UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June
30, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
INSIGHT ACQUISITION CORP.
(Exact name of registrant as specified
in its charter)
Delaware | | 001-40775 | | 86-3386030 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (IRS Employer Identification No.) |
333 East 91st Street New York, NY | | 10128 |
(Address Of Principal Executive Offices) | | (Zip Code) |
(917)374-2922
Registrant’s telephone number,
including area code
Not Applicable
(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 share of Class A Common Stock and one-half of one Redeemable Warrant | | INAQU | | The Nasdaq Stock Market LLC |
Class A Common Stock, $0.0001 par value | | INAQ | | The Nasdaq Stock Market LLC |
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 | | INAQW | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, 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-2ofthe 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 October 23, 2023, 6,100,945 shares of Class A
common stock, par value $0.0001 per share, and 900,000 shares of Class B common stock, par value $0.0001 per share, were issued
and outstanding.
INSIGHT ACQUISITION CORP.
Form 10-Q
For the Quarter Ended June 30, 2023
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
INSIGHT ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 144,592 | | |
$ | 171,583 | |
Restricted cash | |
| 557,519 | | |
| — | |
Prepaid expenses | |
| 85,001 | | |
| 367,219 | |
Total current assets | |
| 787,112 | | |
| 538,802 | |
Investments held in Trust Account | |
| 29,841,332 | | |
| 244,314,622 | |
Total Assets | |
$ | 30,628,444 | | |
$ | 244,853,424 | |
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 91,055 | | |
$ | 128,835 | |
Accrued expenses | |
| 549,269 | | |
| 68,216 | |
Accrued expenses—related party | |
| 235,000 | | |
| 85,000 | |
Income tax payable | |
| 620,034 | | |
| 467,991 | |
Excise tax payable | |
| 2,156,214 | | |
| | |
Franchise tax payable | |
| 100,000 | | |
| 149,041 | |
Total current liabilities | |
| 3,751,572 | | |
| 899,083 | |
Deferred tax liability | |
| — | | |
| 156,593 | |
Forward purchase agreement liability | |
| 8,035 | | |
| — | |
Deferred underwriting commissions in connection with the Initial Public Offering | |
| 6,600,000 | | |
| 12,000,000 | |
Derivative liabilities | |
| 681,050 | | |
| 84,890 | |
Total Liabilities | |
| 11,040,657 | | |
| 13,140,566 | |
Commitments and Contingencies | |
| | | |
| | |
Class A common stock subject to possible redemption, $0.0001 par value; 2,848,607 and 24,000,000 redeemable shares at $10.44 and $10.15 per share redemption value at June 30, 2023 and December 31, 2022, respectively | |
| 29,728,906 | | |
| 243,597,590 | |
Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2023 and December 31, 2022 | |
| — | | |
| — | |
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 5,100,000 and 0 non-redeemable shares issued and outstanding at June 30, 2023 and December 31, 2022 (excluding 2,848,607 and 24,000,000 shares subject to possible redemption), respectively | |
| 510 | | |
| — | |
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 900,000 and 6,000,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | |
| 90 | | |
| 600 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (10,141,719 | ) | |
| (11,885,332 | ) |
Total stockholders’ deficit | |
| (10,141,119 | ) | |
| (11,884,732 | ) |
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit | |
$ | 30,628,444 | | |
$ | 244,853,424 | |
The accompanying notes are an integral
part of these unaudited condensed financial statements.
INSIGHT ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF
OPERATIONS
| |
For the Three Months Ended June 30, | | |
For the Six Months Ended June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| | |
| | |
| | |
| |
General and administrative expenses | |
$ | 416,246 | | |
$ | 339,509 | | |
$ | 922,572 | | |
$ | 752,586 | |
General and administrative expenses - related party | |
| 75,000 | | |
| — | | |
| 150,000 | | |
| — | |
Franchise tax expenses | |
| 50,000 | | |
| 49,315 | | |
| 100,000 | | |
| 98,132 | |
Loss from operations | |
| (541,246 | ) | |
| (388,824 | ) | |
| (1,172,572 | ) | |
| (850,718 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Change in fair value of derivative liabilities | |
| (420,210 | ) | |
| 3,036,600 | | |
| (596,160 | ) | |
| 6,935,670 | |
Change in fair value of Forward Purchase Agreement Liability | |
| 117,438 | | |
| — | | |
| 78,334 | | |
| — | |
Gain on investments held in Trust Account | |
| 629,757 | | |
| 186,500 | | |
| 2,514,748 | | |
| 128,821 | |
Gain on forgiveness of deferred underwriting fee payable | |
| — | | |
| — | | |
| 273,110 | | |
| — | |
Total other income, net | |
| 326,985 | | |
| 3,223,100 | | |
| 2,270,032 | | |
| 7,064,491 | |
| |
| | | |
| | | |
| | | |
| | |
(Loss) income before income tax expense | |
| (214,261 | ) | |
| 2,834,276 | | |
| 1,097,460 | | |
| 6,213,773 | |
Income tax expense | |
| (169,198 | ) | |
| — | | |
| (585,450 | ) | |
| — | |
Net (loss) income | |
$ | (383,459 | ) | |
$ | 2,834,276 | | |
$ | 512,010 | | |
$ | 6,213,773 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A Redeemable common stock, basic and diluted | |
| 2,848,607 | | |
| 24,000,000 | | |
| 10,327,553 | | |
| 24,000,000 | |
Basic and diluted net (loss) income per common share, Class A Redeemable common stock | |
$ | (0.04 | ) | |
$ | 0.09 | | |
$ | 0.03 | | |
$ | 0.21 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class A Non-Redeemable common stock, basic and diluted | |
| 5,100,000 | | |
| — | | |
| 2,848,856 | | |
| — | |
Basic and diluted net (loss) income per common share, Class A Non-Redeemable common stock | |
$ | (0.04 | ) | |
$ | — | | |
$ | 0.03 | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding of Class B common stock, basic and diluted | |
| 900,000 | | |
| 6,000,000 | | |
| 3,166,667 | | |
| 6,000,000 | |
Basic and diluted net (loss) income per common share, Class B common stock | |
$ | (0.04 | ) | |
$ | 0.09 | | |
$ | 0.03 | | |
$ | 0.21 | |
The accompanying notes
are an integral part of these unaudited condensed financial statements.
