.
The dilutive effect for the Company's Green Convertible Notes and Series B Convertible Perpetual Preferred stock is calculated using the "if-converted" method. The dilutive effect of all other instruments is calculated using the treasury stock method.
The computation for the basic and diluted loss per share for the three and nine months ended September 30, 2025 and 2024 are as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands, except per share data) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Less: Dividends accumulated on Series B Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net loss attributable to common |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Dilutive impact of - |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Private Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series A Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series B Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series C Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net loss attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding, |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive shares: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Private Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series A Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series B Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Series C Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding, |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss per share attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
36
PureCycle Technologies, Inc.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(Unaudited)
Certain outstanding Common Stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented as including them would have been anti-dilutive.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Anti-dilutive shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingently - issuable shares to Legacy PCT unitholders (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares issuable upon conversion of Green Convertible Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares issuable upon conversion of Series B Convertible Perpetual Preferred Stock |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total anti-dilutive shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
__________
(1)
NOTE 16 - SUBSEQUENT EVENTS
During October 2025, the Company paid off the entire outstanding balance of the CSC Equipment Financing Payable and recorded a loss on extinguishment of approximately $
On November 4, 2025, the Company entered into the Tenth Amendment to the Revolving Credit Agreement, which extended the maturity date of the Revolving Credit Facility from September 30, 2026 to
37
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the financial condition, results of operations, earnings outlook and prospects of PureCycle Technologies, Inc. (“PCT”). Forward-looking statements generally relate to future events or PCT’s future financial or operating performance and may refer to projections and forecasts. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions (or the negative versions of such words or expressions), but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the management of PCT and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of this Quarterly Report on Form 10-Q. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section of PCT’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Annual Report on Form 10-K”) entitled “Risk Factors,” those discussed and identified in other public filings made with the U.S. Securities and Exchange Commission (the “SEC”) by PCT and the following:
38
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
PCT undertakes no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
39
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Should one or more of these risks or uncertainties materialize or should any of the assumptions made prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.
40
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
The following discussion and analysis provides information that PCT’s management believes is relevant to an assessment and understanding of PCT’s interim condensed consolidated results of operations and financial condition. The discussion should be read together with the audited consolidated financial statements and the accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our most recent Annual Report on Form 10-K, as well as the unaudited interim condensed consolidated financial statements, together with related notes thereto, included elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” and “our,” are intended to mean the business and operations of PCT and its consolidated subsidiaries.
Overview
We are a Florida-based corporation focused on commercializing a patented dissolution recycling technology to physically separate the polymer from other plastics, color, and contaminants (the “Technology”), originally developed by P&G, for restoring waste polypropylene into resin, called PureFive™ resin, which has similar properties and applicability for reuse as virgin polypropylene. PCT has a global license for the Technology from P&G, which was amended during 2025 to permanently waive the possible clawback of our exclusivity for plants located in North America and extend the time in which our plants must begin construction and commence sales in other regions to avoid a clawback of exclusivity under the license agreement. In April 2023, we certified the Ironton Facility as mechanically complete. We expect to have capacity of approximately 107 million pounds per year when fully operational. Commissioning activities are ongoing, but the plant is not yet operating at the expected full capacity. Our goal is to create an important new segment of the global polypropylene market that will assist multinational entities in meeting their sustainability goals, providing consumers with polypropylene-based products that are sustainable, and reducing overall polypropylene waste in the world’s landfills and oceans.
PCT’s process includes the following steps:
41
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Recent Developments
In June 2025, we entered into binding subscription agreements with certain investors, including related parties, to which we agreed to sell to the investors, in a private placement transaction, an aggregate of 300,000 shares of the Company’s Series B Convertible Perpetual Preferred Stock, par value $0.001 per share (the “Series B Convertible Perpetual Preferred Stock”), at an initial issue price of $1,000 per share. The gross proceeds from the offering were approximately $300.0 million before deducting fees and expenses.
In conjunction with the $300.0 million capital raise, we outlined our future growth plans to increase our installed capacity, which includes the following:
Letter of No Objection Submission ("LNO") and the Granting of Food and Drug Administration ("FDA") Food Packaging Clearances for Certain Feedstocks
Our FDA food contact grade resins are, subject to certain conditions, capable of being used for all food types per the conditions of use listed and per all applicable authorizations in the food contact regulations listed in the 21 CFR (Code of Federal Regulations, Title 21).
