As filed with the Securities and Exchange Commission on October 2, 2023.

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

_____________________

Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

_____________________

POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
(Exact name of registrant as specified in its charter)

_____________________

321 North Clark Street, Suite 2440
Chicago, Illinois 60654
Telephone: (312) 262-5642
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_____________________

Patrick C. Eilers
Chief Executive Officer
321 North Clark Street, Suite 2440
Chicago, IL 60654
Telephone: (312) 262-5642
(Name, address, including zip code, and telephone number, including area code, of agent for service)

_____________________

Copies to:

_____________________

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the Business Combination described in the enclosed proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ☐

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

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

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

such Montana Option only if such holder continues to provide services (whether as an employee, director or individual independent contractor) to the Post-Combination Company or one of its subsidiaries through the date on which such Earnout Shares are issued, as determined by a majority of the independent members of the Post-Combination Company Board.

The XPDB Class A common stock, units and XPDB public warrants are currently listed on The Nasdaq Capital Market LLC (the “Nasdaq”) under the symbols “XPDB,” “XPDBU” and “XPDBW,” respectively. Upon consummation of the Business Combination, the Post-Combination Company will be renamed “Montana Technologies Corporation” and the Class A Common Stock and public Warrants of the Post-Combination Company are expected to be listed on the Nasdaq under the symbols “AIRJ” and “AIRJW,” respectively. The Post-Combination Company will not have units traded, and the XPDB units will be delisted and deregistered following the Closing.

This proxy statement/prospectus provides you with detailed information about the Business Combination. It also contains or references information about XPDB and Montana and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 20 for a discussion of the risks you should consider in evaluating the Business Combination and how it will affect you.

If you have any questions regarding this proxy statement/prospectus, you may contact Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the Business Combination, the issuance of shares of the Post-Combination Company common stock in connection with the Business Combination or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated            , 2023, and is first being mailed to stockholders of XPDB on or about            , 2023.

Power & Digital Infrastructure Acquisition II Corp.
321 North Clark Street, Suite 2440
Chicago, IL 60654

Dear XPDB Stockholder:

On June 5, 2023, Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation (“XPDB”), and XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”) with Montana Technologies LLC, a Delaware limited liability company (“Montana”), pursuant to which, and subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Montana (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”), with Montana surviving the Merger as a wholly owned subsidiary of XPDB. Consummation of the Business Combination is subject to the adoption of the Merger Agreement and approval of the Business Combination by XPDB’s stockholders.

As part of the Business Combination, Montana Equityholders (as defined in the accompanying proxy statement/prospectus) will receive aggregate consideration of approximately $421.9 million (the “Purchase Price”), which amount will be (i) adjusted down at the closing of the Business Combination (the “Closing”) by the Dilution Factor (as defined in the accompanying proxy statement/prospectus), if positive only, and (ii) adjusted up at Closing by the implied value of any equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise (as defined in the accompanying proxy statement/prospectus) assuming a $10.00 per share value (the Purchase Price, as so adjusted, the “Merger Consideration”). The “Dilution Factor” is equal to (i) the implied value of the equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise assuming a $10.00 per share value minus (ii) the amount of the gross cash proceeds actually received by Montana from the Capital Raise. After giving effect to the conversion of all outstanding Montana Preferred Units (as defined in the accompanying proxy statement/prospectus) into Montana Class B Common Units (as defined in the accompanying proxy statement/prospectus), which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units (each as defined in the accompanying proxy statement/prospectus), in the form of newly issued shares of Class A common stock, par value $0.0001 per share, of the Post-Combination Company (as defined in the accompanying proxy statement/prospectus) (the “Class A Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units (as defined in the accompanying proxy statement/prospectus), in the form of newly issued shares of Class B common stock, par value $0.0001 per share, of the Post-Combination Company (the “Class B Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, and (iii) in the case of holders of Montana Options and Montana Warrants (each as defined in the accompanying proxy statement/prospectus), in the form of options and warrants of the Post-Combination Company, respectively, having substantially similar terms to the corresponding Montana Options and Montana Warrants, in each case as described in the accompanying proxy statement/prospectus.

Montana Equityholders (other than holders of Montana Warrants) (the “Eligible Equityholders”) will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of shares of Class A Common Stock, with a $10.00 value ascribed to each share (the “Earnout Shares”), only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the discretion of a majority of the independent members of the board of directors of the Post-Combination Company (the “Post-Combination Company Board”), a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA (as defined in the accompanying proxy statement/prospectus) of more than $150,000,000 (the “Threshold Annualized EBITDA”), which shall be determined by a majority of the independent members of the Post-Combination Company Board in its sole discretion, equal to (i) the ratio of (x) (1) the Annualized EBITDA that is

expected from such new production capacity (the “Expected Annualized EBITDA”) less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable Montana Equityholders, the dates on which construction and operational viability of new production capacity is deemed completed and whether to consent to a transfer of the applicable Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such Montana Option only if such holder continues to provide services (whether as an employee, direct or individual independent contractor) to the Post-Combination Company or one of its subsidiaries through the date on which such Earnout Shares are issued, as determined by a majority of the independent members of the Post-Combination Company Board.

Upon consummation of the Business Combination, certain shares of Class A Common Stock owned by the Sponsor (as defined in the accompanying proxy statement/prospectus) following the conversion of the Founder Shares (as defined in the accompanying proxy statement/prospectus) will be subject to (i) certain lock-up restrictions and (ii) certain time and performance-based vesting provisions, as described in the accompanying proxy statement/prospectus.

Prior to Closing, Montana will use its commercially reasonable efforts to enter into subscription agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) with certain investors (the “Subscribers”) pursuant to which Montana will agree to issue equity interests (or securities convertible, exchangeable or exercisable therefor) in Montana (the “Capital Raise”), in exchange for an agreed upon purchase price.

Based on the number of Montana Common Units and Montana Preferred Units outstanding and the number of Montana Common Units issuable upon the net exercise of Montana Options and Montana Warrants (each as defined in the accompanying proxy statement/prospectus) as of            , 2023 (the “Record Date”), and assuming that Montana does not issue any equity interests (or securities convertible, exchangeable or exercisable therefor) in the Capital Raise prior to Closing, (i) the estimated number of shares of Class A Common Stock issuable for each Montana Common Unit is approximately            , (ii) the total number of shares of Class A Common Stock expected to be issued to Montana Equityholders in connection with the Closing is approximately            million (approximately            million on a fully diluted basis under certain assumptions described in the accompanying proxy statement/prospectus), and (iii) the total number of shares of Class B Common Stock expected to be issued to certain Montana Equityholders in connection with the Closing is approximately            . Based on the assumption that no shares of XPDB Class A Common Stock are validly redeemed and the other assumptions described in the accompanying proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock (each as defined in the accompanying proxy statement/prospectus) will hold (x) approximately            % and            % of the total outstanding common stock of the Post-Combination Company, respectively, and (y) approximately            % and            % of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing will hold, in the aggregate, approximately            % of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing            % and            % of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) will hold, in the aggregate and on a fully diluted basis, approximately            % of the Class A Common Stock and 100% of the Class B Common Stock. Based on the Assuming Maximum Contractual Redemptions Scenario (as defined in the accompanying proxy statement/prospectus) and the other assumptions described in the accompanying proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock will hold (x) approximately            % and            % of the total outstanding common stock of the Post-Combination Company, respectively, and (y) approximately            % and            % of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing will hold, in the aggregate, approximately            % of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing            % of the voting power of the Post-Combination Company, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) will hold, in the aggregate and on a fully diluted basis, approximately            % of the Class A Common Stock and 100% of the Class B Common Stock.

XPDB units, XPDB Class A Common Stock and XPDB public warrants are currently publicly traded on The Nasdaq Capital Market LLC (the “Nasdaq”) under the symbols “XPDB,” “XPDBU” and “XPDBW,” respectively. Upon consummation of the Business Combination, the Post-Combination Company will be renamed “Montana Technologies Corporation” and the Class A Common Stock and public Warrants of the Post-Combination Company are expected to be listed on the Nasdaq under the symbols “AIRJ” and “AIRJW”, respectively, upon the Closing. The Post-Combination Company will not have units traded, and the XPDB units will be delisted and deregistered following the Closing.

See the section entitled “The Business Combination” of the accompanying proxy statement/prospectus for further information on the consideration being paid to the Montana Equityholders in the Business Combination.

XPDB will hold a special meeting of stockholders (the “Special Meeting”) to consider matters relating to the proposed Business Combination. XPDB and Montana cannot complete the Business Combination unless XPDB’s stockholders approve the Merger Agreement and the transactions contemplated thereby, including the issuance of Class A Common Stock and Class B Common Stock to be issued as the Merger Consideration and the Earnout Shares. XPDB is sending you the accompanying proxy statement/prospectus to ask you to vote in favor of these and the other matters described in such proxy statement/prospectus.

The Special Meeting will be held at            a.m., Central Time, on            , 2023, in virtual format.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF UNITS OR SHARES OF COMMON STOCK YOU OWN. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in the accompanying proxy statement/prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to attend the meeting. Submitting a proxy now will NOT prevent you from being able to vote in person (which would include presence at a virtual meeting) at the meeting. If you hold your shares in “street name”, you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

The XPDB board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that XPDB stockholders vote “FOR” the approval of the Merger Agreement, “FOR” the issuance of Class A Common Stock and Class B Common Stock to be issued as the Merger Consideration and the Earnout Shares and “FOR” the other matters to be considered at the Special Meeting.

The accompanying proxy statement/prospectus provides you with detailed information about the proposed Business Combination. It also contains or references information about XPDB and Montana and certain related matters. You are encouraged to read the accompanying proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section for a discussion of the risks you should consider in evaluating the proposed Business Combination and how it will affect you.

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO XPDB’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND OTHER REDEMPTION FORMS TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (DWAC) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN ANY TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE STOCKHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “XPDB’S SPECIAL MEETING OF STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Business Combination, the issuance of shares of Class A Common Stock in connection with the Business Combination or the other transactions described in the accompanying proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated            , 2023 and is first being mailed to stockholders of XPDB on or about            , 2023.

POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
321 North Clark Street, Suite 2440
Chicago, Illinois 60654

NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON            , 2023

TO THE STOCKHOLDERS OF POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation (“XPDB”), will be held at            a.m. Central Time, on            , 2023, in virtual format (the “Special Meeting”). You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

(1)    The Business Combination Proposal — To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of June 5, 2023 (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”), by and among XPDB, XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB (“Merger Sub”), and Montana Technologies LLC, a Delaware limited liability company (“Montana”), and the transactions contemplated thereby, pursuant to which, among other things, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination” and such proposal, the “Business Combination Proposal”). A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex A.

(2)    The Charter Proposal — To consider and vote upon a proposal to adopt the Second Amended and Restated Certificate of Incorporation of the Post-Combination Company (the “Proposed Charter”) in the form attached to the accompanying proxy statement/prospectus as Annex B (the “Charter Proposal”);

(3)    The Governance Proposal — To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Proposed Charter in accordance with United States Securities and Exchange Commission requirements (the “Governance Proposal”);

(4)    The Director Election Proposal — To consider and vote upon a proposal to elect            directors to serve on the board of directors of the Post-Combination Company (the “Post-Combination Company Board”) until the 2024 annual meeting of stockholders, in the case of Class I directors, the 2025 annual meeting of stockholders, in the case of Class II directors, and the 2026 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified (the “Director Election Proposal”);

(5)    The Nasdaq Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of shares of Class A Common Stock and Class B Common Stock to Montana Equityholders pursuant to the Merger Agreement (the “Nasdaq Proposal”).

(6)    The Incentive Plan Proposal — To consider and vote upon a proposal to approve and adopt the Incentive Plan (as defined in the accompanying proxy statement/prospectus), in the form attached to the accompanying proxy statement/prospectus as Annex E (the “Incentive Plan Proposal”);

(7)     The Employee Stock Purchase Plan Proposal — To consider and vote upon a proposal to approve and adopt the ESPP (as defined in the accompanying proxy statement/prospectus), in the form attached to the accompanying proxy statement/prospectus as Annex F (the “Employee Stock Purchase Plan Proposal”); and

(8)    The Adjournment Proposal — To consider and vote upon a proposal (the “Adjournment Proposal” and, each of the Business Combination Proposal, the Charter Proposal, the Governance Proposal, the Nasdaq Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, a “Proposal” and collectively, the “Proposals”) to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation

Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Business Combination is not conditioned on stockholders of XPDB approving the Governance Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus. The proxy statement/prospectus accompanying this notice explains the Merger Agreement and the transactions contemplated thereby, as well as the Proposals to be considered at the Special Meeting. Please review the accompanying proxy statement/prospectus carefully.

All XPDB stockholders are cordially invited to attend the Special Meeting in virtual format. XPDB stockholders may attend, vote and examine the list of XPDB stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/xpdispacii/sm2023 and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. The Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically. To ensure your representation at the Special Meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

Thank you for your participation. We look forward to your continued support.

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO XPDB’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND OTHER REDEMPTION FORMS TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (DWAC) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN ANY TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE STOCKHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “XPDB’S SPECIAL MEETING OF STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

TABLE OF CONTENTS

BASIS OF PRESENTATION AND GLOSSARY

As used in this proxy statement/prospectus, unless otherwise noted or the context otherwise requires, references to:

“$12.00 Vesting Time” are to the time when the 690,368 Subject Vesting Shares beneficially owned by the Sponsor vest in full at such time that the volume weighted average price of Class A Common Stock on the Nasdaq as reported by Bloomberg L.P. equals or exceeds $12.00 per share (as adjusted for extraordinary transactions, stock splits, extraordinary stock dividends, reorganizations, recapitalizations and the like) for 20 trading days within any 30 consecutive trading day period during the Vesting Period.

“Aggregate Transaction Proceeds” are to an amount equal to the aggregate cash proceeds available for release to XPDB or Montana, as applicable, from (a) the Trust Account (for the avoidance of doubt, after giving effect to any redemptions of shares of XPDB Class A Common Stock by stockholders of XPDB but before release of any other funds, including in satisfaction of XPDB’s and Montana’s expenses in connection with the Business Combination) plus (b) the aggregate proceeds, if any, actually received by Montana from the Capital Raise;

“Aggregate Transaction Proceeds Condition” are to the condition in the Merger Agreement that, at the Closing, the Aggregate Transaction Proceeds shall be equal to or greater than $85 million; provided that, upon receiving proceeds in the Capital Raise equal to or in excess of such amount, such condition shall no longer apply;

“Anchor Investors” are to the certain funds and accounts managed by subsidiaries of BlackRock, Inc.;

“Annualized EBITDA” are to earnings before interest, taxes, depreciation and amortization, as calculated in accordance with the Post-Combination Company’s accounting policies and any applicable securities laws, that the Post-Combination Company is expected to receive during the 12 months immediately following the applicable Commission Date to the extent primarily attributable to the new production capacity of the Post-Combination Company or its subsidiaries, as such forecast is calculated in the sole discretion of a majority of the independent members of the Post-Combination Company Board (which will be deemed final and binding absent manifest error);

“Amended and Restated Bylaws” are to the amended and restated bylaws of XPDB to be adopted in connection with the consummation of the Business Combination, the form of which is attached to this proxy statement/prospectus as Annex C;

“A&R Joint Venture Agreement” are to that certain Amended and Restated Joint Venture Agreement for CAMT, dated as of September 29, 2023, by and among Montana, CAMT and CATL US;

“Barclays” are to Barclays Capital Inc., one of the underwriters in the XPDB IPO;

“BASF” are to Badische Anilin und Sodafabrik.

“BofA” are to BofA Securities, Inc., one of the underwriters in the XPDB IPO;

“Business Combination” are to the Merger and the other transactions contemplated by the Merger Agreement;

“CAMT” are to CAMT Climate Solutions, Ltd., a joint venture between Montana and an affiliate of CATL.

“Capital Raise” are to the issuance by Montana of its equity interests (or securities convertible, exchangeable or exercisable therefor) pursuant to the Subscription Agreements;

“CATL” are to Contemporary Amperex Technology Co., Limited.

“CATL Parties” are to CATL, together with CATL US and CATL USA;

“CATL US” are to CATL US Inc., an affiliate of CATL;

“CATL USA” are to Contemporary Amperex Technology USA Inc. an affiliate of CATL;

“Class A Common Stock” are to the shares of the Post-Combination Company’s Class A common stock, par value $0.0001 per share, after the Business Combination;

“Class B Common Stock” are to the shares of the Post-Combination Company’s Class B common stock, par value $0.0001 per share, after the Business Combination;

“Closing” are to the closing of the Business Combination;

“Code” are to the Internal Revenue Code of 1986, as amended;

“Commission Date” are to the date of full completion and operational viability of new production capacity of the Post-Combination Company or its subsidiaries’ key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts with a known price or pricing formula (i.e., “cost plus” ) or , so long as a majority of the independent members of the Post-Combination Company Board believes a non-binding letter of intent or indication of interest or similar writing is substantially likely to become a binding contract, in the sole discretion of a majority of the independent members of the Post-Combination Company Board, evidenced by such non-binding writing(s);

“Company” or “Montana” are to Montana Technologies LLC;

“DGCL” are to the Delaware General Corporation Law, as it may be amended from time to time;

“Dilution Factor” are to the difference of (i) the implied value of the equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise assuming a $10.00 share value minus (ii) the amount of the gross cash proceeds actually received by Montana from the Capital Raise;

“Earnout Payment” are to the issuance of Earnout Shares;

“Earnout Shares” are to the equity consideration in the form of additional shares of Class A Common Stock at $10.00 per share that Montana Equityholders (other than holders of Montana Warrants) will receive upon achievement of certain milestones related to production capacity and anticipated Annualized EBITDA of the Post-Combination Company following the Closing, as described herein and in the Merger Agreement;

“Earnout Stock Payment” are to distributions made to holders of Montana Common Units and Montana Options following the Closing (in each case, in accordance with their respective pro rata share), of an additional number of shares of Class A Common Stock equal to an earnout milestone amount divided by $10.00.

“EBITDA” are to earnings before interest, taxes, depreciation and amortization;

“Eligible Equityholders” are to the Montana Equityholders other than holders of Montana Warrants;

“Exchange Act” are to the Securities Exchange Act of 1934, as amended;

“Existing Charter” are to the Amended and Restated Certificate of Incorporation of XPDB, as filed with the Delaware Secretary of State on December 9, 2021, and as amended to date;

“Expected Annualized EBITDA” are to the Annualized EBITDA that is expected from new production capacity of Montana’s key components or assemblies solely on demand from bona fide customer commitments evidenced by binding contracts (or in the discretion of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract);

“Extension” are to the extension of the time by which XPDB has to consummate an initial business combination as set forth in the Existing Charter;

“Extension Amendment Proposal” are to the proposal approved at the Extension Special Meeting extending the date by which XPDB must consummate an initial business combination from June 14, 2023 to December 14, 2023, and allowing XPDB, without another stockholder vote, by resolution of the XPDB Board, to elect to further extend such date in one-month increments up to three additional times, until March 14, 2024, unless the closing of an initial business combination shall have occurred prior thereto, or such earlier date as determined by the XPDB Board to be in the best interests of XPDB;

“Extension Special Meeting” are to the special meeting in lieu of annual meeting of stockholders of XPDB held on June 9, 2023;

“Founder Shares” are to the shares of XPDB Class B Common Stock and XPDB Class A Common Stock issued upon the voluntary conversion thereof as provided in the Existing Charter and Class A Common Stock issued upon the automatic conversion thereof at the time of XPDB’s initial business combination as provided herein.

“GAAP” are to generally accepted accounting principles in the United States, as applied on a consistent basis;

“HVAC” are to heating, ventilation and air conditioning.

“Initial Stockholders” are to Sponsor and Paul Dabbar, Paul Gaynor and Scott Widham, each an independent director of XPDB;

“Investment Agreement” are to the Investment Agreement, dated September 29, 2023, by and among Montana, XPDB and the CATL Parties.

