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 SeptemberJune 30, 2021

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)

                   
216 East 45th100 Wall Street
13th20th Floor
New York, NY
 1001710005
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number,
including area code: (646) 854-6565
 
 Not Applicable216 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.Yesdays. 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 19, 2021, 0August 11, 2023 there were 34,500,000 Class A ordinary shares, par value $0.0001 per share, and 8,625,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding.

Enphys Acquisition Corp.
Quarterly Report on Form 10-Q
Table of Contents
 
PART I. FINANCIAL INFORMATIONPage No.
Item 1.
Financial Statements (Unaudited)
1
 
Condensed Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022
1
 
Condensed Statements of Operations for the Three and Six Months ended June 30, 2023 and 2022 (unaudited)
2
 
Condensed Statements of Changes in Stockholders’ EquityDeficit for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)
3
 
Condensed StatementStatements of Cash Flows for the Six Months ended June 30, 2023 and 2022 (unaudited)
4
 
Notes to Condensed Financial Statements (unaudited)
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1419
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
16
22
Item 4.
Controls and Procedures
16
22
   
PART II. OTHER INFORMATION
 1623
Item 1.
Legal Proceedings
16
23
Item 1A.
Risk Factors
16
23
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
16
24
Item 3.
Defaults Upon Senior Securities
17
24
Item 4.
Mine Safety Disclosures
17
24
Item 5.
Other Information
17
24
Item 6.
Exhibits
17
24
SIGNATURES
18
25


PART I—FINANCIALI-FINANCIAL INFORMATION
 
Item 1.
Financial Information
 
ENPHYS ACQUISITION CORP.
CONDENSED BALANCE SHEET
(UNAUDITED)SHEETS

​
 
September 30,
2021
 
​
 (unaudited) 
ASSETS   
Current assets:
    
Cash $633 
Deferred offering costs
  610,851 
Total Current Assets
  611,484
 
Total Assets $611,484 
​
    
LIABILITIES AND SHAREHOLDERS’ EQUITY    
Current Liabilities:    
Accrued expenses $11,043 
Accrued offering costs  395,859 
Note payable - Sponsor  195,625 
Total Current Liabilities  602,527 
​
    
Commitments and contingencies (Note 6)  0
 
​
    
Shareholders’ Equity:    
Preference shares, $0.0001 par value; 1,000,000 shares authorized;0ne issued and outstanding  0 
Class A ordinary shares, $0.0001 par value; 300,000,000 shares authorized; 0ne issued and outstanding  0 
Class B ordinary shares, $0.0001 par value; 30,000,000 shares authorized; 8,625,000 shares issued and outstanding(1)(2)
  863 
Additional paid-in capital  24,137 
Accumulated deficit  (16,043)
Total Shareholders’ Equity  8,957 
Total Liabilities and Shareholders’ Equity $611,484 


(1)Includes an aggregate of up to 1,125,000 shares of Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 7).

(2)Share amounts for the period ended September 30, 2021 have been retroactively restated to account for the share split as discussed in Note 5.

The accompanying notes are an integral part of these condensed financial statements.
1
Table of Contents
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
​
 
For the Three
Months Ended
September 30, 2021
  
For the
Period from
March 3, 2021
(Inception)
Through
September 30, 2021
 
​
 (unaudited)  (unaudited) 
Formation and operating costs $
5,000  $
16,043 
Net loss $(5,000) $(16,043)
​
        
Weighted average shares outstanding, basic and diluted(1)(2)
  7,500,000   7,500,000 
​
        
Basic and diluted net loss per ordinary share $(0.00)
 $(0.00)
(1)Excludes an aggregate of up to 1,125,000 shares of Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 7).
(2)Share amounts for the period ended September 30, 2021 have been retroactively restated to account for the share split as discussed in Note 5.
The accompanying notes are an integral part of these condensed financial statements.
2
Table of Contents
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM MARCH 3, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
(UNAUDITED)


