10-Q 1 ef20012429_10q.htm 10-Q

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



FORM 10-Q
 


(Mark One)
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2023
OR
 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to



ENPHYS ACQUISITION CORP.
(Exact name of registrant as specified in its charter)



Cayman Islands 
001-40879
87-2010879
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification Number)
                   
100 Wall Street
20th Floor
New York, NY
 
10005
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number,
including area code: (646) 854-6565
 
216 East 45th Street, 13th Floor, New York, NY 10017
(Former name or former address, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Units, each consisting of one Class A ordinary share, $0.0001 par value, and a fraction of one redeemable warrant
 
 NFYS.U
 
New York Stock Exchange
Class A ordinary shares included as part of the units
 
NFYS
 
New York Stock Exchange
Redeemable warrants included as part of the units
  NFYS.WS
  New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒ No  ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company

   
Emerging growth company

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No  ☐
 
As of November 20, 2023 there were 17,010,705 Class A ordinary shares, par value $0.0001 per share, and 1,812,500 Class B ordinary shares, par value $0.0001 per share, issued and outstanding.



Enphys Acquisition Corp.
Quarterly Report on Form 10-Q
Table of Contents

PART I. FINANCIAL INFORMATION
Page No.
Item 1.
1
 
1
 
2
 
3
 
4
 
5
Item 2.
20
Item 3.
23
Item 4.
23
     
24
Item 1.
24
Item 1A.
24
Item 2.
25
Item 3.
25
Item 4.
25
Item 5.
26
Item 6.
26
27

PART I-FINANCIAL INFORMATION
 
Item 1.
Financial Information
 
ENPHYS ACQUISITION CORP.
CONDENSED BALANCE SHEETS

    September 30,     December 31,
 
 
2023
   
2022
 
 
(unaudited)
       
ASSETS
           
Current Assets:
           
Cash
 
$
43,178
    $ 272,922  
Prepaid expenses
    32,250       201,178  
Total Current Assets
    75,428       474,100  
                 
Marketable securities held in Trust Account
    362,782,255       350,168,339  
Total Assets
 
$
362,857,683
    $ 350,642,439  
               
LIABILITIES, REDEEMABLE CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
               
Current Liabilities:
               
Accounts payable and accrued expenses
 
$
409,745
    $ 249,758  
Accrued offering costs
    4,999       4,999  
Advances from Sponsor
    60,000
     
 
Total Current Liabilities
   
474,744
      254,757  

               
Derivative warrant liabilities     1,833,115       2,353,500  
Deferred underwriting fees     12,075,000       12,075,000  
Total Liabilities
    14,382,859       14,683,257  
                 
COMMITMENTS AND CONTINGENCIES
           
                 
Redeemable Class A Ordinary Shares subject to Possible Redemption:                
Class A ordinary shares, $0.0001 par value, 300,000,000 shares authorized, 34,500,000 shares issued and outstanding subject to possible redemption
    362,782,255       350,168,339  
               
Shareholders’ deficit:
               
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
   
       
Class B ordinary shares, $0.0001 par value, 30,000,000 shares authorized, 8,625,000 shares issued and outstanding
   
863
      863  
Additional paid-in capital
   
       
Accumulated deficit
   
(14,308,294
)
   
(14,210,020
)
Total Shareholders’ Deficit
   
(14,307,431
)
    (14,209,157 )
Total Liabilities, Redeemable Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit
 
$
362,857,683
      350,642,439  

The accompanying notes are an integral part of these unaudited condensed financial statements.

ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

   
For the Three Months
Ended
   
For the Nine Months Ended
 
    September 30,     September 30,  
   
2023
   
2022
   
2023
   
2022
 
EXPENSES
                       
Administration fee - related party
 
$
30,000
   
$
30,000
   
$
90,000
   
$
90,000
 
General and administrative expenses
   
225,232
     
124,243
     
528,659
     
644,973
 
TOTAL EXPENSES
   
255,232
     
154,243
     
618,659
     
734,973
 
                                 
OTHER INCOME
                               
Income earned on marketable securities held in Trust Account
   
4,707,416
     
1,624,641
     
12,613,916
     
2,069,911
 
Change in fair value of derivative warrant liabilities
   
(523,000
)
   
1,618,685
     
520,385
     
10,383,685
 
TOTAL OTHER INCOME
   
4,184,416
     
3,243,326
     
13,134,301
     
12,453,596
 
                                 
Net income
 
$
3,929,184
   
$
3,089,083
   
$
12,515,642
   
$
11,718,623
 
                                 
Weighted average number of Class A ordinary shares outstanding, basic and diluted
   
34,500,000
     
34,500,000
     
34,500,000
     
34,500,000
 
Basic and diluted net income per Class A ordinary share
 
$
0.12
   
$
0.08
   
$
0.36
   
$
0.28
 
                                 
Weighted average number of Class B ordinary shares outstanding, basic and diluted
   
8,625,000
     
8,625,000
     
8,625,000
     
8,625,000
 
Basic and diluted net income (loss) per Class B ordinary share
 
$
(0.02
)
 
$
0.03
   
$
(0.00
)
 
$
0.22
 

The accompanying notes are an integral part of these unaudited condensed financial statements.

ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

   
Class B
Ordinary Shares
   
Additional
Paid-In
   
Accumulated
   
Shareholders’
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Deficit
 
Balance as of January 1, 2023
   
8,625,000
   
$
863
   
$
-
   
$
(14,210,020
)
 
$
(14,209,157
)
                                         
Accretion of Class A ordinary shares to redemption value
   
-
     
-
     
-
     
(3,767,513
)
   
(3,767,513
)
                                         
Net income
   
-
     
-
     
-
     
2,801,083
     
2,801,083
 
                                         
Balance as of March 31, 2023
   
8,625,000
   
$
863
   
$
-
   
$
(15,176,450
)
 
$
(15,175,587
)
                                         
Accretion of Class A ordinary shares to redemption value
   
-
     
-
     
-
     
(4,138,987
)
   
(4,138,987
)
                                         
Net income
   
-
     
-
     
-
     
5,785,375
     
5,785,375
 
                                         
Balance as of June 30, 2023
   
8,625,000
   
$
863
   
$
-
   
$
(13,530,062
)
 
$
(13,529,199
)
                                         
Accretion of Class A ordinary shares to redemption value
    -       -       -       (4,707,416 )     (4,707,416 )
                                         
Net income     -       -       -       3,929,184       3,929,184  
                                         
Balance as of September 30, 2023     8,625,000     $
863     $
-     $
(14,308,294 )   $
(14,307,431 )

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

   
Class B
Ordinary Shares
   
Additional
Paid-In
   
Accumulated
   
Shareholders’
 
   
Shares
   
Amount
   
Capital
   
Deficit
    Deficit
 
Balance as of January 1, 2022
   
8,625,000
   
$
863
   
$
-
   
$
(23,889,167
)
 
$
(23,888,304
)
                                         
Accretion of Class A ordinary shares to redemption value
    -       -       -       (59,056 )     (59,056 )
                                         
Net income
   
-
     
-
     
-
      5,657,484      
5,657,484
 
                                         
Balance as of March 31, 2022
   
8,625,000
   
$
863
   
$
-
   
$
(18,290,739
)
 
$
(18,289,876
)
                                         
Accretion of Class A ordinary shares to redemption value
    -       -       -       (386,214 )     (386,214 )
                                         
Net income
   
-
     
-
     
-
     
2,972,056
     
2,972,056
 
                                         
Balance as of June 30, 2022
   
8,625,000
   
$
863
   
$
-
   
$
(15,704,897
)
 
$
(15,704,034
)
                                         
Accretion of Class A ordinary shares to redemption value
    -       -       -       (1,624,641 )     (1,624,641 )
                                         
Net income     -       -       -       3,089,083       3,089,083  
                                         
Balance as of September 30, 2022     8,625,000     $
863     $
-     $
(14,240,455 )   $
(14,239,592 )

The accompanying notes are an integral part of these unaudited condensed financial statements.

ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

   
For the Nine Months Ended
 
   
September 30,
   
September 30,
 
    2023
    2022
 
Cash Flows From Operating Activities:
           
Net income
 
$
12,515,642
   
$
11,718,623
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
               
Realized gains on investment held in Trust Account
   
(7,908,618
)
   
(2,069,911
)
Change in fair value of derivative warrant liabilities
   
(520,385
)
   
(10,383,685
)
Changes in operating assets and liabilities:
               
Prepaid expenses
   
168,928
     
175,715
 
Accounts payable and accrued expenses
   
159,987
     
226,774
 
Net Cash Provided By (Used In) Operating Activities
   
4,415,554
     
(332,484
)
                 
Cash Flows From Investing Activities:
               
Proceeds from redemption of securities held in Trust Account
    2,133,301,809       1,728,212,616  
Purchase of securities held in Trust Account
    (2,138,007,107 )     (1,728,212,616 )
Net Cash Used In Investing Activities
    (4,705,298 )      
                 
Cash Flows From Financing Activities:
               
Proceeds from repayment of due from Sponsor
   
     
100,000
 
Proceeds from Sponsor advances
    60,000        
Payment of offering costs
   
     
(199,143
)
Net Cash Provided By (Used in) Financing Activities
   
60,000
     
(99,143
)
                 
Net change in cash and cash equivalents
   
(229,744
)
   
(431,627
)
                 
Cash, and cash equivalents at beginning of period
   
272,922
     
811,442
 
Cash and cash equivalents at end of period
 
$
43,178
   
$
379,815
 
                 
Supplemental disclosure of non-cash financing activities:
               
                 
Accretion of Class A ordinary shares to redemption value
 
$
12,613,916
   
$
2,069,911
 

The accompanying notes are an integral part of these unaudited condensed financial statements.

ENPHYS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND GOING CONCERN


Enphys Acquisition Corp. (the “Company”) was incorporated in the Cayman Islands on March 3, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.


As of September 30, 2023, the Company had not commenced any operations. All activity for the period from March 3, 2021 (inception) through September 30, 2023 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

Initial Financing and Sponsor


The registration statement for the Company’s Initial Public Offering was declared effective on October 5, 2021. On October 8, 2021, the Company consummated the Initial Public Offering of 30.0 million units (“Units” and, with respect to the ordinary shares included in the Units being offered, the “Public Shares”), generating gross proceeds of $300,000,000, which is described in Note 3.


Simultaneously with the closing of the Initial Public Offering, the Company consummated the private sale (the “Private Placement”) of an aggregate of 8.0 million warrants (the “Private Placement Warrants”) to Enphys Acquisition Sponsor LLC (the “Sponsor”) at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company in the amount of $8.0 million.


On October 8, 2021, the underwriters purchased an additional 4.5 million Units pursuant to the exercise of the over-allotment option. The Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $45,000,000. Also, in connection with the partial exercise of the over-allotment option, the Sponsor purchased an additional 900,000 Private Placement Warrants at a purchase price of $1.00 per warrant.

Trust Account


Following the closing of the Initial Public Offering and the exercise of the overallotment option on October 8, 2021, an amount of $345.0 million ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and $6.9 million from the Private Placement Warrants were placed in a trust account (“Trust Account”) which may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account, as described below. The Company deposited the remaining $2.0 million of the net proceeds of the Private Placement Warrants into a bank account for working capital purposes.