“Investment Company Act” are to the Investment Company Act of 1940, as amended;

“IPO Underwriting Agreement” are to the Underwriting Agreement, dated December 9, 2021, between XPDB and Barclays and BofA, as representatives of the underwriters named therein;

“Joint Development Agreement” are to that certain Joint Development Agreement, dated as of September 27, 2022, by and between Montana and BASF for the production of engineered super-porous MOF materials to Montana’s specifications that are applied as a coating to AirJoule contactors to perform the energy and water-harvesting function;

“Joint Inventions” are to any assignable intellectual property jointly generated under the Joint Development Agreement by employees of both parties;

“June Redemptions” are to the redemption of 18,141,822 shares of XPDB Class A Common Stock in connection with the Extension;

“Lock-Up Agreement” are to, as contemplated by the Merger Agreement, each agreement to be entered into at the Closing by XPDB, Sponsor, XPDB’s independent directors and certain Montana Equityholders, the form of which is attached to this proxy statement/prospectus as Annex G;

“Maximum Earnout Milestone Amount” are to the aggregate sum of all earnout milestone amounts, which in no event shall exceed $200,000,000 assuming a $10.00 share value;

“Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of June 5, 2023, among XPDB, XPDB Merger Sub and Montana, a copy of which is attached to this proxy statement/prospectus as Annex A;

“Merger Consideration” are to the aggregate consideration of $421.9 million that the Montana Equityholders will receive as adjusted at Closing by subtracting the Dilution Factor (if positive only) and adding the implied value of any equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise assuming a $10.00 share value;

“Merger Sub” are to XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB;

“Montana Class A Common Units” are to the units designated in Montana’s organizational documents as “Class A Common Units”;

“Montana Class B Common Units” are to the units designated in Montana’s organizational documents as “Class B Common Units”;

“Montana Class C Common Units” are to the units designated in Montana’s organizational documents as “Class C Common Units”;

“Montana Common Units” are to the Montana Class A Common Units, the Montana Class B Common Units and the Montana Class C Common Units, collectively;

“Montana Equityholders” are to holders of Montana Common Units, holders of Montana Preferred Units, holders of Montana Options and holders of Montana Warrants;

“Montana Options” are to an option to purchase Montana Common Units granted by Montana under Montana’s operating agreement or otherwise that is outstanding immediately prior to the Closing;

“Montana Preferred Units” are to the Montana Series A Preferred Units and the Montana Series B Preferred Units, collectively;

“Montana Series A Preferred Units” are to the units designated in Montana’s organizational documents as “Series A Preferred Units”;

“Montana Series B Preferred Units” are to the units designated in Montana’s organizational documents as “Series B Preferred Units”;

“Montana Warrants” are to all warrants to purchase Montana Common Units;

“Post-Combination Company” are to XPDB following the consummation of the Business Combination;

“Post-Combination Company Board” are to the board of directors of the Post-Combination Company following the consummation of the Business Combination;

“Private Placement” are to XPDB’s sale of Private Placement Warrants to the Sponsor and Anchor Investors concurrently with the XPDB IPO;

“Private Placement Warrants” are to the warrants issued by XPDB to the Sponsor and the Anchor Investors in the Private Placement;

“Proposed Charter” are to the Second Amended and Restated Certificate of Incorporation of XPDB, a form of which is included as Annex B to this proxy statement/prospectus and which will be filed with the Delaware Secretary of State following approval according to this proxy statement/prospectus;

“Public Shares” are to shares of XPDB Class A Common Stock sold as part of the units in the XPDB IPO (whether they were purchased in the XPDB IPO or thereafter in the open market);

“Record Date” are to            , 2023;

“Redemption Limitation Amendment Proposal” are to the proposal approved at the Extension Special Meeting to amend XPDB’s amended and restated certificate of incorporation to remove the limitation that XPDB may not redeem Public Shares to the extent that such redemption would result in XPDB having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act, as amended) of less than $5,000,001;

“SEC” are to the U.S. Securities and Exchange Commission;

“Securities Act” are to the Securities Act of 1933, as amended;

“Special Meeting” are to a special meeting of stockholders held by XPDB to consider matters related to the proposed Business Combination;

“Sponsor” are to XPDI Sponsor II LLC, a Delaware limited liability company;

“Sponsor Support Agreement” are to the Sponsor Support Agreement entered into among the Sponsor, XPDB, Montana and other holders of XPDB Class B Common Stock, a copy of which is attached to this proxy statement/prospectus as Annex D;

“Subject Shares” are to the 7,097,500 shares of Class A Common Stock that Sponsor will beneficially own, of which (i) 5,716,764 shares will automatically vest (and shall not be subject to forfeiture), and (ii) 1,380,736 Subject Vesting Shares will be unvested and shall only vest and no longer be subject to forfeiture under the achievement of certain milestone and stock price metrics;

“Subject Vesting Shares” are to the 1,380,736 shares beneficially owned by the Sponsor that will vest upon the earliest to occur during the Vesting Period of the following: (i) from time to time, simultaneously with the Earnout Payments made to the Montana Equityholders in a proportionate amount to the payment achieved in relation to the maximum Earnout Payment of equity interests of $200 million, and (ii) up to 50% of the Subject Vesting Shares (including any vested Subject Vesting Shares from the Performance Vesting Trigger) will vest on any day following the Closing when the closing price of a share of Class A Common Stock on the Nasdaq equals or exceeds $12.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) and all remaining Subject Vesting Shares will vest when the closing price of a share of Class A Common Stock on the Nasdaq equals or exceeds $14.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like);

“Subscribers” are to the certain investors with whom Montana intends to enter into Subscription Agreements;

“Subscription Agreements” are to the subscription agreements to which Montana intends to become a party relating to the Capital Raise;

“TAM” are to the total addressable market for the AirJoule technology;

“TEP” are to Transition Equity Partners, LLC, a private equity fund focused on renewable and transition energy infrastructure in North America;

“TEP Montana” are to TEP Montana, LLC, a Delaware limited liability company;

“Threshold Annualized EBITDA” are to Annualized EBITDA of more than $150,000,000;

“TRL” are to technology readiness level, a scale of 1 to 9, with 9 representing a proven technology;

“Trust Account” are to the trust account established by XPDB at Bank of America, National Association for the benefit of XPDB’s stockholders;

“Vesting Period” are to the period beginning on the date of Closing and ending five (5) years following the date of Closing;

“Warrants” are to the Post-Combination Company’s warrants after the Business Combination;

“XMS” are to XMS XPDI Sponsor Holdings II LLC, an entity owned by professionals of XMS Capital Partners, LLC, a global independent financial services firm, primarily providing strategic and financial advisory services;

“XMS Capital” are to XMS Capital Partners, LLC;

“XPDB” are to Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation;

“XPDB Board” are to XPDB’s board of directors;

“XPDB Class A Common Stock” are to the shares of XPDB’s Class A common stock, par value $0.0001 per share, prior to the Business Combination;

“XPDB Class B Common Stock” are to the shares of XPDB’s Class B common stock, par value $0.0001 per share, prior to the Business Combination;

“XPDB Common Stock” are to XPDB Class A Common Stock and XPDB Class B Common Stock, collectively;

“XPDB IPO” are to the initial public offering by XPDB, which was consummated on December 14, 2021. Unless specified otherwise, amounts in this proxy statement/prospectus are presented in United States (“U.S.”) dollars;

“XPDB Public Stockholders” are to the holders of the Public Shares, including the Sponsor and any of our directors and officers to the extent any of them purchase XPDB Class A Common Stock (provided that the Sponsor’s and such director’s or officer’s status as an “XPDB Public Stockholder” will only exist with respect to such XPDB Class A Common Stock); and

“XPDB public warrants” are to warrants to purchase shares of XPDB Class A Common Stock sold as part of the units in the XPDB IPO (whether they were purchased in the XPDB IPO or thereafter in the open market).

Defined terms in the financial statements contained in this proxy statement/prospectus have the meanings ascribed to them in the financial statements.

SHARE CALCULATIONS AND OWNERSHIP PERCENTAGES

Unless otherwise specified (including in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Beneficial Ownership of Securities”), the share calculations and ownership percentages set forth in this proxy statement/prospectus with respect to the XPDB Public Stockholders following the Business Combination are for illustrative purposes only and assume the following (certain capitalized terms below are defined elsewhere in this proxy statement/prospectus):

1.      There are no further XPDB Public Stockholders that exercise their redemption rights in connection with the Closing, and the balance of the Trust Account as of the Closing is the same as its balance on June 30, 2023 of approximately $110 million, plus the Extension deposit of $0.9 million into the Trust Account during July, August, and September of 2023.

2.      No holders of XPDB public warrants exercise any of the outstanding XPDB public warrants prior to or in connection with the Closing.

3.      There are no other issuances of equity securities of XPDB prior to or in connection with the Closing.

4.      That for all purposes the number of outstanding shares and equity-linked securities of each of XPDB and Montana is the same as the number of outstanding shares and equity-linked securities of XPDB and Montana, respectively, as of June 30, 2023.

5.      There are no forfeitures of equity securities held by Sponsor in connection with the Closing.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

XPDB and Montana own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable®, M and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.

QUESTIONS AND ANSWERS

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Business Combination, the Special Meeting and the Proposals to be presented at the Special Meeting. The following questions and answers do not include all the information that may be important to XPDB stockholders. You are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the Special Meeting.

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

Q:     WHAT IS THE BUSINESS COMBINATION?

A:     XPDB, Merger Sub, a wholly owned subsidiary of XPDB, and Montana have entered into the Merger Agreement, pursuant to which, among other things, subject to the approval of the XPDB stockholders, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB. In connection with the Closing of the Merger, XPDB will be renamed Montana Technologies Corporation.

         XPDB will hold the Special Meeting to, among other things, obtain the approvals required for the Business Combination, and you are receiving this proxy statement/prospectus in connection with such meeting. See the section entitled “The Merger Agreement.” In addition, a copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. We urge you to read carefully this proxy statement/prospectus, including the Annexes and the other documents referred to herein, in their entirety.

Q:     WHY AM I RECEIVING THIS DOCUMENT?

A:     XPDB is sending this proxy statement/prospectus to its stockholders to help them decide how to vote their shares of XPDB Common Stock with respect to the matters to be considered at the Special Meeting. The Business Combination cannot be completed unless XPDB’s stockholders approve the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal set forth in this proxy statement/prospectus for their approval. Information about the Special Meeting, the Business Combination and the other business to be considered by stockholders at the Special Meeting is contained in this proxy statement/prospectus. This document constitutes a proxy statement of XPDB and a prospectus of XPDB. It is a proxy statement because the XPDB Board is soliciting proxies using this proxy statement/prospectus from its stockholders. It is a prospectus because XPDB, in connection with the Business Combination, is offering shares of XPDB Class A Common Stock in exchange for the outstanding Montana Common Units and as additional consideration pursuant to the earnout provisions set forth in the Merger Agreement and as described herein. See the sections entitled “The Merger Agreement — Consideration to the Equityholders in the Business Combination” and “The Merger Agreement — Earnout Shares.”

Q:     WHAT WILL MONTANA EQUITYHOLDERS RECEIVE IN THE BUSINESS COMBINATION?

A:     As part of the Business Combination, Montana Equityholders will receive the Merger Consideration. After giving effect to the conversion of all outstanding Montana Preferred Units into Montana Class B Common Units, which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units, in the form of newly issued shares of Class A Common Stock of the Post-Combination Company, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units, in the form of newly issued shares of Class B Common Stock of the Post-Combination Company, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, (iii) in the case of holders of Montana Options, each outstanding Montana Option, whether vested or unvested, will be converted into an option to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Option immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A

Common Stock (rounded down to the nearest whole share) equal to the product of (x) the number of Montana Common Units underlying such option immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per Montana Common Unit underlying such option immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, and (iv) in the case of holders of Montana Warrants, each outstanding Montana Warrant will be converted into a warrant to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Warrant immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock equal to the product of (x) the number of Montana Common Units underlying such warrant immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share equal to (A) the exercise price per Montana Common Unit underlying such warrant immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement. Montana Equityholders (other than holders of Montana Warrants) (the “Eligible Equityholders”) will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of shares of Class A Common Stock with a $10.00 value ascribed to each share (the “Earnout Shares”) only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the sole discretion of a majority of the independent members of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA of more than $150,000,000 (the “Threshold Annualized EBITDA”), which shall be determined by a majority of the independent members of the Post-Combination Company Board in their sole discretion, equal to (i) the ratio of (x) (1) the Annualized EBITDA that is expected from such new production capacity (the “Expected Annualized EBITDA”) less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable Montana Equityholders, the dates on which construction and operational viability of new production capacity is deemed completed and whether to consent to a transfer of the applicable Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such Montana Option only if such holder continues to provide services (whether as an employee, director or individual independent contractor) to the Post-Combination Company or one of its subsidiaries through the date on which such Earnout Shares are issued, as determined by a majority of the independent members of Post-Combination Company Board. See the section entitled “The Merger Agreement — Earnout Shares.”

Prior to Closing, Montana will use its commercially reasonable efforts to enter into Subscription Agreements with the Subscribers pursuant to the Capital Raise, in exchange for an agreed upon purchase price.

Based on the number of Montana Common Units and Montana Preferred Units outstanding as of the Record Date and the number of Montana Common Units issuable upon the net exercise of Montana Options and Montana Warrants as of the Record Date, and assuming that Montana does not issue any equity interests (or securities convertible therefor) in the Capital Raise prior to Closing, (i) the estimated number of shares of Class A Common Stock issuable for each Montana Common Unit is approximately            , (ii) the total number of shares of Class A Common Stock expected to be issued to Montana Equityholders in connection with the Closing is approximately            million (approximately            million on a fully diluted basis under certain assumptions described in this proxy statement/prospectus), and (iii) the total number of shares of

Class B Common Stock expected to be issued to certain Montana Equityholders in connection with the Closing is approximately            million. Based on the assumption that no shares of XPDB Class A Common Stock are validly redeemed and the other assumptions described in this proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock will hold (x) approximately      % and      % of the total outstanding common stock of the Post-Combination Company, respectively and (y) approximately      % and      % of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing will hold, in the aggregate, approximately      % of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing      % and      % of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) will hold, in the aggregate and on a fully diluted basis, approximately      % of the Class A Common Stock and 100% of the Class B Common Stock. Based on the Assuming Maximum Contractual Redemptions Scenario and the other assumptions described in this proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock will hold (x) approximately      % and      % of the total outstanding common stock of the Post-Combination Company, respectively and (y) approximately      % and      % of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing will hold, in the aggregate, approximately      % of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing      % of the voting power of the Post-Combination Company, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) will hold, in the aggregate and on a fully diluted basis, approximately      % of the Class A Common Stock and 100% of the Class B Common Stock.

Q:     WHAT IS THE CAPITAL RAISE?

A:     Prior to Closing, Montana will use its commercially reasonable efforts to enter into Subscription Agreements with certain Subscribers, pursuant to which Montana will agree to issue equity interests (or securities convertible, exchangeable and exercisable therefor) in Montana in exchange for an agreed upon purchase price. The Capital Raise is expected to be conditioned on customary closing conditions.

Q:     WHEN DO YOU EXPECT THE BUSINESS COMBINATION TO BE COMPLETED?

A:     It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which is set for            , 2023; however, such meeting could be adjourned, as described herein. Neither XPDB nor Montana can assure you of when or if the Business Combination will be completed and it is possible that factors outside of the control of both companies could result in the Business Combination being completed at a different time or not at all. XPDB must first obtain the approval of its stockholders for certain of the Proposals set forth in this proxy statement/prospectus for their approval and XPDB and Montana must also first satisfy certain closing conditions. See the section entitled “The Merger Agreement — Conditions to Closing of Business Combination.”

Q:     WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?

A:     If the Business Combination is not completed, Montana Equityholders will not receive any consideration for their Montana securities. Instead, Montana will remain an independent company. See the section entitled “The Merger Agreement — Termination” and “Risk Factors.”

Additionally, if XPDB does not complete the Business Combination with Montana for whatever reason, XPDB would search for another target business with which to complete a business combination. If XPDB does not complete the Business Combination with Montana or another target business by December 14, 2023 or such further extended date as determined by the XPDB Board in accordance with the Existing Charter (the “Completion Window”), XPDB must redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding Public Shares. The Initial Stockholders have no redemption rights in the event a business combination is not effected by the end of the Completion Window, and, accordingly, their Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to XPDB’s outstanding warrants. Accordingly, the warrants will expire worthless.

Q:     HOW WILL THE POST-COMBINATION COMPANY BE MANAGED AND GOVERNED FOLLOWING THE BUSINESS COMBINATION?

A:     Concurrently with the consummation of the Business Combination, XPDB’s officers and directors, other than Patrick C. Eilers, will resign from their respective positions. Following the Closing, the Post-Combination Company’s executive officers are expected to be the current management team of Montana. See the section entitled “Management of the Post-Combination Company Following the Business Combination” for more information.

XPDB is, and after the Closing, the Post-Combination Company will continue to be, managed by a board of directors. Following the Closing, the size of the board of directors will be            directors and will consist of            ,            ,            ,            and Patrick C. Eilers.

Following the Closing, we expect that a majority of the directors will be independent under applicable Nasdaq listing rules. See the section entitled “Management of the Post-Combination Company Following the Business Combination” for more information.

Q:     WHAT EQUITY STAKE WILL CURRENT XPDB STOCKHOLDERS, THE INITIAL STOCKHOLDERS AND THE MONTANA EQUITYHOLDERS HOLD IN THE POST-COMBINATION COMPANY FOLLOWING THE CLOSING?

A:     Upon consummation of the Business Combination (assuming, among other things, that after the June Redemptions, no XPDB Public Stockholders exercise redemption rights in connection with the Closing and the other assumptions described under the section with the heading “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages”), (i) the XPDB Public Stockholders are expected to own approximately 19.0% of the outstanding Post-Combination Company’s common stock, (ii) the Initial Stockholders are expected to own approximately 13.0% of the outstanding Post-Combination Company’s common stock, and (iii) the Montana Equityholders are expected to own approximately 68.0% of the Post-Combination Company’s common stock.

         If any of the XPDB Public Stockholders exercise redemption rights in connection with the Closing, the percentage of the outstanding Post-Combination Company’s common stock held by the XPDB Public Stockholders will decrease, and the percentages of the outstanding Post-Combination Company’s common stock held by the Initial Stockholders and by the Montana Equityholders will increase, in each case, relative to the percentage held if none of the Public Shares are redeemed.

         The following table illustrates varying ownership levels of the Post-Combination Company immediately following the Business Combination(1):

____________

(1)      The table does not include the 14,375,000 shares underlying XPDB public warrants, the 11,125,000 shares underlying Private Placement Warrants, the 3,856,649 shares underlying Montana Options, and the 388,023 shares underlying Montana Warrants.

         All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages” and, with respect to the determination of the “Assuming Maximum Contractual Redemptions Scenario,” the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.” Should one or more of these assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Q:     FOLLOWING THE BUSINESS COMBINATION, WILL XPDB’S SECURITIES CONTINUE TO TRADE ON A STOCK EXCHANGE?

A:     Yes. Upon the Closing, we intend to change our name from “Power & Digital Infrastructure Acquisition II Corp.” to “Montana Technologies Corporation,” and our Class A Common Stock and public Warrants will continue to be listed on the Nasdaq following the Closing under the symbols “AIRJ” and “AIRJW,” respectively. The XPDBU units will be delisted and deregistered following the Closing.

QUESTIONS AND ANSWERS ABOUT XPDB’S SPECIAL STOCKHOLDER MEETING

Q:     WHEN AND WHERE IS THE SPECIAL MEETING?

A:     The Special Meeting will be held at            a.m. Central Time, on            , 2023, in virtual format. XPDB stockholders may attend, vote and examine the list of XPDB stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/xpdispacii/sm2023 and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. The Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically.

Q:     WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

A:     The stockholders of XPDB are being asked to vote on the following:

•        A proposal to adopt the Merger Agreement and the transactions contemplated thereby. See the section entitled “Proposal No. 1 — The Business Combination Proposal.”

•        A proposal to adopt the Proposed Charter in the form attached hereto as Annex B. See the section entitled “Proposal No. 2 — The Charter Proposal.”

•        A proposal with respect to certain governance provisions in the Proposed Charter, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis. See the section entitled “Proposal No. 3 — The Governance Proposal.”

•        A proposal to elect            directors to serve on the Post-Combination Company Board until the 2024 annual meeting of stockholders, in the case of Class I directors, the 2025 annual meeting of stockholders, in the case of Class II directors, and the 2026 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified. See the section entitled “Proposal No. 4 — The Director Election Proposal.”

•        A proposal to approve, for purposes of complying with applicable listing rules of the Nasdaq, the issuance of shares of Class A Common Stock and Class B Common Stock to Montana Equityholders pursuant to the Merger Agreement. See the section entitled “Proposal No. 5 — The Nasdaq Proposal.”

•        A proposal to approve and adopt the Incentive Plan in the form attached hereto as Annex E. See the section entitled “Proposal No. 6 — The Incentive Plan Proposal.”

