RELATED PARTY TRANSACTIONS	6 Months Ended
Jun. 30, 2023
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On August 10, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the “Founder Shares”). In January 2021, the Company effected a 1:1.20 stock split of Class B common stock, resulting in an aggregate of 6,900,000 shares of Class B common stock issued and outstanding. Effective upon consummation of the Initial Public Offering, the Sponsor collectively owns, on an as-converted basis, 20% of the Company’s issued and outstanding shares. The Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (a) one year after the completion of an Initial Business Combination or (b) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after an Initial Business Combination that results in all of the Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property. Notwithstanding the foregoing, if (i) the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 after the Initial Business Combination or (ii) if the Company consummates a transaction after the Initial Business Combination which results in the Company’s stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up. Related Party Loans In order to finance transaction costs in connection with an Initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (the “Sponsor Working Capital Loans”). If the Company completes an Initial Business Combination, the Company would repay the Sponsor Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Sponsor Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that an Initial Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Sponsor Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Sponsor Working Capital Loans. Except for the foregoing, the terms of such Sponsor Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Sponsor Working Capital Loans would either be repaid upon consummation of an Initial Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Sponsor Working Capital Loans may be convertible into warrants of the post-Initial Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. On March 22, 2022, the Company entered into a working capital loan with the Sponsor (the “March Sponsor Working Capital Loan”) in the amount of $150,000, pursuant to which the Company received proceeds of $150,000. The March Sponsor Working Capital Loan is non-interest bearing and payable upon the earlier of (i) completion of the Initial Business Combination or (ii) the date the winding up of the Company is effective. The unpaid principal balance on the promissory note may be convertible into warrants at the option of the Sponsor at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. As of June 30, 2023, the total amount drawn on the March Sponsor Working Capital Loan was $150,000. On July 21, 2022, the Company entered into a separate working capital loan with the Sponsor (the “July Sponsor Working Capital Loan,” together with the March Sponsor Working Capital Loan, the “Sponsor Working Capital Loans”) in the amount of $375,000. The July Sponsor Working Capital Loan matures on the earliest to occur of (i) the date on which the Company consummates its Initial Business Combination and (ii) the date that the winding up of the Company is effective. The promissory note in connection with the July Sponsor Working Capital Loan is convertible into warrants at $1.00 per warrant on terms identical to those of the Private Placement Warrants. On July 21, 2022, the Company drew $370,000 from the July Sponsor Working Capital Loan, which has not yet been repaid as of June 30, 2023. The fair value option was elected (see Note 9) and, as such, the fair value of the Sponsor Working Capital Loans is shown on the condensed balance sheets as $70,935 and $77,900 as of June 30, 2023 and December 31, 2022, respectively. On December 9, 2022, the Company issued a promissory note (the “Second Promissory Note”) in the principal amount of up to $1,000,000 to the Sponsor. The Second Promissory Note was issued in connection with advances the Sponsor has made, and may make in the future, to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the Initial Business Combination or (ii) the date the winding up of the Company is effective. On December 9, 2022, January 23, 2023, February 3, 2023, February 16, 2023, March 1, 2023, April 12, 2023, April 20, 2023, and May 3, 2023 the Company drew $86,100, $32,445, $34,505, $61,750, $30,900, $136,500, $2,000, and $100,000, respectively, from the Second Promissory Note, which have not yet been repaid as of June 30, 2023. As of June 30, 2023, the total amount drawn on the Second Promissory Note was $484,200. On January 11, 2023, the Company issued a promissory note (the “Third Promissory Note”) in the principal amount of up to $878,078 to the Sponsor, pursuant to which the Sponsor agreed to loan the Company up to $878,078 in connection with the extension of the Company’s time to consummate an Initial Business Combination from January 12, 2023 to July 12, 2023 on a month-by-month basis. The Third Promissory Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s Initial Business Combination, or (b) the date of the liquidation of the Company. On January 20, 2023, February 15, 2023, March 28, 2023, April 11, 2023, May 11, 2023 and June 13, 2023 the Company deposited $146,346 each month, totaling $878,078 or $0.05 per Public Share that was not redeemed in connection with the Extension Meeting, into the Trust Account to extend the Combination Period to July 12, 2023. Such amounts will be distributed either to: (i) holders of shares of Class A common stock upon the Company’s liquidation or (ii) holders of shares of Class A common stock who elect to have their shares redeemed in connection with the consummation of the Company’s Initial Business Combination. On July 11, 2023, the Company extended the Combination Period from July 12, 2023 to January 12, 2024. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay the Sponsor a total of $10,000 per month for secretarial and administrative support. During the three and six months ended June 30, 2023, the Company incurred expenses of $30,000 and $60,000, respectively. During the three and six months ended June 30, 2022, the Company incurred expenses of $30,000 and $60,000, respectively. As of June 30, 2023 and December 31, 2022, $288,000 and $228,000 of these expenses are recorded in Accrued expenses in the condensed balance sheets, respectively.