During 2025, we received additional FDA LNOs, which expand upon previous LNOs and allows our PureFive™ resin to be produced under a broader range of process conditions. These broader conditions allow for greater flexibility and reduced energy usage in the purification process. Subject to operating under these process conditions, our resin can be used in articles in contact with all types of food under FDA’s Conditions of Use ("COU") "A" (“high temperature heat-sterilized”) through "H" (“frozen or refrigerated storage: ready-prepared foods intended to be reheated in containers at time of use”), provided the feedstock comes from food contact articles and complies with all applicable authorizations.
We are conducting additional testing and plan to make further LNO submissions for additional post-consumer recycled feedstock sources and expanded COUs.
42
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Components of Results of Operations
Revenue
Our revenue is primarily generated from the sale of finished products or byproducts to customers. Those sales predominantly contain a single performance obligation and revenue is recognized at the point in time when control of the product is transferred to customers, along with the title, risk of loss and rewards of ownership. Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered to the destination specified in the agreement with the customer. Net sales revenue is recognized on the net amount expected to be received by the Company from the customer.
Cost of Operations
Operating expenses to date have consisted mainly of personnel costs (including wages, salaries and benefits) and other costs directly related to operations at our operating facilities, including feedstock, rent, depreciation, repairs and maintenance, utilities and supplies. Costs attributable to the design and development of Feed PreP and purification facilities are capitalized and, when placed in service, depreciated over the expected useful life of the asset. We expect our operating costs to increase as we continue to scale operations and increase headcount.
Research and Development Expense
Research and development expenses consist primarily of costs related to the development of the Technology, the facilities and equipment that will use the Technology to purify recycled polypropylene, and the processes needed to collect, sort, and prepare feedstock for purification. These include mainly personnel costs, depreciation for long-lived assets, third-party consulting costs, and the cost of various recycled waste. Research and development expenses include evaluation of new front-end feedstock mechanical separators to improve feedstock purity and increase the range of feedstocks PCT can process economically. In addition, we are increasing our in-house feedstock analytical capabilities, which will include additional supporting equipment and personnel.
Selling, General and Administrative Expense
Selling, general and administrative expenses consist primarily of personnel-related expenses for our corporate, executive, finance and other administrative functions and professional services, including legal, audit and accounting services. We expect our selling, general, and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business.
43
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Results of Operations
Comparison of Three and Nine Months ended September 30, 2025 and 2024
The following table summarizes our operating results for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|
2025 |
|
|
2024 |
|
|
Change |
|
||||||
Revenues |
|
$ |
2,430 |
|
|
$ |
— |
|
|
$ |
2,430 |
|
|
$ |
5,660 |
|
|
$ |
— |
|
|
$ |
5,660 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of operations |
|
|
29,570 |
|
|
|
16,965 |
|
|
|
12,605 |
|
|
|
82,843 |
|
|
|
60,379 |
|
|
|
22,464 |
|
Research and development |
|
|
1,443 |
|
|
|
1,544 |
|
|
|
(101 |
) |
|
|
4,381 |
|
|
|
4,940 |
|
|
|
(559 |
) |
Selling, general and administrative |
|
|
10,350 |
|
|
|
12,789 |
|
|
|
(2,439 |
) |
|
|
40,688 |
|
|
|
44,883 |
|
|
|
(4,195 |
) |
Total operating expenses |
|
|
41,363 |
|
|
|
31,298 |
|
|
|
10,065 |
|
|
|
127,912 |
|
|
|
110,202 |
|
|
|
17,710 |
|
Operating loss |
|
|
(38,933 |
) |
|
|
(31,298 |
) |
|
|
(7,635 |
) |
|
|
(122,252 |
) |
|
|
(110,202 |
) |
|
|
(12,050 |
) |
Interest expense |
|
|
16,235 |
|
|
|
14,567 |
|
|
|
1,668 |
|
|
|
48,939 |
|
|
|
41,676 |
|
|
|
7,263 |
|
Interest income |
|
|
(2,850 |
) |
|
|
(414 |
) |
|
|
(2,436 |
) |
|
|
(3,850 |
) |
|
|
(4,530 |
) |
|
|
680 |
|
Change in fair value of warrants |
|
|
(23,745 |
) |
|
|
44,899 |
|
|
|
(68,644 |
) |
|
|
1,881 |
|
|
|
54,532 |
|
|
|
(52,651 |
) |
Loss on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21,214 |