Initial Business Combination


The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred underwriting fees and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).


The Company will provide the holders of the outstanding Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption are recorded as temporary equity upon the completion of the Initial Public Offering and subsequently accreted to redemption value in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity.



The Company will not redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 (so that it does not then become subject to the U.S. Securities and Exchange Commission’s (“SEC”) “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to the Business Combination. If the Company seeks shareholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a shareholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its second amended and restated certificate of incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Class B ordinary shares previously issued in March 2021 (the “Founder Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Shareholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.



Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.


The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shares’ rights or pre-business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.



If the Company has not completed a Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.


The holders of the Founders Shares have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the holders of Founder Shares acquire Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting fees held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).


In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 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, if less than $10.00 per public Share due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as 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 the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Going Concern, Liquidity and Management’s Plan


As of September 30, 2023, the Company had $43,178 in cash and working capital deficit of $399,316. As of December 31, 2022, we had $272,922 in cash and working capital of $219,343.


In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Combination Period is less than one year from the date of the issuance of the financial statements. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period and the Company does not have sufficient cash and working capital to sustain its operation. As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.

Risks and Uncertainties


Management continues to evaluate the impact of global conflicts and any further escalation of hostilities related thereto, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), on the industry and has concluded that while it is reasonably possible that such events could have a negative effect on the Company’s financial position, results of its operations, close of the Initial Public Offering and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of Presentation



The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Article 8 of Regulation S-X. The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on April 13, 2023. In the opinion of the Company’s management, these unaudited condensed financial statements include all adjustments, which are only of a normal and recurring nature, necessary for a fair statement of the Company’s financial position as of September 30, 2023 and the Company’s results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.



Emerging Growth Company



The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.


Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. 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. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.



Use of Estimates



The preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.



Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.



Cash Equivalents



The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2023 and December 31, 2022.



Marketable Securities held in Trust Account

 

Trading securities in the Trust Account were invested in U.S. Treasury Securities and marketable securities, which are reported at fair value. The Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, investments in money market funds that invest in U.S. government securities, cash, or a combination thereof. Gains and losses resulting from the change in fair value of these securities are recorded to net income each period. The estimated fair values of the investments held in the Trust Account are determined using quoted market prices in active markets.

 

Class A Ordinary Shares subject to Possible Redemption



The Company’s Class A ordinary shares contain certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2023 and December 31, 2022, the Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ deficit section of the Company’s balance sheets.



The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in-capital, or in the absence of additional capital, in accumulated deficit, in the statements of changes in shareholders’ deficit.



At September 30, 2023 and December 31, 2022, the Class A ordinary shares reflected in the condensed balance sheets is reconciled in the following table:

Gross proceeds, October 8, 2021
 
$
345,000,000
 
Less:
       
Issuance costs allocated to Class A ordinary shares
   
(32,658,945
)
Proceeds allocated to Public Warrants
   
(11,212,500
)
     
(43,871,445
)
Plus:
       
Remeasurement adjustment of carrying value to redemption value
   
43,902,292
 
Balance, December 31, 2021
 
$
345,030,847
 
Remeasurement adjustment of carrying value to redemption value
   
5,137,492
 
Balance, December 31, 2022
 

350,168,339
 
Remeasurement adjustment of carrying value to redemption value
    12,613,916  
Balance, September 30, 2023
  $
362,782,255  

Income Taxes


The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.


ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.



There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements.



Net Income (Loss) per Share

 

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. The Company applies the two-class method in calculating earnings and losses per share. Earnings and losses are shared pro rata between the two classes of shares. The calculation of diluted income (loss) per ordinary share does not consider the effect of the warrants issued in connection with the (i) Public Offering and (ii) Private Placement, since their inclusion would be anti-dilutive under the two-class method. As a result, diluted earnings and losses per ordinary share is the same as basic earnings and losses per ordinary share for the periods presented. The warrants are exercisable to purchase 26,150,000 Class A ordinary shares in the aggregate.

 

The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts) for the three months ended September 30, 2023:

   
For the Three Months Ended
September 30, 2023
 
Net income
 
$
3,929,184
 
Accretion of temporary equity to redemption value
   
(4,707,416
)
Net loss including accretion of temporary equity to redemption value
 
$
(778,232
)


   
For the Three Months Ended
 
   
September 30, 2023
 
   
Redeemable
   
Non-Redeemable
 
Basic and diluted net income (loss) per share:
           
Numerator:
           
Allocation of net loss including accretion of temporary equity
 
$
(622,586
)
 
$
(155,646
)
Allocation of accretion of temporary equity to Class A Ordinary shares
   
4,707,416
     
-
 
Allocation of net income (loss)
 
$
4,084,830
   
$
(155,646
)
Denominator:
               
Weighted-average shares outstanding
   
34,500,000
     
8,625,000
 
Basic and diluted net income (loss) per ordinary share
 
$
0.12
   
$
(0.02
)


The following table reflects the calculation of basic and diluted net loss per ordinary share (in dollars, except per share amounts) for the three months ended September 30, 2022:
 
   
For the Three Months Ended
September 30, 2022
 
Net income
 
$
3,089,083
 
Accretion of temporary equity to redemption value
   
(1,624,641
)
Net income including accretion of temporary equity to redemption value
 
$
1,464,442
 

   
For the Three Months Ended
 
   
September 30, 2022
 
   
Redeemable
   
Non-Redeemable
 
Basic and diluted net income per share:
           
Numerator:
           