 Class B Ordinary Shares  Additional     Total 

 Shares  Amount  
Paid-in
Capital
  
Accumulated
Deficit
  
Shareholders’
Equity
 
Balance, March 3, 2021 (inception)  0  $0
  $0  $0  $0 
Issuance of Class B ordinary shares to Sponsor(1)(2)
  8,625,000   863   24,137   0   25,000 
Net loss  —   0   0   (11,043)  (11,043)
Balance, June 30, 2021 (unaudited)  8,625,000  $863  $24,137  $(11,043) $13,957 
Net loss  —   0   0   (5,000)  (5,000)
Balance, September 30, 2021 (unaudited)  8,625,000  $863  $24,137  $(16,043) $8,957 
(1)Includes an aggregate of up to 1,125,000 shares of Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 7).
(2)Share amounts for the period ended September 30, 2021 have been retroactively restated to account for the share split as discussed in Note 5.
The accompanying notes are an integral part of these condensed financial statements.
3
Table of Contents
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)

  
For The Period From
March 3, 2021
(inception) Through
September 30, 2021
 
  (unaudited) 
Cash flows from operating activities:   
Net loss $(16,043)
Adjustment to reconcile net loss to net cash used in operating activities:    
Change in accrued expenses
  11,043 
Net cash used in operating activities  (5,000)
Cash flows from financing activities:    
Proceeds from Sponsor note  52,000 
Payment of offering costs  (46,367)
Net cash from financing activities  5,633 
Net change in cash  633 
Cash at beginning of period  0 
Cash at end of period $633 
Non-cash financing activities:    
Deferred offering costs included in accrued offering costs $395,859 
Deferred offering costs paid by related party $168,625 
Deferred offering costs paid by related party in exchange for Class B ordinary shares $25,000 
​
 
June 30,
2023
  
December 31,
2022
 
​
 (unaudited)    
ASSETS      
Current Assets:
      
Cash $8,226  $272,922 
Prepaid expenses
  120,011   201,178 
Total Current Assets
  128,237   474,100 
         
Cash and marketable securities held in Trust Account
  358,074,839   350,168,339 
Total Assets $358,203,076  $350,642,439 
​
        
LIABILITIES, REDEEMABLE CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
        
Current Liabilities:        
Accounts payable and accrued expenses $267,322  $249,758 
Accrued offering costs
  4,999   4,999 
Total Current Liabilities  272,321   254,757 

        
Derivative warrant liabilities  1,310,115   2,353,500 
Deferred underwriting fees  12,075,000   12,075,000 
Total Liabilities
  13,657,436   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
  358,074,839   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  (13,530,062)  (14,210,020)
Total Shareholders’ Deficit  (13,529,199)  (14,209,157)
Total Liabilities, Redeemable Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit $358,203,076   350,642,439 

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

4
1
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

  
For the Three Months Ended
June 30,
  
For the Six Months Ended
June 30,
 
  2023  2022  2023  2022 
EXPENSES            
Administration fee - related party $30,000  $30,000  $60,000  $60,000 
General and administrative expenses
  151,497   363,858   303,427   520,730 
TOTAL EXPENSES  181,497   393,858   363,427   580,730 
                 
OTHER INCOME
                
Income earned on cash and marketable securities held in Trust Account  4,138,987   386,214   7,906,500   445,270 
Change in fair value of derivative warrant liabilities  1,827,885   2,979,700   1,043,385   8,765,000 
TOTAL OTHER INCOME
  5,966,872   3,365,914   8,949,885   9,210,270 
                 
Net income
 $5,785,375  $2,972,056
 $8,586,458  $8,629,540 
                 
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 $0.16  $0.07  $0.24  $0.20 
                 
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 per Class B ordinary share $0.04  $0.06  $0.02  $0.19 

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

2
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED JUNE 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)