|
|
|
(21,214 |
) |
Other (income)/expense |
|
|
(203 |
) |
|
|
289 |
|
|
|
(492 |
) |
|
|
(5,444 |
) |
|
|
1,364 |
|
|
|
(6,808 |
) |
Total (income)/other expense |
|
|
(10,563 |
) |
|
|
59,341 |
|
|
|
(69,904 |
) |
|
|
41,526 |
|
|
|
114,256 |
|
|
|
(72,730 |
) |
Net loss |
|
$ |
(28,370 |
) |
|
$ |
(90,639 |
) |
|
$ |
62,269 |
|
|
$ |
(163,778 |
) |
|
$ |
(224,458 |
) |
|
$ |
60,680 |
|
Revenues
The Company reported approximately $2.4 million and $5.7 million in revenues during the three and nine months ended September 30, 2025, respectively. Fiscal year 2025 is the first year of meaningful operations. The Company is currently in various stages of customer application trials, which is anticipated to generate revenue growth in future periods.
Cost of Operations
Cost of operations increased approximately $12.6 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Cost of operations for the three months ended September 30, 2025 included $4.9 million of higher professional services and contract labor driven by preliminary planning and design work for our Thailand and Augusta facilities, $3.2 million of higher production-related costs due to the ramp-up in production that has occurred during the current year as compared to the prior year, $2.6 million higher facilities costs attributable to the opening of our PreP facility in Denver, Pennsylvania in September of 2024, and the expansion of offsite storage and processing space, and $1.0 million of higher supplies and materials costs.
Cost of operations increased approximately $22.5 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Cost of operations for the nine months ended September 30, 2025 included approximately $7.5 million higher production-related costs due to the ramp-up in production that occurred during the current year, $5.0 million of higher professional services and contract labor driven by preliminary planning and design work for our Thailand and Augusta facilities, $3.7 million in loss on disposal of fixed assets, $3.4 million higher employee-related expenses to support the expanded needs of the organization, $2.3 million of higher supplies and materials, and $1.3 million of higher facilities costs attributable to the opening of our PreP facility in Denver, Pennsylvania in September of 2024, and the expansion of offsite storage and processing space, partially offset by $1.7 million lower depreciation expense.
44
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
We intend to construct new polypropylene recycling facilities in Thailand and Belgium, and build a multi-line purification facility at our Augusta, Georgia location. Certain equipment that has been purchased for the Augusta Facility (and recorded as construction in progress) is currently being evaluated for use in the construction of the Thailand or Belgium facilities. If we determine that any of the Augusta equipment cannot be used in either Thailand, Belgium, in the redesigned Augusta facility, or re-purposed for other uses, we could incur a non-cash charge for the loss on disposition of such equipment. Currently, we are in the early stages of the planning and design of our Thailand, Belgium and Augusta facilities, so we are not yet able to determine the loss, if any, for equipment that may not be placed into operation.
Research and Development Expenses
Research and development expenses decreased approximately $0.1 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. This decrease was mainly driven by lower employee costs.
Research and development expenses decreased approximately $0.6 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. This decrease was primarily driven by $0.6 million of lower employee costs and $0.1 million of lower operational site costs, partially offset by $0.2 million of higher research and development activities.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased approximately $2.4 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. This decrease was primarily driven by approximately $1.5 million of lower legal costs mostly as a result of settlement of outstanding cases in the prior year.
Selling, general and administrative expenses decreased approximately $4.2 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. This decrease was primarily driven by approximately $7.5 million of lower legal costs mostly as a result of settlement of outstanding cases in the prior year, partially offset by $3.5 million of higher equity-based compensation from new awards issued since the prior year, including a special grant valued at $2.3 million to the Chief Executive Officer that immediately vested upon grant, and $0.4 million higher employee-related expenses.