Allocation of net income including accretion of temporary equity
 
$
1,171,553
   
$
292,889
 
Allocation of accretion of temporary equity to Class A Ordinary shares
   
1,624,641
     
-
 
Allocation of net income
 
$
2,796,194
   
$
292,889
 
Denominator:
               
Weighted-average shares outstanding
   
34,500,000
     
8,625,000
 
Basic and diluted net income per ordinary share
 
$
0.08    
$
0.03
 
 

The following table reflects the calculation of basic and diluted net income per ordinary share (in dollars, except per share amounts) for the nine months ended September 30, 2023:

   
For the Nine Months Ended
September 30, 2023
 
Net income
 
$
12,515,642
 
Accretion of temporary equity to redemption value
   
(12,613,916
)
Net income including accretion of temporary equity to redemption value
 
$
(98,274
)
 
   
For the Nine Months Ended
 
   
September 30, 2023
 
   
Redeemable
   
Non-Redeemable
 
Basic and diluted net income (loss) per share:
           
Numerator:
           
Allocation of net loss including accretion of temporary equity
 
$
(78,619
)
 
$
(19,655
)
Allocation of accretion of temporary equity to Class A Ordinary shares
   
12,613,916
     
-
 
Allocation of net income (loss)
 
$
12,535,297
   
$
(19,655
)
Denominator:
               
Weighted-average shares outstanding
   
34,500,000
      8,625,000  
Basic and diluted net income (loss) per ordinary share
 
$
0.36
   
$
(0.00
)
 

The following table reflects the calculation of basic and diluted net loss per ordinary share (in dollars, except per share amounts) for the nine months ended September 30, 2022:

   
For the Nine Months Ended
September 30, 2022
 
Net income
 
$
11,718,623
 
Accretion of temporary equity to redemption value
   
(2,069,911
)
Net income including accretion of temporary equity to redemption value
 
$
9,648,712
 

 
 
For the Nine Months Ended
 
   
September 30, 2022
 
   
Redeemable
   
Non-Redeemable
 
Basic and diluted net income per share:
           
Numerator:
           
Allocation of net income including accretion of temporary equity
 
$
7,718,969
   
$
1,929,743
 
Allocation of accretion of temporary equity to Class A Ordinary shares
   
2,069,911
     
-
 
Allocation of net income
 
$
9,788,880
   
$
1,929,743
 
Denominator:
               
Weighted-average shares outstanding
    34,500,000
     
8,625,000
 
Basic and diluted net income per ordinary share
 
$
0.28
   
$
0.22
 

Concentration of Credit Risk


Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed federally insured limits. As of September 30, 2023 and December 31, 2022, the Company has not experienced losses on this account. The Company places its cash with major banks and monitors the credit ratings of such banks. The concentration of cash in our Trust Account as of September 30, 2023 exposes the Company to increased credit risk with such banks.


The failures of Silicon Valley Bank and Signature Bank on March 10, 2023, raised significant concerns regarding potential risks to deposits at First Republic Bank (“FRB”), including the operating account of the Company held at FRB. On March 13, 2023, the Company and its management moved to protect the funds in the operating account by reducing the funds held within the FRB Account, for the benefit of the Company and its shareholders, an aggregate amount of $90,000 to a trust account held by an independent third party. The Company transferred the remaining funds of $63,875 to accounts now owned by JP Morgan Chase on May 5, 2023.

Fair Value Measurements
 

Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
 
 
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices or similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
 

The fair value of the Company’s financial assets and liabilities, except for derivative warrant liabilities, approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature (see Note 8).


Derivative Warrant Liabilities

 

The Company accounts for the Public Warrants and the Private Placement Warrants issued in connection with the Initial Public Offering and the Private Placement in accordance with the guidance contained in ASC 815, “Derivatives and Hedging” whereby under that provision the Public Warrants and the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classifies the warrant instrument as a liability at fair value and adjusts the balance to fair value at each reporting date. This liability is re-measured at each balance sheet date until the Public Warrants and the Private Placement Warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statements of operations. Such warrant classification is also subject to re-evaluation at each reporting period.

 

Share-based Compensation Expense



Share-based compensation associated with equity-classified awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a share-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. The fair value of equity awards has been estimated using a market approach. Forfeitures are recognized as incurred.




Recent Accounting Standards



Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

NOTE 3 - PRIVATE PLACEMENTS


Simultaneously with the closing of the Initial Public Offering, the Company consummated the private sale (the “Private Placement”) of an aggregate of 8,000,000 warrants (the “Private Placement Warrants”) to Enphys Acquisition Sponsor LLC (the “Sponsor”) at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company in the amount of $8,000,000.


In connection with the exercise of the over-allotment option, the Sponsor purchased an additional 900,000 Private Placement Warrants at a purchase price of $1.00 per warrant.


A portion of the proceeds from the Private Placement Units was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Units will be worthless.


The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to certain exceptions.

NOTE 4 - RELATED PARTIES

Founder Shares


During the period ended March 4, 2021, the Sponsor received 7,187,500 of the Company’s Class B ordinary shares (the “Founder Shares”) for an aggregate price of $25,000 in exchange for paying certain expenses on behalf of the Company. On October 5, 2021, the Company effected a share capitalization issuing 0.2 of a share for each ordinary share in issue, resulting in the Sponsor holding an aggregate of 8,625,000 Founder Shares. The Founder Shares included an aggregate of up to 1,125,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. Upon exercise of the underwriter’s overallotment option, these shares are no longer subject to forfeiture. Concurrent with the offering, the Sponsor transferred 20,000 Founder Shares to each of the Company’s independent directors as consideration for services already performed on behalf of the Company. These 80,000 Founder Shares were not subject to forfeiture in the event that the underwriter’s did not exercise the over-allotment option. Upon transfer of these shares, the Company recorded $557,600 of share-based compensation for services provided by the independent directors in 2021.