•        A proposal to approve and adopt the ESPP in the form attached hereto as Annex F. See the section entitled “Proposal No. 7 — The Employee Stock Purchase Plan Proposal.”

•        A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal. See the section entitled “Proposal No. 8 — The Adjournment Proposal.”

XPDB will hold the Special Meeting to consider and vote upon these Proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting.

Stockholders should read this proxy statement/prospectus carefully, including the Annexes and the other documents referred to herein.

Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other Proposals, except the Adjournment Proposal, will not be presented to stockholders for a vote.

The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

Q:     WHO IS MONTANA?

A:     Montana is an atmospheric renewable energy and water harvesting technology company that aims to provide efficient and sustainable evaporative cooling and atmospheric water generation, reduce energy consumption, eliminate harmful refrigerants and create cost efficiencies through its AirJoule technology. AirJoule is a climate solution technology that harvests the untapped supply of renewable thermal energy in water vapor in the atmosphere in an effort to provide significant energy efficiency gains in HVAC, as well as a potential source of potable water. Montana is focused on developing and deploying AirJoule units worldwide as a key part of the solution to address global warming and water scarcity. As the demand for HVAC has increased, the demand for space cooling and water generation technology has also increased, and we believe Montana is poised to meet this demand with its AirJoule unit, which provides HVAC technology designed to be relatively energy efficient compared to traditional air conditioning systems. Additionally, we see companies coming under increasing pressure from governments, customers and the general public to transition to using clean and sustainable energy, and we believe Montana is in a position to bridge the gap between the increasing demands for both HVAC and renewable energy. Montana strives to alleviate the need for comfort cooling and water stress by providing its future clients with an efficient solution to HVAC and space cooling demands that harness renewable energy through AirJoule. See the section entitled “Information About Montana.”

Q:     WHY IS XPDB PROPOSING THE BUSINESS COMBINATION?

A:     XPDB was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On December 14, 2021, XPDB completed its initial public offering of 28,750,000 units, with each unit consisting of XPDB Class A Common Stock and one-half of one XPDB public warrant (including 3,750,000 units issued pursuant to the full exercise of the underwriters’ over-allotment option), raising total gross proceeds of $287.5 million. On the same date, XPDB also completed a private placement of warrants to its Sponsor and the Anchor Investors (the “Private Placement”), raising total gross proceeds of approximately $11.1 million. Following the closing of the XPDB IPO and Private Placement, approximately $290.4 million was placed in the Trust Account.

In connection with the Extension Special Meeting, holders of 18,141,822 shares of XPDB Class A Common Stock elected to redeem their shares in connection with the proposal to extend the time by which the Company has to consummate an initial business combination, which resulted in 10,608,178 shares of XPDB Class A Common Stock remaining outstanding after giving effect to such redemptions.

Since the XPDB IPO, XPDB’s activity has been limited to the evaluation of business combination candidates. Based on its due diligence investigations of Montana and the industry in which it operates, including the financial and other information provided by Montana in the course of their negotiations in connection with the Merger Agreement, XPDB believes that the Business Combination with Montana is advisable and in the best interests of XPDB and its stockholders. See the section entitled “The Merger — Recommendation of the XPDB Board of Directors and Reasons for the Business Combination.”

Q:     DID THE XPDB BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?

A:     The XPDB Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. The directors and officers of XPDB and XPDB’s advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of XPDB’s

financial advisors and consultants, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, XPDB’s directors and officers and XPDB’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the XPDB Board and management and XPDB’s advisors in valuing Montana’s business.

Q:     WHY IS XPDB PROVIDING STOCKHOLDERS WITH THE OPPORTUNITY TO VOTE ON THE BUSINESS COMBINATION?

A:     We are seeking approval of the Business Combination pursuant to the Existing Charter. In addition, in conjunction with such stockholder vote, we must provide all XPDB Public Stockholders with the opportunity to redeem all or a portion of their Public Shares upon the consummation of the Business Combination pursuant to the applicable SEC proxy solicitation rules. We also are seeking approval of the Business Combination for purposes of complying with applicable Nasdaq listing rules requiring stockholder approval of issuances of more than 20% of a listed company’s issued and outstanding common stock.

Q:     DO THE MONTANA EQUITYHOLDERS NEED TO APPROVE THE BUSINESS COMBINATION?

A:     No. Under the Montana organizational documents, no approval of the Business Combination by the Montana Equityholders is required.

Q:     DO I HAVE REDEMPTION RIGHTS?

A:     If you are a holder of Public Shares, you have the right to demand that XPDB redeem such shares for a pro rata portion of the cash held in the Trust Account, as of two business days prior to the consummation of the Business Combination (including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay taxes) upon the Closing.

Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the Public Shares without the consent of XPDB. Accordingly, all Public Shares in excess of 15% held by an XPDB Public Stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without the consent of XPDB.

Q:     WILL HOW I VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?

A:     No. You may exercise your redemption rights whether you vote your shares of Public Shares for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Proposal described in this proxy statement/prospectus. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders and the Merger may be consummated even though the funds available from the Trust Account and the number of XPDB Public Stockholders are substantially reduced as a result of redemptions by XPDB Public Stockholders.

Q:     HOW DO I EXERCISE MY REDEMPTION RIGHTS?

A:     If you are a holder of Public Shares and wish to exercise your redemption rights, you must demand that XPDB redeem your shares for cash no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock to XPDB’s transfer agent physically or electronically using the Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system. In order to exercise your redemption rights, you need to identify yourself as a beneficial holder and provide your legal name, phone number and address in your written demand. Any holder of Public Shares will be entitled to demand that such holder’s Public Shares be redeemed for a pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was approximately $            million, or approximately $            per Public Share, as of            , 2023, the Record Date). Such amount, including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay its taxes, will be paid promptly upon consummation of the Business Combination. However, under Delaware law, the proceeds held in the Trust Account could be subject to claims that could take priority over those of the XPDB Public Stockholders exercising redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.

Any request for redemption, once made by a holder of Public Shares, may be withdrawn, with XPDB’s consent, at any time up to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting. If you deliver your Public Shares for redemption to XPDB’s transfer agent and later decide prior to the Special Meeting not to elect redemption, you may request that XPDB’s transfer agent return the Public Shares (physically or electronically).

If a holder of Public Shares properly makes a request for redemption and the Public Shares are delivered as described to XPDB’s transfer agent as described herein, then, if the Business Combination is consummated, XPDB will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Public Shares for cash and you will cease to have any rights as an XPDB stockholder (other than the right to receive the redemption amount) upon consummation of the Business Combination.

If the Business Combination is not approved or consummated for any reason, XPDB Public Stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares for the applicable pro rata share of the Trust Account. In such case, XPDB will promptly return any certificates delivered by XPDB Public Stockholders who elected to redeem their shares.

For a discussion of the material U.S. federal income tax considerations for holders of Public Shares with respect to the exercise of these redemption rights, see the section entitled “Material U.S. Federal Income Tax Consequences — Tax Consequences of a Redemption of Public Shares.” The consequences of a redemption to any particular holder of Public Shares will depend on that holder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state and local and non-U.S. income and other tax laws in light of your particular circumstances.

Q:     DO I HAVE APPRAISAL RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?

A:     No. Neither XPDB stockholders nor its unit or warrant holders have appraisal rights in connection with the Business Combination under the DGCL. See the section entitled “XPDB’s Special Meeting of Stockholders — Appraisal Rights.”

Q:     WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?

A:     After consummation of the Business Combination, the funds in the Trust Account will be used to pay holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of up to approximately $6 million in the form of a Deferred Discount (as defined in the IPO Underwriting Agreement)) and for the Post-Combination Company’s working capital and general corporate purposes. As of the Record Date, there was approximately $            million in the Trust Account.

Q:     HOW DO THE INITIAL STOCKHOLDERS INTEND TO VOTE ON THE PROPOSALS?

A:     As of the Record Date, the Initial Stockholders of record are entitled to vote an aggregate of approximately            % of the outstanding shares of XPDB Common Stock. The Sponsor and certain of XPDB’s directors have agreed to vote any Founder Shares and any Public Shares held by them as of the Record Date in favor of each of the Proposals presented at the Special Meeting. As a result, in addition to our Initial Stockholders’ Founder Shares, we would need            , or            %, of the             Public Shares outstanding as of the Record Date to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted).

Q:     WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?

A:     A majority of the voting power of the issued and outstanding XPDB Common Stock entitled to vote at the Special Meeting must be present, in person (which would include presence at a virtual meeting) or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions will be counted as present for the purpose of determining a quorum, but broker non-votes will not. The holders of the Founder Shares, who as of the Record Date own approximately            % of the issued and outstanding shares of XPDB Common Stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the Record Date for the Special Meeting,            shares of XPDB Common Stock would be required to achieve a quorum.

Q:     WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

A:     The Business Combination Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Business Combination Proposal. XPDB stockholders must approve the Business Combination Proposal in order for the Business Combination to occur.

The Charter Proposal:    The affirmative vote (in person or by proxy) of (i) the holders of a majority of the shares of XPDB Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote, voting as a single class, is required to approve the Charter Proposal. The Business Combination is conditioned on the approval of the Charter Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Charter Proposal will not be presented to the stockholders for a vote.

The Governance Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Governance Proposal. The Business Combination is not conditioned on the approval of the Governance Proposal. If the Business Combination Proposal is not approved, the Governance Proposal will not be presented to the stockholders for a vote.

The Director Election Proposal:    The affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a class, is required to approve the Director Election Proposal. The Business Combination is conditioned on the approval of the Director Election Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented to the stockholders for a vote.

The Nasdaq Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Nasdaq Proposal. The Business Combination is conditioned on the approval of the Nasdaq Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Nasdaq Proposal will not be presented to the stockholders for a vote.

The Incentive Plan Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Incentive Plan Proposal. The Business Combination is conditioned on the approval of the Incentive Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Incentive Plan Proposal will not be presented to the stockholders for a vote.

The Employee Stock Purchase Plan Proposal.    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Employee Stock Purchase Plan Proposal. The Business Combination is conditioned on the approval of the Employee Stock Purchase Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Employee Stock Purchase Plan Proposal will not be presented to the stockholders for a vote.

The Adjournment Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Adjournment Proposal. The Business Combination is not conditioned on the approval of the Adjournment Proposal. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

The Sponsor and certain of XPDB’s directors have agreed to vote any shares of XPDB Common Stock owned by them in favor of each of the Proposals presented at the Special Meeting. As a result, in addition to our Initial Stockholders’ Founder Shares, we would need 1,710,340, or 16.12%, of the 10,608,178 Public Shares outstanding as of June 30, 2023 to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted).

Q:     DO ANY OF XPDB’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF XPDB STOCKHOLDERS?

A:     Certain of XPDB’s executive officers and certain directors may have interests in the Business Combination that may be different from, or in addition to, the interests of XPDB stockholders generally.

These interests include, among other things:

•        If the Business Combination with Montana or another business combination is not consummated within the Completion Window, XPDB will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the XPDB Board, dissolving and liquidating. In such event, the 7,187,500 Founder Shares purchased by the Sponsor for an aggregate purchase price of $25,000, or approximately $0.004 per share, and held by the Initial Stockholders would be worthless because the Initial Stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such Founder Shares had an aggregate market value of $76,187,500 based upon the closing price of $10.60 per share of XPDB Class A Common Stock on the Nasdaq on September 29, 2023, the most recent practicable date prior to the date of this proxy statement/prospectus.

•        The Sponsor purchased an aggregate of 8,900,000 Private Placement Warrants from XPDB for an aggregate purchase price of approximately $8,900,000 (or $1.00 per warrant). Such Private Placement Warrants had an aggregate market value of $890,000 based upon the closing price of $0.10 per XPDB public warrant on the Nasdaq on September 29, 2023, the most recent practicable date prior to the date of this proxy statement/prospectus. The Private Placement Warrants would become worthless if XPDB does not consummate a business combination within the Completion Window.

•        No compensation of any kind, including finder’s and consulting fees, is paid to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except for reimbursement for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, advisory fees and consulting fees in an aggregate amount of up to $3,000,000 that will be paid to XMS Capital and TEP in connection with the Business Combination and $20,000 per month for office space, secretarial and administrative services. These amounts have not yet been paid but are accruing. Such arrangement will terminate upon the consummation of the Business Combination. From the date of the XPDB IPO until the date of the Merger Agreement, there have been no reimbursable out of pocket expenses incurred in connection with the Business Combination other than certain expenses in connection with conducting due diligence on Montana and negotiating the Merger Agreement.

•        Due to the differential in the purchase price that our Sponsor and its affiliates paid for the Founder Shares and Private Placement Warrants as compared to the price of the Public Shares sold in the XPDB IPO and the substantial number of XPDB Class A Common Stock our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination and exercise of the Private Placement Warrants, our Sponsor and its affiliates may earn a positive rate of return on their investment even if other XPDB Public Stockholders experience a negative rate of return in the Post-Combination Company, and they may therefore be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to XPDB stockholders rather than liquidate.

•        One of our directors, Patrick C. Eilers, is a majority investor in TEP Montana, which owns 77,095 Montana Class B Common Units, or 4.9% of Montana’s outstanding units. TEP Montana paid approximately $4,452,825 for such units. Assuming that there is no Capital Raise or further dilution to the Montana Common Units, TEP Montana will receive approximately 1,857,301 shares of Class A Common Stock at the Closing, which, at a price of $10.00 per share, will have an aggregate value of $18,573,010 (of these shares, 1,667,256 shares having an aggregate value of $16,672,560 would be indirectly owned by Mr. Eilers). Mr. Eilers is an advisor to the Montana board of directors. Additionally, Mr. Eilers is expected to be a member of the Post-Combination Company Board following the Closing.

•        The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

The XPDB Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination be approved by the stockholders of XPDB. See the section entitled “The Business Combination — Interests of the Sponsor and XPDB’s Directors and Officers in the Business Combination” in this proxy statement/prospectus.

Q:     WHAT DO I NEED TO DO NOW?

A:     XPDB urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes and the other documents referred to herein, and to consider how the Business Combination will affect you as a stockholder of XPDB. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

Q:     WHAT HAPPENS IF I SELL MY SHARES OF XPDB CLASS A COMMON STOCK BEFORE THE SPECIAL MEETING?

A:     The Record Date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of XPDB Class A Common Stock after the Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of XPDB Class A Common Stock because you will no longer be able to tender them prior to the Special Meeting in accordance with the provisions described herein. If you transferred your shares of XPDB Class A Common Stock prior to the Record Date, you have no right to vote those shares at the Special Meeting or seek redemption of those shares.

Q:     HOW DO I VOTE?

A:     If you are a stockholder of record of XPDB as of            , 2023, the Record Date for the Special Meeting, you may submit your proxy before the Special Meeting in any of the following ways, if available:

•        use the toll-free number shown on your proxy card;

•        visit the website shown on your proxy card to vote via the Internet; or

•        complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

Stockholders who choose to participate in the Special Meeting can vote their shares electronically during the meeting via live audio webcast by visiting https://www.cstproxy.com/xpdispacii/sm2023. You will need the control number that is printed on your proxy card to enter the Special Meeting. XPDB recommends that you log in at least 15 minutes before the meeting to ensure you are logged in when the Special Meeting starts.

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. “Street name” stockholders who wish to vote at the Special Meeting will need to obtain a proxy form from their broker, bank or other nominee.

Q:     IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

A:     If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to XPDB or by voting in person (which would include presence at a virtual meeting) at the Special Meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank or other nominee.

Under the rules of the Nasdaq, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the Nasdaq determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all Proposals to be voted on at the Special Meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are an XPDB stockholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any of the Proposals. Such broker non-votes will be the equivalent of a vote “AGAINST” the Charter Proposal but will have no effect on the vote count for the other Proposals.

Q:     WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?

A:     For purposes of the Special Meeting, an abstention occurs when a stockholder attends the meeting in person (which would include presence at a virtual meeting) and does not vote or returns a proxy with an “abstain” vote. Abstentions will be counted as present at the Special Meeting for the purpose of determining a quorum.

If you are an XPDB stockholder who attends the Special Meeting virtually and fails to vote on the Charter Proposal, your failure to vote will have the same effect as a vote “AGAINST” such proposal.

If you are an XPDB stockholder who attends the Special Meeting virtually and fails to vote on the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, your failure to vote will have no effect on such Proposal.

Q:     WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

A:     If you sign and return your proxy card without indicating how to vote on any particular Proposal, the XPDB Common Stock represented by your proxy will be voted “FOR” each of the Proposals presented at the Special Meeting.

Q:     MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A:     Yes. You may change your vote at any time before your proxy is exercised by doing any one of the following:

•        send another proxy card with a later date;

•        notify XPDB’s secretary in writing before the Special Meeting that you have revoked your proxy;

•        submit a new proxy online before the meeting; or

•        attend the Special Meeting and vote electronically by visiting https://www.cstproxy.com/xpdispacii/sm2023 and entering the control number found on your proxy card, instruction form or notice you previously received.

Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 11:59 p.m. Eastern Time on            , 2023, or by voting online at the Special Meeting. Simply attending the Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares of XPDB Common Stock, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

Q:     WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?

A:     If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder of the Post-Combination Company. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a stockholder of XPDB while XPDB searches for another target business with which to complete a business combination.

Q:     WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

A:     Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of XPDB and Montana. These statements are based on the beliefs and assumptions of the management of XPDB and Montana. Although XPDB and Montana believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither XPDB nor Montana can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “predicts”, “projects”, “potential”, “forecasts”, “target”, “future”, “opportunity,” “may”, “might”, “will”, “will be”, “will continue,” “will likely result”, “strategy”, “could”, “should”, “would”, “seeks”, “plans”, “scheduled”, “possible”, “anticipates” or “intends” or similar expressions (including the negative versions of such words or expressions). Forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements about the ability or likelihood of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, to:

•        execute their business strategies, including monetization of Montana’s product offerings;

•        anticipate the uncertainties inherent in the development of new business lines and business strategies;

•        meet the closing conditions to the Business Combination, including approval by stockholders of XPDB on the expected terms and schedule;

•        realize the benefits expected from the proposed Business Combination;

•        anticipate the amount of funds available in the Trust Account as a result of stockholder redemptions or otherwise;

•        develop, design, and sell products that are differentiated from those of competitors;

•        consummate the Business Combination due to the uncertainty resulting from the COVID-19 pandemic, the invasion of Ukraine by Russia and resulting sanctions, and other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases);

•        retain and hire necessary employees;

•        attract, train and retain effective officers, key employees or directors;

•        achieve future operating and financial results;

•        comply with or anticipate the effects of laws and regulations applicable to its business;

•        stay abreast of modified or new laws and regulations applying to its business;

•        anticipate the impact of, and response to, new accounting standards;

•        anticipate the significance and timing of contractual obligations;

•        maintain key strategic relationships with partners and form relationships with customers;

•        respond to uncertainties associated with product development and market acceptance, including the impact, cost and performance of the AirJoule technology once commercialized;

•        successfully defend against potential litigation;

•        upgrade and maintain information technology systems;

•        access, collect and use personal data about third parties;

•        acquire and protect intellectual property;

•        anticipate rapid technological changes;

•        meet potential future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

•        maintain the listing on, or the delisting of XPDB’s or the Post-Combination Company’s securities from, the Nasdaq or an inability to have our securities listed on the Nasdaq or another national securities exchange following the Business Combination;

•        effectively respond to general economic and business conditions;

•        obtain additional capital or financing, as necessary, including use of the debt market; and

•        successfully deploy the proceeds from the Business Combination.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus, could affect the future results of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/ prospectus:

•        the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of XPDB securities;

•        the risk that the Business Combination may not be completed by XPDB’s business combination deadline and the potential failure to obtain an Extension of the business combination deadline if sought by XPDB;

•        the failure to satisfy the conditions to the consummation of the Business Combination, including the approval of the proposed transactions by XPDB’s stockholders, the satisfaction of the minimum Aggregate Transaction Proceeds amount following redemptions by XPDB Public Stockholders and the receipt of certain governmental and regulatory approvals;

•        the failure to obtain financing to complete the Business Combination and to support the future working capital needs of Montana;

•        the effect of the announcement or pendency of the Business Combination on Montana’s business relationships, performance, and business generally;

•        risks that the Business Combination disrupts current plans of Montana and potential difficulties in Montana’s employee retention as a result of the Business Combination;

•        risks related to disruption of management’s time and attention from ongoing business operations due to the proposed Business Combination;

•        litigation, complaints, product liability claims and/or adverse publicity, including any legal proceedings that may be instituted against XPDB or Montana related to the Merger Agreement and the Business Combination;

•        the ability to maintain the listing of the Post-Combination Company’s securities on the Nasdaq following the Business Combination;

•        privacy and data protection laws, privacy or data breaches, or the loss of data;

•        the enforceability of Montana’s intellectual property, including its patents, and the potential infringement on the intellectual property rights of others;

•        the price of XPDB’s securities, including volatility resulting from changes in the competitive and highly regulated industries in which Montana plans to operate, variations in performance across competitors, and changes in laws and regulations, or changes in the implementation of regulations by regulatory bodies, affecting Montana’s business;

•        the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather (including weather influenced by climate change), demographic trends and employee availability;

•        the ability to implement business plans, forecasts, and other expectations after the completion of the Business Combination, including the possibility of cost overruns or unanticipated expenses in development programs, and the ability to identify and realize additional opportunities; and

•        any defects in new products or enhancements to existing products.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can XPDB or Montana assess the impact of all such risk factors on the business of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to XPDB or Montana or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect the beliefs and opinions of XPDB or Montana, as applicable, on the relevant subject. These statements are based upon information available to XPDB or Montana, as applicable, as of the date of this proxy statement/prospectus, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that XPDB or Montana, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Neither XPDB nor Montana gives any assurance that either XPDB or Montana will achieve its expectations. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

RISK FACTORS

In addition to the other information contained in this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements”, you should carefully consider the following risk factors in deciding how to vote on the Proposals presented in this proxy statement/prospectus. In this section “we,” “us” and “our” refer to Montana prior to the Business Combination and to the Post-Combination Company following the Business Combination.