INSIGHT ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF
CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2023
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance – December 31, 2022 | |
| — | | |
$ | — | | |
| 6,000,000 | | |
$ | 600 | | |
$ | — | | |
$ | (11,885,332 | ) | |
$ | (11,884,732 | ) |
Accretion of Class A common stock subject to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3,628,151 | | |
| 3,628,151 | |
Contributions from Sponsor | |
| — | | |
| — | | |
| — | | |
| — | | |
| 100,000 | | |
| — | | |
| 100,000 | |
Initial Value of Forward Purchase Agreement | |
| — | | |
| — | | |
| — | | |
| — | | |
| (86,369 | ) | |
| — | | |
| (86,369 | ) |
Class B common stock converted to Class A common stock on a one for one basis | |
| 5,100,000 | | |
| 510 | | |
| (5,100,000 | ) | |
| (510 | ) | |
| — | | |
| — | | |
| — | |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 895,469 | | |
| 895,469 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance – March 31, 2023 (unaudited) | |
| 5,100,000 | | |
| 510 | | |
| 900,000 | | |
| 90 | | |
| 13,631 | | |
| (7,361,712 | ) | |
| (7,347,481 | ) |
Accretion of Class A common stock subject to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| (13,631 | ) | |
| (240,334 | ) | |
| (253,965 | ) |
Excise tax payable | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,156,214 | ) | |
| (2,156,214 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (383,459 | ) | |
| (383,459 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance – June 30, 2023 (unaudited) | |
| 5,100,000 | | |
$ | 510 | | |
| 900,000 | | |
$ | 90 | | |
$ | — | | |
$ | (10,141,719 | ) | |
$ | (10,141,119 | ) |
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2022
| |
Common Stock | | |
Additional | | |
| | |
Total | |
| |
Class A | | |
Class B | | |
Paid-In | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance – December 31, 2021 | |
| — | | |
$ | — | | |
| 6,000,000 | | |
$ | 600 | | |
$ | — | | |
$ | (21,395,176 | ) | |
$ | (21,394,576 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3,379,497 | | |
| 3,379,497 | |
Balance – March 31, 2022 (unaudited) | |
| — | | |
| — | | |
| 6,000,000 | | |
| 600 | | |
| — | | |
| (18,015,679 | ) | |
| (18,015,079 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,834,276 | | |
| 2,834,276 | |
Balance – June 30, 2022 (unaudited) | |
| — | | |
$ | — | | |
| 6,000,000 | | |
$ | 600 | | |
$ | — | | |
$ | (15,181,403 | ) | |
$ | (15,180,803 | ) |
The accompanying notes are an integral
part of these unaudited condensed financial statements.
INSIGHT ACQUISITION CORP.
UNAUDITED CONDENSED STATEMENTS OF
CASH FLOWS
| |
For the Six Months Ended June 30, | |
| |
2023 | | |
2022 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net income | |
$ | 512,010 | | |
$ | 6,213,773 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Change in fair value of derivative liabilities | |
| 596,160 | | |
| (6,935,670 | ) |
Gain on investments held in Trust Account | |
| (2,514,748 | ) | |
| (128,821 | ) |
Gain on forgiveness of deferred underwriting fee payable | |
| (273,110 | ) | |
| — | |
Change in fair value of forward purchase agreement | |
| (78,334 | ) | |
| — | |
Deferred tax benefit | |
| (156,593 | ) | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 282,218 | | |
| 221,598 | |
Accounts payable | |
| (37,780 | ) | |
| 60,307 | |
Accrued expenses – related party | |
| 481,053 | | |
| 1,473 | |
Due to related party | |
| 150,000 | | |
| — | |
Income tax payable | |
| 152,043 | | |
| — | |
Franchise tax payable | |
| (49,041 | ) | |
| (99,093 | ) |
Net cash used in operating activities | |
| (936,122 | ) | |
| (666,433 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Cash withdrawn from Trust Account to pay franchise and income taxes | |
| 1,446,650 | | |
| — | |
Cash withdrawn from Trust Account in connection with redemption | |
| 215,621,388 | | |
| — | |
Cash deposited in Trust Account | |
| (80,000 | ) | |
| — | |
Net cash provided by investing activities | |
| 216,988,038 | | |
| — | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Contributions from Sponsor | |
| 100,000 | | |
| — | |
Offering costs paid | |
| — | | |
| (85,000 | ) |
Redemption of common stock | |
| (215,621,388 | ) | |
| — | |
Net cash used in financing activities | |
| (215,521,388 | ) | |
| (85,000 | ) |
Net change in cash and restricted cash | |
| 530,528 | | |
| (751,433 | ) |
Cash and restricted cash – beginning of the period | |
| 171,583 | | |
| 877,937 | |
Total cash and restricted cash– end of the period | |
$ | 702,111 | | |
$ | 126,504 | |
Cash | |
$ | 144,592 | | |
$ | 126,504 | |
Restricted Cash | |
$ | 557,519 | | |
$ | — | |
| |
| | | |
| | |
Supplemental disclosure of noncash activities: | |
| | | |
| | |
Forgiveness of deferred underwriting fee payable | |
$ | (5,126,890 | ) | |
$ | — | |
Value of excise tax liability | |
$ | 2,156,214 | | |
$ | — | |
Initial value of forward purchase agreement liability | |
$ | 83,369 | | |
$ | — | |
The accompanying notes are an integral
part of these unaudited condensed financial statements.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Note 1 – Description of Organization
and Business Operations
Insight Acquisition Corp. (the “Company”)
was incorporated in Delaware on April 20, 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 an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of June 30, 2023, the Company had
not commenced any operations. All activity for the period from April 20, 2021 (inception) through June 30, 2023 relates to the Company’s
formation and the initial public offering (the “Initial Public Offering”) described below and subsequent to the Initial Public
Offering, the search for a business combination. The Company will not generate any operating revenues until after the completion of its
initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering.
The Company’s sponsor is Insight
Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s
Initial Public Offering was declared effective on September 1, 2021. On September 7, 2021, the Company consummated its Initial
Public Offering of 24,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units
being offered, the “Public Shares”), generating gross proceeds of $240.0 million, and incurring offering costs of approximately
$17.5 million, of which approximately $12.0 million and approximately $668,000 were for deferred underwriting commissions (see
Note 5) and offering costs allocated to derivate warrant liabilities, respectively.
Simultaneously with the closing of
the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 7,500,000 and 1,200,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), to the Sponsor
and Cantor Fitzgerald & Co. (“Cantor”) and Odeon Capital Group, LLC (“Odeon”), respectively, for an aggregate
of 8,700,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, generating proceeds of $8.7 million (see
Note 4).
Upon the closing of the Initial Public Offering
and the Private Placement, $241.2 million ($10.05 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering
and of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in
the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in
money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct
U.S. government treasury obligations, as determined by the Company, until the earlier of (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account.
The company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts
disbursed to management for working capital purposes and excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or
otherwise acquires a controlling interest in the target 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
Company’s outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of
their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholders meeting called
to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek
stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, in its sole discretion. The
Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust
Account (initially at $10.05 per Public Share plus pro rata interest earned in Trust Account). The per-share amount to be
distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the
Company will pay to the underwriters (as discussed in Note 5). These Public Shares were recorded at a redemption value and
classified as temporary equity in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” The Company will proceed with a
Business Combination if the holders of 65% of the shares voted are voted in favor of the Business Combination. If a stockholder vote
is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct
the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction
is required by law, or the Company decides to obtain stockholder approval for business or legal 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.
Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the
proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the Initial Stockholders
(as defined below) agreed to vote their Founder Shares (as defined below in Note 3) and any Public Shares purchased during or after
the Initial Public Offering, and the Anchor Investors (as defined below in Note 3) agreed to vote any Founder Shares held by them in
favor of a Business Combination. In addition, the Initial Stockholders agreed to waive their redemption rights with respect to their
Founder Shares and Public Shares in connection with the completion of a Business Combination. The Company’s Certificate of
Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such
stockholder 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”)), is restricted from redeeming an aggregate of 20% or more of the Public Shares,
without the prior consent of the Company.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
The Company’s Certificate of
Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
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”)), is restricted from redeeming an aggregate of 20% or more of the Public Shares, without the prior consent
of the Company.