Interest Expense
Interest expense increased by $1.7 million for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The increase in interest expense was primarily attributed to interest on the Company's Series A Preferred Stock issued during the third quarter of 2024 and higher interest on our Revenue Bonds as a result of current year sales of Revenue Bonds. The increase in interest expense was partially offset by a decrease in interest expense on equipment financing due to paydown of outstanding balances.
Interest expense increased by $7.3 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The increase in interest expense was primarily attributed to interest on the Series A Preferred Stock issued during the third quarter of 2024 and higher interest on our Revenue Bonds as a result of current year sales of our Revenue Bonds. The increase in interest expense was partially offset by a decrease in interest expense on equipment financing and interest on the Pure Plastic Term Loan Facility paid off during the second quarter of 2024.
45
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Interest Income
Interest income for the three months ended September 30, 2025 increased $2.4 million from three months ended September 30, 2024 due to higher cash balances as a result of the proceeds from the issuance of the Series B Convertible Perpetual Preferred Stock during the second quarter of 2025.
The interest income decrease of $0.7 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily attributable to the liquidation of our available-for-sale investment portfolio earlier during 2024, offset by the increase in the cash balance as a result of the proceeds from the issuance of the Series B Convertible Perpetual Preferred Stock during the second quarter of 2025.
Change in Fair Value of Warrants
During the three months ended September 30, 2025, the fair value of our liability-classified warrants decreased approximately $23.7 million, as compared to an increase in fair value of $44.9 million during the three months ended September 30, 2024. The decrease during the three months ended September 30, 2025 was primarily attributable to a decrease in the Company's Common Stock price during the quarter, combined with a decrease in the remaining term and implied volatility assumption as well as a decrease in the number of warrants during 2025 due to exercises during 2025. The increase during the three months ended September 30, 2024 was chiefly driven by an increase in the underlying price of the Company's Common Stock, combined with an increase in the number of warrants during 2024.
During the nine months ended September 30, 2025, the fair value of our liability-classified warrants increased by $1.9 million, as compared to an increase in the fair value of $54.5 million during the nine months ended September 30, 2024. The current year increase is mainly driven by an increase in the underlying value of our Common Stock, partially offset by fewer warrants outstanding as a result of current year warrant exercises combined with a decrease in the remaining term. The prior year increase was chiefly driven by an increase in the underlying price of the Company's Common Stock, combined with an increase in the number of warrants during 2024.
Loss on Debt Extinguishment
The Company recorded a loss associated with the repurchase of the Revenue Bonds in the first quarter of 2024. There have been no similar transactions during 2025.
Other (Income)/Expense
During the three months ended September 30, 2025, the $0.2 million of other income was primarily comprised of sublease income. During the three months ended September 30, 2024, the $0.3 million of other expense was primarily comprised of a $0.4 million increase in the fair value of the Series A Preferred Stock put option.
During the nine months ended September 30, 2025, the $5.4 million in other income was primarily comprised of a $3.4 million decrease in the fair value of the Series A Preferred Stock put option, resulting in a gain recorded in other income, and a net gain from insurance proceeds of approximately $1.3 million related to settlement of the shareholder derivative lawsuit. During the nine months ended September 30, 2024, the $1.4 million of other expense was primarily attributed to a $0.8 million impairment charge related to an operating right-of-use asset during the second quarter of 2024 plus a $0.4 million change in the fair value of the put option during the third quarter of 2024.
46
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Liquidity and Capital Resources
Our ongoing operations have primarily been funded to date by a combination of equity financing through the issuance of Common Stock and preferred stock, as well as the issuance of various debt instruments. The Company's current financial projections support the Company's ability to meet its obligations as they become due for at least the twelve-month period from the date that these financial statements were issued. The Company’s ability to meet its requirements longer term is dependent on continued improvement in operations at our Ironton Facility, the commercialization of our PureFiveTM resin product, and the successful construction and sale of product from our Thailand facility. Management continues to evaluate different strategies and may pursue additional actions to further increase its liquidity position.
The following is a summary of the components of our current liquidity. As of September 30, 2025, restricted cash consisted primarily of certain amounts required to support outstanding letters of credit and other collateral, initial construction commitments for the Augusta Facility, and bond reserves for the Ironton Facility.