FOR THE THREE AND SIX MONTHS ENDED JUNE 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)

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

3
ENPHYS ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  For the Six Months Ended
 
  June 30,  June 30, 
  2023
  2022
 
Cash Flows From Operating Activities:      
Net income $8,586,458  $8,629,540 
Adjustments to reconcile net income to net cash used in operating activities:        
Accreted income on investment held in Trust Account  (7,906,500)  (445,270)
Change in fair value of derivative warrant liabilities  (1,043,385)  (8,765,000)
Changes in operating assets and liabilities:        
Prepaid expenses  81,167   9,879 
Other assets
  -   77,976 
Accounts payable and accrued expenses  17,564  350,859 
Net Cash Used In Operating Activities  (264,696)  (142,016)
         
Cash Flows From Investing Activities:
        
Proceeds from redemption of U.S. government treasury obligations
  1,775,224,853   345,280,102 
Purchase of U.S. government treasury obligations
  (1,417,150,014)  (345,280,102)
Net Cash Provided By Investing Activities
  358,074,839   - 
         
Cash Flows From Financing Activities:        
Proceeds from repayment of due from Sponsor
  -   100,000 
Payment of offering costs  -   (164,143)
Net Cash used in Financing Activities  -   (64,143)
         
Net change in cash, cash equivalents and restricted cash  357,810,143   (206,159)
         
Cash, cash equivalents and restricted cash at beginning of period  272,922   811,442 
Cash, cash equivalents and restricted cash at end of period $358,083,065  $605,283 
         
Supplemental disclosure of non-cash financing activities:        
         
Accretion of Class A ordinary shares to redemption value
 $7,906,500  $445,270 

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

4
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 SeptemberJune 30, 2021,2023, the Company had not commenced any operations. All activity for the period from March 3, 2021 (inception) through SeptemberJune 30, 20212023 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. The Company has selected December 31 as its fiscal year end.

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.


5
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 1one 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 commissionsfees 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”) Topic 480, Distinguishing Liabilities from Equity.

5
Table of Contents
ENPHYS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)



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 Founder Shares (as definedClass B ordinary shares previously issued in Note 5)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.


6

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 commission (see Note 6)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.
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ENPHYS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

Going Concern, Liquidity and Management’s Plan


As of SeptemberJune 30, 2021,2023, the Company had $633$8,226 in cash and working capital deficit of $601,894. On October 8, 2021, the Company closed its Initial Public Offering$144,084. At December 31, 2022, we had $272,922 in cash and working capital of 30.0 million Units at $10.00 per Unit, generating gross proceeds of $300 million. Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 8.0 million Private Placement Warrants to the Sponsor and the anchor investor at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds of $8 million.$219,343.


The CompanyIn 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 incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacksdetermined that the financial resources it needs to sustain operations for a reasonable period of time, whichCombination Period is considered to beless than one year from the issuance date of the financial statement. Subsequent to the consummationissuance of the Initial Public Offering,financial statements. There is no assurance that 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. Although no formal agreement exists, the Sponsor is committed to extend Working Capital Loans as needed (defined in Note 5 below). The Company cannot assure that its plans to consummate an initiala Business Combination will be successful. In addition, management is currently evaluatingsuccessful within the impact ofCombination Period and the COVID-19 pandemicCompany does not have sufficient cash and working capital to sustain its effect on the Company’s financial position, results of its operations and/or search foroperation. As a target company.


Theseresult, these factors among others, raise substantial doubt about the Company’s ability to continue as a going concern one yearfor the next twelve months from the date thisissuance of these financial statement is issued. Thisstatements. The financial statement doesstatements do not include any adjustments that might result from the outcome of thisthe uncertainty.

COVID-19
7
Risks and Uncertainties


On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. Management continues to evaluate the impact of the COVID-19recent invasion by Russia of Ukraine 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 the virussuch 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 this uncertainty.these uncertainties.