Risks Related to Our Business and Our Industry

We have not yet commenced planned business line activities and have a limited operating history, which may make it difficult to evaluate the prospects for our future viability. There is no assurance that we will successfully execute our proposed strategy.

We are a pre-revenue and development-stage company. We were established as Montana Technologies LLC in 2018 and have not commenced any operations and have no history of commercializing our AirJoule technology. Our limited operating history may make it difficult for you to evaluate our current business and future prospects as we continue to grow our business. Our ability to forecast future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, and we will continue to encounter such risks and uncertainties as we grow our business. If our assumptions regarding these uncertainties are incorrect, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer. Consequently, any predictions we make about our future success and our viability may not be as accurate as they could be if we had an operating history.

We will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products.

After we have successfully developed and commercialized our AirJoule technology, we will initially depend on revenue generated from our AirJoule units for the foreseeable future and will be significantly dependent on a single or limited number of products. Given that, for the foreseeable future, our business will depend on a single or limited number of products, to the extent that a particular product is not well-received by the market, our sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected.

We face significant barriers in our attempts to deploy our technology and may not be able to successfully develop our technology. If we cannot successfully overcome those barriers, it could adversely impact our business and operations.

The technology behind our AirJoule units is very complex, and, while we have successfully produced a prototype unit within our test facility, we are still in the process of producing a unit that delivers dehumidified air, cooling and volume of water at the energy efficiency that we are anticipating we can achieve. If we are unable to successfully develop our technology, our operating and financial results could materially differ from our expectations and our business could suffer.

Our commercialization strategy relies heavily on our relationships with BASF, CATL and other third parties and partners who may have interests that diverge from ours and who may not be easily replaced if our relationships terminate, which could adversely impact our business and financial condition.

We anticipate that the growth of our business will depend on third-party relationships, including service providers, suppliers, consultants, referral sources, and other partners. In particular, our commercialization strategy relies heavily on our relationships with BASF and CATL. We have entered into a development agreement with BASF for the production of engineered super-porous materials that are applied as a coating to AirJoule contactors to perform the energy and water-harvesting function, and we are continuing to work with BASF to execute an ongoing development agreement to scale for mass production and global manufacturing and supply. Additionally, we have entered into a joint venture agreement with an affiliate of CATL to manufacture and commercialize our AirJoule technology in certain countries.

Our heavy reliance on both of these business partners could adversely affect our business and financial condition if either of these partners chooses to terminate their relationship with us or make material changes to their businesses, products or services in a manner that is adverse to us. CATL has informed us that it intends to exit a portion of its equity investment in Montana, by selling some of its equity interests in Montana to third parties, in favor of focusing on the CAMT joint venture. This exit by CATL may have a material and adverse effect on our efforts to raise capital, which in turn could have a material adverse effect on our business and financial condition. Further, while we intend to pursue additional relationships with other third parties, identifying, negotiating and documenting relationships with third parties, as well as integrating third-party products and services requires significant time and resources, and we may not be successful in doing so.

Demand for our products may not grow or may grow at a slower rate than we anticipate.

To date, we have not had any sales of our products, but we have engaged with partners like BASF and CATL to assist us with the commercialization of our AirJoule units. Operating results are difficult to forecast as they generally depend on our assessment of the demand for our products. Our business may be affected by reductions in demand for our products and the price of competitors’ products as a result of a number of factors which may be difficult to predict. Similarly, our assumptions and expectations with respect to margins and the pricing of our AirJoule unit may not prove to be accurate. We may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in demand, which could ultimately cause our operating results to differ from expectations. If actual results differ from our estimates, analysts or investors may negatively react and our share price could be materially adversely affected.

Our financial results depend on successful project execution and may be adversely affected by cost overruns, failure to meet customer schedules, failure of our suppliers or partners to fulfill their obligations to us or other execution issues.

Commercialization of our AirJoule units is subject to a number of significant risks, including project delays, cost overruns, changes in scope, unanticipated site conditions, design and engineering issues, incorrect cost assumptions, increases in the cost of materials and labor, health and safety hazards, third-party performance issues and changes in laws or permitting requirements. If a third party or other subcontractor that we have contracted fails to fulfill its contractual obligations to us, we could face significant delays, cost overruns and liabilities. Our continued growth will depend in part on executing a greater volume of large projects, which will require us to expand and retain our project management and execution personnel and resources. If we are unable to manage these risks, we may incur higher costs, liquidated damages and other liabilities, which may decrease our profitability and harm our reputation.

COVID-19 and any future widespread public health crisis could negatively affect various aspects of our business, make it more difficult for us to meet our obligations to our future customers and result in reduced demand for our products.

Examples of how COVID-19 and any future widespread public health crisis may impact our business, results of operations and the price of our securities in the future include, but are not limited to:

•        such event may interfere with our ability, or the ability of our employees, contractors, suppliers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business;

•        such event may cause disruptions from the temporary closure or suspension of activities related to the relocation of our facilities, third-party suppliers and manufacturers or restrictions on our employee’s and other service providers’ ability to travel; and

•        such event and related government responses to address any such event may cause sudden and extreme changes in the price of our securities.

New variants of COVID-19 and other future public health crises and pandemics may affect our operating and financial results in a manner that is not presently known to us or not presently considered to be a significant risk to our operations. Furthermore, our limited operating history combined with the uncertainty created by the COVID-19 pandemic significantly increases the difficulty of forecasting operating results and of strategic planning. If we are unable to effectively predict and manage the impact of the COVID-19 pandemic and other future public health crises on our business, our results of operations and financial condition may be negatively impacted.

Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect our business, financial condition and results of operations.

In recent years, global economies have suffered dramatic downturns as a result of the COVID-19 pandemic, a deterioration in the credit markets and related financial crisis, and a variety of other factors including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, inflation, ratings downgrades of certain investments and declining valuations of others. The United States and certain other governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to the financial markets. The outcome of the actions taken by these governments is still ongoing and, consequently, the return of adverse economic conditions may negatively impact the demand for our technology and may negatively impact our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all.

Manufacturing issues not identified prior to design finalization, long-lead procurement and/or fabrication could potentially be realized during production or fabrication and may impact our deployment cost and schedule, which could adversely impact our business.

It is possible that in the future we may experience delays and other complications from our partners and third-party suppliers in the development and manufacturing of the components and other implementing technology required for deploying our AirJoule units. Any disruption or delay in the development or supply of such components and technology could result in the delay or other complication in the design, manufacture, production and delivery of our technology that could prevent us from commercializing our AirJoule units according to our planned timeline and scale. If delays like this recur or if we experience issues with planned manufacturing activities, supply of components from third parties or design and safety, we could experience issues or delays in commencing or sustaining our commercial operations.

If we encounter difficulties in scaling our production and delivery capabilities, if we fail to develop such technologies before our competitors or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, reputation and financial condition could be materially and adversely impacted.

Our sales and profitability may be impacted by, and we may incur liabilities as a result of, warranty claims, product defects, recalls, improper use of our products, or our failure to meet performance guarantees or customer safety standards.

We anticipate that our customers will require product warranties as to the proper operation and conformance to specifications of the products we manufacture or install. Failure of our products to operate properly or to meet specifications of our customers or our failure to meet our performance guarantees may increase costs by requiring additional engineering resources and services, replacement of parts and equipment or monetary reimbursement to a customer, or could otherwise result in liability to our customers. There are significant uncertainties and judgments involved in estimating warranty and performance guarantee obligations, including changing product designs, differences in customer installation processes and failure to identify or disclaim certain variables. To the extent that we incur substantial warranty or performance guarantee claims in any period, our reputation, earnings and ability to obtain future business could be materially adversely affected.

Increased scrutiny of ESG matters, including our completion of certain ESG initiatives, could have an adverse effect on our business, financial condition and results of operations, result in reputational harm and negatively impact the assessments made by ESG-focused investors when evaluating us.

We are increasingly facing more stringent ESG standards, policies and expectations, and expect to continue to do so as a listed company following the Closing with growing operations. Companies across all industries are facing increasing scrutiny from a variety of stakeholders, including investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment funds and other influential investors and rating agencies, related to their ESG and sustainability practices. We generally experience a strong ESG emphasis among our customers, partners and competitors. Some of these stakeholders maintain standards, policies and expectations regarding environmental matters (e.g., climate change and sustainability), social matters (e.g., diversity and human rights) and corporate governance matters (e.g., taking into account employee relations when making business and investment decisions,

ethical matters and the composition of the board of directors and various committees). There is no guarantee that we will be able to comply with applicable ESG standards, policies and expectations, or that we will, from the perspective of other stakeholders and the public, appear to be complying with such ESG standards, policies and expectations. If we do not adapt to or comply with investor or other stakeholder standards, policies, or expectations on ESG matters as they continue to evolve, or if we are perceived to have not responded appropriately or quickly enough to growing concern for ESG and sustainability issues, regardless of whether there is a regulatory or legal requirement to do so, we may suffer from reputational damage and our business, financial condition and/or stock price could be materially and adversely affected.

While we may at times engage in or prepare voluntary ESG initiatives and disclosures to respond to stakeholder expectations or to improve our ESG profile, such initiatives and disclosures may be costly and may not have the desired effect. Expectations regarding our management of ESG matters continues to evolve rapidly, in many instances due to factors that are beyond our control. For example, we may ultimately be unable to complete certain initiatives or targets, either on the timelines initially announced or at all, due to technological, cost, or other constraints, which may be within or outside of our control. Moreover, our ESG actions or statements may be based on expectations, assumptions, or third-party information that we currently believe to be reasonable, but which may subsequently be determined to be erroneous or be subject to misinterpretation. If we fail to, or are perceived to fail to, implement certain ESG initiatives or achieve certain ESG objectives, we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement and/or litigation, even if such initiatives are currently voluntary. Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry and to the diversion of investment to other industries, which could negatively impact our share price as well as our access to and cost of capital.

Moreover, because of the industry we are in, any of our operational or strategic efforts may be viewed as relating to our ESG initiatives and, even if those initiatives are undertaken voluntarily, they may still be viewed as relating to our operational and strategic efforts. This means that if we fail, or are perceived to fail, to implement certain ESG initiatives or achieve certain ESG objectives it could have a disproportionately negative impact on our business.

Actual or perceived failure to comply with ESG standards may detrimentally affect our business in a variety of ways. Among others, we could face challenges with procuring investments and financing, whether for general business purposes or for specific projects, and we could have difficulty attracting or retaining employees. Accordingly, failure to establish a sufficiently strong ESG profile relative to our peers could limit our ability to generate and successfully utilize business opportunities. We also note that divergent views regarding ESG principles are emerging in the U.S., and in particular, in U.S. state-level regulation and enforcement efforts. In the future, various U.S. regulators, state actors and other stakeholders may have views on ESG matters, the renewable energy industry, the energy transition or our business that are less favorable to our business or operations, or such stakeholders may seek to impose additional regulation and restrictions on us or our business. Any such events could have material adverse effects on our business, financial condition, results of operations, cash flow and prospects.

We also expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters. We may be subject to ESG or sustainability-related regulation in multiple jurisdictions, including the U.S., and complying with these regulations in multiple jurisdictions may increase the complexity and cost of our compliance efforts. Moreover, increased regulation and increased stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.

Our ability to realize projects may be impaired should we fail to adhere to the common ESG standards in our industry. Moreover, such failure could result in reputational damage for us among both potential customers and investors. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects. For further information regarding ESG-related risk, see “There are risks associated with operating in foreign countries, including those related to economic, social and/or political instability, and changes of law affecting foreign companies operating in that country. In particular, we may suffer reputational harm due to our business dealings in certain countries that have previously been associated, or perceived to have been associated, with human rights issues. Increased scrutiny and changing expectations from investors regarding environmental, social and governance (“ESG”) considerations may result in the decrease of the trading price of our securities.”

Physical and transition risks arising from climate change, including risks posed by the increased frequency or severity of natural and catastrophic events and regulations or policies related to climate change, may negatively impact our business and operations.

A natural disaster, or severe weather conditions, including in connection with climate change, or an accident that damages or otherwise adversely affects any of our current or future operations, assets, or third-party infrastructure could materially and adversely affect our business, financial condition and results of operations. Severe floods, droughts, lightning strikes, earthquakes, extreme wind conditions, severe storms, heatwaves, wildfires, monsoons and other unfavorable weather conditions or natural disasters (including those related to climate change) could damage our property and assets, or those of third parties on which we rely, or require us to shut down our current or future production facilities and/or related equipment and facilities, impeding our ability to operate and maintain our current or future production facilities and decreasing our revenues from operations. Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may also adversely impact our or our suppliers’ operations or the operations of those who would install our products. While we may take various actions to mitigate our business risks associated with climate change and other natural and catastrophic events, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent natural and catastrophic events or severe weather conditions become more frequent and intense, it may adversely impact the availability or cost of materials and increase the cost of insurance and other operating costs and therefore result in an increase in the costs of our products. Potential adverse impacts from climate change may also create health and safety issues for employees operating at our facilities and may lead to an inability to maintain standard operating hours.

Additionally, we expect to be subject to transition risks associated with societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased laws and regulations, evolving stakeholder expectations, and changes in market demand. For example, at the international level, the United Nations-sponsored “Paris Agreement” requires member states to submit individually determined reduction goals known as “Nationally Determined Contributions” every five years after 2020. President Biden recommitted the United States to the Paris Agreement and, in April 2021, announced a goal of reducing the United States’ greenhouse emissions by 50-52% below 2005 levels by 2030. Various state and local governments have also publicly committed to furthering the goals of the Paris Agreement. In addition, the 26th Conference of the Parties concluded with the finalization of the Glasgow Climate Pact, which stated long-term global goals (including those in the Paris Agreement) to limit the increase in global average temperature and emphasized the need for reductions in greenhouse gas emissions. The full impact of these actions, and any legislation promulgated to fulfill national commitments thereunder, is uncertain at this time, and it is unclear what additional regulatory, policy, or other initiatives may be adopted or implemented in the future. New or amended international agreements, legislation, regulations or executive action addressing climate change could increase our current and future production, compliance, and other operating costs and the costs of our customers, which could decrease demand for our products. Should our customers and the markets we serve impose emissions or other environmental standards through regulation, policies, consumer preferences or otherwise, we may not be able to timely meet such standards, which could have an adverse effect upon our reputation, competitive position, and our business more broadly. There is also regulatory and budgetary uncertainty associated with certain government incentives, which, if discontinued, could adversely impact the demand for energy-efficient buildings and could increase our costs of compliance. Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations. Any failure to adapt to changing market conditions influenced by climate change, to compete successfully with existing or new competitors (which may arise in part to meet demand driven by climate change), and to adopt new or enhanced offerings could limit our growth and have a material adverse effect on our business and prospects. Relatedly, see “We are subject to risks associated with changing technology, product innovation, manufacturing techniques, operational flexibility and business continuity, which could place us at a competitive disadvantage.”

Our business and current and future production facilities are subject to liabilities and operating restrictions arising from environmental, health and safety laws, regulations, and permits. We will be subject to environmental, health and safety laws and regulations in multiple jurisdictions, which impose substantial compliance requirements on our operations. Our operating costs could be significantly increased in order to comply with new or more stringent regulatory standards in the jurisdictions in which we operate.

Our business and our and our partners’ current and future production facilities are and will be subject to various foreign, federal, state and local environmental, health and safety (“EHS”) laws, regulations, guidelines, policies, directives, permits, and other requirements governing or relating to, among other things:

•        the protection of wildlife, including migratory birds, bats, and threatened and endangered species, such as desert tortoises, or protected species such as eagles, and other protected plants or animals whose presence or movements often cannot be anticipated or controlled;

•        water use, and discharges of pollutants into nearby wetlands or navigable waters;

•        hazardous or toxic substances or wastes and other regulated substances, materials, or chemicals, including those existing on a site prior to our use or occupancy of the site or releases thereof into the environment;

•        land use, zoning, building, and transportation laws and requirements, which may mandate conformance with sound levels, radar and communications interference, hazards to aviation or navigation, or other potential nuisances;

•        the presence or discovery of archaeological, historical, religious, or cultural artifacts or resources at or near our facilities;

•        the protection of workers’ health and safety; and

•        the proper decommissioning and reclamation of a site at the end of its useful life.

Pursuant to these laws, we may be required to obtain various permits from certain regulatory agencies for our operations. If our facilities and operations do not comply with such laws, regulations, requirements or permits, each of which may vary across the jurisdictions in which we operate, we may be required to pay significant administrative or civil penalties or fines, curtail or cease operation of the affected facilities, make costly modifications to such facilities, or seek new or amended permits for our operations. Violations of environmental and other laws, regulations, and permit requirements, including certain violations of laws protecting wetlands, migratory birds, and threatened or endangered species, may also result in criminal sanctions or injunctions. The global EHS regulatory environment continues to change, and these laws and regulations, and the enforcement thereof, have tended to become more stringent over time. It is possible that new standards could be imposed, or interpretation or enforcement of existing laws and regulations could change, making the regulatory environment more stringent. Such changes could result in higher operating expenses, the obsolescence of our products or an interruption or suspension of our operations and have an adverse effect on our business, financial condition and results of operations.

Our current and future operations also carry inherent EHS risks, including the potential for related civil litigation, regulatory compliance, remediation orders, fines, and other penalties. For instance, equipment or machinery at our current facility or any future facilities could malfunction or experience other unplanned events that cause spills or environmental contamination, which in turn could result in personal injury, fines, or property damage. EHS laws and regulations have generally become more stringent over time, and we expect this trend to continue. We may need to incur significant capital and operating costs to keep our current facility and any future facilities in compliance with such EHS laws and regulations. If it is not economical to make those expenditures, or if we violate any applicable EHS laws and regulation, it may be necessary to retire or suspend operations of our facilities or restrict or modify our operations to obtain or maintain compliance, either of which could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.

Additionally, we may be held liable for related investigatory and clean-up costs for any property where there has been a release or potential release of a hazardous substance, regardless of whether we knew of or caused the release or potential release, even in the absence of negligence. We could also be liable for other costs, including fines, personal injury, property damage, damage to natural resources or the costs of certain health studies. In addition, some environmental laws place a lien on a contaminated site in favor of the government as security for damages and costs it

may incur relating to contamination and clean-up. Contained or uncontained hazardous substances on, under, or near our facilities, regardless of whether we own or lease the property, or the inability to remove or otherwise remediate such substances may restrict or eliminate our ability to operate our projects.

Furthermore, foreign, federal, state, and local governments are increasingly regulating and restricting the use of certain chemicals, substances, and materials. Some of these policy initiatives could impact our business. For example, laws, regulations, or other policy initiatives might restrict substances found within component parts to our products, in which event we would be required to comply with such requirements, which could in turn require changes to our products and increase our production and operating costs.

Many foreign, federal, state, and local environmental laws, regulations, and permitting requirements will apply to development of our future facilities and could negatively impact our ability to develop and operate our future facilities. Violations of environmental and other laws, regulations, and permit requirements; the discovery of threatened or endangered species or their habitat, hazardous materials, or archaeological, historical, or cultural artifacts at our future facility sites; or adverse effects on public or private lands could also result in negative publicity for us, which could, in turn, limit our ability to develop our facilities and acquire interests in additional facilities in the future.