Upon close of the Initial Public Offering, the anchor investors received 2,050,200 Founder Shares (“Anchor Shares”) with the Company cancelling an equivalent number of shares. The grant date fair value of the shares transferred was $6.97 per share or an aggregate of $14,289,894 which was treated as an offering cost in accordance with Staff Accounting Bulletin 5A. Accordingly, the offering cost was allocated to the separable financial instruments issued in the Initial Public Offering in the same proportion that the proceeds were allocated to such instruments.


The initial shareholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their shares of ordinary shares for cash, securities or other property.

General and Administrative Services


Commencing on the date the Units are first listed on the NYSE, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. During the three months ended September 30, 2023 and 2022, the Company recorded $30,000 respectively in fees pursuant to the agreement, which are recorded in the condensed statements of operations. During the nine months ended September 30, 2023 and 2022, the Company recorded $90,000 respectively in fees pursuant to the agreement, which are recorded in the condensed statements of operations. As of September 30, 2023 and December 31, 2022, $240,000 and $150,000, respectively, was due to the Sponsor which is included in accounts payable and accrued expenses on the accompanying balance sheets.



Advances from Sponsor



In August 2023, the Sponsor advanced the Company $60,000 in order to finance certain operational costs. At the time of advance, the funds received were non-interest bearing and due on demand. On October 30, 2023, the Company and the Sponsor executed a promissory note for $300,000, of which $60,000 was advanced in August 2023. The entire outstanding principal of the promissory note shall be due and payable in full on the date on which the Company consummates an initial business combination. See Note 9.


Related Party Loans


In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of September 30, 2023 and December 31, 2022, there were no amounts outstanding under the Working Capital Loans.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Registration Rights


The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A ordinary shares). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement


The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting fees.


The underwriters were entitled to a cash underwriting fee of $0.20 per Unit, or $6,000,000 in the aggregate (or $6,900,000 in the aggregate if the underwriters’ over-allotment option is exercised in full), payable upon the closing of the Initial Public Offering. In addition, the underwriters were entitled to a deferred fee of $0.35 per Unit, or $10,500,000 in the aggregate (or $12,075,000 in the aggregate if the underwriters’ over-allotment option is exercised in full).



On October 8, 2021, the underwriters purchased an additional 4,500,000 Units pursuant to the exercise of the over-allotment option. The Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $45,000,000.



The deferred underwriting fee of $12,075,000 will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes the Business Combination, subject to the terms of the underwriting agreement.

NOTE 6 - SHAREHOLDER’S EQUITY


Preferred Shares - The Company is authorized to issue 1,000,000 shares of preference shares with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2023 and December 31, 2022, there were no preference shares issued or outstanding.


Class A Ordinary Shares - The Company is authorized to issue 300,000,000 shares of Class A ordinary shares with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. As of September 30, 2023 and December 31, 2022, there were 34,500,000 shares of the Class A ordinary shares issued and outstanding, including 34,500,000 Class A ordinary shares subject to possible conversion that are classified as temporary equity in the accompanying balance sheets.


Class B Ordinary Shares - The Company is authorized to issue 30,000,000 shares of Class B ordinary shares with a par value of $0.0001 per share. Holders of Class B ordinary shares are entitled to one vote for each share. As of September 30, 2023 and December 31, 2022, there were 8,625,000 shares of Class B ordinary shares issued and outstanding. Upon close of the Initial Public Offering, the Class B ordinary shares were allocated as follows: 6,494,800 by Sponsor, 80,000 by independent directors and 2,050,200 by anchor investors.



Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law. In connection with our initial Business Combination, the Company may enter into a shareholders agreement or other arrangements with the shareholders of the target or other investors to provide for voting or other corporate governance arrangements that differ from those in effect upon completion of the offering.


The shares of Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B ordinary shares shall convert into shares of Class A ordinary shares will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A ordinary shares issuable upon conversion of all shares of Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of ordinary shares outstanding upon the completion of Initial Public Offering plus all shares of Class A ordinary shares and equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A ordinary shares redeemed in connection with a Business Combination), excluding any Class A ordinary shares or equity-linked securities issued or issuable to any seller of an interest in the target to us in a Business Combination and any Private Placement Warrants issued to the Sponsor.

NOTE 7 – DERIVATIVE WARRANT LIABILITIES


The Company accounts for the 26,150,000 warrants to be issued in connection with the Initial Public Offering (representing 17,250,000 Public Warrants and 8,900,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40, “Derivatives and Hedging”. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a derivative warrant liability at its fair value.


Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.


The Company will not be obligated to deliver any shares of Class A ordinary share pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A ordinary shares is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.


The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A ordinary shares issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A ordinary shares until the warrants expire or are redeemed. Notwithstanding the above, if the Class A ordinary share is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.


Redemption of Warrants When the Price per Share of Class A Ordinary Share Equals or Exceeds $18.00 - Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
 

in whole and not in part;
 

at a price of $0.01 per Public Warrant;
 

upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and
 

if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganization, recapitalizations and the like) for any 10 trading days within a 20-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to warrant holders.


If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.


Redemption of Warrants When the Price per Share of Class A Ordinary Share Equals or Exceeds $10.00 - Once the warrants become exercisable, the Company may redeem the outstanding Public warrants:
 

in whole and not in part;
 

at a price of $0.10 per warrant provided that the holder will be able to exercise their warrants on cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A ordinary shares;
 

upon a minimum of 30 days’ prior written notice of redemption;
 

if, and only if, the last reported sale price of the Class A ordinary share equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganization, recapitalizations and the like) for any 10 trading days within a 20-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
 

if, and only if, the private placement warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A ordinary share) as the outstanding public warrants, as described above.