The Sponsor and the Company’s
officers and any other holders of the Founder Shares immediately prior to the Initial Public Offering (the “Initial Stockholders”)
agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation
to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined
below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity,
unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Anchor Investors are not entitled
to (i) redemption rights with respect to any Founder Shares held by them in connection with the completion of the initial Business
Combination, (ii) redemption rights with respect to any Founder Shares held by them in connection with a stockholder vote to amend
the Certificate of Incorporation in a manner that would affect the substance or timing of the Company’s obligation to redeem 100%
of its Public Shares if the Company has not consummated an initial Business Combination within the Combination Period or (iii) rights
to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if the Company fails to complete the
initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust
Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Combination
Period).
If the Company is unable to complete
a Business Combination by November 7, 2023 (the “Combination Period”), or up to June 7, 2024 provided the Company extends
the Combination Period to the fullest extent, as further as noted below, 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 (which interest shall be net of taxes payable and 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 Stockholders’
rights as stockholders (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 remaining stockholders and the board of directors, liquidate and dissolve,
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.
On March 6, 2023 the Company held a special
meeting (the “Special Meeting”) of stockholders. At the Special Meeting, the Company’s stockholders were asked to vote
on the following items: (i) a proposal to amend the Charter to extend the date by which the Company has to consummate a business
combination for an additional one month, from March 7, 2023 to April 7, 2023 and thereafter, at the discretion of the board
of directors of the Company and without a vote of the stockholders, up to five (5) times for an additional one month each time, for
a total of up to five additional months to September 7, 2023 (the “First Charter Amendment Proposal”), (ii) a proposal
to amend the Company’s Charter to eliminate from the Charter the limitation that the Company may not redeem public shares to the
extent that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1)
of the Exchange Act) of less than $5,000,001 (the “Redemption Limitation”) in order to allow the Company to redeem public
shares irrespective of whether such redemption would exceed the Redemption Limitation (the “Second Charter Amendment Proposal”),
(iii) a proposal to amend the Charter to provide for the right of a holder of Class B common stock of the Company, par value $0.0001
per share (“Class B Common Stock”) to convert such shares into shares of Class A common stock of the Company, par
value $0.0001 per share (“Class A Common Stock”) on a one-for-one basis prior to the closing of a business combination
at the election of the holder (the “Third Charter Amendment Proposal” and together with the First Charter Amendment Proposal
and the Second Charter Amendment Proposal, the “Charter Amendment Proposals”) and (iv) a proposal to direct the chairman
of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote
of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve each of the
Charter Amendment Proposals. In connection with the Extension, the holders of 21,151,393 Class A common shares, representing approximately
88.1% of the Company’s issued and outstanding Class A common shares, elected to redeem their shares. Following such redemptions,
approximately $28,744,831 remained in the trust account and 2,848,607 shares of Class A Common Stock remained issued and outstanding.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
On March 28, 2023, the board of
directors of the Company approved a one-month extension of the date by which the Company has to consummate a business combination to May
7, 2023 and authorized management to deposit $80,000 into the Trust Account for such extension. Accordingly, management deposited $80,000
into the Trust Account and the date by which the Company has to consummate a business combination has been extended to May 7, 2023. On
May 2, 2023, the board of directors of the Company approved an additional one-month extension to June 7, 2023 and deposited an additional
$80,000 into the Trust Account.
On March 29, 2023, the Company entered into
a forward share purchase agreement (the “Forward Share Purchase Agreement”) with Avila, Meteora Special Opportunity Fund I,
LP, Meteora Capital Partners, LP and Meteora Select Trading Opportunities Master, LP (collectively, “Seller”) for an OTC Equity
Prepaid Forward Transaction (the “Forward Purchase Transaction”). Pursuant to the terms of the Forward Purchase Agreement,
Seller intends but is not obligated to purchase the Company’s Class A Common Stock from holders (other than the Company or
its affiliates) who have elected to redeem such shares in connection with the Proposed Transactions. Purchases by Seller will be made
through brokers in the open market after the redemption deadline in connection with the Proposed Transactions at a price no higher than
the redemption price to be paid by the Company in connection with the Proposed Transactions (the “Initial Price”). The Shares
purchased by the Seller, other than the Share Consideration Shares are referred to herein as the “Recycled Shares.” The Seller
also may sell 2,376,000 shares of the Company Class A Common Stock purchased in the Company’s initial public offering (“IPO
Shares”) in the Forward Purchase Transaction, up to a maximum of 2,500,000 shares of Class A Common Stock (including any Recycled
Shares).
On April 3, 2023, the Company entered into a Business Combination
Agreement (“Avila BCA”) with Avila Energy Corporation, an Alberta corporation (“Avila”), pursuant to which the
Company will acquire Avila for consideration of shares of the Company following its redomicile into the Province of Alberta. The business
combination agreement and related executed agreements included supporting agreements and a forward share purchase agreement are more fully
described and filed with the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2023.
On April 18, 2022, the Company
received a notification from the New York Stock Exchange (“NYSE”) that it was in violation of NYSE requirements as it had
failed to timely file its Annual Report on Form10-K for the fiscal year ended December 31, 2022 (the “Form10-K”) and
that if the Form 10-K is not filed with the SEC by 2:30 p.m. Eastern Time on April 21, 2023, NYSE post the Company to the NYSE’s
late filers list on the Profile, Data and News pages with respect to each of the Company’s securities (the “LF Designation”).
Effective April 19, 2022, the Company filed the Form10-Kand that same day the Company received additional correspondence from the
NYSE acknowledging that the filing had been made and cancelling its prior correspondence and stating that the LF Designation would not
be posted on the Profile, Data and News pages with respect to each of the Company’s securities.
On April 27, 2023, the Company
issued a press release reporting that the Company will transfer the listing of its securities to The Nasdaq Stock Market. In the press
release, the Company stated that its securities will commence trading on Nasdaq upon the market open on Tuesday, May 2, 2023. The
Company’s Class A common stock will continue trading under the ticker symbol “INAQ” on the Nasdaq Global Market
and the Company’s units and warrants will continue trading under the ticker symbols “INAQU” and “INAQW,”
respectively, on the Nasdaq Capital Market.
On May 24, 2023, the Company received a notification
from The Nasdaq Stock Market (“Nasdaq”) that it was not in compliance with Nasdaq Listing Rule 5250I(1) as it had failed to
timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Form 10-Q”). Under the Nasdaq Listing
Rules, the Company now has 60 calendar days to submit a plan to regain compliance and if the plan is accepted, Nasdaq may grant an exception
of up to 180 calendar days from the Form 10-Q’s due date, or until November 20, 2023, to regain compliance. The Company subsequently
filed the Form 10-Q for the quarter ended March 31, 2023 on June 2, 2023, regaining compliance.