NOTE 2 —- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Basis of Presentation



The accompanying auditedunaudited condensed financial statements are presentedhave been prepared in conformityaccordance with accounting principles generally accepted in the United States of America (“USU.S. GAAP”) and pursuant to the rules and regulations of the SEC.


The accompanying unaudited financial statements as of September 30, 2021 and for the period from March 3, 2021 (inception) through September 30, 2021 have been prepared in accordance with 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 Company’s final prospectus for its Initial Public Offering, asaudited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on July 2, 2021, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on October 21, 2021.April 13, 2023. In the opinion of the Company’s management, of the Company,these unaudited condensed financial statements include all adjustments, (consistingwhich are only of a normal accruals) consideredand recurring nature, necessary for a fair presentation have been included. Operatingstatement of the Company’s financial position as of June 30, 2023 and the Company’s results of operations and cash flows for the period from March 3, 2021 (inception) Septemberperiods presented. The results of operations for the three and six months ended June 30, 20212023 are not necessarily indicative of the results that mayto be expected for the periodfull year ending December 31, 2021. Amounts as of and or for the period ended September 30, 2021 and thereafter are unaudited.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.


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

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 USU.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 and the reported amounts of expenses during the reporting period.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.


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Cash and 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 0tnot have any cash equivalents as of SeptemberJune 30, 2021.2023 and December 31, 2022.

Deferred Offering Costs

Cash and Marketable Securities held in Trust Account


The Company’s portfolio of marketable securities held in the Trust Account are comprised of U.S. Treasury securities that invest primarily in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities and interest and dividends is included in income earned on marketable securities held in Trust Account in the accompanying statements of operations. As of June 30, 2023, the balance in the Trust Account consisted of cash and cash equivalents.


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 June 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 complies withrecognizes changes in redemption value immediately as they occur and adjusts the requirementscarrying value of redeemable ordinary shares to equal the Financial Accounting Standards Board ASC Topic 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A, “Expensesredemption value at the end of Offering.” Deferred offering costs consisteach reporting period. Such changes are reflected in additional paid-in-capital, or in the absence of costs incurredadditional capital, in connection with preparation foraccumulated deficit, in the Initial Public Offering. These costs, together with the underwriting discounts and commissions, will be charged to additional paidstatements of changes in capital upon completion of the Initial Public Offering or charged to operations if the Initial Public Offering is not completed.shareholders’ deficit.


At June 30, 2023 and December 31, 2022, the Class A ordinary shares reflected in the 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
  7,906,500 
Balance, June 30, 2023
 $
358,074,839 



Income Taxes


The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income TaxesTaxes..” 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.

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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 0no unrecognized tax benefits and 0no amounts accrued for interest and penalties as of SeptemberJune 30, 2021.2023 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 Loss per Ordinary Share


Net lossIncome per Share


Net income per share is computed by dividing net lossincome (loss) by the weighted average number of shares of ordinary shares outstanding during the period, excluding sharesperiod. 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 shares subject to forfeiture. Weighted average shares were reduced forshare of does not consider the effect of an aggregate of 1,125,000 shares of Class B ordinary shares that are subject to forfeiture if the over-allotment option is not exercised bywarrants issued in connection with the underwriters (see Note 5). At September 30, 2021,(i) Public Offering and (ii) Private Placement, since their inclusion would be anti-dilutive under the Company did 0t have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of ordinary shares and then share in the earnings of the Company.two-class method. As a result, diluted lossearnings and losses per ordinary share is the same as basic lossearnings and losses per ordinary share for the periodperiods 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 June 30, 2023:


  For the Three Months Ended 
  June 30, 2023 
Net income
 $5,785,375 
Accretion of temporary equity to redemption value  (4,138,987)
Net income including accretion of temporary equity to redemption value $1,646,388 
8