If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.


The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTE 8.  FAIR VALUE MEASUREMENTS
 

The following table presents information about the Company’s assets and liabilities that are measured at fair value at September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description
 
Level
   
September 30,
2023
   
December 31,
2022
 
                   
Assets:
                 
Marketable Securities held in Trust Account
   
1
   
$
362,782,255
   
$
350,168,339
 
                         
Liabilities:
                       
Derivative warrant liabilities – Private Placement Warrants
   
2
   
$
623,890
   
$
801,000
 
Derivative warrant liabilities – Public Warrants
   
1
     
1,209,225
     
1,552,500
 
           
$
1,833,115
   
$
2,353,500
 



The Warrants are measured at fair value on a recurring basis.


The following table provides a summary of the changes in the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis:
 
   
Private
Placement
Warrants
   
Public
Warrants
   
Total
 
Fair value at December 31, 2022
 
$
801,000
   
$
1,552,500
   
$
2,353,500
 
Change in fair value
   
(177,110
)
   
(343,275
)
   
(520,385
)
Fair value at September 30, 2023
 
$
623,890
   
$
1,209,225
   
$
1,833,115
 
 
   
Private
Placement
Warrants
   
Public
Warrants
   
Total
 
Fair value at December 31, 2021
 
$
4,324,000
   
$
8,625,000
   
$
12,949,000
 
Change in fair value
   
(3,450,910
)
   
(6,932,775
)
   
(10,383,685
)
Fair value at September 30, 2022
 
$
873,090
   
$
1,692,225
   
$
2,565,315
 

NOTE 9. SUBSEQUENT EVENTS


Amendments to Amended and Restated Memorandum and Articles of Association



On October 6, 2023, the Company held an extraordinary general meeting of shareholders (the “Extraordinary General Meeting”) to vote on certain proposals as described below. At the Extraordinary General Meeting, the Company’s shareholders approved an amendment to the Company’s amended and restated memorandum and articles of association (the “Extension Amendment”) to extend the date by which the Company must consummate a business combination from October 8, 2023 to February 8, 2024 (the “Extended Date”) (the “Extension Amendment Proposal”).



At the Extraordinary General Meeting, the Company’s shareholders also approved an amendment to the Company’s amended and restated memorandum and articles of association (the “Founder Share Amendment”) to provide for the right of a holder of the Company’s Class B ordinary shares, par value $0.0001 per share, to convert into Class A ordinary shares, par value $0.0001 per share, of the Company on a one-for-one basis prior to the closing of an initial business combination at the election of the holder (the “Founder Share Amendment Proposal”).



The foregoing descriptions of the amendments are qualified in their entirety by reference to the Extension Amendment and the Founder Share Amendment, copies of which are filed as Exhibit 3.1 in the Company’s Current Report on Form 8-K dated October 6, 2023 and are incorporated by reference herein.



Promissory Note



On October 10, 2023, the Company issued a promissory note (the “Extension Note”) to the Sponsor or its registered assigns or successors in interest (the “Payee”), pursuant to which the Payee agreed that the Payee or one or more of its affiliates or designees will deposit into the Company’s Trust Account an amount equal to the lesser of (i) $0.025 per Class A ordinary share of the Company multiplied by the number of Class A ordinary shares of the Company then outstanding and (ii) $100,000, for each calendar month (each, a “Deposit”) until the earlier of (i) the Company’s completion of a business combination and (ii) the Extended Date. The maximum aggregate amount of Deposits shall be $400,000.



The foregoing description of the Extension Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Extension Note, a copy of which is filed as Exhibit 10.1 in the Company’s Current Report on Form 8-K dated October 10, 2023 and is incorporated by reference herein.



On October 30, 2023, the Company issued a promissory note to the Sponsor, pursuant to which the Company may borrow an aggregate of $300,000 from the Sponsor in order to fund costs and expenses related to the Company’s daily operations and due diligence in connection with a potential business combination and which the Company shall repay on the date on which the Company consummates an initial business combination (the “OPEX Note”). If the Company has not consummated an initial business combination on or prior to July 1, 2024, then the Sponsor shall have no recourse against the Company and all outstanding amounts of principal and accrued and unpaid interest payable under the Promissory Note shall immediately terminate and all related indebtedness shall be deemed cancelled. An initial advance of $60,000 to the Company was made in August 2023.



Class B Conversion and Redemptions



On October 17, 2023 and October 23, 2023, holders of 6,812,500 Class B ordinary shares, par value $0.0001 per share (the “Class B Common Stock”), of the Company voluntarily elected to convert such shares of Class B Common Stock to shares of Class A ordinary shares, par value $0.0001 per share, of the Company (the “Class A Common Stock”), on a one-for-one basis in accordance with the Company’s amended and restated memorandum and articles of association (the “Class B Conversion”). Notwithstanding the Class B Conversion, such holders will not be entitled to receive any funds held in the Trust Account with respect to any shares of Class A Common Stock issued to such holders as a result of the Class B Conversion, and no additional amounts will be deposited into the Trust Account in respect of shares of Class A Common Stock held by such holders.



Additionally, as previously disclosed in the Company’s Current Report on Form 8-K dated October 6, 2023, the Company’s public stockholders elected to redeem 24,301,795 shares of Class A Common Stock at a redemption price of approximately $10.53 per share, for an aggregate redemption amount of approximately $256 million (the “Redemption”). After the satisfaction of the Redemption, the balance in the Trust Account was approximately $107 million.