On August 10, 2023, the Company and Avila entered into a Letter Agreement
providing for the mutual termination of the Avila BCA. The Letter Agreement provides for the mutual release of claims against the other
party and also provides that Avila will pay to the Company $300,000 in partial reimbursement of expenses incurred by the Company in connection
with the Avila BCA (the “Avila Payment”). The Avila Payment is due and payable as follows: 1) up to $300,000 immediately upon
Avila’s receipt of net proceeds from any financing, public or private, in excess of U.S. $3,000,000, -or- (2) (i) $50,000 by December
1, 2023, (ii) $100,000 by February 1, 2024 and (iii) $150,000 by April 1, 2024.
On August 17, 2023, the Company issued
an unsecured promissory note in the aggregate principal amount of $480,000 (the “Note”) to the Sponsor, in exchange for the
Sponsor advancing $480,000 to the Company to fund six one-month extensions of the amount of time the Company has to complete its initial
business combination, from March 7, 2023 to September 7, 2023. The Note does not bear interest and matures upon the closing of an initial
business combination by the Company. In addition, at the option of the holder, the Note may be paid by the Company through the issuance
of private placement warrants of the Company at a price of $1.00 per unit. The loan will be forgiven, except to the extent of any funds
held outside of the Company’s trust account, by the Sponsor, if Company is unable to consummate an initial business combination.
As approved by its stockholders at
the annual meeting of stockholders held on September 6, 2023 (the “Annual Meeting”), the Company filed a Second Amendment
(the “Second Amendment”) to its Amended and Restated Certificate of Incorporation (the “Charter”) with the Delaware
Secretary of State on September 6, 2023 to modify the terms and extend Combination Period by which the Company has to consummate an initial
business combination (the “Business Combination”) from September 7, 2023 to June 7, 2024, provided that the Company deposits
the lesser of $20,000 and $0.02 for each outstanding share of common stock sold in the Company’s initial public offering into the
Trust Account, as defined in the Charter for each one-month extension. In connection with the stockholder’s vote at the Annual Meeting,
1,847,662 shares were tendered for redemption.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
On September 7, 2023, the Company deposited
$20,000 into the Trust Account to extend the Business Combination Period from September 7, 2023 to October 7, 2023. In October 2023 the
Company deposited $20,000 into the Trust Account to extend the Business Combination Period from October 7, 2023 to November 7, 2023.
Effective as of October 13, 2023, the Company, IAC Merger Sub Inc.,
a Florida corporation (“Merger Sub”) and Alpha Modus, Corp., a Florida corporation (“Alpha Modus”), entered into
a business combination agreement and plan of merger (the “AM BCA”) pursuant to which Merger Sub will merge with and into Alpha
Modus with Alpha Modus as the surviving corporation and becoming a wholly owned subsidiary of the Company. The Board of Directors of the
Company (the “Board”) has unanimously approved and declared advisable the AM BCA, the Merger and the other transactions contemplated
thereby (the “Proposed Transactions”). A copy of the AM BCA is filed as Exhibit 2.1 in the Current Report on Form 8-K, dated
October 17, 2023.
The Initial Stockholders agreed to
waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete
a Business Combination within the Combination Period. However, if the Initial Stockholders acquire Public Shares in or after the Initial
Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company
fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred
underwriting commission (see Note 5) 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 residual
assets remaining available for distribution (including Trust Account assets) will be only $10.05. In order to protect the amounts held
in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party (except for the
Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination
agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.05 per Public Share
and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if
less than $10.05 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability
will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) nor will it apply 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”). 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, prospective target businesses or 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.
Risks and Uncertainties
Management continues to evaluate the
impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative
effect on the Company’s financial position, the results of its operations and search for a target company, the specific impact is
not readily determinable as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation
and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United
States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy is not determinable as of the date of these condensed financial statements. The specific impact on the
Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed
financial statements.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR
Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases
of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations
occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from
which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time
of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market
value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain
exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide
regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share
repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject
to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination,
extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases
in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the
nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not
in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content
of regulations and other guidance from the Treasury.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
The Company held a meeting on March 6, 2023 where
the stockholders voted to approve a proposal to amend the Company’s amended and restated certificate of incorporation to extend
the Combination Period, from March 7, 2023, monthly for up to six additional months at the election of the Company, ultimately until as
late as September 7, 2023 (the “Extension”, and such extension date the “Extended Date”). In connection with the
March 6, 2023 meeting, 21,151,393 shares of the Company’s common stock were redeemed with a total redemption payment of $215,621,387.
As a result, the Company booked a liability of $2,156,214 for the excise tax based on 1% of shares redeemed during the reporting period.
For interim periods, an entity is not required to estimate future stock repurchases and stock issuances to measure its excise tax obligation.
Rather, an entity can generally record the obligation on an as-incurred basis. In other words, the excise tax obligation recognized at
the end of a quarterly financial reporting period is calculated as if the end of the quarterly period was the end of the annual period
for which the excise tax obligation is payable.
Pursuant to the AM BCA, (i) in the event the business
combination contemplated by the AM BCA occurs, then the surviving company shall pay the Company’s excise tax liability; (ii) if
Alpha Modus does not obtain its shareholders approval of the business combination, or Alpha Modus breaches the AM BCA, then Alpha Modus
will be responsible to pay the Company’s excise tax liability; and (iii) if an Alpha Modus material adverse effect occurs and the
business combination does not close, or if Alpha Modus fails to close the business combination for any reason other than a material breach
by the Company, then Alpha Modus will be responsible to pay the Company’s excise tax liability. In all other circumstances the Company
will be responsible to pay the Company’s excise tax liability, except if the Company liquidates prior to December 31, 2023, in which
event there will be no excise tax liability. The Company will not use any of the funds held in the Trust Account and any additional amounts
deposited into the Trust Account, as well as any interest earned thereon, to pay for the Company’s excise tax liability. In addition,
because the excise tax would be payable by the Company and not by the redeeming holders, the mechanics of any required payment of the
excise tax by the Company have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a
Business Combination and in the Company’s ability to complete a Business Combination.
Emerging Growth Company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(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 of 2002, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of
the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that an emerging growth 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 condensed 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.
Liquidity and Going Concern
As of June 30, 2023, the Company had approximately
$144,600 in its operating bank account available to pay operating expenses and working capital deficit of approximately $2,964,500.
The Company’s liquidity needs prior to the
consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering
costs on behalf of the Company in exchange for issuance of the Founder Shares (as defined in Note 3), and the loan from the Sponsor of
approximately $163,000 under the Note (as defined in Note 4). The Company repaid $157,000 of Note balance on September 7, 2021 and
repaid the remaining balance of approximately $6,000 in full on September 13, 2021, at which time the Note was terminated. Subsequent
to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the
consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, 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, provide the Company Working Capital Loans (see Note 4). As of June 30, 2023 and
December 31, 2022, there were no amounts outstanding under any Working Capital Loans.
In connection with the Company’s assessment
of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of
Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until June 7, 2024 (extended monthly
through extension payments), to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business
Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent
dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination
not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern.