  For the Three Months Ended 
  June 30, 2023 
  Redeemable  Non-Redeemable 
Basic and diluted net income per share:      
Numerator:      
Allocation of net income including accretion of temporary equity $1,317,110 $329,278
Allocation of accretion of temporary equity to Class A Ordinary shares
  4,138,987   - 
Allocation of net income (loss)
 $5,456,097 $329,278
Denominator:        
Weighted-average shares outstanding  34,500,000
   8,625,000
 
Basic and diluted net income per ordinary share $0.16
 $0.04

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ENPHYS ACQUISITION CORP.
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 June 30, 2022:
NOTES TO CONDENSED FINANCIAL STATEMENTS
  For the Three Months Ended 
  June 30, 2022 
Net income
 $2,972,056 
Accretion of temporary equity to redemption value  (386,214)
Net income including accretion of temporary equity to redemption value $2,585,842 
(Unaudited)
  For the Three Months Ended 
  June 30, 2022 
  Redeemable  Non-Redeemable 
Basic and diluted net income per share:      
Numerator:      
Allocation of net income including accretion of temporary equity $2,068,674  $517,168 
Allocation of accretion of temporary equity to Class A Ordinary shares
  386,214   - 
Allocation of net income
 $2,454,888  $517,168 
Denominator:        
Weighted-average shares outstanding  34,500,000
   8,625,000
 
Basic and diluted net income per ordinary share $0.07  $0.06
 

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


  For the Six Months Ended 
  June 30, 2023 
Net income
 $8,586,458 
Accretion of temporary equity to redemption value  (7,906,500)
Net income including accretion of temporary equity to redemption value $679,958 
  For the Six Months Ended 
  June 30, 2023 
  Redeemable  Non-Redeemable 
Basic and diluted net income per share:      
Numerator:      
Allocation of net income including accretion of temporary equity $543,966  $135,992 
Allocation of accretion of temporary equity to Class A Ordinary shares  7,906,500   - 
Allocation of net income (loss) $8,450,466  $135,992 
Denominator:        
Weighted-average shares outstanding  34,500,000   8,625,000 
Basic and diluted net income per ordinary share $0.24  $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 six months ended June 30, 2022:

  For the Six Months Ended
 
  June 30, 2022 
    
Net income $8,629,540 
Accretion of temporary equity to redemption value  (445,270)
Net income including accretion of temporary equity to redemption value $8,184,270 

11
 
 For the Six Months Ended 
  June 30, 2022 
  Redeemable  Non-Redeemable 
Basic and diluted net income per share:      
Numerator:      
Allocation of net income including accretion of temporary equity $6,547,416  $1,636,854 
Allocation of accretion of temporary equity to Class A Ordinary shares
  445,270   - 
Allocation of net income
 $6,992,686  $1,636,854 
Denominator:        
Weighted-average shares outstanding  34,500,000
   8,625,000
 
Basic and diluted net income per ordinary share $0.20
  $0.19
 



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. TheAs of June 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 June 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 of Financial InstrumentsMeasurements


ASC Topic 820, “Fair Value Measurement”, defines fair value is defined as the amountprice that would be received to sellfor sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants.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:


Fair value measurements are classified on a three-tier hierarchy as follows:

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices foror similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;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.


In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.


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


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Derivative Financial InstrumentsWarrant Liabilities


The Company accounts for derivative financial instrumentsthe 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 Topic 815, “Derivatives and Hedging”Hedging. For derivative financial instruments” whereby under that are accountedprovision the Public Warrants and the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities,a liability. Accordingly, the derivativeCompany classifies the warrant instrument is initially recordedas a liability at its fair value upon issuance and remeasuredadjusts the balance to fair value at each reporting date. This liability is re-measured at each balance sheet date with changesuntil the Public Warrants and the Private Placement Warrants are exercised or expire, and any change in fair value will be recognized in the fair value reported in theCompany’s statements of operations. TheSuch warrant classification of derivative financial instruments is evaluatedalso subject to re-evaluation at the end of each reporting period. There were 0 derivative financial instruments as of September 30, 2021.