(in thousands) |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Cash and cash equivalents |
|
$ |
234,359 |
|
|
$ |
15,683 |
|
|
|
|
|
|
|
|
||
Letters of credit and other collateral |
|
|
6,397 |
|
|
|
6,310 |
|
Augusta Facility construction escrow |
|
|
3,281 |
|
|
|
16,398 |
|
Ironton Facility bond reserves |
|
|
3,216 |
|
|
|
3,120 |
|
Restricted cash (current and noncurrent) |
|
|
12,894 |
|
|
|
25,828 |
|
|
|
|
|
|
|
|
||
Green Convertible Notes |
|
|
250,000 |
|
|
|
250,000 |
|
Revenue Bonds |
|
|
148,630 |
|
|
|
118,630 |
|
Equipment financing payable and other debt |
|
|
26,162 |
|
|
|
31,491 |
|
Less: discount and issuance costs |
|
|
(45,705 |
) |
|
|
(53,477 |
) |
Gross long-term debt and related party bonds payable |
|
$ |
379,087 |
|
|
$ |
346,644 |
|
As of September 30, 2025, we had approximately $234.4 million of cash and cash equivalents, which consists primarily of investments in money markets and commercial paper with original maturities of three months or less, as well as approximately $12.9 million of restricted cash. We also have a $200.0 million revolving credit facility (“Revolving Credit Facility”) with Sylebra Capital Management ("Sylebra") that is undrawn and expires on September 30, 2027. On November 4, 2025, the Company entered into the Tenth Amendment to the Revolving Credit Agreement, which extended the maturity date of the Revolving Credit Facility from September 30, 2026 to September 30, 2027 and added a clause regarding the potential redemption of Series A Preferred Stock. If, on or prior to March 17, 2026, sufficient proceeds are received from the exercise of Series A Warrants and the Board of Directors approve, then the Company shall redeem in full the Series A Preferred Stock.
We have no 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. We do not have any off-balance sheet arrangements or interests in variable interest entities that would require consolidation. While certain legally binding offtake arrangements have been entered into with customers, these arrangements are not unconditional and definite agreements subject only to customer closing conditions, and do not qualify as off-balance sheet arrangements required for disclosure.
47
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Cash Flows
A summary of our cash flows for the nine months ended September 30, 2025 and 2024 is as follows:
|
|
Nine Months Ended September 30, |
|
|
$ |
|
||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Net cash used in operating activities |
|
$ |
(114,052 |
) |
|
$ |
(112,985 |
) |
|
$ |
(1,067 |
) |
Net cash (used in)/provided by investing activities |
|
|
(27,504 |
) |
|
|
14,586 |
|
|
|
(42,090 |
) |
Net cash provided by/(used in) financing activities |
|
|
347,298 |
|
|
|
(110,462 |
) |
|
|
457,760 |
|
Net increase/(decrease) in cash and cash equivalents and restricted cash |
|
|
205,742 |
|
|
|
(208,861 |
) |
|
|
414,603 |
|
Cash and cash equivalents and restricted cash, beginning of period |
|
|
41,511 |
|
|
|
302,514 |
|
|
|
(261,003 |
) |
Cash and cash equivalents and restricted cash, end of period |
|
$ |
247,253 |
|
|
$ |
93,653 |
|
|
$ |
153,600 |
|
Cash Flows from Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2025 increased by $1.1 million as compared to the nine months ended September 30, 2024. This increase is mainly attributed to higher operating costs in connection with the ramp-up in production at the Ironton Facility during 2025.
Cash Flows from Investing Activities
During the nine months ended September 30, 2025, we reported cash used in investing activities of approximately $27.5 million, which was entirely comprised of cash paid for capital expenditures during that period. During the nine months ended September 30, 2024, we reported cash provided by investing activities of approximately $14.6 million, which is comprised of approximately $79.2 million of cash proceeds from the sale of debt securities, partially offset by capital expenditures of $34.0 million, and the purchase of debt securities totaling $30.6 million. We sold all of our debt securities during 2024 and had no similar type transactions during 2025.
Cash Flows from Financing Activities
We reported net cash provided by financing activities of approximately $347.3 million during the nine months ended September 30, 2025 as compared to net cash used in financing activities of approximately $110.5 million during the nine months ended September 30, 2024.