Management intends to complete a Business Combination by close of business on June 7, 2024. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate after June 7, 2024.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Note 2 - Basis of Presentation and
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed
financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X
and pursuant to the rules and regulations of the SEC. Accordingly, certain disclosures included in the annual financial statements have
been condensed or omitted from these financial statements as they are not required for interim financial statements. In the opinion of
management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary
for the fair statement of the balances and results for the periods presented. Operating results for the three and six months ended June
30, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023 or any future period.
The accompanying unaudited condensed
financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report
on Form10-K filed by the Company with the SEC on April 19, 2023.
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 had no cash equivalents
as of June 30, 2023 and December 31, 2022.
Restricted Cash
The Company has approximately $557,500 of restricted
cash to be used to pay for taxes as of June 30, 2023. There was no restricted cash balance as of December 31, 2022.
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed
the Federal Deposit Insurance Corporation coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a
significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
Use of Estimates
The preparation of condensed financial
statements in conformity with GAAP requires 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 condensed financial statements and the reported amounts
of income and expenses during the reporting period. Making estimates requires management to exercise significant judgment. One of the
more significant accounting estimates included in these condensed financial statements is the determination of the fair value of the warrant
liabilities. 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 condensed 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.
Investments Held in the Trust
Account
The Company’s portfolio of investments
is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with
a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have
a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised
of U.S. government securities, the investments are classified as trading securities. Trading securities and investments in money market
funds are presented on the condensed 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 are included in income from investments held in Trust Account in the accompanying condensed
statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Financial Instruments
The fair value of the Company’s
assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,”
equals or approximates the carrying amounts represented in the condensed balance sheets, except for the derivative liabilities (see Note
9).
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement
date. 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 consist of:
| ● | Level 1,
defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2,
defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices
for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used
to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement
is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Liabilities
The Company does not use derivative
instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments,
including issued stock purchase warrants and the forward purchase agreement, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC
815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as
equity, is re-assessed at the end of each reporting period.
The warrants issued in the Initial
Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance
with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the carrying value
of the instruments to fair value at each reporting period for so long as they are outstanding. The initial fair value of the Public Warrants
issued in connection with the Public Offering and the fair value of the Private Placement Warrants have been estimated using a Monte Carlo
simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using the public market quoted
prices at each measurement date starting at June 30, 2022. The fair value of Public Warrants has subsequently been measured based on the
listed market price of such warrants. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is
not reasonably expected to require the use of current assets or require the creation of current liabilities.
The Company granted the underwriters
a 45-day option to purchase up to 3,600,000 additional Units solely to cover over-allotments, if any. The Company estimated the fair
value of the over-allotment option using a Black-Scholes model. On October 16, 2021, the over-allotment option expired unexercised.
The Forward Purchase Agreement entered into on
March 29, 2023 included elements that require liability classification under ASC 480. Accordingly, the Company recognizes the Forward
Purchase Agreement as a liability at fair value and adjusts the carrying value of the instruments to fair value at each reporting period
for so long as it is outstanding. The initial fair value and the value as of June 30, 2023 of the Forward Purchase Agreement liability
issued was estimated using a Put Option Pricing model, which analyzed and incorporated into the model the put price, the risk-free rate,
the variable term, the settlement features, the likelihood of completing a business combination and the early termination provisions.
The model estimates the underlying economic factors that influenced which of these events would occur, when they were likely to occur,
and the specific terms that would be in effect at the time (i.e., stock price, exercise price, etc.). Probabilities were assigned to each
variable such as the timing and pricing of events over the term of the instruments based on management projections. The fair value was
adjusted for the market implied likelihood of completing a business combination.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Offering Costs Associated with
the Initial Public Offering
Offering costs consisted of legal,
accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public
Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative
fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as
incurred and presented as non-operating expenses in the condensed statements of operations. Offering costs associated with issuance of
the Class A common stock were charged against the carrying value of the Class A common stock subject to possible redemption
upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities
as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statement 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. Deferred tax assets were offset
by a full valuation allowance as of June 30, 2023 and December 31, 2022. The deferred tax liability as of June 30, 2023 and December
31, 2022 was $0 and $156,593, respectively.
FASB 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. Tax expense of approximately $169,000 and $0 was recognized for the three months ended June 30, 2023 and 2022, respectively,
and amounts of approximately $585,000 and $0 were recognized for the six months ended June 30, 2023 and 2022, respectively. There
were no unrecognized tax benefits as of June 30, 2023 and December 31, 2022. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as
of June 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant
payments, accruals or material deviation from its position. The Company has been subject to income tax examinations by major taxing authorities
since inception.
Class A Common Stock Subject
to Possible Redemption
The Company accounts for its Class A
common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.”
Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value.
Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either
within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity.
The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, 2,848,607 and 24,000,000 shares of Class A common
stock subject to possible redemption as of June 30, 2023 and December 31, 2022, respectively, are presented at redemption value as
temporary equity, outside of the stockholders’ deficit section of the Company’s condensed balance sheets.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal
the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the
redemption date for the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from
initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated
deficit.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Net (Loss) Income Per Common
Share
The Company complies with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are
referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes
of shares. The presentation assumes a business combination as the most likely outcome. Net (loss) income per common share is calculated
by dividing the net (loss) income by the weighted average shares of common stock outstanding for the respective period.
The calculation of diluted net (loss)
income does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering and the private placement
warrants to purchase an aggregate of 20,700,000 shares of Class A common stock in the calculation of diluted (loss) income per share,
because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As
a result, diluted net (loss) income per share is the same as basic net (loss) income per share for the three and six months ended June
30, 2023 and 2022. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption
value approximates fair value.
The following tables present a reconciliation
of the numerator and denominator used to compute basic and diluted net (loss) income per share for each class of common stock:
|
|
For the Three Months Ended
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
Class A
redeemable |
|
|
Class B |
|
|
Class A non-
redeemable |
|
|
Class A
redeemable |
|
|
Class B |
|
Basic and diluted net (loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net (loss) income |
|
$ |
(129,446 |
) |
|
$ |
(39,002 |
) |
|
$ |
(221,011 |
) |
|
$ |
2,267,421 |
|
|
$ |
566,855 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding |
|
|
2,848,607 |
|
|
|
900,000 |
|
|
|
5,100,000 |
|
|
|
24,000,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net (loss) income per common share |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
|
For the Six Months Ended
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
|
Class A
redeemable |
|
|
Class B |
|
|
Class A non-
redeemable |
|
|
Class A
redeemable |
|
|
Class B |
|
Basic and diluted net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income |
|
$ |
323,775 |
|
|
$ |
98,879 |
|
|
$ |
89,356 |
|
|
$ |
4,971,018 |
|
|
$ |
1,242,755 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding |
|
|
10,327,553 |
|
|
|
3,166,667 |
|
|
|
2,861,667 |
|
|
|
24,000,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common share |
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
Recent Accounting Pronouncements
Management does not believe that any
recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed
financial statements.