Our past and potential future transactions with foreign-based commercial partners and investors may be subject to review by the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS actions, including potentially imposing restrictions or conditions on these transactions, or forcing us to terminate these transactions, could adversely impact our business and operations.

CFIUS has authority to review certain direct or indirect foreign investments in U.S. businesses for national security considerations. Among other things, CFIUS is authorized to require mandatory filings for certain foreign investments in the United States and to self-initiate national security reviews of certain foreign direct and indirect investments in U.S. businesses if the parties to such investments choose not to file voluntarily. With respect to transactions that CFIUS determines present unresolved national security concerns, CFIUS has the power to suspend transactions, impose mitigation measures or recommend that the president of the United States block pending transactions or order divestitures of completed transactions when national security concerns cannot be mitigated. Whether CFIUS has jurisdiction to review an acquisition or investment transaction depends on, among other factors: the nature and structure of the transaction; whether the target entity or assets constitute a U.S. business; the level of beneficial ownership and voting interests acquired by foreign persons; and the nature of any information, control, access or governance rights that the transaction affords foreign persons. For example, any transaction that could result in foreign “control” (as such term is defined in the CFIUS regulations) of a U.S. business is within CFIUS’s jurisdiction, including such a transaction carried out through a joint venture. In addition, CFIUS has jurisdiction over certain investments that do not result in control of a U.S. business by a foreign person but that afford a foreign person certain access, involvement or governance rights in a “TID U.S. business,” that is, a U.S. business that: (1) produces, designs, tests, manufactures, fabricates, or develops one or more “critical technologies;” (2) owns, operates, manufactures, supplies or services certain “covered investment critical infrastructure;” or (3) maintains or collects, directly or indirectly, “sensitive personal data” of U.S. citizens.

We have in the past entered into, and may in the future enter into, commercial arrangements with foreign persons including, for example, our development agreement with BASF and our joint venture with an affiliate of CATL. In addition, foreign investors have invested in us in the past and may invest in us in the future, and we may continue to pursue partnerships and operations outside of the United States.

CFIUS has broad discretion to interpret its regulations, and CFIUS policies and practices are evolving rapidly. As a result, we cannot predict whether CFIUS may seek to review our past or potential future transactions involving a foreign person, even if such transactions did not or will not require a mandatory CFIUS filing at the time of the transaction. Any review by CFIUS of one or more of our past or potential future transactions involving a foreign person may have outsized impacts on, among other things, the certainty, timing, feasibility and cost of the transaction in question, and there can be no assurance that we and the foreign person will be able to maintain (if the transaction has already been completed), or proceed with (if the transaction is pending), the transaction on acceptable terms or at all.

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

We are in the process of developing our technology and do not yet have any customers. We expect to depend upon a small number of customers for a substantial portion of our future revenue. Accordingly, a decline in revenue from, or the loss of, any significant customer could have a material adverse effect on our financial condition and operating results. We cannot assure that prospective customers will ultimately utilize our products and services or enter into contracts with us for such products and services on acceptable terms or at all.

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

We may depend on sole-source and limited-source suppliers for key components and products. If we are unable to source these components and products on a timely basis or at acceptable prices, we will not be able to deliver our products to our customers and production time and production costs could increase, which may adversely affect our business.

Our manufacturing processes rely on many materials. We purchase, and will continue to purchase, a significant portion of our materials, components and finished goods used in our production facilities from a few suppliers, some of which are single-source suppliers. As certain materials are highly specialized, the lead time needed to identify and qualify a new supplier is typically lengthy and there is often no readily available alternative source. We do not generally have long-term contracts with our suppliers and substantially all of our purchases are on a purchase order basis. Suppliers may extend lead times, limit supplies, place products on allocation or increase prices due to commodity price increases, capacity constraints or other factors and could lead to interruption of supply or increased demand in the industry.

Additionally, the supply of these materials may be negatively impacted by increased trade tensions between the U.S. and its trading partners, particularly China. In the event that we cannot obtain sufficient quantities of materials in a timely manner, at reasonable prices or of sufficient quality, or if we are not able to pass on higher materials costs to our customers, our business, financial condition and results of operations could be adversely impacted.

We may face supply chain competition, including competition from businesses in other industries, which could result in insufficient inventory and negatively affect our results of operations.

Certain of our suppliers also supply systems and components to other businesses. As a relatively low-volume purchaser of certain of these parts and materials, we may be unable to procure a sufficient supply of the items we need in the event that our suppliers fail to produce sufficient quantities to satisfy the demands of all of their customers, which could materially adversely affect our business, financial condition and results of operations.

We are subject to risks associated with changing technology, product innovation, manufacturing techniques, operational flexibility and business continuity, which could place us at a competitive disadvantage.

The industries in which we operate are subject to rapid technological change, evolving industry standards and practices and changing customer needs and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. We may introduce significant changes to our AirJoule unit or develop and introduce new and unproven products, including using technologies with which we have little or no prior development or operating experience. If we are unable to develop and sell new technology, features and functionality for our AirJoule unit that satisfy our customers and that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected. If new technologies emerge that deliver competitive solutions at lower prices, more efficiently, more conveniently or more securely, it could adversely impact our ability to compete and place us at a competitive disadvantage.

We expect to incur research and development costs and devote resources to identifying and commercializing new products, which could reduce our profitability and may never result in revenue to us.

We will require significant capital to develop and grow our business and we expect to incur significant expenses, including those relating to developing and commercializing our AirJoule units, research and development, production, sales, maintenance and service and building the AirJoule brand. Our current estimates of the costs associated with development and commercialization could prove inaccurate, and that could impact the cost of our technology and of our business overall. If we are unable to efficiently design, develop, commercialize, license, market and deploy our technology in a cost-effective manner, our margins, profitability and prospects would be materially and adversely affected.

Our long-term success will depend ultimately on implementing our business strategy and operational plan, as well as our ability to generate revenues, achieve and maintain profitability and develop positive cash flows.

We are a new company with a history of losses. We have incurred a net loss of approximately $2.8 million and $2.3 million for the year ended December 31, 2022, and 2021, respectively. Although we were established as Montana Technologies LLC in 2018, we did not develop our first prototype of the AirJoule unit until June of 2021 and have not yet begun commercialization. We expect to continue to incur operating and net losses each quarter until we have begun a large-scale delivery of AirJoule units and have realized increased market adoption of energy-efficient air conditioning and water-stress technologies. Even if we can successfully develop our AirJoule unit and attract customers, there can be no assurance that we will be able to generate net income.

We expect that we will continue to incur losses in future periods as we:

•        design, develop, market, commercialize and begin to sell AirJoule units;

•        continue to utilize and develop potential new relationships with third-party partners for supply and manufacturing;

•        build up inventories of parts and components for AirJoule units;

•        expand our design, development, installation and servicing capabilities;

•        further develop our proprietary technology;

•        develop our distribution network;

•        increase our general and administrative functions to support our growing operations and to operate as a public company; and

•        expand our facility to enhance our efficiency and capabilities for assembly of AirJoule units.

Because we will incur the costs and expenses from these efforts before we receive any incremental revenues with respect thereto, our losses in future periods could be significant. In addition, we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in additional revenues, which could further increase our losses.

We may lack sufficient funds to achieve our planned business objectives. Our ability to continue as a going concern is dependent on (i) continued financial support from our shareholders and other related parties, (ii) raising capital via external financing and/or (iii) attaining profitable operations. We may seek to raise further funds through equity or debt financing, joint ventures, production sharing arrangements or other means. Any inability to access the capital or financial markets may limit our ability to fund our ongoing operations and execute our business plan to pursue investments that we may rely on for future growth.

We have limited capital resources and operations. From time to time, we may seek additional financing to provide the capital required to expand production of our business operations, development initiatives and/or working capital, as well as to repay outstanding loans if cash flow from operations is insufficient to do so. We cannot predict with certainty the timing or amount of any such capital requirements.

We may in the future require access to capital markets and debt financing as a source of liquidity for investments and expenditures. If we do not raise sufficient capital to fund our ongoing development activities, it is likely that we will be unable to carry out our business plans. We may not be able to obtain additional financing on terms acceptable, or at all. Even if we obtain financing for near term operations, we may require additional capital beyond the near term. If we are unable to raise capital when needed, or if our ability to access required capital were to become significantly constrained, we could incur material borrowing cost and our business, financial condition and results of operations would be materially adversely affected, and it could force us to reduce or discontinue our operations.

Actual capital costs, operating costs, production and economic returns may differ significantly from those we have anticipated and future development activities may not result in profitable operations.

The actual operating costs of manufacturing, commercializing and distributing AirJoule on a commercial scale will depend upon a variety of factors, such as changes in the availability of and price of materials and changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control. Due to any of these or other factors, our capital and operating costs may be significantly higher than those initially estimated by management. As a result of higher capital and operating costs, our financing ability may be impacted, and this may be further affected by lower commodity prices in the international markets that could impact production or economic returns which may differ significantly from management’s expectations and there can be no assurance that any of our development activities will result in profitable operations.

Our long-term success depends, in part, on our ability to negotiate and enter into sales agreements with, and deliver our products to, customers on commercially viable terms. There can be no assurance that we will be successful in securing such agreements.

Our success depends, in part, on our ability to acquire and retain new customers and to do so in a cost-effective manner. In order to obtain and expand our customer base, we must appeal to, acquire and enter into sales agreements with third-party customers on commercially viable terms, either directly or through third-party distributors. We expect to make significant investments related to customer acquisition in the future. If we fail to deliver and market a robust product that appeals to customers, or if customers do not perceive AirJoule units to be of high value and quality, we may be unable to acquire or retain customers. If we are unable to acquire or retain customers sufficient to grow our business, we may be unable to generate the scale necessary to achieve operational efficiency. Consequently, our prices may increase, or may not decrease to levels sufficient to generate customer interest, and total revenue may decrease and margins and profitability may decline. As a result, our business, financial condition and results of operations may be materially and adversely affected.

Exchange rate fluctuations may materially affect our results of operations and financial condition.

We anticipate that our partner and customer contracts will primarily be denominated in U.S. dollars, and therefore substantially all of our revenue will not be subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of AirJoule units to our customers outside of the United States, which could adversely affect our operating results. In addition, a portion of our operating expenses are expected to be incurred and a portion of our assets are expected to be held outside the United States. These operating expenses and assets would be denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.

If we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our success depends to a significant extent on our ability to attract and retain talent, specifically in senior management and skilled technical, engineering, project management and other key roles. Macroeconomic conditions, specifically labor shortages, increased competition for employees and wage inflation could have a material impact on our ability to attract and retain talent, our turnover rate and the cost of operating our business. If we are unable to attract and retain sufficient talent, minimize employee turnover or manage wage inflation, it could have a material adverse effect on our business, financial condition, results of operations or prospects.

We may face significant competition from established companies with longer operating histories, customer incumbency advantages, access to and influence with governmental authorities and more capital resources than we do.

The markets for energy-efficient air conditioning and generation of potable water are evolving and highly competitive. We expect competition to increase in the future from established competitors and new market entrants. This could negatively impact our ability to compete in these markets. We will face competition from other water generation and comfort cooling companies that offer standalone air conditioning and water production solutions and services. In addition, we may face competition from niche companies and new market entrants that offer point products that attempt to address the specific problems that our AirJoule unit attempts to solve.

Many of our existing competitors have, and our potential competitors could have, substantial competitive advantages such as greater name recognition, longer operating histories, larger sales and marketing budgets and resources, greater customer support resources, lower labor and development costs, larger and more mature intellectual property portfolios and substantially greater financial, technical and other resources.

Some of our larger competitors also have substantially broader product lines and market focus and will therefore not be as susceptible to downturns in a particular market. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors, or continuing market consolidation. New start-up companies that innovate and/or large companies that are making significant investments in research and development may invent similar or superior products and technologies that compete with our AirJoule units. In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with agency partners, technology and application providers in complementary categories or other parties. Any such consolidation, acquisition, alliance or cooperative relationship could lead to pricing pressure, a loss of market share or a smaller addressable share of the market, all of which could harm our ability to compete and may materially affect our results of operations and financial condition.

Any failure by our management to properly manage our growth could have a material adverse effect on our business, operating results and financial condition.

We may experience rapid growth and organizational change, which may place significant demands on our management and our operational and financial resources. Our success will depend in part on our ability to manage this growth effectively. We will require significant capital expenditures and valuable management resources to grow without undermining our culture of innovation and teamwork, which has been central to our growth so far. If we fail to manage our anticipated growth and change in a manner that preserves our culture, it could negatively affect our reputation and ability to retain and attract customers and employees. We also intend to expand our international operations in the future. Our expansion may place a significant strain on our managerial, administrative, financial and other resources. If we are unable to manage our growth successfully, our business and results of operations could suffer.

Damage to our reputation or brand image could adversely affect our business.

Our reputation will be one of our key assets. Our ability to attract and retain customers will be highly dependent upon the external perceptions of our level of service, trustworthiness, business practices, financial condition and other subjective qualities. Negative perceptions or publicity regarding these or other matters, including from actual or alleged conduct by us or our employees, could damage our reputation. Any resulting erosion of trust and confidence among customers, business partners, regulators and other parties important to the success of our business could make it difficult for us to attract customers and business partners, which could have a material adverse effect on our business, financial condition and results of operations.

The occurrence of significant events against which we may not be fully insured could have a material adverse effect on our business, financial condition and results of operations.

We may be subject, in the ordinary course of business, to losses resulting from product liability, accidents, acts of God and other claims against us, for which we may have no insurance coverage. We cannot be certain that any future insurance coverage we obtain will be sufficient to cover all future losses or claims against us. A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our business, financial condition and results of operations.

The threat of global economic, capital markets and credit disruptions pose risks to our business.

Our performance will depend on the financial health and strength of our customers, which in turn will be dependent on the economic conditions of the markets in which we and our customers operate. A decline in the global economy, difficulties in the financial services sector and credit markets, continuing geopolitical uncertainties and other macroeconomic factors all affect the spending behavior of potential customers. The economic uncertainty in Europe, the United States, India, China and elsewhere arising out of the COVID-19 pandemic and increased monetary inflation may cause end-users to further delay or reduce technology purchases.

We may also face risks from financial difficulties or other uncertainties experienced by our suppliers, distributors or other third parties on which we rely. If third parties are unable to supply us with required materials or components or otherwise assist us in operating our business, our business could be harmed.

Inflation may increase our operating costs.

Inflation rates, particularly in the United States, have increased recently to levels not seen in years. Increased inflation may result in decreased demand for our products and services, increased operating costs (including our labor costs), reduced liquidity and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the United States Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.

Our business may be adversely affected by force majeure events outside of our control, including labor unrest, civil disorder, war, subversive activities or sabotage, extreme weather conditions, fires, floods, explosions or other catastrophes or epidemics.

The occurrence of one or more natural disasters, including and not limited to tornadoes, hurricanes, fires, floods and earthquakes, unusual weather conditions, pandemics and endemic outbreaks, terrorist attacks or disruptive political events in certain regions where our facilities are located, or where our third-party contractors’ and suppliers’ facilities are located, could adversely affect our business. The continuing conflict arising from the invasion of Ukraine by Russia, or strategic competition and tensions between China, the United States, Taiwan or other countries have also contributed to uncertainty in the geopolitical and regulatory landscape. Such conflicts and tensions could adversely impact macroeconomic conditions, give rise to regional instability and result in heightened economic tariffs, sanctions and import-export restrictions from the United States and the international community in a manner that adversely affect us, including to the extent that any such actions cause material business interruptions or restrict our ability in these regions to conduct business with certain suppliers or vendors. Additionally, such conflict or sanctions may significantly devalue various global currencies and have a negative impact on economies in geographies in which we do business.

Similarly, other events such as terrorist attacks, actual or threatened acts of war or the escalation of current hostilities, or any other military or trade disruptions impacting our domestic or foreign suppliers of components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity prices, which could adversely affect our raw materials or transportation costs. These events also could cause or act to prolong an economic recession in the United States or abroad. Any future disaster recovery and business continuity plans we may put in place may prove inadequate in the event of a serious disaster or similar event, and, more generally, any of these events could cause consumer member confidence and spending to decrease, which could adversely impact our operations.

If the estimates and assumptions we use to determine the size of our total addressable market are inaccurate, our future growth rate may be affected and the potential growth of our business may be limited.

Our estimates for our total addressable market are based on a number of internal and third-party estimates, including the number of potential customers who have expressed interest in licensing our technology, assumed prices and production costs for our products, our ability to leverage our current logistical and operational processes and general market conditions. However, our assumptions and the data underlying our estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy

of these underlying factors. As a result, our estimates of the annual total addressable market for our products, as well as the expected growth rate for the total addressable market for our products, may prove to be incorrect, which could materially and adversely affect our business.

Risks Related to Legal, Compliance and Regulations

There are risks associated with operating in foreign countries, including those related to economic, social and/or political instability, and changes of law affecting foreign companies operating in that country. In particular, we may suffer reputational harm due to our business dealings in certain countries that have previously been associated, or perceived to have been associated, with human rights issues. Increased scrutiny and changing expectations from investors regarding environmental, social and governance (“ESG”) considerations may result in the decrease of the trading price of our securities.

We are currently party to a joint venture with an affiliate of CATL, a Chinese battery manufacturer and technology company, and a development agreement with BASF, an international chemical producer headquartered in Germany. We may continue to pursue partnerships and operations outside of the United States, particularly with suppliers and partners that are located or operate in China. Accordingly, we are subject to risks associated with operating in foreign countries, including:

•        fluctuations in currency exchange rates;

•        limitations on the remittance of dividends and other payments by foreign subsidiaries and joint ventures;

•        additional costs of compliance with local regulations;

•        historically, in certain countries, higher rates of inflation than in the United States;

•        changes in the economic conditions or consumer preferences or demand for our products in these markets;

•        restrictive actions by multinational governing bodies, foreign governments or subdivisions thereof;

•        changes in U.S. and foreign laws regarding trade and investment, including with respect to taxation, import and export tariffs, energy use, land use rights, intellectual property, network security and other matters;

•        less robust protection of our intellectual property under foreign laws;

•        geopolitical events, including natural disasters, public health issues, acts of war, nationalism and terrorism, social unrest or human rights issues; and

•        difficulty in obtaining distribution and support for our products.

In addition, our operations outside the United States are subject to the risk of new and different legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations and potentially adverse tax consequences. The costs associated with operating our continuing international business could adversely affect our results of operations, financial condition and cash flows in the future.

There is an increasing focus from certain investors, employees, partners and other stakeholders concerning ESG matters. While we have internal efforts directed at ESG matters and preparations for increased required future ESG disclosures to an extent we believe to be appropriate at this time, we could be perceived to be not acting responsibly in connection with ESG matters, which could negatively impact us and our reputation. Moreover, the SEC has recently proposed, and may continue to propose, certain mandated ESG reporting requirements, such as the SEC’s proposed rules designed to enhance and standardize climate-related disclosures, which, if finally approved, would significantly increase our compliance and reporting costs and may also result in disclosures that certain investors or other stakeholders deem to negatively impact our reputation or that harm our stock price. For further information regarding ESG-related risk, see “Increased scrutiny of ESG matters, including our completion of certain ESG initiatives, could have an adverse effect on our business, financial condition and results of operations, result in reputational harm and negatively impact the assessments made by ESG-focused investors when evaluating us.”

Our business may require numerous permits, licenses and other approvals from various governmental agencies, and the failure to obtain or maintain any of them, or delays in obtaining them, could materially adversely affect us.

Regulatory risks associated with our business include:

•        our ability to obtain and maintain applicable permits, approvals, licenses or certifications from regulatory agencies, if required;

•        regulatory delays, delays imposed as a result of regulatory inspections and changing regulatory requirements may cause a delay in our ability to fulfill our orders or may cause manufacturing plans to not be completed at all, many of which may be out of our control, including changes in governmental regulations or in the status of our regulatory approvals or applications or other events that force us to cancel or reschedule production, any of which could have an adverse impact on our business and financial condition;

•        regulatory, availability and other challenges may delay our progress in establishing the number of AirJoule units we are able to produce, and such challenges could have an adverse effect on our ability to grow our business; and

•        challenges as a result of regulatory processes or in our ability to secure the necessary permissions to deliver our products could adversely affect our business.

Any of these risk factors could have a material adverse effect on our business.