Cash provided by financing activities for the nine months ended September 30, 2025 is primarily comprised of $300.0 million of proceeds from the issuance of the Series B Convertible Perpetual Preferred Stock during the second quarter of 2025, $33.5 million of proceeds from the issuance of the Company's Common Stock, $26.9 million of proceeds from the sale of Revenue Bonds, $14.9 million in proceeds on draws on our Revolving Credit Facility and a short-term borrowing from a related party, $6.6 million in proceeds from the exercise of the RTI Global Warrants, Series A Warrants and private warrants during 2025, and $0.7 million in proceeds for other financing activities. These cash inflows were partially offset by $14.9 million in payments on our Revolving Credit Facility and a short-term borrowing from a related party, $7.7 million in payments on equipment financing, $7.6 million in debt and preferred stock issuance costs paid, and $4.5 million in payments to repurchase shares.
Cash used in financing activities for the nine months ended September 30, 2024 is mainly comprised of $253.2 million paid to purchase the outstanding Revenue Bonds during 2024, $3.1 million in payments on equipment financing, $1.1 million in payments to repurchase shares of the Company's Common Stock, and $1.1 million in debt issuance costs paid. These outflows are partially offset by $48.0 million of proceeds from the sale of Revenue
48
PureCycle Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations — CONTINUED
Bonds, $38.1 million of proceeds from the issuance of the Company's Common Stock, $30.1 million of proceeds from the issuance of warrants, $21.8 million in proceeds from the issuance of our Series A Preferred Stock, $9.5 million of proceeds from equipment lease financing, and $0.6 million of other net proceeds from financing activities.
Indebtedness
There have been no material changes regarding our indebtedness from the information we provided in our most recent Annual Report on Form 10-K, except as outlined in the information below. Refer to Note 8 - Long-Term Debt and Bonds Payable to our unaudited condensed consolidated financial statements included in Part I, Item 1. "Financial Statements."
Revenue Bonds
The Company sold $30.5 million par value in Revenue Bonds during the nine months ended September 30, 2025. See Note 8 - Long-Term Debt and Bonds Payable to our unaudited condensed consolidated financial statements included in Part I, Item 1. "Financial Statements."
Revenue Bonds Issued to Related Party
See Note 8 - Long-Term Debt and Bonds Payable to our unaudited condensed consolidated financial statements included in Part I, Item 1. "Financial Statements."
Revolving Credit Facility with Sylebra
See Note 8 - Long-Term Debt and Bonds Payable to our unaudited condensed consolidated financial statements included in Part I, Item 1. "Financial Statements."
Financial Assurance
See Note 8 - Long-Term Debt and Bonds Payable to our unaudited condensed consolidated financial statements included in Part I, Item 1. "Financial Statements."
Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and estimates from the information we provided in our most recent Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
49
PureCycle Technologies, Inc.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks as of September 30, 2025 does not differ materially from that included in our most recent Annual Report on Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, including ensuring that such information is accumulated and communicated to management (including the principal executive and financial officers) as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of September 30, 2025 (the end of the period covered by this Quarterly Report on Form 10-Q).
Changes in Internal Control over Financial Reporting
There have been no changes during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
50
PureCycle Technologies, Inc.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
For a description of the legal proceedings pending against us, see “Legal Proceedings” in Note 10 - Commitments and Contingencies - to the Notes to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10‑Q.
In the future, we may become party to additional legal matters and claims arising in the ordinary course of business. While we are unable to predict the outcome of the above or future matters, we do not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on our overall financial position, results of operations, or cash flows.
Item 1A. Risk Factors
There have been no material changes from risk factors previously disclosed in our most recent Annual Report on Form 10-K in response to Part 1, Item 1A.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information with respect to the Company’s purchases of its Common Stock for the third quarter of 2025:
Period |
|
(a) Total number of shares (or units) purchased* |
|
|
(b) Average price paid per share (or unit)* |
|
|
(c) Total number |
|
|
(d) Maximum |
|
||||
July 1 to July 31 |
|
|
72,527 |
|
|
$ |
9.88 |
|
|
|
— |
|
|
$ |
— |
|
August 1 to August 31 |
|
|
16,912 |
|
|
|
13.11 |
|
|
|
— |
|
|
|
— |
|
September 1 to September 30 |
|
|
36,278 |
|
|
|
13.90 |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
125,717 |
|
|
$ |
11.47 |
|
|
|
— |
|
|
$ |
— |
|
* Shares withheld to cover tax withholding obligations under the net settlement provision upon vesting of restricted stock units.