Note 3 - Initial Public Offering
On September 7, 2021, the Company
consummated its Initial Public Offering of 24,000,000 Units, generating gross proceeds of $240.0 million, and incurring offering
costs of approximately $17.5 million, of which approximately $12.0 million and approximately $668,000 were for deferred underwriting
commissions and offering costs allocated to derivative warrant liabilities, respectively. Each Unit consists of one share of Class A
common stock, and one-half of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to
purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Of the 24,000,000 Units sold in the
Initial Public Offering, 23,760,000 Units were purchased by certain qualified institutional buyers or institutional accredited investors
which are not affiliated with any member of the Company management (the “Anchor Investors”). In connection with the sale of
Units to the Anchor Investors, the Sponsor transferred an aggregate of 1,350,000 of the Company’s Class B common stock held
by the Sponsor (the “Founder Shares”) to the Anchor Investors at a price of approximately $0.004 per Founder Share. The Company
determined that the excess of the fair value of the Founder Shares acquired by the Anchor Investors over the price paid by such Anchor
Investors should be recognized as an offering cost in accordance with SEC Staff Accounting Bulletin Topic 5A. The Company estimated the
fair value of the Founder Shares sold to the Anchor Investors to be $2.37 per share or an aggregate of approximately $3.2 million,
based on third-party transactions in the Sponsor’s equity interests. Accordingly, the offering cost is allocated to the separable
financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received.
Offering costs allocated to the Public Warrants are expensed as incurred. Offering costs allocated to the Public Shares are charged against
the carrying value of Class A common stock upon the completion of the Initial Public Offering.
The Company granted
the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to
3,600,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts and
commissions. On October 16, 2021, the over-allotment option expired unexercised.
Note 4 - Related Party Transactions
Founder Shares
On May 5, 2021, the Sponsor paid
for certain offering costs totaling $25,000 on behalf of the Company in exchange for issuance of 6,181,250 shares of the Company’s
Founder Shares, par value $0.0001 per share. On July 29, 2021, the Company effected a 1:1.1162791 stock split of Class B
common stock, resulting in an aggregate of 6,900,000 shares of Class B common stock outstanding. In connection with the sale of Units
to the Anchor Investors, the Sponsor transferred 1,350,000 Founder Shares to the Anchor Investors, as described in Note 3, above. The
Sponsor agreed to forfeit up to 900,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters,
so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering.
On October 16, 2021, the over-allotment option expired unexercised. As such, 900,000 shares of Class B common stock were forfeited.
The Initial
Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to
occur of: (i) one year after the completion of the initial Business Combination and (ii) the date following the completion
of the initial Business Combination on which the Company completes a liquidation, merger, capital stock exchange or other similar
transaction that results in all of the stockholders having the right to exchange their common stock for cash, securities or other
property. Notwithstanding the foregoing, if the closing price of Class A common stock 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 the initial Business Combination, the Founder Shares will be released
from the lockup.
Contributed Capital
During the quarter ended March 31, 2023, the Sponsor contributed $100,000
to the Company for no consideration.
Private Placement Warrants
Simultaneously with the closing of
the Initial Public Offering, the Company consummated the Private Placement of 7,500,000 and 1,200,000 Private Placement Warrants to the
Sponsor and Cantor and Odeon, respectively, for an aggregate of 8,700,000 Private Placement Warrants, at a price of $1.00 per Private
Placement Warrant, generating proceeds of $8.7 million.
Each Private Placement Warrant is exercisable
for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private
Placement Warrants to the Sponsor and the underwriters 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 Private Placement Warrants will expire worthless.
Except as set forth below, the Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long
as they are held by the Sponsor, the underwriters or their permitted transferees.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
The Sponsor, the underwriters and the
Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement
Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On April 30, 2021, the Sponsor
agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory
note (the “Note”). This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. The
Company borrowed approximately $163,000 under the Note. On September 7, 2021, the Company repaid $157,000 of Note balance and repaid
the remaining balance of approximately $6,000 in full on September 13, 2021. Subsequent to the repayment, the facility was no longer
available to the Company.
In addition, 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”). If the Company
completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released
to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. 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. The Working Capital Loans would either
be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital
Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be
identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been
determined and no written agreements exist with respect to such loans. As of June 30, 2023 and December 31, 2022, the Company had
no borrowings under the Working Capital Loans.
Services Agreement
On September 1, 2021, the Company
entered into an agreement with the Sponsor, pursuant to which the Company agreed to pay the Sponsor a total of $10,000 per month for office
space, secretarial and administrative services provided to or incurred by members of the Company’s management team until the earlier
of the Company’s consummation of a Business Combination and the Company’s liquidation. For the three and six months ended
June 30, 2023, the Company incurred approximately $30,000 and $60,000, respectively, under the services agreement in the condensed statements
of operations. For the three and six months ended June 30, 2022, the Company incurred approximately $30,000 and $60,000, respectively,
under the services agreement in the condensed statements of operations. As of June 30, 2023 and December 31, 2022, $100,000 and $40,000 were
included in due to related party on the condensed balance sheets, respectively.
The board of directors has also approved
payments of up to $15,000 per month, through the earlier of the consummation of the Company’s initial Business Combination or its
liquidation, to members of the Company’s management team for services rendered to the Company. In addition, the Sponsor, executive
officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection
with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor,
executive officers or directors, or the Company’s or their affiliates. For the three and six months ended June 30, 2023 and 2022,
the Company incurred approximately $45,000 and $90,000, respectively, under the services agreement. For the three and six months
ended June 30, 2022, the Company incurred approximately $45,000 and $90,000, respectively, under the services agreement in the condensed
statements of operations. As of June 30, 2023 and December 31, 2022, $235,000 and $45,000 were included in due to related party
on the condensed balance sheets, respectively.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Note 5 - Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private
Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock 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), were entitled to registration rights pursuant to a registration and stockholder rights agreement signed prior to
the consummation of the Initial Public Offering. These holders were entitled to certain demand and “piggyback” registration
rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an
underwriting discount of $0.20 per unit, or $4.8 million in the aggregate, paid upon the closing of the Initial Public Offering.
An additional fee of $0.50 per unit, or $12.0 million in the aggregate will be payable to the underwriters for deferred underwriting
commissions. If the underwriters’ over-allotment option was fully exercised, $0.70 per over-allotment unit, or up to an additional
approximately $2.5 million, or approximately $14.5 million in the aggregate, would have been deposited in the Trust Account
as deferred underwriting commissions. On October 16, 2021, the over-allotment option expired unexercised. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement. On October 16, 2021, the over-allotment option expired unexercised.
On March 28, 2023, the Company received
a waiver from one of the underwriters of its Initial Public Offering pursuant to which such underwriter waived all rights to $5.4 million
of its $8.4 million deferred underwriting commissions payable upon completion of an initial Business Combination. As a result, the
Company recognized $273,110 of gain on forgiveness of underwriting fee payable and $5,126,890 toward Class A redeemable shares in
relation to the forgiveness of the deferred underwriter fee allocated to the underwriter in the accompanying consolidated financial statements.
In connection with this waiver, the underwriter also agreed that the remainder of the deferred underwriting fee of $3.0 million will
be payable upon the consummation of the business combination. As of June 30, 2023 and December 31, 2022, $6,600,000 and $12,000,000
were outstanding under deferred underwriting fee payable, respectively.