Related Parties

Share-based Compensation Expense


Parties, which can be a corporation or individual, are considered to be related if

Share-based compensation associated with equity-classified awards is measured at fair value upon the Company has the ability, directly or indirectly, to control the other party or exercise significant influencegrant date and recognized over the other party in making financial and operational decisions. Companies are also considered to be related if they arerequisite service period. To the extent a share-based award is subject to common control or common significant influence.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 — INITIAL PUBLIC OFFERING


Pursuant to the Initial Public Offering, the Company sold 30,000,000 Units at a purchase price of $10.00 per Unit generating gross proceeds to the Company in the amount of $300,000,000. Each Unit consists of 1 share of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), and one-half of one redeemable warrant of the Company (each whole warrant, a “Warrant”), with each whole Warrant entitling the holder thereof to purchase 1 whole share of Class A Ordinary Shares at a price of $11.50 per share, subject to adjustment.


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.

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


NOTE 4 —- 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 5 —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 iswas not exercised in full or in part, so that the number of Founder Shares willwould 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 shallwere not be subject to forfeiture in the event that the underwriter’s did not exercise the over-allotment option is not exercised.option. Upon transfer of these shares, the Company recorded $557,600 of share-based compensation for services provided by the independent directors.directors in 2021.

13

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.

Promissory Note


On March 4, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearingGeneral and payable on the earlier of (i) December 31, 2021 or (ii) the consummation of the Initial Public Offering. As of September 30, 2021, there were $195,625, respectively outstanding under the Promissory Note.

Administrative Services Agreement


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.

10During the
Tablethree months ended June 30, 2023 and 2022, the Company recorded $30,000 in fees pursuant to the agreement, which are recorded in the condensed statements of Contentsoperations.
ENPHYS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
During the six months ended June 30, 2023 and 2022, the Company recorded $60,000 in fees pursuant to the agreement, which are recorded in the condensed statements of operations. As of June 30, 2023 and December 31, 2022, $210,000 and $150,000, respectively, was due to the Sponsor which is included in accounts payable and accrued expenses on the accompanying balance sheets.

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 SeptemberJune 30, 2021,2023 and December 31, 2022, there were 0no amounts outstanding under the Working Capital Loans.

NOTE 6 —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 3three 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.

14
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 discounts and commissions.fees.


The underwriters were entitled to a cash underwriting discountfee 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). The deferred underwriting fee 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.



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 7 —6 - SHAREHOLDER’S EQUITY


PreferencePreferred 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 SeptemberJune 30, 2021,2023 and December 31, 2022, there were 0 shares ofno 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 1one vote for each share. As of SeptemberJune 30, 2021,2023 and December 31, 2022, there were 034,500,000 shares of the Class A ordinary shares issued or outstanding.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 1one vote for each share. As of SeptemberJune 30, 2021,2023 and December 31, 2022, there were 8,625,000 shares of Class B ordinary shares issued and outstanding,outstanding. Upon close of which an aggregate of up to 1,125,000 shares ofthe Initial Public Offering, the Class B ordinary shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part so that the number of Founder Shares will equal 20% of the Company’s issuedwere allocated as follows: 6,494,800 by Sponsor, 80,000 by independent directors and outstanding ordinary shares after the Initial Public Offering.2,050,200 by anchor investors.

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


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, wethe 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 thisthe offering.

15

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-1one-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 8 —7 – DERIVATIVE WARRANT LIABILITIES


As of September 30, 2021, there were 0 warrants outstanding. The Company will accountaccounts for the 23,000,00026,150,000 warrants to be issued in connection with the Initial Public Offering (representing 15,000,00017,250,000 Public Warrants and 8,000,0008,900,000 Private Placement Warrants assuming the underwriters’ over-allotment option is not exercised)Warrants) in accordance with the guidance contained in ASC 815-40.815-40, “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.


