Pyrophyte Acquisition (PHYT) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Financial Statements The unaudited statements show the company's pre-business combination status, with a net income of $4.0 million for H1 2022 driven by non-cash gains Condensed Balance Sheets Condensed Balance Sheet Highlights (Unaudited) | Financial Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $395,164 | $966,695 | | Investments and cash held in Trust Account | $206,666,699 | $206,299,296 | | Total Assets | $207,612,968 | $207,945,686 | | Liabilities & Equity | | | | Total Liabilities | $15,719,071 | $20,080,666 | | Derivative warrant liabilities | $6,065,625 | $11,506,893 | | Class A ordinary shares subject to possible redemption | $206,566,699 | $206,281,250 | | Total shareholders' deficit | $(14,672,802) | $(18,416,230) | Condensed Statements of Operations Condensed Statements of Operations Highlights (Unaudited) | Financial Item | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Loss from operations | $(446,213) | $(1,779,811) | | Change in fair value of derivative warrant liabilities | $3,064,897 | $5,441,268 | | Gain on investments held in Trust Account | $291,044 | $367,403 | | Net income (loss) | $2,909,745 | $4,028,877 | Condensed Statements of Cash Flows - For the six months ended June 30, 2022, net cash used in operating activities was $571,531, resulting from a net income of $4.0 million adjusted primarily for a non-cash gain of $5.4 million from the change in fair value of derivative warrant liabilities and a $0.4 million gain on investments[21] Notes to Unaudited Condensed Financial Statements - The Company is a blank check company that consummated its Initial Public Offering (IPO) on October 29, 2021, raising gross proceeds of $201.25 million[25][27] - The Company has until April 29, 2023, to complete a Business Combination, or it will be required to cease operations and redeem all public shares[37] - Management identified and restated errors in its Q1 2022 financial statements related to overstated accrued expenses and understated deferred legal fees[46] - Management determined there is substantial doubt about the Company's ability to continue as a going concern due to the impending business combination deadline[44][45] - The Company's outstanding warrants are classified as derivative liabilities, resulting in a non-cash gain of $5,441,268 for the six months ended June 30, 2022, due to a decrease in their fair value[69][115] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company seeking an energy transition business combination, its financial results, and going concern doubts - The company is a blank check company seeking to acquire a business in the energy transition sector, focusing on technologies that support decarbonization[122] - As of the IPO closing, $206,281,250 ($10.25 per unit) of net proceeds were placed in a trust account, and the company has until April 29, 2023, to complete an initial business combination[125][127] - For the six months ended June 30, 2022, the company had a net income of $4,028,877, driven by a $5,441,268 gain in fair value of derivative warrant liabilities that offset operating costs[129] - Management has determined that liquidity conditions raise substantial doubt about the Company's ability to continue as a going concern for the next year[139] Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure requirement as it qualifies as a smaller reporting company - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[158] Controls and Procedures Management concluded that disclosure controls were ineffective due to a material weakness in financial reporting related to accruals and complex financial instruments - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were not effective[160] - A material weakness in internal control over financial reporting was identified related to the process of recording accruals and the accounting of complex financial instruments[161] PART II–OTHER INFORMATION Legal Proceedings The company reports no current legal proceedings - The company has no legal proceedings to report[166] Risk Factors Key risks include a material weakness in internal controls, potential adverse effects from proposed SEC rules for SPACs, and macroeconomic uncertainties - A material weakness in internal control over financial reporting has been identified, which could adversely affect investor confidence and timely financial reporting[168][169] - Proposed SEC rules related to SPACs could materially and adversely affect the company's ability to complete its initial business combination and may increase associated costs[173] - The search for a business combination may be materially and adversely affected by global events, including the COVID-19 outbreak and the invasion of Ukraine by Russia[174][177] Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of proceeds from its IPO and private placement, with $206.3 million placed in its trust account - On October 29, 2021, the company consummated its IPO of 20,125,000 units, generating gross proceeds of $201,250,000[182] - Simultaneously with the IPO, the company sold 10,156,250 private placement warrants to its sponsor, generating proceeds of $10,156,250[183] - A total of $206,281,250 from the IPO and private placement was deposited into the Trust Account[185] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[186] Mine Safety Disclosures This disclosure requirement is not applicable to the company - Not applicable[187] Other Information The company reports no other information for disclosure - None[188] Exhibits This section lists filed exhibits, including officer certifications required by the Sarbanes-Oxley Act and XBRL data files - The report includes CEO and CFO certifications as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[189]