Forward Share Purchase Agreement
On March 29, 2023, the Company entered into a forward share purchase
agreement (the “Forward Share Purchase Agreement”) with Avila, Meteora Special Opportunity Fund I, LP, Meteora Capital Partners,
LP and Meteora Select Trading Opportunities Master, LP (collectively, “Seller”) for an OTC Equity Prepaid Forward Transaction
(the “Forward Purchase Transaction”). Pursuant to the terms of the Forward Purchase Agreement, Seller intends but is not obligated
to purchase shares of SPAC Class A Common Stock from holders (other than SPAC or its affiliates) who have elected to redeem such
shares in connection with the Proposed Transactions. Purchases by Seller will be made through brokers in the open market after the redemption
deadline in connection with the Proposed Transactions at a price no higher than the redemption price to be paid by SPAC in connection
with the Proposed Transactions (the “Initial Price”). The Shares purchased by the Seller, other than the Share Consideration
Shares are referred to herein as the “Recycled Shares.” The Seller also may sell 2,376,000 shares of SPAC Class A Common
Stock purchased in the SPAC’s initial public offering (“IPO Shares”) in the Forward Purchase Transaction, up to a maximum
of 2,500,000 shares of Class A Common Stock (including any Recycled Shares). The Forward Share Purchase Agreement was terminated
as a result of the termination of the Avila BCA on August 10, 2023, as described below.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Business Combination Agreement
On April 3, 2023, the Company
entered into a Business Combination Agreement with Avila Energy Corporation, an Alberta corporation (“Avila”), pursuant to
which the Company will acquire Avila for consideration of shares of the Company following its redomicile into the Province of Alberta.
The business combination agreement and related executed agreements included supporting agreements and a forward share purchase agreement
are more fully described and filed with the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2023.
On August 10, 2023, the Company and Avila entered
into a Letter Agreement providing for the mutual termination of the Avila BCA. The Letter Agreement provides for the mutual release of
claims against the other party and also provides that Avila will pay to the Company $300,000 in partial reimbursement of expenses incurred
by the Company in connection with the Avila BCA (the “Avila Payment”). The Avila Payment is due and payable as follows: 1)
up to $300,000 immediately upon Avila’s receipt of net proceeds from any financing, public or private, in excess of U.S. $3,000,000,
-or- (2) (i) $50,000 by December 1, 2023, (ii) $100,000 by February 1, 2024 and (iii) $150,000 by April 1, 2024.
Effective as of October 13, 2023, the Company,
IAC Merger Sub Inc., a Florida corporation (“Merger Sub”) and Alpha Modus, Corp., a Florida corporation (“Alpha Modus”),
entered into a business combination agreement and plan of merger (the “AM BCA”) pursuant to which Merger Sub will merge with
and into Alpha Modus with Alpha Modus as the surviving corporation and becoming a wholly owned subsidiary of the Company. The Board of
Directors of the Company (the “Board”) has unanimously approved and declared advisable the AM BCA, the Merger and the other
transactions contemplated thereby (the “Proposed Transactions”). A copy of the AM BCA is filed as Exhibit 2.1 in the Current
Report on Form 8-K dated October 17, 2023.
Note 6 - Class A Shares of Common Stock
Subject to Possible Redemption
The Company’s Class A common
stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of future events. The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share.
Holders of the Company’s Class A common stock are entitled to one vote for each share. In connection with the Extension, the
holders of 21,151,393 Class A common shares, representing approximately 88.1% of the Company’s issued and outstanding Class A
common shares, elected to redeem their shares. Following such redemptions, approximately $28,744,831 will remain in the trust account
and 2,848,607 shares of Class A Common Stock subject to possible redemption will remain issued and outstanding. As of June 30, 2023
and December 31, 2022, there were 2,848,607 and 24,000,000 shares of Class A common stock subject to possible redemption outstanding
at $10.44 and $10.15 redemption value, respectively, all of which were subject to possible redemption.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
The shares of Class A common stock
issued in the Initial Public Offering were recognized in Class A common stock subject to possible redemption as follows:
Gross proceeds from Initial Public Offering | |
$ | 240,000,000 | |
Less: | |
| | |
Fair value of Public Warrants at issuance | |
| (7,582,627 | ) |
Offering costs allocated to Class A common stock subject to possible redemption | |
| (20,050,096 | ) |
Plus: | |
| | |
Accretion on Class A common stock subject to possible redemption amount | |
| 31,230,313 | |
| |
| | |
Class A common stock subject to possible redemption at December 31, 2022 | |
| 243,597,590 | |
Less: | |
| | |
Redemptions | |
| (215,621,388 | ) |
Accretion of carrying value to redemption value | |
| (3,374,186 | ) |
Plus: | |
| | |
Waiver of underwriting fee allocated to Class A Common Stock | |
| 5,126,890 | |
Class A common stock subject to possible redemption at June 30, 2023 | |
$ | 29,728,906 | |
Note 7 - Stockholders’ Deficit
Preferred Stock -The
Company is authorized to issue 1,000,000 shares of preferred stock, par value $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 June 30, 2023 and December 31,
2022, there were no preferred shares issued or outstanding.
Class A Common Stock -The
Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, 2023
and December 31, 2022, there were 7,948,607 and 24,000,000 shares of Class A common stock, respectively, issued and outstanding. All shares
of Class A common stock subject to possible redemption have been classified as temporary equity (see Note 6). On March 22, 2023, 5,100,000
shares of Class B common stock were exchanged for an equal number of shares of Class A common stock. Such shares are not entitled
to redemption rights.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Class B
Common Stock - The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001
per share. As of June 30, 2023 and December 31, 2022, there were 900,000 and 6,000,000 shares of Class B common stock
issued and outstanding (see Note 6).
Common stockholders of record are entitled
to one vote for each share held on all matters to be voted on by stockholders. Holders of Class B common stock and holders of Class A
common stock will vote together as a single class, except as required by applicable law or stock exchange rule.
The Class B common stock will
automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of the initial
Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or
equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A
common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number
of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A
common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable
upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in
relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities
or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial
Business Combination and any private placement warrants issued to the Sponsor, officers or directors upon conversion of Working Capital
Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Note 8 - Warrants
As of June 30, 2023 and December 31,
2022, the Company has 12,000,000 and 8,700,000 Public Warrants and Private Placement Warrants, respectively, outstanding.
Public Warrants may only be exercised
for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants
will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that the Company
has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise
of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public
Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company agreed that
as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company
will use its best efforts to file with the SEC and have an effective registration statement covering the shares of Class A common
stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock
until the warrants expire or are redeemed. If a registration statement covering the Class A common stock issuable upon exercise of
the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until
such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any
exercise of a warrant not listed on a national securities exchange such that they satisfy 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 elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not
so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available.
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
The warrants have an exercise price
of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon
redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked
securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective
issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined
in good faith by the board of directors and, in the case of any such issuance to the Initial Stockholders or their affiliates, without
taking into account any Founder Shares held by the Initial Stockholders or such affiliates, as applicable, prior to such issuance) (the
“Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business
Combination (net of redemptions), and (z) the volume weighted average trading price of Class A common stock during the 20 trading
day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price,
the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to
be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described
below under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market
Value and the Newly Issued Price.