Offering costs will be allocated to the Class A ordinary Shares and Public Warrants, and the amounts allocated to the Public Warrants will be expensed immediately. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.


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.

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16
ENPHYS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)





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 9 — SUBSEQUENT EVENTS


On October 8, 2021, the Company closed its Initial Public Offering of 30,000,000 Units at $10.00 per Unit, generating gross proceeds of $300 million, and incurring offering costs of approximately $19.4 million, inclusive of $12.08 million in deferred underwriting commissions. Simultaneously with the closing of the Initial Public Offering, we consummated the Private Placement of 8.0 million Private Placement Warrants at a price of $1.00 per Private Placement Warrant with the Sponsor, generating gross proceeds of $8.0 million. On October 8, 2021, the underwriter fully exercised the over-allotment option resulting in the issuance by the Company of 4.5 million Units at a price of $10.00 per Unit resulted in total gross proceeds of $45.0 million. Simultaneously with the closing of the over-allotment, the Company sold an additional 900,000 Private Placement Warrants to the Sponsor generating gross proceeds of $900,000.


The Company’s management has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements was issued. Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.

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NOTE 8.  FAIR VALUE MEASUREMENTS

The following table presents information about the Company’s assets and liabilities that are measured at fair value at June 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  
June 30,
2023
  
December 31,
2022
 
          
Assets:         
Cash and Marketable Securities held in Trust Account  1  $
358,074,839
  $
350,168,339
 
             
Liabilities:            
Derivative warrant liabilities – Private Placement Warrants  2  $
445,890
  $
801,000
 
Derivative warrant liabilities – Public Warrants  1   
864,225
   
1,552,500
 
      $
1,310,115
  $
2,353,500
 



The Warrants are measured at fair value on a recurring basis. As of June 30, 2023 and December 31, 2022, the fair value of the Public Warrants is determined using quoted market prices and are classified as Level 1, and the Private Warrants are benchmarked to the fair value of the Public Warrants and are classified as Level 2.


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
  
(355,110
)
  
(688,275
)
  
(1,043,385
)
Fair value at June 30, 2023
 
$
445,890
  
$
864,225
  
$
1,310,115
 
  
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  (2,900,000)  (5,865,000)  (8,765,000)
Fair value at June 30, 2022
 $1,424,000  $2,760,000  $4,184,000 

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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.

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Overview

We are a newly incorporated 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.

The issuance of additional ordinary shares or preference shares in a business combination:
• may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
• may subordinate the rights of holders of ordinary shares if preference shares are issued with rights senior to those afforded our ordinary shares;
• could cause a change of control if a substantial number of our ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present directors and officers;
• may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;
• may adversely affect prevailing market prices for our units, ordinary shares and/or warrants; and
• may not result in adjustment to the exercise price of our warrants. Similarly, if we issue debt or otherwise incur significant indebtedness, it could result in:
• default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
• acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
• our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
• our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
• our inability to pay dividends on our ordinary shares;
• using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
• limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
• increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
• limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

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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 cash and cash equivalents.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 SeptemberJune 30, 2021,2023, we had net lossincome of $5,000,$5,785,375, which was primarily drivenconsisted of general and administrative expenses of $181,497 offset by formation$1,827,885 for the net change in derivative warrant liabilities and operating costs.the income earned on the investments in the Trust Account of $4,138,987.

For the from March 5, 2021 (inception) to Septemberthree months ended June 30, 2021,2022, we had we had net lossincome of $16,043,$2,972,056, which was primarily drivenconsisted of general and administrative expenses of $393,858 offset by formation$2,979,700 for the net change in derivative warrant liabilities and operating costs.the income earned on the investments in the Trust Account of $386,214.

For the six months ended June 30, 2023, we had net income of $8,586,458, which consisted of general and administrative expenses of $363,427 offset by $1,043,385 for the net change in derivative warrant liabilities and the income earned on the investments in the Trust Account of $7,906,500.