Our failure to comply with applicable anti-corruption, anti-bribery, anti-money laundering, antitrust, foreign investment and similar laws and regulations could negatively impact our reputation and results of operations.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and other anti-bribery and anti-money laundering laws in the countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years. These laws are interpreted broadly to prohibit companies and their employees and third-party intermediaries from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. As we increase our international sales and business and sales to the public sector, we may engage with partners and third-party intermediaries to market our services and to obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities.

While we have policies and procedures to address compliance with such laws, our employees and agents could violate our policies and applicable law, for which we may be ultimately held responsible. As we increase our international sales and business, our risks under these laws may increase.

Noncompliance with anti-corruption, anti-bribery or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations and financial condition.

Our business could be adversely affected by trade wars, trade tariffs or other trade barriers.

Trade barriers, embargoes, tariffs or shortages and other general economic or political conditions may limit our ability to obtain key components for our AirJoule units or significantly increase freight charges, raw material costs and other expenses associated with our business, which could materially and adversely affect our business, financial condition, prospects and results of operations.

Risks Related to Intellectual Property and Technology

Our patent applications may not result in issued patents, and our issued patents may not provide adequate protection, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

Our patent applications may not result in issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours. The registration of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot be certain that our patent applications will result in patents being issued, or that our patents and any patents that may be issued to us will afford protection against competitors with similar technology. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and is and will be developing our technology. Many of these existing patents and patent applications might have priority over our patent applications and could subject our patent applications to rejection. Furthermore, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued.

Many patent applications in the United States are maintained in secrecy for a period of time after they are filed, and since publication of discoveries in the scientific or patent literature tends to lag behind actual discoveries by several months, we cannot be certain that we will be the first creator of inventions covered by any patent application we make or that we will be the first to file patent applications on such inventions. Because some patent applications are maintained in secrecy for a period of time, there is also a risk that we could adopt a technology without knowledge of a pending patent application, which technology would infringe a third-party patent once that patent is issued.

Even if our patent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented, invalidated or limited in scope in the future. In addition to those who may claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable. The rights granted under any issued patents may not provide us with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement than what the United States provides. In addition, the claims under any patents that issued to us may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar or limit us from licensing, exploiting or enforcing any patents issued to us. In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that it needs to license or design around, either of which would increase costs and may adversely affect our business, financial condition, prospects and results of operations.

Our failure to protect our intellectual property rights may undermine our competitive position, and litigation associated with our intellectual property rights may be costly.

We seek to protect proprietary technologies primarily through patents and trade secrets. Patent protection may not be available or appropriate for some of the products or technology we are developing. While we own several patents and pending patent applications in the United States and in foreign jurisdictions, these applications do not ensure the protection of our intellectual property for a number of reasons, including that there may be prior art of which we are not aware or there may be other patents existing in the patent landscape that affect our freedom to operate. If we must spend significant time and money prosecuting, protecting or enforcing our patents, designing around patents held by others or licensing, potentially for large fees, patents or other proprietary rights held by others, our business and financial prospects may be harmed. Additionally, pending applications may not be issued or may be issued with claims significantly narrower than we currently seek. Similarly, patents for which claims have been allowed may be successfully challenged and invalidated. Unless and until our pending applications issue, their protective scope is impossible to determine and, even after issuance, their protective scope may be limited. Also, litigation may be necessary to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of others. Such litigation may result in our intellectual property rights being challenged, limited in scope or declared invalid or unenforceable. We cannot be certain that the outcome of any litigation will be in our favor, and an adverse determination in any such litigation could impair our intellectual property rights and may harm our business, prospects and reputation.

In addition, our success depends in large part on our proprietary information, including certain processes, formulations and other know-how developed over years of research and development. We rely heavily on trade secrets, especially in cases where we believe patents or other forms of registered intellectual property protection may not be appropriate or obtainable. However, trade secrets are difficult to protect. We employ various methods to protect such intellectual property, such as entering into confidentiality agreements with certain third parties and our employees, and controlling access to, and distribution of, our proprietary information. We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology and processes. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information. There can be no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets, know-how and other proprietary information will not otherwise become known. Enforcing a claim that a party disclosed proprietary information in an unauthorized manner or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts are less willing or unwilling to protect trade secrets, and agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases. Furthermore, even if we successfully maintain the confidentiality of our trade secrets and other proprietary information, competitors may independently develop products or technologies that are substantially equivalent or superior to our own.

If we are unable to maintain the proprietary nature of our technologies, intellectual property, trade secrets and other proprietary information, our competitive position, business, financial condition, and results of operations could be harmed.

We may need to defend ourselves against claims that we infringe, have misappropriated or otherwise violate the intellectual property rights of others, which may be time-consuming and would cause us to incur substantial costs. Third-party claims that we are infringing on intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and our business could be adversely affected.

Companies, organizations, or individuals, including our competitors, and suppliers may hold or obtain patents, trademarks or other proprietary rights that they may in the future believe are infringed by our products or services. Although we are not currently subject to any claims related to intellectual property, these companies holding patents, trademarks or other intellectual property rights allegedly relating to our technologies could, in the future, make claims or bring suits alleging infringement, misappropriation or other violations of such rights, or otherwise asserting their rights and seeking licenses or injunctions. If a claim is successfully brought in the future and we or our products are determined to have infringed, misappropriated or otherwise violated a third party’s intellectual property rights, we may be required to do one or more of the following:

•        cease selling or using our products that incorporate the challenged intellectual property;

•        pay substantial royalty or license fees or other damages (including treble damages and attorneys’ fees if our infringement is determined to be willful);

•        obtain a license from the holder of the intellectual property right, which license may not be available on reasonable terms, or at all;

•        redesign or reengineer our technology, products or services, which may be costly, time-consuming or impossible; or

•        establish and maintain alternative branding for our technology, products or services.

Any of the foregoing could adversely affect our business, prospects, operating results and financial condition. In addition, any litigation or claims, whether or not valid, could harm our reputation, result in substantial costs and divert resources and management attention.

Cyber-attacks or a failure in our information technology and data security infrastructure could adversely affect our business and operations.

We may rely in the future on information technology systems in connection with various aspects of the operation of our business. Our business may depend on the integrity of such information technology systems, which are inherently susceptible to a number of threats, including, but not limited to, viruses, ransomware, malware, malicious codes, hacking, phishing, denial of service actions, human error, network failures, electronic loss of data and other electronic security breaches. A successful material cyber-attack may result in the loss or compromise of customer, financial or operational data, theft of intellectual property, disruption of billing, collections or normal field service activities, disruption of data analytics and electronic monitoring and control of operational systems, loss of revenue, ransomware payments, remediation costs related to lost, stolen or compromised data, repairs to infrastructure, physical systems or data processing systems, increased cybersecurity protection costs or violation of United States and international privacy laws, which may result in litigation. Any of these occurrences could harm our reputation or have a material adverse effect on our business, financial condition, results of operation and prospects. We intend to adopt measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, there is no assurance that these measures will prevent cyber-attacks or security breaches. Although we intend to periodically assess these risks, implement controls and perform business continuity and disaster recovery planning, we cannot be sure that interruptions with material adverse effects will not occur.

A number of foreign countries do not protect intellectual property rights to the same extent as the United States. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the infringement, misappropriation or unauthorized use of our intellectual property rights, technology and other proprietary rights may be difficult and costly outside of the United States. Furthermore, legal standards relating to the intellectual property rights are uncertain and any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our patent rights, trade secrets and other intellectual property rights.

Patent, trademark, trade secret and other intellectual property laws are geographical in scope and vary throughout the world. Some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. In addition, trade secrets and know-how can be difficult to protect and some courts inside and outside the United States are less willing or unwilling to protect trade secrets and know-how. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us, and our competitive position would be materially and adversely harmed. Further, even if we engaged local counsel in key foreign jurisdictions, policing the unauthorized use of our intellectual property in foreign jurisdictions may be difficult or impossible. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States, and efforts to protect against the infringement, misappropriation or unauthorized use of our intellectual property rights, technology and other proprietary rights may be difficult and costly outside of the United States. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and any changes in, or unexpected interpretations of, intellectual property laws may compromise our ability to enforce our patent rights, trade secrets and other intellectual property rights.

We rely on licenses to use the intellectual property rights of third parties, which are incorporated into our products, services and offerings.

We rely, and expect to continue to rely on, certain services and intellectual property that we license from third parties for use in our operations. We cannot be certain that our licensors are not infringing upon the intellectual property rights of others or that our suppliers and licensors have sufficient rights to the third-party technology used in our business in all jurisdictions in which we may operate. Disputes with licensors over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal of the underlying license or litigation. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the operations, products, or offerings that include or incorporate the licensed intellectual property. Any such discontinuation or limitation could have a material and adverse impact on our business, financial condition and results of operation.

Risks Related to Being a Public Company

The market price of shares of our common stock may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment.

The trading price of our common stock following the Business Combination is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “— Risks Related to Montana’s Operations, Technology and Financial Condition” and the following:

•        the uncertainty resulting from the COVID-19 pandemic, the invasion of Ukraine by Russia and resulting sanctions, and other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases);

•        our operating and financial performance and prospects;

•        our quarterly or annual earnings or those of other companies in our industry compared to market expectations;

•        conditions that impact demand for our products and/or services;

•        future announcements concerning our business, our clients’ businesses or our competitors’ businesses;

•        the public’s reaction to our press releases, other public announcements and filings with the SEC;

•        the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”);

•        the size of our public float;

•        coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;

•        market and industry perception of our success, or lack thereof, in pursuing our growth strategy;

•        strategic actions by us or our competitors, such as acquisitions or restructurings;

•        changes in laws or regulations, or changes in the implementation of regulations by regulatory bodies, which adversely affect our industry or us;

•        privacy and data protection laws, privacy or data breaches, or the loss of data;

•        changes in accounting standards, policies, guidance, interpretations or principles;

•        changes in senior management or key personnel;

•        issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;

•        changes in our dividend policy;

•        adverse resolution of new or pending litigation against us; and

•        changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.

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

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

Since the redemption by XPDB Public Stockholders, there may be increased volatility in the trading of XPDB Common Stock due to a lower public float.

The XPDB Public Stockholders elected to redeem 18,141,822 Public Shares in connection with the implementation of the Extension. Upon completion of such redemption, 10,608,178 Public Shares remained issued and outstanding. As a result, there is a lower public float of the XPDB Class A Common Stock, which may cause further volatility in the price of our securities and adversely impact our ability to secure financing following the Closing. Holders will have redemption rights in connection with the Special Meeting to vote on the Business Combination, and consequently, the public float may be further reduced if additional XPDB Public Stockholders redeem their shares.

We do not intend to pay dividends on our common stock for the foreseeable future.

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

If securities or industry analysts do not publish research or reports about our business or publish negative reports, the market price of our common stock could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We may be unable or slow to attract research coverage and if one or more analysts cease coverage of us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts that may cover us change their recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our securities to decline. Moreover, if one or more of the analysts who cover us downgrades our common stock or if our reporting results do not meet their expectations, the market price of our common stock could decline.

Our ability to timely raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all. Our failure to raise capital when needed could harm our business, operating results and financial condition. Debt issued to raise additional capital may reduce the value of our common stock.

We have funded our operations since inception primarily through the continued financial support from our shareholders and other related parties. We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business.

We intend to continue to make investments to support our business and may require additional funds. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition. If we incur debt, the terms of such debt, including the accrual of interest at fixed or variable interest rates, could restrict our operations, including our ability to pay dividends on our common stock. Moreover, as a result of widespread inflation in the global economy, certain governmental authorities responsible for administering monetary policy have recently increased, and may continue to increase, applicable central bank interest rates, which could increase the costs required to obtain debt financing in the future or refinance any such future indebtedness Furthermore, if we incur debt, the debt holders could have rights senior to holders of common stock to make claims on our assets. As a result, our stockholders bear the risk of future issuances of debt securities reducing the value of our common stock.

Our issuance of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.

In connection with the proposed Business Combination, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of our common stock reserved for issuance pursuant to Montana Options and under the Incentive Plan and the ESPP. The Incentive Plan and ESPP each will provide for automatic increases in the shares reserved for grant or issuance under the applicable plan which could result in additional dilution to our stockholders. Subject to the satisfaction of vesting conditions and the expiration of any applicable lockup restrictions, shares registered under the registration statement on Form S-8 will generally be available for resale immediately in the public market without restriction. From time to time in the future, we may also issue additional shares of our common stock or securities convertible into common stock pursuant to a variety of transactions, including acquisitions. We may also execute or have executed agreements which allow certain third parties the right to purchase additional shares of our common stock or securities convertible into common stock. The issuance by us of additional shares of our common stock or securities convertible into our common stock would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our common stock.

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

Future sales, or the perception of future sales, of our common stock by us or our existing stockholders in the public market following the Closing could cause the market price for our common stock to decline.

The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of the Business Combination, in the Assuming Minimum Redemption Scenario, we will have a total of 55,741,006 shares of common stock outstanding, consisting of (i) 37,945,328 shares issued to holders of Montana Class A Common Units and Montana Class B Common Units, (ii) 10,608,178 shares held by XPDB Public Stockholders, (iii) 7,097,500 shares held by the Sponsor and our Anchor Investors (including up to 1,380,736 shares subject to vesting and earnout requirements pursuant to the Sponsor Support Agreement) and (iv) 90,000 shares held by the independent directors of XPDB. Montana Equityholders (other than holders of Montana Warrants) will also have the opportunity to receive up to 20.0 million Earnout Shares. All shares issued as Merger Consideration in the Business Combination will be freely tradable without registration under the Securities Act and without restriction by persons other than our “affiliates” (as defined under Rule 144 of the Securities Act, referred to herein as “Rule 144”), including our directors, executive officers and other affiliates.

In connection with the Closing, Sponsor, XPDB’s independent directors and certain Montana Equityholders will each enter into Lock-Up Agreements with the Post-Combination Company, pursuant to which they will be subject to certain restrictions on transfer with respect to the shares of common stock issued as part of the Merger Consideration beginning at Closing and ending on the date that is six months after the completion of the Business Combination and with respect to the Private Placement Warrants, thirty calendar days after the completion of the Business Combination. See the section entitled “Other Agreements — Lock-Up Agreements” for a description of the Lock-Up Agreements.

Upon the expiration or waiver of the lock-ups described above, shares held by certain of our stockholders will be eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations under Rule 144.

In addition, pursuant to the Registration Rights Agreement, certain stockholders will have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act. By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our common stock to decline. Following completion of the Business Combination, the shares covered by registration rights would represent approximately             % and             % of our outstanding common stock in the Assuming No Redemptions Scenario and Assuming Maximum Contractual Redemptions Scenario, respectively. See the section entitled “Other Agreements — Registration Rights Agreement” for a description of these registration rights.

As shares vest pursuant to the Sponsor Support Agreement, Earnout Shares are earned, restrictions on resale end or if these stockholders exercise their registration rights, the market price of shares of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

In addition, the shares of our common stock issuable pursuant to the Montana Options and reserved for future issuance under the Incentive Plan and the ESPP will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. The number of shares to be reserved for future issuance under the Incentive Plan is expected to equal             ,              or              shares of our common stock, in the Assuming Minimum Redemptions Scenario, Assuming Mid-Point Redemptions Scenario or Assuming Maximum Contractual Redemptions Scenario, respectively. The number of shares to be reserved for future issuance under the ESPP is expected to equal             ,              or              shares of our common stock, in the Assuming Minimum Redemptions Scenario, Assuming Mid-Point Redemptions Scenario or Assuming Maximum Contractual Redemptions Scenario, respectively. We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities issuable pursuant to the Montana Options, the Incentive Plan and the ESPP. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market.

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of the Nasdaq, may strain our resources, increase our costs and require additional attention of management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we will be subject to laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and the requirements of the Nasdaq, which we were not required to comply with as a private company. As a newly public company as a result of the Business Combination, complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and significantly increases our costs and expenses. For example, we will have to institute a more comprehensive compliance function, comply with rules promulgated by the Nasdaq, prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws, and establish new internal policies, such as those relating to insider trading. We will also have to retain and rely on outside counsel and accountants to a greater degree in these activities. In addition, being subject to these rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officer.

We are an “emerging growth company.” The reduced public company reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We qualify as an “emerging growth company,” as defined in the JOBS Act. While we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include: (1) presenting only two years of audited financial statements, (2) presenting only two years of related selected financial data and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, (3) an

exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley, (4) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, (5) reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, registration statements, and proxy statements, and (6) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information we provide will be different than the information that is available with respect to other public companies that are not emerging growth companies. Additionally, management has elected to present two years of audited financial statements and selected financial data.

We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock. The market price of our common stock may be more volatile.

We will remain an emerging growth company until the earliest of: (1) December 31, 2026, (2) the first fiscal year after our annual gross revenue exceed $1.235 billion, (3) the date on which we have, during the immediately preceding three-year period, issued more than $1.0 billion in non-convertible debt securities, and (4) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

Our management has limited experience in operating a public company.

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

Changes to, or changes to interpretations of, the U.S. federal, state, local or other jurisdictional tax laws could have a material adverse effect on our business, financial condition and results of operations.

All statements contained herein concerning U.S. federal income tax (or other tax) consequences are based on existing law and interpretations thereof. The tax regimes to which we are subject or under which we operate, including income and non-income taxes, are unsettled and may be subject to significant change. While some of these changes could be beneficial, others could negatively affect our after-tax returns. Accordingly, no assurance can be given that the currently anticipated tax treatment will not be modified by legislative, judicial or administrative changes, possibly with retroactive effect. In addition, no assurance can be given that any tax authority or court will agree with any particular interpretation of the relevant laws.

State, local or other jurisdictions could impose, levy or otherwise enforce tax laws against us. Tax laws and regulations at the state and local levels frequently change, especially in relation to the interpretation of existing tax laws for new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future taxes, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to the Business Combination

XPDB stockholders will have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

Upon the issuance of the shares to Montana Equityholders, current XPDB stockholders’ percentage ownership will be diluted. In the Assuming Minimum Redemptions Scenario and excluding any shares issuable pursuant to XPDB’s outstanding warrants, options to purchase shares of Class A Common Stock or shares to be reserved for issuance under the Incentive Plan or ESPP, current XPDB stockholders’ percentage ownership in the Post-Combination Company following the issuance of shares to Montana Equityholders would be approximately 19.0%. Additionally, of the expected members of the Post-Combination Company Board after the completion of the Business Combination, only             will be current directors of XPDB and             will be current directors of Montana. The percentage of the Post-Combination Company’s common stock that will be owned by current XPDB stockholders as a group will vary based on the number of Public Shares for which the holders thereof request redemption in connection with the Business Combination. To illustrate the potential ownership percentages of current XPDB stockholders (including the Sponsor and directors of XPDB), under different redemption levels, based on the number of issued and outstanding shares of XPDB Common Stock and units of Montana on June 30, 2023, after taking into account the June Redemptions, and based on the Merger Consideration, current XPDB stockholders as a group, will own (1) in the Assuming Mid-Point Redemption Scenario, approximately 17.2% of the Post-Combination Company’s common stock expected to be outstanding immediately after the Business Combination or (2) in the Assuming Maximum Contractual Redemptions, approximately 15.1% of the Post-Combination Company’s common stock expected to be outstanding immediately after the Business Combination (in each case, excluding any shares issuable pursuant to XPDB’s outstanding warrants, options to purchase shares of Class A Common Stock or shares to be reserved for issuance under the Incentive Plan or ESPP). Because of this, current XPDB stockholders, as a group, will have less influence on the board of directors, management and policies of the Post-Combination Company than they now have on the board of directors, management and policies of XPDB.

The market price of shares of the Post-Combination Company’s common stock after the Business Combination may be affected by factors different from those currently affecting the prices of shares of XPDB Class A Common Stock.

Upon completion of the Business Combination, holders of Montana Common Units and Montana Preferred Units will become holders of shares of the Post-Combination Company’s common stock. Prior to the Business Combination, XPDB has had limited operations. Upon completion of the Business Combination, the Post-Combination Company’s results of operations will depend upon the performance of Montana’s businesses, which are affected by factors that are different from those currently affecting the results of operations of XPDB.

XPDB has not obtained an opinion from an independent investment banking firm, and consequently, there is no assurance from an independent source that the Merger Consideration is fair to its stockholders from a financial point of view.

XPDB is not required to, and has not, obtained an opinion from an independent investment banking firm that the Merger Consideration it is paying for Montana is fair to XPDB’s stockholders from a financial point of view. The fair market value of Montana has been determined by the XPDB Board based upon standards generally accepted by the financial community, such as potential sales and the price for which comparable businesses or assets have been valued. The XPDB Board believes because of the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders and that Montana’s fair market value was at least 80% of the assets held in the Trust Account (excluding the Deferred Discount and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into the Business Combination. XPDB’s stockholders will be relying on the judgment of its board of directors with respect to such matters.