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

On August 10, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the “Founder Shares”). In January 2021, the Company effected a 1:1.20 stock split of Class B common stock, resulting in an aggregate of 6,900,000 shares of Class B common stock issued and outstanding. Effective upon consummation of the Initial Public Offering, the Sponsor collectively owns, on an as-converted basis, 20% of the Company’s issued and outstanding shares.

The Sponsor has agreed that, subject to certain limited exceptions, the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (a) one year after the completion of an Initial Business Combination or (b) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after an Initial Business Combination that results in all of the Company’s stockholders having the right to exchange their Class A common stock for cash, securities or other property. Notwithstanding the foregoing, if (i) the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 after the Initial Business Combination or (ii) if the Company consummates a transaction after the Initial Business Combination which results in the Company’s stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up.

Related Party Loans

In order to finance transaction costs in connection with an Initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (the “Sponsor Working Capital Loans”). If the Company completes an Initial Business Combination, the Company would repay the Sponsor Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Sponsor Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that an Initial Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Sponsor Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Sponsor Working Capital Loans. Except for the foregoing, the terms of such Sponsor Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Sponsor Working Capital Loans would either be repaid upon consummation of an Initial Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Sponsor Working Capital Loans may be convertible into warrants of the post-Initial Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

On March 22, 2022, the Company entered into a working capital loan with the Sponsor (the “March Sponsor Working Capital Loan”) in the amount of $150,000, pursuant to which the Company received proceeds of $150,000. The March Sponsor Working Capital Loan is non-interest bearing and payable upon the earlier of (i) completion of the Initial Business Combination or (ii) the date the winding up of the Company is effective. The unpaid principal balance on the promissory note may be convertible into warrants at the option of the Sponsor at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. As of June 30, 2023, the total amount drawn on the March Sponsor Working Capital Loan was $150,000.

On July 21, 2022, the Company entered into a separate working capital loan with the Sponsor (the “July Sponsor Working Capital Loan,” together with the March Sponsor Working Capital Loan, the “Sponsor Working Capital Loans”) in the amount of $375,000. The July Sponsor Working Capital Loan matures on the earliest to occur of (i) the date on which the Company consummates its Initial Business Combination and (ii) the date that the winding up of the Company is effective. The promissory note in connection with the July Sponsor Working Capital Loan is convertible into warrants at $1.00 per warrant on terms identical to those of the Private Placement Warrants. On July 21, 2022, the Company drew $370,000 from the July Sponsor Working Capital Loan, which has not yet been repaid as of June 30, 2023.

The fair value option was elected (see Note 9) and, as such, the fair value of the Sponsor Working Capital Loans is shown on the condensed balance sheets as $70,935 and $77,900 as of June 30, 2023 and December 31, 2022, respectively.

On December 9, 2022, the Company issued a promissory note (the “Second Promissory Note”) in the principal amount of up to $1,000,000 to the Sponsor. The Second Promissory Note was issued in connection with advances the Sponsor has made, and may make in the future, to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the Initial Business Combination or (ii) the date the winding up of the Company is effective. On December 9, 2022, January 23, 2023, February 3, 2023, February 16, 2023, March 1, 2023, April 12, 2023, April 20, 2023, and May 3, 2023 the Company drew $86,100, $32,445, $34,505, $61,750, $30,900, $136,500, $2,000, and $100,000, respectively, from the Second Promissory Note, which have not yet been repaid as of June 30, 2023. As of June 30, 2023, the total amount drawn on the Second Promissory Note was $484,200.

On January 11, 2023, the Company issued a promissory note (the “Third Promissory Note”) in the principal amount of up to $878,078 to the Sponsor, pursuant to which the Sponsor agreed to loan the Company up to $878,078 in connection with the extension of the Company’s time to consummate an Initial Business Combination from January 12, 2023 to July 12, 2023 on a month-by-month basis.

The Third Promissory Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s Initial Business Combination, or (b) the date of the liquidation of the Company.

On January 20, 2023, February 15, 2023, March 28, 2023, April 11, 2023, May 11, 2023 and June 13, 2023 the Company deposited $146,346 each month, totaling $878,078 or $0.05 per Public Share that was not redeemed in connection with the Extension Meeting, into the Trust Account to extend the Combination Period to July 12, 2023. Such amounts will be distributed either to: (i) holders of shares of Class A common stock upon the Company’s liquidation or (ii) holders of shares of Class A common stock who elect to have their shares redeemed in connection with the consummation of the Company’s Initial Business Combination. On July 11, 2023, the Company extended the Combination Period from July 12, 2023 to January 12, 2024.

Administrative Support Agreement

The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay the Sponsor a total of $10,000 per month for secretarial and administrative support. During the three and six months ended June 30, 2023, the Company incurred expenses of $30,000 and $60,000, respectively. During the three and six months ended June 30, 2022, the Company incurred expenses of $30,000 and $60,000, respectively. As of June 30, 2023 and December 31, 2022, $288,000 and $228,000 of these expenses are recorded in Accrued expenses in the condensed balance sheets, respectively.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Priveterra Acquisition Corp. II 10-Q