Spectaire Holdings (SPEC) Risk Analysis

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

To the extent we sell shares of common stock under the Common Stock Purchase Agreement, substantial amounts of common stock will be issued and available for resale by Keystone, which would cause dilution and represent a significant portion of our public float and may result in substantial decreases to the price of our common stock. After Keystone has acquired shares under the Common Stock Purchase Agreement, Keystone may resell all, some or none of such common shares at any time or from time to time in its discretion and at different prices. We have filed registration statements with the SEC for purposes of registering (a) the resale by Keystone of up to 3,067,438 shares of common stock and (b) (1) the resale from time to time of up to (i) up to 24,469,671 shares of common stock constituting approximately 61.9% of our issued and outstanding shares of common stock and approximately 70.4% of our issued and outstanding shares of common stock held by non-affiliates (in each case, assuming the exercise of all our warrants), which consists of (a) up to 6,133,344 shares of common stock issued in connection with the Business Combination, (b) up to 5,165,000 shares of common stock originally issued to the Sponsor, (c) up to 10,050,000 shares of common stock that are issuable upon the exercise of the Private Placement Warrants, (d) up to 670,874 shares of common stock issued to Polar pursuant to the Amended and Restated Polar Subscription Agreement, (e) up to 206,000 shares of common stock issued to Polar pursuant to the Polar Forward Purchase Agreement, (f) up to 50,000 shares of common stock issued in the PIPE Investment, and (g) up to 2,194,453 shares of common stock that are issuable upon the exercise of the Arosa Warrant, and (ii) up to 10,050,000 Private Placement Warrants and (2) the issuance by us of up to 23,744,453 shares of our common stock, which consists of (i) up to 10,050,000 shares of common stock that are issuable upon the exercise of 10,050,000 warrants (the "Private Placement Warrants") constituting approximately 46.6% of our issued and outstanding Warrants, which were originally issued in a private placement at a price of $1.00 per Warrant in connection with the initial public offering of PCCT, (ii) up to 11,500,000 shares of common stock that are issuable upon the exercise of 11,500,000 warrants (the "Public Warrants" and, together with the Private Placement Warrants, the "Warrants") originally issued in the initial public offering of PCCT, and (iii) up to 2,194,453 shares of common stock that are issuable upon the exercise of the Arosa Warrant. Subject to applicable transfer restrictions, shares of common stock held by these stockholders will be eligible for resale, potentially subject to, in the case of stockholders who are our affiliates, volume, manner of sale, and other limitations under Rule 144 promulgated under the Securities Act. In addition, shares of our common stock issuable upon exercise or vesting of incentive awards under our incentive plans are, once issued, eligible for sale in the public market, subject to any lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144. Furthermore, shares of our common stock reserved for future issuance under our incentive plan may become available for sale in future. The market price of shares of our common stock could drop significantly if the holders of the shares of common stock described above sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of shares of our common stock or other securities.

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

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

The outstanding Warrants to purchase an aggregate of 21,550,000 shares of our common stock became exercisable on December 22, 2022. Each Warrant entitles the holder thereof to purchase one share of our common stock at a price of $11.50 per whole share. The Arosa Warrant to purchase an aggregate of 2,194,453 shares of our common stock became exercisable upon its issuance. The Arosa Warrant entitles the holder thereof to purchase up to 2,194,453 shares of common stock at an exercise price of $0.01 per share. Warrants may be exercised only for a whole number of shares of common stock. To the extent such Warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the then existing holders of our common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock. On March 27, 2024, the closing price for our common stock was $0.84. If the price of our common stock remains below $11.50 per share, we believe Warrant holders will be unlikely to cash exercise their Warrants, resulting in little or no cash proceeds to us.