If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of our common stock may decline.

The market price of our common stock may decline as a result of the Business Combination if we do not achieve the perceived benefits of the Business Combination as rapidly, or to the extent anticipated by, financial analysts or the effect of the Business Combination on our financial results is not consistent with the expectations of financial analysts. Accordingly, holders of our common stock following the consummation of the Business Combination may experience

a loss as a result of a decline in the market price of such common stock. In addition, a decline in the market price of our common stock following the consummation of the Business Combination could adversely affect our ability to issue additional securities and to obtain additional financing in the future.

There can be no assurance that the Post-Combination Company’s common stock will be approved for listing on the Nasdaq or that the Post-Combination Company will be able to comply with the continued listing standards of the Nasdaq.

In connection with the Closing, we intend to list the Post-Combination Company’s common stock and Warrants on the Nasdaq under the symbols “AIRJ” and “AIRJW,” respectively. The Post-Combination Company’s continued eligibility for listing may depend on the number of our shares that are converted. If, after the Business Combination, the Nasdaq delists the Post-Combination Company’s shares from trading on its exchange for failure to meet the listing standards, the Post-Combination Company and its stockholders could face significant material adverse consequences including:

•        a limited availability of market quotations for the Post-Combination Company’s securities;

•        reduced liquidity for the Post-Combination Company’s securities;

•        a determination that the Post-Combination Company’s common stock is a “penny stock” which will require brokers trading in the Post-Combination Company’s common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of the Post-Combination Company’s common stock;

•        a limited amount of analyst coverage; and

•        a decreased ability to issue additional securities or obtain additional financing in the future.

The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.

The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Business Combination. Those conditions include: approval of the proposals required to effect the Business Combination by XPDB stockholders, as well as receipt of certain requisite regulatory approvals, absence of orders prohibiting completion of the Business Combination, effectiveness of the registration statement of which this proxy statement/prospectus is a part, approval of the shares of Class A Common Stock to be issued to XPDB stockholders for listing on the Nasdaq, the accuracy of the representations and warranties by both parties (subject to the materiality standards set forth in the Merger Agreement) and the performance by both parties of their covenants and agreements. These conditions to the Closing may not be fulfilled in a timely manner or at all, and, accordingly, the Business Combination may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after stockholder approval, or XPDB or Montana may elect to terminate the Merger Agreement in certain other circumstances. See the section entitled “The Merger Agreement — Termination.”

The parties to the Merger Agreement may amend the terms of the Merger Agreement or waive one or more of the conditions to Closing, and the exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of our stockholders.

In the period leading up to the Closing, other events may occur that, pursuant to the Merger Agreement, would require us to agree to amend the Merger Agreement, to consent to certain actions or to waive certain closing conditions or other rights that we are entitled to under the Merger Agreement. Such events could arise because of changes in the course of Montana’s business, a request by Montana to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Montana’s business and would entitle us to terminate the Merger Agreement. In any of such circumstances, it would be in our discretion, acting through our board of directors, to grant our consent or waive our rights. The existence of the financial and personal interests of the directors and officers described elsewhere in this proxy statement may result in a conflict of interest on the part of one or more of the directors or officers between what he or she may believe is best for XPDB and our stockholders and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action.

For example, it is a condition to XPDB’s obligation to close the Business Combination that Montana’s representations and warranties be true and correct as of the Closing in all respects subject to the applicable materiality standards as set forth in the Merger Agreement. However, if the XPDB Board determines that any such breach is not material to the business of Montana, then the XPDB Board may elect to waive that condition and close the Business Combination. The parties will not waive the condition that XPDB’s stockholders approve the Business Combination.

While certain changes could be made without further stockholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the stockholders, we will be required to circulate a new or amended proxy statement or supplement thereto and resolicit the vote of our stockholders with respect to the Business Combination Proposal.

Termination of the Merger Agreement could negatively impact Montana and XPDB.

If the Business Combination is not completed for any reason, including as a result of Montana Equityholders declining to adopt the Merger Agreement or XPDB stockholders declining to approve the proposals required to effect the Business Combination, the ongoing businesses of Montana and XPDB may be adversely impacted and, without realizing any of the anticipated benefits of completing the Business Combination, Montana and XPDB would be subject to a number of risks, including the following:

•        Montana or XPDB may experience negative reactions from the financial markets, including negative impacts on its stock price (including to the extent that the current market price reflects a market assumption that the Business Combination will be completed);

•        Montana may experience negative reactions from its customers, vendors and employees;

•        Montana and XPDB will have incurred substantial expenses and will be required to pay certain costs relating to the Business Combination, whether or not the Business Combination is completed; and

•        since the Merger Agreement restricts the conduct of Montana’s and XPDB’s businesses prior to completion of the Business Combination, each of Montana and XPDB may not have been able to take certain actions during the pendency of the Business Combination that would have benefitted it as an independent company, and the opportunity to take such actions may no longer be available (see the section of this proxy statement/prospectus entitled “The Merger Agreement — Covenants and Agreements” for a description of the restrictive covenants applicable to Montana and XPDB).

If the Merger Agreement is terminated and Montana’s board of directors seeks another merger or business combination, Montana Equityholders cannot be certain that Montana will be able to find a party willing to offer equivalent or more attractive consideration than the consideration XPDB has agreed to provide in the Business Combination or that such other merger or business combination is completed. If the Merger Agreement is terminated and the XPDB Board seeks another merger or business combination, XPDB stockholders cannot be certain that XPDB will be able to find another acquisition target that would constitute a business combination or that such other merger or business combination will be completed before the end of the Completion Window. See the section entitled “The Merger Agreement — Termination.”

Montana will be subject to business uncertainties and contractual restrictions while the Business Combination is pending.

Uncertainty about the effect of the Business Combination on employees and customers may have an adverse effect on Montana and consequently on XPDB. These uncertainties may impair Montana’s ability to attract, retain and motivate key personnel until the Business Combination is completed and could cause customers and others that deal with Montana to seek to change existing business relationships with Montana. Retention of certain employees may be challenging during the pendency of the Business Combination as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, our business following the Business Combination could be negatively impacted. In addition, the Merger Agreement restricts Montana from making certain expenditures and taking other specified actions without the consent of XPDB until the Business

Combination occurs. These restrictions may prevent Montana from pursuing attractive business opportunities that may arise prior to the completion of the Business Combination. See the section entitled “The Merger Agreement — Covenants and Agreements.”

XPDB directors and officers may have interests in the Business Combination different from the interests of XPDB stockholders.

Executive officers of XPDB negotiated the terms of the Merger Agreement with their counterparts at Montana, and the XPDB Board determined that entering into the Merger Agreement was in the best interests of XPDB and its stockholders, declared the Merger Agreement advisable and recommended that XPDB stockholders approve the proposals required to effect the Business Combination. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that XPDB’s executive officers and directors may have financial interests in the Business Combination that may be different from, or in addition to, the interests of XPDB stockholders. Specifically, the 7,187,500 Founder Shares held by the Initial Stockholders, which were acquired for an aggregate purchase price of $25,000 prior to the completion of the XPDB IPO, and the 8,900,000 Private Placement Warrants the Sponsor purchased from XPDB for an aggregate purchase price of approximately $8,900,000 (or $1.00 per warrant) concurrently with the closing of the XPDB IPO, will expire worthless if XPDB does not consummate a business combination within the Completion Window. The XPDB Board was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination and in recommending to XPDB’s stockholders that they vote to approve the Business Combination. For a detailed discussion of the special interests that XPDB’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination — Interests of the Sponsor and XPDB’s Directors and Executive Officers in the Business Combination.”

Montana directors and officers may have interests in the Business Combination different from the interests of Montana Equityholders.

Executive officers of Montana negotiated the terms of the Merger Agreement with their counterparts at XPDB, and the Montana board of managers determined that entering into the Merger Agreement was in the best interests of Montana and its stockholders. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that Montana’s executive officers and directors may have financial interests in the Business Combination that may be different from, or in addition to, the interests of Montana Equityholders. The Montana board of managers was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination.

The Sponsor may have interests in the Business Combination different from the interests of XPDB stockholders.

When considering the XPDB Board’s recommendation that XPDB stockholders vote in favor of the approval of the Business Combination Proposal and the other Proposals described in this proxy statement, stockholders should be aware that the Sponsor has interests in the Business Combination that may be different from, in addition to, or conflict with the interests of our stockholders in general. Certain members of the XPDB Board collectively own 90,000 shares of XPDB Class B Common Stock and the Sponsor holds 7,097,500 shares of XPDB Class B Common Stock, which were acquired for an aggregate purchase price of $25,000 prior to the completion of the XPDB IPO. XPDB has agreed to sell to the Anchor Investors up to 1,078,125 shares of XPDB Class B Common Stock on the date of the initial business combination for an aggregate purchase price of approximately $4,312.51 or approximately $0.004 per share. Our Sponsor has also agreed that in the event of such purchase by the Anchor Investors, our Sponsor will forfeit to us for no consideration a number of shares of XPDB Class B Common Stock equal to the number of shares purchased by the Anchor Investors. The Sponsor holds 8,900,000 Private Placement Warrants purchased from XPDB for an aggregate purchase price of approximately $8,900,000 (or $1.00 per warrant) concurrently with the closing of the XPDB IPO. The XPDB Class B Common Stock and Private Placement Warrants will expire worthless if XPDB does not consummate a business combination within the Completion Window. For a more complete description of these interests, see the section entitled “The Business Combination — Interests of the Sponsor and XPDB’s Directors and Executive Officers in the Business Combination.”

Because Montana will become a publicly traded company through the Business Combination rather than an underwritten initial public offering, the scope of due diligence conducted may be different from that conducted by an underwriter in an underwritten initial public offering.

Montana will effectively become a publicly listed company upon the completion of the Business Combination. The Business Combination and the transactions described in this proxy statement/prospectus differ from an underwritten initial public offering. In a traditional underwritten initial public offering, underwriters typically conduct a certain amount of due diligence on the company being taken public in order to establish a due diligence defense against liability claims under federal securities laws. Because XPDB is already a publicly listed company, an underwriter has not been engaged. The due diligence conducted by management and the XPDB Board may be different than the due diligence undertaken by an underwriter in a traditional initial public offering. The Sponsor may have an inherent conflict of interest because its shares and warrants will be worthless if an initial business combination is not completed with Montana or another company before December 14, 2023 or such further extended date as determined by the XPDB Board in accordance with the Existing Charter. Therefore, there could be a heightened risk of an incorrect valuation of Montana’s business, which could cause potential harm to investors.

The Business Combination will result in changes to the board of directors that may affect our strategy.

If the parties complete the Business Combination and the Director Election Proposal is approved, the composition of the Post-Combination Company Board will change from the current boards of directors of XPDB and Montana. The Post-Combination Company Board will be divided into three classes and will consist of the directors elected pursuant to the Director Election Proposal, each of which will serve an initial term ending in either 2024, 2025 or 2026, and thereafter will serve a three-year term. This new composition of the Post-Combination Company Board may affect our business strategy and operating decisions upon the completion of the Business Combination.

The Merger Agreement contains provisions that may discourage other companies from trying to acquire Montana for greater Merger Consideration.

The Merger Agreement contains provisions that prohibit Montana from seeking alternative business combinations during the pendency of the Business Combination. These provisions include a general prohibition on Montana from soliciting or entering into discussions with any third party regarding any acquisition proposal or offers for competing transactions. Montana also has an unqualified obligation to submit the proposal to adopt the Merger Agreement to a vote by its stockholders, even if Montana receives an alternative acquisition proposal that its board of directors believes is superior to the Business Combination, unless the Merger Agreement has been terminated in accordance with its terms. See the section entitled “The Merger Agreement — Termination.”

The Merger Agreement contains provisions that may discourage XPDB from seeking an alternative business combination.

The Merger Agreement contains provisions that prohibit XPDB from seeking alternative business combinations during the pendency of the Business Combination. Further, if XPDB is unable to obtain the requisite approval of its stockholders, either party may terminate the Merger Agreement. See the section entitled “The Merger Agreement — Termination.”

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

The unaudited pro forma financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that XPDB and Montana currently believe are reasonable. The unaudited pro forma financial information reflects adjustments, which are based upon preliminary estimates, among other things, to allocate the purchase price to Montana’s net assets. The purchase price allocation reflected in this proxy statement/prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Montana as of the date of the completion of the Business Combination. In addition, following the completion of the Business Combination, there

may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

XPDB and Montana will incur transaction costs in connection with the Business Combination.

Each of XPDB and Montana has incurred and expects that it will incur significant, non-recurring costs in connection with consummating the Business Combination. XPDB and Montana may also incur additional costs to retain key employees. XPDB and Montana will also incur significant legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the Business Combination. XPDB and Montana estimate that they will incur approximately $20.0 million in aggregate transaction costs, inclusive of approximately $6 million in form of a Deferred Discount. Some of these costs are payable regardless of whether the Business Combination is completed. See the section entitled “The Business Combination — Terms of the Business Combination.”

XPDB’s stockholders will have their rights as stockholders governed by the Post-Combination Company’s organizational documents.

As a result of the completion of the Business Combination, holders of shares of XPDB Common Stock will become holders of shares of the Post-Combination Company’s common stock, which are expected to be governed by the Post-Combination Company’s organizational documents. As a result, there will be differences between the rights currently enjoyed by XPDB stockholders and the rights that XPDB stockholders who become stockholders of the Post-Combination Company will have as stockholders of the Post-Combination Company. See the section entitled “Comparison of Stockholders’ Rights.”

The Sponsor has agreed to vote in favor of each of the Proposals presented at the Special Meeting, regardless of how XPDB Public Stockholders vote.

Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to vote its Founder Shares and any Public Shares it holds in favor of each of the Proposals presented at the Special Meeting, regardless of how XPDB Public Stockholders vote. Accordingly, given Sponsor’s ownership of approximately 40% of the XPDB Common Stock as of June 30, 2023, the agreement by the Sponsor to vote in favor of the each of the Proposals presented at the Special Meeting will increase the likelihood that XPDB will receive the requisite stockholder approval for the Business Combination and the transactions contemplated thereby. In addition to our Initial Stockholders’ Founder Shares, we would need 1,710,340, or 16.12%, of the 10,608,178 Public Shares outstanding as of June 30, 2023 to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted). See the section entitled “Other Agreements — Sponsor Support Agreement.”

XPDB’s and Montana’s ability to consummate the Business Combination, and the operations of the Post-Combination Company following the Business Combination, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic.

The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Business Combination, and the business of Montana or the Post-Combination Company following the Business Combination could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.

The parties will be required to consummate the Business Combination even if Montana, its business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and if Montana is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, Montana’s ability to consummate the Business Combination and the Post-Combination Company’s financial condition and results of operations following the Business Combination may be materially adversely affected. Each of Montana and the Post-Combination Company may also incur additional costs due to delays caused by COVID-19, which could adversely affect the Post-Combination Company’s financial condition and results of operations.

BofA, one of the underwriters in the XPDB IPO, along with Barclays, was to be compensated, in part, on a deferred basis for already-rendered underwriting services in connection with the XPDB IPO, yet it waived such compensation without any consideration from XPDB and, effective as of June 20, 2023, resigned and withdrew from its role in the Business Combination. As a result, BofA disclaims any responsibility for this proxy statement/prospectus and will not be associated with the disclosure or underlying business analysis related to the Business Combination, which could result in an increased number of XPDB stockholders voting against the Business Combination or seeking to redeem their shares for cash.

As underwriters in the XPDB IPO, BofA and Barclays were entitled to a Deferred Discount of $0.35 per share, or $10,062,500 in the aggregate, payable to the underwriters from the amounts held in the Trust Account solely in the event that XPDB completes a Business Combination, subject to the terms of the Underwriting Agreement. On June 20, 2023, BofA formally notified XPDB in writing that it had resigned and withdrew from its role in the Business Combination and thereby waived its entitlement to its portion of the Deferred Discount. Barclays has not resigned from its role in the Business Combination, but has agreed that its $6 million capital markets advisory fee is creditable against its portion of the Deferred Discount. Investors should be aware that a fee waiver for services already rendered is unusual and some investors may find the Business Combination less attractive as a result. This may make it more difficult for XPDB to consummate the Business Combination. As a result of its resignation, BofA claims no role in the Business Combination, disclaims any responsibility for this proxy statement/prospectus and will not be associated with the disclosure or underlying business analysis related to the Business Combination. BofA had no role in the identification or evaluation of business combination targets, and BofA was not involved in the preparation of any disclosure included in this proxy statement/prospectus or any analysis underlying disclosure included in this proxy statement/prospectus. Further, BofA has not assisted in the preparation or review of any materials for XPDB in connection with the Business Combination and did not participate in any other aspect of the Business Combination. You should not put any reliance on the fact that BofA was previously involved in the XPDB IPO. It is possible that such resignation may adversely affect market perception of the Business Combination generally. If market perception of the Business Combination is negatively impacted, an increased number of XPDB stockholders may vote against the Business Combination or seek to redeem their shares for cash.

Risks Related to Ownership of Class A Common Stock Following the Business Combination

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

Although XPDB has conducted due diligence on Montana, this diligence may not surface all material issues that may be present with Montana’s business. Factors outside of XPDB’s and outside of Montana’s control may, at any time, arise. As a result of these factors, the Post-Combination Company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in the Post-Combination Company reporting losses. Even if XPDB’s due diligence successfully identified certain risks, unexpected risks may arise, and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and therefore not have an immediate impact on the Post-Combination Company’s liquidity, the fact that the Post-Combination Company reports charges of this nature could contribute to negative market perceptions about the Post-Combination Company or its securities. In addition, charges of this nature may cause the Post-Combination Company to be unable to obtain future financing on favorable terms or at all.

The Post-Combination Company will have a dual class stock structure that will have the effect of concentrating voting control with the holders of Class B Common Stock. The Class B Common Stock will have multiple votes per share, and this ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of the Post-Combination Company’s organizational documents, and any merger, consolidation, sale of all or substantially all of the Post-Combination Company’s assets, or other major corporate transactions requiring stockholder approval, and that may adversely affect the trading price of Class A Common Stock.

The Post-Combination Company will have a dual class stock structure in which shares of Class A Common Stock will each have one vote per share and shares of Class B Common Stock will have a number of votes per share necessary such that the Montana Equityholders collectively would own at the Closing at least 80% of the voting power of all classes of stock of the Post-Combination Company entitled to vote; provided, however, that the number of votes per share shall be at least one vote per share. This concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring stockholder approval. In addition, this concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. As a result, such concentrated control may adversely affect the market price of our Class A Common Stock.

Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

The Proposed Charter, the Amended and Restated Bylaws and Delaware law contain or will contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. Among other things, the Proposed Charter and/or the Amended and Restated Bylaws will include the following provisions:

•        a dual class stock structure in which shares of Class A Common Stock will each have one vote per share and shares of Class B Common Stock will have a number of votes per share necessary such that the Montana Equityholders collectively would own at the Closing at least 80% of the voting power of all classes of stock of the Post-Combination Company entitled to vote; provided, however, that the number of votes per share shall be at least one vote per share;

•        a staggered board, which means that our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause;

•        limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes;

•        a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;

•        a forum selection clause, which means certain litigation against us can only be brought in Delaware;

•        the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and

•        advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board of directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such

stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder at an annual or special meeting of stockholders.

Any provision of the Proposed Charter, the Amended and Restated Bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

The Proposed Charter will provide that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

The Proposed Charter, which will become effective prior to the completion of the Business Combination, will provide that, unless we consent in writing to the selection of an alternative forum, the (a) Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf; (ii) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers, or stockholders to us or to our stockholders; (iii) any action, suit or proceeding asserting a claim arising pursuant to the DGCL, the Proposed Charter or the Amended and Restated Bylaws; or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; and (b) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, such forum selection provisions shall not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Proposed Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, the Proposed Charter and the Amended and Restated Bylaws will provide that the federal district courts of the United States of America shall have jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

XPDB has identified a material weakness in its internal control over financial reporting as of December 31, 2022 and June 30, 2023. If XPDB is unable to develop and maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. XPDB’s management concluded that there was a material weakness in internal control over financial reporting as of December 31, 2022 and June 30, 2023 relating to the accounting for accrued general and administrative expenses as well as XPDB’s tax provision. Additionally, this material weakness could result in a misstatement of the carrying value of accounts payable or accrued expenses and the reported amount of general and administrative expenses and income tax expense in the financial statements that would not be prevented or detected on a timely basis.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

If XPDB identifies any new material weaknesses in the future, any such newly identified material weakness could limit its ability to prevent or detect a misstatement of its accounts or disclosures that could result in a material misstatement of its annual or interim financial statements. In such case, XPDB may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in XPDB’s financial reporting and XPDB’s stock price may decline as a result. XPDB cannot assure you that the measures it has taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

Risks Related to Redemption

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.10 per share.

Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we have sought and will continue to seek to have all vendors, service providers, prospective target businesses, including Montana, or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our XPDB Public Stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Marcum LLP, our independent registered public accounting firm, did not execute agreements with us waiving such claims to the monies held in the Trust Account.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by XPDB Public Stockholders could be less than the $10.10 per share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business, with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.10 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of the XPDB IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then our Sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets are our securities. We have not asked our Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less than $10.10 per Public Share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your Public Shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to complete the Business Combination and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to complete the Business Combination, and results of operations.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases (including redemptions) of shares by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased, and thus could cause a reduction in the value of our Class A Common Stock. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new shares issuances against the fair market value of shares repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in connection with the Business Combination, the exercise of a redemption right, the liquidation of our company, or otherwise, may be subject to the excise tax. Whether and to what extent we would be subject to the excise tax in connection with the Business Combination, the exercise of a redemption right (including in connection with the Extension), the liquidation of our company, or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination or otherwise, (ii) the structure of the Business Combination, (iii) the nature and amount of any equity issuances in connection with the Business Combination (or otherwise issued not in connection with the Business Combination but issued within the same taxable year of the Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by us and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete the Business Combination and in our ability to complete the Business Combination. Further, the application of the excise tax in the event of a liquidation is uncertain.

Our independent directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our XPDB Public Stockholders

In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.10 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations.

While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our XPDB Public Stockholders may be reduced below $10.10 per share.

There is no guarantee that an XPDB Public Stockholder’s decision whether to redeem their Public Shares for a pro rata portion of the Trust Account will put such stockholder in a better future economic position.

No assurance can be given as to the price at which a XPDB Public Stockholder may be able to sell the shares of our Class A Common Stock in the future following the completion of the Business Combination. Certain events following the consummation of any business combination, including the Business Combination, may cause an increase

in our stock price, and may result in a lower value realized now than an XPDB stockholder might realize in the future had the stockholder not elected to redeem such stockholder’s Public Shares. Similarly, if an XPDB Public Stockholder does not redeem his, her or its shares, such stockholder will bear the risk of ownership of our Class A Common Stock after the consummation of the Business Combination, and there can be no assurance that a stockholder can sell his, her or its shares of our Class A Common Stock in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. An XPDB Public Stockholder should consult his, her or its own tax and/or financial advisor for assistance on how this may affect its individual situation.

If XPDB Public Stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.

To exercise their redemption rights, holders are required to deliver their stock, either physically or electronically using the Depository Trust Company’s DWAC System, to XPDB’s transfer agent two business days prior to the vote at the Special Meeting. If a holder properly seeks redemption as described in this proxy statement/prospectus and the Business Combination with Montana is consummated, XPDB will redeem these Public Shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own such Public Shares following the Business Combination. See the section entitled “XPDB’s Special Meeting of Stockholders — Redemption Rights” for additional information on how to exercise your redemption rights.

If, before distributing the proceeds in the Trust Account to our XPDB Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to our XPDB Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.

If, after we distribute the proceeds in the Trust Account to our XPDB Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.

If, after we distribute the proceeds in the Trust Account to our XPDB Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying XPDB Public Stockholders from the Trust Account prior to addressing the claims of creditors.

If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of more than 15% of the Public Shares, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the Public Shares.

An XPDB Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its Public Shares or, if part of such a group, the group’s Public Shares, in excess of 15% of the Public Shares without the consent of XPDB. Your inability to redeem any such excess Public Shares could resulting in you suffering a material loss on your investment in XPDB if you sell such excess Public Shares in open market transactions. XPDB cannot assure you that the value of such excess Public Shares will appreciate over time following the Business Combination or that the market price of the Public Shares will exceed the per-share redemption price.

However, XPDB’s stockholders’ ability to vote all of their Public Shares (including such excess shares) for or against the Business Combination Proposal is not restricted by this limitation on redemption.

We may redeem your unexpired XPDB public warrants prior to their exercise at a time that is disadvantageous to you, thereby making your XPDB public warrants worthless, and Private Placement Warrants have different cashless exercise rights than other warrants issued by XPDB.

We have the ability to redeem the outstanding warrants underlying the XPDB units sold in the XPDB IPO, or the “XPDB public warrants,” at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, in whole and not in part, upon a minimum of 30 days’ prior written notice of redemption to each warrant holder and if, and only if, the last reported sale price of the Class A Common Stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise, such as for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like). If and when the warrants become redeemable by us, we may exercise our redemption right. Redemption of the outstanding warrants as described above could force you to: (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.

We have established the last of the redemption criteria discussed above to prevent a redemption call unless there is, at the time of the call, a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the XPDB public warrants, each warrant holder will be entitled to exercise his, her or its XPDB public warrant prior to the scheduled redemption date. Unless we have elected to require warrant holders to exercise the warrants on a cashless basis, any such exercise would require the exercising warrant holder to pay the exercise price for each warrant being exercised. However, the price of the Class A Common Stock may fall below the $18.00 redemption trigger price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued).

The Private Placement Warrants are identical to the XPDB public warrants except that (i) the Private Placement Warrants and the Class A Common Stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (ii) the Private Placement Warrants will be exercisable on a cashless basis at the election of such holder, whereas XPDB public warrants will only be exercisable on a cashless basis at XPDB’s election, and (iii) none of the Private Placement Warrants will be redeemable by us.

If we elect to redeem the XPDB public warrants on a cashless basis, or if the holders of the Private Placement Warrants elect to exercise their Private Placement Warrants on a cashless basis, then XPDB will not receive any cash proceeds from the exercise of such warrants. See the section entitled “Description of Securities of the Post-Combination Company — Warrants” for additional information on both the public and Private Placement Warrants.

Montana’s obligation to consummate the Business Combination is conditioned upon the Aggregate Transaction Proceeds equaling or exceeding $85.0 million. This condition may make it more difficult for us to complete the Business Combination as contemplated. If the Aggregate Transaction Proceeds Condition is waived by Montana, the business, financial condition and operations of the Post-Combination Company may be adversely affected.

The Merger Agreement provides that Montana’s obligation to consummate the Business Combination is conditioned on, among other things, as of the Closing, the Aggregate Transaction Proceeds, being equal to or greater than $85.0 million. Although the Aggregate Transaction Proceeds Condition will no longer apply upon receipt by Montana of proceeds from the Capital Raise greater than or equal to $85 million, there can be no assurance that Montana will receive such amount, or any proceeds from the Capital Raise.

Furthermore, the Aggregate Transaction Proceeds will be reduced as a result of XPDB Public Stockholders electing to redeem their Public Shares prior to the consummation of the Business Combination. If a significant number of XPDB Public Stockholders elect to redeem their Public Shares for cash, the Aggregate Transaction Proceeds may be difficult, or impossible to satisfy. If the Aggregate Transaction Proceeds Condition is not satisfied and is not waived by Montana under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. There can be no assurance that Montana would waive the Aggregate Transaction Proceeds Condition.

If Aggregate Transaction Proceeds are less than $85.0 million and the Aggregate Transaction Proceeds Condition is waived by Montana and the Business Combination is consummated, the cash held by the Post-Combination Company may not be sufficient for the Post-Combination Company to successfully operate, and its business, financial condition and operations may be adversely affected.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Defined terms included below have the same meaning as terms defined and included elsewhere in this proxy statement/prospectus.

Introduction

The following unaudited pro forma condensed combined financial information presents the combination of financial information of XPDB and Montana, adjusted to give effect to the Business Combination and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). XPDB has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.

The following unaudited pro forma condensed combined balance sheet as of June 30, 2023, assumes that the Business Combination occurred on June 30, 2023. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2023, and for the year ended December 31, 2022, assume that the Business Combination occurred on January 1, 2022.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the Post-Combination Company’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Post-Combination Company. The actual financial position and results of operations of the Post-Combination Company may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

The historical financial information of XPDB was derived from the unaudited financial statements of XPDB as of and for the six months ended June 30, 2023, and the audited financial statements of XPDB for the year ended December 31, 2022, included elsewhere in this proxy statement/prospectus. The historical financial information of Montana was derived from the unaudited financial statements of Montana as of and for the six months ended June 30, 2023, and the audited financial statements of Montana for the year ended December 31, 2022, which are included elsewhere in this proxy statement/prospectus. This information should be read together with XPDB’s and Montana’s unaudited and audited financial statements, and related notes, the sections titled “XPDB Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Montana Technologies’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus.

Description of the Business Combination

On June 5, 2023, XPDB and Merger Sub entered into the Merger Agreement with Montana, pursuant to which and subject to the terms and conditions contained in the Merger Agreement, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB.

As part of the Business Combination, Montana Equityholders will receive the Merger Consideration. After giving effect to the conversion of all outstanding Montana Preferred Units into Montana Class B Common Units, which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units, in the form of newly issued shares of Class A Common Stock, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units, in the form of newly issued shares of Class B Common Stock, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes

of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, (iii) in the case of holders of Montana Options, each outstanding Montana Option, whether vested or unvested, will be converted into an option to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Option immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock (rounded down to the nearest whole share) equal to the product of (x) the number of Montana Common Units underlying such option immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per Montana Common Unit underlying such option immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, and (iv) in the case of holders of Montana Warrants, each outstanding Montana Warrant will be converted into a warrant to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Warrant immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock equal to the product of (x) the number of Montana Common Units underlying such warrant immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share equal to (A) the exercise price per Montana Common Unit underlying such warrant immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement.

The Eligible Equityholders will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of Earnout Shares only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the sole discretion of a majority of the independent members of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pr icing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA of more than $150,000,000, which shall be determined by a majority of the independent members of the Post-Combination Company Board in their sole discretion, equal to (i) the ratio of (x) (1) the Expected Annualized EBITDA less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable Montana Equityholders, the dates on which construction and operational viability of new production capacity is deemed completed and whether to consent to a transfer of the applicable Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such Montana Option only if such holder continues to provide services (whether as an employee, director or individual independent contractor) to the Post-Combination Company or one of its subsidiaries through the date on which such Earnout Shares are issued, as determined by a majority of the independent members of the Post-Combination Company Board.

If the conditions for payment of the Earnout Shares are satisfied and assuming all originally designated holders of Montana Options are then still providing services to the Post-Combination Company on the date such condition is met, approximately 9% of the aggregate Earnout Shares will be payable to the holders of Montana Options (subject to the holder’s continued service with the Post-Combination Company or its subsidiaries through the applicable payment date) and 91% of the aggregate Earnout Shares will be payable to the holders of Montana Common Units, in accordance with their respective pro rata share immediately following the Closing. The settlement of the Earnout Shares to the holders of Montana Common Units contains variations in something other than the fair value of the issuer’s equity shares. As such, management determined that they should be classified as a liability and recognized at fair value at each reporting period with changes in fair value included in earnings. The Earnout Shares to the holders of Montana Options are subject to ASC 718 and would be accounted for as post-combination compensation cost.

Upon the Closing of the Business Combination, and following the conversion of the XPDB Class B Common Stock to Class A Common Stock, the Sponsor will beneficially own 7,097,500 shares of Class A Common Stock, of which (i) 5,716,764 Subject Shares will automatically vest (and shall not be subject to forfeiture) at the Closing and (ii) 1,380,736 Subject Vesting Shares shall be vested and no longer be subject to forfeiture as follows:

1)      During the Vesting Period, a portion of the Subject Vesting Shares shall vest, from time to time, simultaneously with any Earnout Stock Payment, with the number of vesting shares calculated as (A) the aggregate number of Subject Vesting Shares outstanding immediately after the Closing multiplied by (B) the fraction of (x) the applicable Earnout Milestone Amount divided by (y) the Maximum Earnout Milestone Amount; and

2)      (A) 690,368 shall vest at such time that the volume weighted average price of Class A Common Stock on the Nasdaq as reported by Bloomberg L.P. equals or exceeds $12.00 per share (as adjusted for extraordinary transactions, stock splits, extraordinary stock dividends, reorganizations, recapitalizations and the like) for 20 trading days within any 30 consecutive trading day period during the Vesting Period; or (B) if, prior to the $12.00 Vesting Time, any Subject Vesting Shares have vested simultaneously with any Earnout Stock Payment, then (x) if the number of Subject Vesting Shares that have vested exceeds 690,368, then no additional Subject Vesting Shares shall vest and (y) if the number of Subject Vesting Shares that have vested is less than 690,368 (the “Deficit Amount”), then a number of Subject Vesting Shares equal to 690,368 less the Deficit Amount shall vest; and

3)      Any remaining Subject Vesting Shares shall vest in full at the same time that the volume weighted average price of Class A Common Stock on the Nasdaq as reported by Bloomberg L.P. equals or exceeds $14.00 per share (as adjusted for extraordinary transactions, stock splits, extraordinary stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period.

The Subject Vesting Shares do not meet the “fixed-for-fixed” criterion and thus are not considered indexed to the issuer’s stock. As such, management determined that the Subject Vesting Shares should be classified as a liability and recognized at fair value at each reporting period with changes in fair value included in earnings.

The following table illustrates varying ownership levels of the Post-Combination Company immediately following the Business Combination(1):

____________

(1)      The table does not include the 14,375,000 shares underlying XPDB public warrants, the 11,125,000 shares underlying Private Placement Warrants, the 3,856,649 shares underlying Montana Options, and the 388,023 shares underlying Montana Warrants.

All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages” and, with respect to the determination of the Assuming Maximum Contractual Redemptions Scenario in this section. Additionally, the relative percentages above assume the Business Combination was consummated on June 30, 2023. Should one or more of the assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended.

Anticipated Accounting Treatment

It is anticipated that the Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although XPDB will acquire all of the outstanding equity interests of Montana in the Business Combination, XPDB will be treated as the “acquired” company and Montana will be treated as the accounting acquirer for financial statement reporting purposes. Accordingly, it is anticipated that the Business Combination will be treated as the equivalent of Montana issuing stock for the net assets of XPDB, accompanied by a recapitalization. The net assets of XPDB will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Montana.

Montana has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances under both the Assuming Minimum Redemptions Scenario and the Assuming Maximum Contractual Redemptions Scenario:

•        The Montana Equityholders will have the greatest voting interest in the Post-Combination Company;

•        The Post-Combination Company Board is expected to have            members, and Montana is expected to nominate the majority of the members of the Post-Combination Company Board at Closing;

•        Montana will comprise the ongoing operations of the Post-Combination Company;

•        Montana’s existing senior management will be the senior management of the Post-Combination Company; and

•        The intended strategy and operations of the Post-Combination Company will continue Montana’s current strategy and operations.

The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption for cash of XPDB Common Stock:

•        Assuming Minimum Redemptions Scenario: This presentation assumes that, after the June Redemptions, no XPDB Public Stockholders will exercise redemption rights with respect to the Public Shares for a pro rata share of the funds in the Trust Account; and

•        Assuming Maximum Contractual Redemptions Scenario: This presentation assumes that, after the June Redemptions, 2,552,639 Public Shares are redeemed for aggregate redemption payments of $26.8 million, assuming a $10.50 per share redemption price. The Merger Agreement contains a condition to the Closing that, at the Closing, the Aggregate Transaction Proceeds shall be equal to or greater than $85 million; provided that, upon receiving proceeds in the Capital Raise equal to or in excess of such amount, this condition shall no longer apply. As certain of XPDB’s directors and the Sponsor waived their redemption rights, only 24% of potential redemptions by XPDB Public Stockholders are reflected in this presentation. This scenario includes all adjustments contained in the “Assuming Minimum Redemptions Scenario” and presents additional adjustments to reflect the effect of the Assuming Maximum Contractual Redemptions Scenario. The “Assuming Maximum Contractual Redemptions Scenario” represents the maximum number of Public Shares that may be redeemed and still satisfy the Aggregate Transaction Proceeds Condition. In the event XPDB’s Aggregate Transaction Proceeds at Closing is insufficient to meet the Aggregate Transaction Proceeds Condition due to redemptions by XPDB Public Stockholders beyond what is represented in the “Assuming Maximum Contractual Redemptions Scenario,” a condition to the Closing would not be met and the Business Combination may not be consummated. However, the Aggregate Transaction Proceeds Condition is a contractual condition that may be waived by Montana or may be modified by the parties to the Merger Agreement and if the applicable parties agree to waive or modify such condition, up to an additional 8,055,539 Public Shares may be redeemed.

The following unaudited pro forma condensed combined balance sheet as of June 30, 2023, and the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2023, and for the year ended December 31, 2022, are based on the unaudited and audited historical financial statements of XPDB and Montana. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information and include immaterial rounding differences.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2023
(in thousands, except share and per share data)

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 2023
(in thousands, except share and per share data) — (Continued)

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
(in thousands, except share and per share data)

(1)    Derived from the unaudited balance sheet of Montana as of June 30, 2023.

(2)    Derived from the unaudited balance sheet of XPDB as of June 30, 2023.

(A)    Reflects the deposit of $0.9 million to the Trust Account in connection with the Extension and the accretion of $0.9 million to the XPDB Class A Common Stock subject to possible redemption.

(B)    Reflects the reimbursement of $0.5 million from a previous target of a potential business combination as a partial reimbursement of expenses incurred by XPDB.

(C)    Reflects the transfer of investments held in the Trust Account to cash.

(D)    Reflects the payment of the capital markets advisory fee to Barclays.

(E)    Represents preliminary estimated transaction costs expected to be incurred by XPDB and Montana of approximately $9.0 million and $4.3 million, respectively. These costs are accounted for a reduction in the combined cash account with a corresponding reduction in additional paid-in capital or accumulated deficit consistent with the treatment described in SEC Staff Accounting Bulletin Topic 5.A. These transaction costs will not recur in the Post-Combination Company’s income beyond 12 months after the transaction.

For the XPDB transaction costs, $4.0 million has been accrued as of the pro forma balance sheet date. The remaining amount of $5.0 million is reflected as an adjustment to accumulated losses. The XPDB estimated transaction costs exclude the deferred underwriting commissions included in (D) above.

For the Montana transaction costs, $1.4 million has been accrued as of the pro forma balance sheet date. The remaining amount of $2.9 million is included as an adjustment to additional paid-in capital.

(F)    Represents the issuance of 33,127,115 shares of Class A Common Stock and 4,818,213 shares of Class B Common Stock to the existing Montana Equityholders (excluding 3,856,649 shares underlying the Montana Options and 388,023 shares underlying the Montana Warrants).

(G)    Reflects the elimination of XPDB’s historical accumulated deficit after recording the accretion as described in (A) above, the reimbursement of expenses as described in (B) above, the transaction costs as described in (E) above and the stock-based compensation as described in (I) below.

(H)    Reflects the redemption of shares for cash by the XPDB Public Stockholders upon consummation of the Business Combination. In Scenario 1, it assumes that, after the June Redemptions, no XPDB Public Stockholders will exercise redemption rights with respect to their Public Shares for a pro rata share of the funds in the Trust Account. In Scenario 2, it assumes that, after the June Redemptions, holders of 2,522,639 Public Shares redeem all of their Public Shares for approximately $10.50 per share, resulting in an aggregate redemption payment of $26.8 million.

(I)     Reflects the recognition of stock-based compensation upon consummation of the Business Combination for the Founder Shares transferred from Sponsor to certain of XPDB’s directors in 2021.

(J)     Reflects the conversion of XPDB Class B Common Stock into XPDB Class A Common Stock at the Business Combination.

(K)    Reflects the obligation to issue Earnout Shares to Montana Equityholders (excluding the shares to be issued to Montana Option holders) upon the achievement of certain earnout milestones. The pro-forma estimated fair value of the Earnout Shares was determined with a Monte Carlo simulation using a distribution of potential outcomes for expected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and stock price at expected Commission Dates, utilizing a correlation coefficient for EBITDA and stock price, and assuming $50 million of Annualized EBITDA per production line, with six production lines commissioned over a five-year period. EBITDA was discounted to the valuation date with a weighted average cost of capital estimate and forecasted to each estimated Commission Date. Earnout mechanics at each estimated Commission Date were assessed, and if the Earnout Thresholds were achieved, the future value of the Earnout Shares was discounted to the Valuation Date utilizing a risk-free rate commensurate with the overall term. Expected EBITDA assumes