Upon completion of the Class B Conversion and the Redemption described above, as of October 23, 2023, 17,010,705 shares of Class A Common Stock (out of which 10,198,205 shares are subject to redemption and 6,812,500 shares are non-redeemable) and 1,812,500 shares of Class B Common Stock remain issued and outstanding.

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References to “we,” “us,” “company” or “our company” are to Enphys Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward- looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S. Securities and Exchange Commission (“SEC”) filings.

Overview

We are a blank check company, incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. We have not selected any business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement warrants, our shares, debt or a combination of cash, shares and debt.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for our initial public offering. We will not generate any operating revenues until after completion of our initial business combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. We expect to incur substantially increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2023, we had net income of $3,929,184, which consisted of general and administrative expenses of $255,232 and $523,000 for the net change in derivative warrant liabilities offset by the income earned on the investments in the Trust Account of $4,707,416.

For the three months ended September 30, 2022, we had we had net income of $3,089,083, which consisted of general and administrative expenses of $154,243 offset by $1,618,685 for the net change in derivative warrant liabilities and the income earned on the investments in the Trust Account of $1,624,641.

For the nine months ended September 30, 2023, we had net income of $12,515,642, which consisted of general and administrative expenses of $618,659 offset by $520,385 for the net change in derivative warrant liabilities and the income earned on the investments in the Trust Account of $12,613,916.

For the nine months ended September 30, 2022, we had we had net income of $11,718,623, which consisted of general and administrative expenses of $734,973 offset by $10,383,685 for the net change in derivative warrant liabilities and the income earned on the investments in the Trust Account of $2,069,911.
Liquidity and Capital Resources

As of September 30, 2023, the Company had $43,178 in cash and working capital deficit of $399,316.

If the Company needs additional working capital in order to finance transaction costs in connection with a Business Combination, our Sponsor may, but is not obligated to, provide us working capital loans. To date, there were no amounts outstanding under any working capital loan.

Based on the foregoing, our management believes that there is substantial doubt about the Company’s ability to continue as a going concern for one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Management does not believe that we will need to raise additional funds following our initial public offering in order to meet the expenditures required for operating our business. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity will be satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

Management continues to evaluate the impact of global conflicts and any further escalation of hostilities related thereto, terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), on the industry and has concluded that while it is reasonably possible that these events could have a negative effect on the Company’s financial position, results of its operations, close of the Initial Public Offering and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Contractual Obligations

Registration Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

We granted the underwriters a 45-day option from the final prospectus relating to the IPO to purchase up to 4,500,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On October 8, 2021, the underwriters purchased an additional 4,500,000 Units pursuant to the exercise of the over-allotment option. The Units were sold at an offering price of $10.00 per Unit, generating additional gross proceeds to the Company of $45.0 million.

The underwriters were paid a cash underwriting discount of $0.20 per Public Share, or $6.9 million in the aggregate. In addition, $0.35 per Public Share, or approximately $12.1 million in the aggregate will be payable to the underwriters for deferred underwriting commissions.

The deferred underwriting fee of $12,075,000 will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes the Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Estimates

The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. There were no critical accounting policies that contain significant judgment or estimates. We have not identified any additional critical accounting estimates that were not disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Pronouncements

Please refer to Note 2, Summary of Significant Accounting Policies, in “Part 1. Financial Information - Item 1. Financial Statements” for a discussion of recent accounting pronouncements and their anticipated effect on our business.

JOBS Act

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.

Recent Developments

Amendments to Amended and Restated Memorandum and Articles of Association

On October 6, 2023, the Company held an extraordinary general meeting of shareholders (the “Extraordinary General Meeting”) to vote on certain proposals as described below. At the Extraordinary General Meeting, the Company’s shareholders approved an amendment to the Company’s amended and restated memorandum and articles of association (the “Extension Amendment”) to extend the date by which the Company must consummate a business combination from October 8, 2023 to February 8, 2024 (the “Extended Date”) (the “Extension Amendment Proposal”).

At the Extraordinary General Meeting, the Company’s shareholders also approved an amendment to the Company’s amended and restated memorandum and articles of association (the “Founder Share Amendment”) to provide for the right of a holder of the Company’s Class B ordinary shares, par value $0.0001 per share, to convert into Class A ordinary shares, par value $0.0001 per share, of the Company on a one-for-one basis prior to the closing of an initial business combination at the election of the holder (the “Founder Share Amendment Proposal”).

The foregoing descriptions of the amendments are qualified in their entirety by reference to the Extension Amendment and the Founder Share Amendment, copies of which are filed as Exhibit 3.1 in the Company’s Current Report on Form 8-K dated October 6, 2023 and are incorporated by reference herein.

Promissory Note

On October 10, 2023, the Company issued a promissory note (the “Extension Note”) to the Sponsor or its registered assigns or successors in interest (the “Payee”), pursuant to which the Payee agreed that the Payee or one or more of its affiliates or designees will deposit into the Company’s Trust Account an amount equal to the lesser of (i) $0.025 per Class A ordinary share of the Company multiplied by the number of Class A ordinary shares of the Company then outstanding and (ii) $100,000, for each calendar month (each, a “Deposit”) until the earlier of (i) the Company’s completion of a business combination and (ii) the Extended Date. The maximum aggregate amount of Deposits shall be $400,000.

The foregoing description of the Extension Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Extension Note, a copy of which is filed as Exhibit 10.1 in the Company’s Current Report on Form 8-K dated October 10, 2023 and is incorporated by reference herein.