The Company's securities are listed on Nasdaq. However, the Company cannot assure you that its securities will continue to be listed on Nasdaq. In order to continue listing its securities on Nasdaq, the Company must maintain certain financial, distribution and stock price levels. Generally, the Company must maintain a minimum amount of stockholders' equity (generally $4.0 million) and a minimum number of holders of its securities (generally 300 unrestricted, round-lot holders). On December 5, 2023, the Company received a letter (the "Letter") from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that, for the last 30 consecutive business days prior to the date of the Letter, the Company's Market Value of Listed Securities ("MVLS") was below the $50 million minimum MVLS requirement for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(A) (the "MVLS Rule"). The Letter is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company's securities. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company will have 180 calendar days, or until June 3, 2024 (the "June 3rd Compliance Date"), to regain compliance with the MVLS Rule. To regain compliance with the MVLS Rule, the Company's MVLS must equal or exceed $50 million for a minimum of 10 consecutive business days at any time prior to the June 3rd Compliance Date. If the Company regains compliance with the MVLS Rule, Nasdaq will provide the Company with written confirmation and will close the matter. In the event that the Company does not regain compliance with the MVLS Rule by the June 3rd Compliance Date, it will receive written notification that its securities are subject to delisting. At that time, the Company may appeal the delisting determination to a Hearings Panel. The Letter notes that the Company may be eligible to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). The Company is monitoring its MVLS and will consider its available options to regain compliance with the MVLS Rule; however, there can be no assurance that the Company will be able to regain compliance with the MVLS Rule. On December 15, 2023, Spectaire Holdings Inc. (the "Company") received a letter (the "Letter") from the Listing Qualifications Department of Nasdaq notifying the Company that, for the last 30 consecutive business days prior to the date of the Letter, the Company's Market Value of Publicly Held Shares ("MVPHS") was below the $15 million minimum requirement for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(C) (the "MVPHS Rule"). The Letter is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company's securities. In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company will have 180 calendar days, or until June 12, 2024 (the "June 12th Compliance Date"), to regain compliance with the MVPHS Rule. To regain compliance with the MVPHS Rule, the Company's MVPHS must equal or exceed $15 million for a minimum of 10 consecutive business days at any time prior to the June 12th Compliance Date. If the Company regains compliance with the MVPHS, Nasdaq will provide the Company with written confirmation and will close the matter. In the event that the Company does not regain compliance with the MVPHS Rule by the June 12th Compliance Date, it will receive written notification that its securities are subject to delisting. At that time, the Company may appeal the delisting determination to a Hearings Panel. The Letter notes that the Company may be eligible to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). The Company is monitoring its MVPHS and will consider its available options to regain compliance with the MVPHS Rule; however, there can be no assurance that the Company will be able to regain compliance with the MVPHS Rule. If Nasdaq delists any of our securities from trading on its exchange and we are not able to list such securities on another approved national securities exchange, we expect that such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: (i) a limited availability of market quotations for our securities, (ii) reduced liquidity for our securities, (iii) a determination that our public shares are "penny stocks" which will require brokers trading in our public shares to adhere to more stringent rules, including being subject to the depository requirements of Rule 419 of the Securities Act, and possibly result in a reduced level of trading activity in the secondary trading market for our securities, (iv) a decreased ability to issue additional securities or obtain additional financing in the future, and (v) a less attractive acquisition vehicle to a target business in connection with an initial business combination. The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as "covered securities." The Company's public shares, units and warrants qualify as covered securities under such statute. If we were no longer listed on Nasdaq, our securities would not qualify as covered securities under such statute and we would be subject to regulation in each state in which we offer our securities. If Nasdaq delists our securities from trading on its exchange and we are not able to list its securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, the Company could face significant material adverse consequences, including: - a limited availability of market quotations for its securities;- reduced liquidity for its securities;- a determination that our Common Stock constitutes a "penny stock" which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company's securities;- a limited amount of news and analyst coverage; and - a decreased ability to issue additional securities or obtain additional financing in the future.

The trading price of common stock may be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as the following: - Spectaire's operating and financial performance and prospects;- Spectaire's quarterly or annual earnings or those of other companies in its industry compared to market expectations;- conditions that impact demand for Spectaire's products and/or services;- future announcements concerning Spectaire's business, its clients' businesses or its competitors' businesses;- the public's reaction to Spectaire's press releases or other public announcements and filings with the SEC;- the market's reaction to Spectaire's reduced disclosure and other requirements as a result of being an "emerging growth company" under the JOBS Act;- the size of Spectaire's public float;- coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;- market and industry perception of Spectaire's success, or lack thereof, in pursuing its growth strategy;- strategic actions by Spectaire or its competitors, such as acquisitions or restructurings;- changes in laws or regulations which adversely affect Spectaire's industry or Spectaire;- 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 Spectaire capital stock;- changes in Spectaire's dividend policy;- adverse resolution of new or pending litigation against Spectaire; and - changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from inflation, 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 common stock, regardless of Spectaire's operating performance. In addition, price volatility may be greater if the public float and trading volume of common stock is low. As a result, you may suffer a loss on your investment. In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If Spectaire was involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from Spectaire's business regardless of the outcome of such litigation.

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

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

Spectaire qualifies as an "emerging growth company," as defined in the JOBS Act. While Spectaire remains an emerging growth company, it is permitted to and plans to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These provisions include: (1) an exemption from compliance with the auditor attestation requirement in the assessment of Spectaire's internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (2) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, (3) reduced disclosure obligations regarding executive compensation arrangements in Spectaire's periodic reports, registration statements, and proxy statements, and (4) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information Spectaire provides will be different than the information that is available with respect to other public companies that are not emerging growth companies. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as Spectaire is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. Spectaire cannot predict whether investors will find common stock less attractive if it relies on these exemptions. If some investors find common stock less attractive as a result, there may be a less active trading market for common stock. The market price of common stock may be more volatile. Spectaire will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the PCCT IPO, (b) in which Spectaire has total annual gross revenue of at least $1.235 billion, or (c) in which Spectaire is deemed to be a large accelerated filer, which means the market value of common stock that is held by non-affiliates equaled or exceeded $700 million as of the end of that year's second fiscal quarter, and (2) the date on which Spectaire has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.