51
PureCycle Technologies, Inc.
PART II — OTHER INFORMATION — CONTINUED
ITEM 5. Other Information
Rule 10b5-1 Trading Plans
None of our directors or officers
52
PureCycle Technologies, Inc.
PART II — OTHER INFORMATION — CONTINUED
ITEM 6. Exhibits
Exhibit Number |
|
Description of Exhibit |
2.1 |
|
Agreement and Plan of Merger, dated as of November 16, 2020, by and among Roth CH Acquisition I Co., Roth CH Acquisition I Co. Parent Corp., Roth CH Merger Sub, LLC, Roth CH Merger Sub, Inc. and PureCycle Technologies LLC. (incorporated herein by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4, as amended (File No. 333-250847)) † |
|
|
|
3.1 |
|
Amended and Restated Certificate of Incorporation of PureCycle Technologies, Inc., filed with the Secretary of State of Delaware on March 17, 2021 (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (File No. 333-251034)) |
|
|
|
3.2 |
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of PureCycle Technologies, Inc. to Declassify the Board of Directors (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 15, 2023) |
|
|
|
3.3 |
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of PureCycle Technologies, Inc. to Incorporate Certain Other Changes (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 15, 2023) |
|
|
|
3.4 |
|
Certificate of Designations of Series A Preferred Stock of PureCycle Technologies, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 13, 2024) |
|
|
|
3.5 |
|
Second Amended and Restated Bylaws of PureCycle Technologies, Inc. (incorporated herein by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on May 15, 2023) |
|
|
|
3.6 |
|
Certificate of Designations of Series B Convertible Perpetual Stock of PureCycle Technologies, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed June 23, 2025) |
|
|
|
31.1 |
|
Rule 13a – 14(a) Certification by Dustin Olson, Chief Executive Officer, for the quarter ended September 30, 2025* |
|
|
|
31.2 |
|
Rule 13a – 14(a) Certification by Jaime Vasquez, Chief Financial Officer, for the quarter ended September 30, 2025* |
|
|
|
32.1 |
|
Section 1350 Certification by Dustin Olson, Chief Executive Officer, for the quarter ended September 30, 2025^ |
|
|
|
32.2 |
|
Section 1350 Certification by Jaime Vasquez, Chief Financial Officer, for the quarter ended September 30, 2025^ |
|
|
|
101.1 |
|
The following financial statements from PureCycle Technologies, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): |
|
|
(i) Consolidated Balance Sheets as of September 30, 2025 (Condensed and Unaudited) and December 31, 2024. |
|
|
(ii) Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024. |
|
|
(iii) Unaudited Condensed Consolidated Statements of Mezzanine Equity and Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024. |
|
|
(iv) Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024. |
|
|
(v) Notes to the Condensed Consolidated Financial Statements. |
|
|
|
53
PureCycle Technologies, Inc.
PART II — OTHER INFORMATION — CONTINUED
104.1 |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.1) |
* Filed electronically herewith.
^ Furnished electronically herewith.
** Certain identified information has been excluded from this exhibit pursuant to Rule 601(b)(10) of Regulation S-K because it is both (i) not material and (ii) is the type of information that the registrant treats as private or confidential.
† Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules upon request by the Securities and Exchange Commission.
54
PureCycle Technologies, Inc.
PART II — OTHER INFORMATION — CONTINUED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PURECYCLE TECHNOLOGIES, INC. |
||
(Registrant) |
||
By: |
|
/s/ Dustin Olson |
Dustin Olson |
||
Chief Executive Officer |
||
(Principal Executive Officer) |
||
By: |
|
/s/ Jaime Vasquez |
Jaime Vasquez |
||
Chief Financial Officer |
||
(Principal Financial Officer) |
||
|
||
Date: November 6, 2025 |
||
55
FAQ
What were PureCycle (PCT) Q3 2025 revenues and net loss?
How much cash did PCT have at September 30, 2025?
What financing drove the liquidity increase at PCT?
What is PCT’s balance sheet size and equity as of Q3 2025?
Did PCT address going concern uncertainty?
How many PCT common shares were outstanding?
What are PCT’s key debt balances?