On October 30, 2023, the Company issued a promissory note to the Sponsor, pursuant to which the Company may borrow an aggregate of $300,000 from the Sponsor in order to fund costs and expenses related to the Company’s daily operations and due diligence in connection with a potential business combination and which the Company shall repay on the date on which the Company consummates an initial business combination (the “OPEX Note”). If the Company has not consummated an initial business combination on or prior to July 1, 2024, then the Sponsor shall have no recourse against the Company and all outstanding amounts of principal and accrued and unpaid interest payable under the Promissory Note shall immediately terminate and all related indebtedness shall be deemed cancelled.  An initial advance of $60,000 to the Company was made in August 2023.

Class B Conversion and Redemptions

On October 17, 2023 and October 23, 2023, holders of 6,812,500 Class B ordinary shares, par value $0.0001 per share (the “Class B Common Stock”), of the Company voluntarily elected to convert such shares of Class B Common Stock to shares of Class A ordinary shares, par value $0.0001 per share, of the Company (the “Class A Common Stock”), on a one-for-one basis in accordance with the Company’s amended and restated memorandum and articles of association (the “Class B Conversion”). Notwithstanding the Class B Conversion, such holders will not be entitled to receive any funds held in the Trust Account with respect to any shares of Class A Common Stock issued to such holders as a result of the Class B Conversion, and no additional amounts will be deposited into the Trust Account in respect of shares of Class A Common Stock held by such holders.

Additionally, as previously disclosed in the Company’s Current Report on Form 8-K dated October 6, 2023, the Company’s public stockholders elected to redeem 24,301,795 shares of Class A Common Stock at a redemption price of approximately $10.53 per share, for an aggregate redemption amount of approximately $256 million (the “Redemption”). After the satisfaction of the Redemption, the balance in the Trust Account was approximately $107 million.

Upon completion of the Class B Conversion and the Redemption described above, as of October 23, 2023, 17,010,705 shares of Class A Common Stock and 1,812,500 shares of Class B Common Stock remain issued and outstanding.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Item 4.
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in its reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer, principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, the Company’s principal executive officer and principal financial officer have concluded that a material weakness existed and the Company’s disclosure controls and procedures were not effective. Specifically, the Company did not design and maintain effective internal controls over the valuation of the public warrants and private placement warrants and the presentation of the statements of cash flows.

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.

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. We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, other than the changes intended to remediate the material weaknesses identified and discussed above, our management has concluded that no such changes have occurred. The material weaknesses have not been fully remediated as of September 30, 2023.

PART II - OTHER INFORMATION

Item 1.
Legal Proceedings

None.

Item 1A.
Risk Factors.

A description of the risks associated with our business, financial condition, and results of operations is set forth in Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K filed with the SEC on April 13, 2023 (“Form 10-K”). Except as set forth below, as of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors previously disclosed in our Form 10-K.

The following new risk factor is added:

We may not be able to complete a business combination with certain potential target companies if a proposed transaction with the target company may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations.

Certain acquisitions or business combinations may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations. In the event that such regulatory approval or clearance is not obtained, or the review process is extended beyond the period of time that would permit a business combination to be consummated with us, we may not be able to consummate a business combination with such target.

Among other things, the U.S. Federal Communications Act prohibits foreign individuals, governments, and corporations from owning a specified percentage of the capital stock of a broadcast, common carrier, or aeronautical radio station licensee. In addition, U.S. law currently restricts foreign ownership of U.S. airlines. In the United States, certain mergers that may affect competition may require certain filings and review by the Department of Justice and the Federal Trade Commission, and investments or acquisitions that may affect national security are subject to review by the Committee on Foreign Investment in the United States (“CFIUS”). CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States by foreign persons in order to determine the effect of such transactions on the national security of the United States. The scope of CFIUS was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) to include certain non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S. business. FIRRMA, and subsequent implementing regulations that are now in force, also subject certain categories of investments to mandatory filings. We and our sponsor have ties to non-US persons. Specifically, Jorge de Pablo, our Chief Executive Officer and a member of the Board of Directors of the Company (the “Board”), is a citizen of Spain. Carlos Guimarães, our Chairman of the Board, is a citizen of Brazil. Pär Lindström, our Chief Financial Officer and a member of the Board, is a citizen of Sweden. Matías de Buján, our Chief Operating Officer, is a citizen of Argentina. Additionally, our independent directors, José Antonio Aguilar Bueno, Federico Carrillo- Zürcher, Hélio L. Magalhães and Eva Redhe are citizens of Mexico, Costa Rica, Brazil and Sweden, respectively.

Outside the United States, laws or regulations may affect our ability to consummate a business combination with potential target companies incorporated or having business operations in jurisdictions where national security considerations, involvement in regulated industries (including telecommunications), or in businesses relating to a country’s culture or heritage may be implicated.

U.S. and foreign regulators generally have the power to deny the ability of the parties to consummate a transaction or to condition approval of a transaction on specified terms and conditions, which may not be acceptable to us or a target. In such event, we may not be able to consummate a transaction with that potential target.

As a result of these various restrictions, the pool of potential targets with which we could complete an initial business combination may be limited and we may be adversely affected in terms of competing with other SPACs that do not have similar ownership issues. Moreover, the process of government review, could be lengthy. Because we have only a limited time to complete our business combination, our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we liquidate, our public shareholders may only receive $10.00 per share, and our warrants will expire worthless. This will also cause you to lose any potential investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation in the combined company.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Mine Safety Disclosures

Not applicable.

Item 5.
Other Information

None.

Item 6.
Exhibits.

Exhibit
Number

Description
     
 
Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
 
Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
     
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
     
101.INS*
 
Inline XBRL Instance Document