For the six months ended June 30, 2022, we had we had net income of $8,629,540, which consisted of general and administrative expenses of $580,730 offset by $8,765,000 for the net change in derivative warrant liabilities and the income earned on the investments in the Trust Account of $445,270.

Liquidity and Capital Resources

As of SeptemberJune 30, 2021,2023, the Company had $633$8,226 in cash and working capital deficit of $601,894.$144,084.

Our liquidity
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, have been satisfied through receipt of $25,000 fromthere were no amounts outstanding under any working capital loan.

Based on the sale of the founder shares toforegoing, our sponsor and $195,625 under the $300,000 promissory note with our sponsor. We cannot assure youmanagement believes that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raisethere is substantial doubt about ourthe Company’s ability to continue as a going concern.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.

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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 the COVID-19 pandemicrecent invasion by Russia of Ukraine 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 thethese financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.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 we complete athe Company completes the Business Combination, subject to the terms of the underwriting agreement.

Related Party Transactions
 
Please refer to Note 5, Related Parties, in “Part 1. Financial Information – Item 1. Financial Statements” for a discussion of our related party transactions.
Critical Accounting Policies and 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. Refer to Note 2We have not identified any additional critical accounting estimates that were not disclosed in our Annual Report on Form 10-K for the Company’s accounting policies.year ended December 31, 2022.

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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.

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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.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

As of September 30, 2021, we were not subject to any significant market or interest rate risk. The net proceeds of our initial public offering and the saleWe are a smaller reporting company as defined by Rule 12b-2 of the private placement warrants held inExchange Act and are not required to provide the trust account are invested in U.S. government securities with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditionsinformation otherwise required under Rule 2a-7 under the Investment Company Act. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.this item.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer has concluded that during the period covered by this report, our disclosure controls and procedures were effective.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by usthe Company in ourits reports filed with the SEC under the Exchange Act reports 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 ourthe Company’s management, including ourthe Company’s principal executive officer, and 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 June 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.

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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 SeptemberJune 30, 20212023 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 weakness identified and discussed above, our management has concluded that no such changes have occurred. The material weakness has not been fully remediated as of June 30, 2023.

PART II – - OTHER INFORMATION

Item 1.Legal Proceedings

None.

Item 1A.Risk Factors.

AsA 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 tofrom the risk factors previously disclosed in our final prospectus filedForm 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 SEC on October 5, 2021.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.
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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

Substantially concurrently with the closing of our initial public offering, we consummated the private placement of 8,900,000 Private Placement Warrants to the Sponsor at an aggregate price of, and generating gross proceeds to the Company of $8,900,000, $6.9 million of which was placed in the Trust Account.
None.
In connection with our initial public offering, our sponsor had agreed to loan us an aggregate of up to $300,000 pursuant to an unsecured promissory note. As of September 30, 2021, the loan balance was $195,625.  The Company partially repaid the note on October 8, 2021.

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Table of Contents
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
   
31.1*

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.
   
31.2*

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.
   
32.1**

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.
   
32.2**

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
   
101.SCH*
 Inline XBRL Taxonomy Extension Schema Document
   
101.CAL*
 Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
Document 101.DEF* 
Inline XBRL Taxonomy Extension Definition Linkbase Document
 
Linkbase Document 101.LAB* 
Inline XBRL Taxonomy Extension Label Linkbase Document
 
Linkbase Document 101.PRE* 
Inline XBRL Taxonomy Extension Presentation Linkbase Document
 
Presentation Linkbase Document
 
104*
 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


*
Filed herewith.

**
Furnished.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 ENPHYS ACQUISITION CORP.
   
Date: November 19, 2021
August 18, 2023
By:
/s/ Pär Lindström
 
Name: Pär Lindström
 
Title: Chief Financial Officer


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