The Private Placement Warrants are
identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon
exercise of the Private Placement Warrants will not be transferable, assignable or salable until the completion of a Business Combination,
subject to certain limited exceptions. Additionally, except as set forth below, the Private Placement Warrants will be non-redeemable
so long as they are held by the Sponsor, the underwriters or their permitted transferees. If the Private Placement Warrants are held by
someone other than the Sponsor, the underwriters 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.
Redemption of warrants.
Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect
to the Private Placement Warrants):
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; |
| ● | upon
a minimum of 30 days’ prior written notice of redemption; and |
| ● | if, and only if, the
closing price of Class A common stock equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within a
30-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. |
Note 9 - Fair Value Measurements
The following tables present information
about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31,
2022 and indicate the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:
June 30, 2023
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account—U.S. Treasury Securities | |
$ | 29,841,332 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative liabilities-public warrants | |
$ | — | | |
$ | 394,800 | | |
$ | — | |
Derivative liabilities-private warrants | |
$ | — | | |
$ | 286,250 | | |
$ | — | |
Forward Purchase Agreement liability | |
$ | — | | |
$ | — | | |
$ | 8,035 | |
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
December 31, 2022
Description | |
Quoted Prices in Active Markets (Level 1) | | |
Significant Other Observable Inputs (Level 2) | | |
Significant Other Unobservable Inputs (Level 3) | |
Assets: | |
| | |
| | |
| |
Investments held in Trust Account—U.S. Treasury Securities | |
$ | 244,314,622 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | |
Derivative liabilities-public warrants | |
$ | — | | |
$ | 49,200 | | |
$ | — | |
Derivative liabilities-private warrants | |
$ | — | | |
$ | 35,690 | | |
$ | — | |
Transfers to/from Levels 1, 2, and
3 are recognized at the beginning of the reporting period. The estimated fair value of the Public Warrants transferred from a Level 3
measurement to a Level 1 fair value measurement on October 1, 2021 because the Public Warrants were separately listed and traded
in an active market. The estimated fair value of the Public Warrants transferred from a Level 1 measurement to a Level 2 fair
value measurement in September 2022, due to the limited trading activity of the Public Warrants at September 30, 2022 through June
30, 2023. The Private Placement Warrants were transferred from a Level 3 measurement to a Level 2 measurement in September 2022,
as the Public and Private Placement Warrants are viewed as economically equivalent. There were no transfers to/from Levels 1, 2,
and 3 during the three and six months ended June 30, 2023.
Level 1 assets include investments
in U.S. Treasury securities. The Company uses inputs such as actual trade data, benchmark yields and quoted market
prices from dealers or brokers.
The initial fair value of the Public
Warrants issued in connection with the Initial Public Offering and the fair value of the Private Placement Warrants have been estimated
using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Black-Scholes
model at each measurement date until September 30, 2022 when the public market quoted price was used. For the three and six months ended June 30, 2023, the Company recognized a loss to the
statements of operations resulting from a increase in the fair value of liabilities of approximately $420,000 and $596,000, respectively,
presented as change in fair value of derivative warrant liabilities on the accompanying statements of operations. For the three and six
months ended June 30, 2022, the Company recognized a gain to the condensed statements of operations resulting from a decrease in the fair
value of liabilities of approximately $3.0 million and $6.9 million, respectively, presented as change in fair value of derivative liabilities on the accompanying condensed statements of operations.
The initial fair value and the value as of June 30, 2023 of the Forward Purchase Agreement liability issued
was estimated using a Put Option Pricing model, which that were analyzed and incorporated into the model included the put price, the risk-free
rate, the variable term, the settlement features, the likelihood of completing a business combination and the early termination provisions.
The model estimates the underlying economic factors that influenced which of these events would occur, when they were likely to occur,
and the specific terms that would be in effect at the time (i.e., stock price, exercise price, etc.). Probabilities were assigned to each
variable such as the timing and pricing of events over the term of the instruments based on management projections. The fair value was
adjusted for the market implied likelihood of completing a business combination. The key inputs are summarized below:
Valuation Date | | Common Stock Price | | | Probability of completing BC | | | Maximum Term yrs | | | Risk Free Rate | | | Implied Volatility | |
3/29/2023 | | $ | 10.35 | | | | 14.00 | % | | | 3.74 | | | | 3.74 | % | | | 2.90 | % |
3/31/2023 | | $ | 10.22 | | | | 14.00 | % | | | 3.73 | | | | 3.68 | % | | | 3.50 | % |
6/30/2023 | | $ | 10.43 | | | | 14.00 | % | | | 3.48 | | | | 3.74 | % | | | 2.30 | % |
Description | |
Carrying Value at March 29, 2023 | | |
Change in Fair Value | | |
Carrying Value at June 30, 2023 | |
Liabilities: | |
| | |
| | |
| |
Forward Purchase Agreement | |
$ | 86,369 | | |
$ | 78,334 | | |
$ | 8,035 | |
INSIGHT ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
JUNE 30, 2023
Note 10 - Subsequent Events
The Company evaluated subsequent events
and transactions that occurred up to the date the condensed financial statements were issued. Based upon this review, other than noted
below and as described above, the Company did not identify any subsequent events that would have required adjustment or disclosure in
the condensed financial statements.
On August 10, 2023, the Company and Avila entered
into a Letter Agreement providing for the mutual termination of the Avila BCA. The Letter Agreement provides for the mutual release of
claims against the other party and also provides that Avila will pay to the Company $300,000 in partial reimbursement of expenses incurred
by the Company in connection with the Avila BCA (the “Avila Payment”). The Avila Payment is due and payable as follows: 1)
up to $300,000 immediately upon Avila’s receipt of net proceeds from any financing, public or private, in excess of U.S. $3,000,000,
-or- (2) (i) $50,000 by December 1, 2023, (ii) $100,000 by February 1, 2024 and (iii) $150,000 by April 1, 2024.
On August 17, 2023, the Company issued
an unsecured promissory note in the aggregate principal amount of $180,000 to the Sponsor, in exchange for the Sponsor advancing $480,000
to the Company to fund six one-month extensions of the amount of time the Company has to complete its initial business combination and
to fund working capital expenses. The Note does not bear interest and matures upon the closing of an initial business combination by the
Company. In addition, at the option of the holder, the Note may be paid by the Company through the issuance of private placement warrants
of the Company at a price of $1.00 per unit. The loan will be forgiven, except to the extent of any funds held outside of the Company’s
trust account, by the Sponsor, if Company is unable to consummate an initial business combination.
On August 30, 2023, the Company, Sponsor and Polar
Multi-Strategy Master Fund (“Polar”), an investor, entered into an agreement (the Subscription Agreement”) in which
Polar has agreed to fund the Sponsor up to $1,000,000, pursuant to written draw down requests (a “Capital Call”), and the
Sponsor will in turn loan such funds to the Company, to cover the Company’s working capital expenses (each a “Sponsor Loan”).
In September 2023, Polar funded Sponsor $150,000 under the Subscription Agreement and the Sponsor loaned the Company $150,000 from Polar.
All subsequent Capital Calls are subject to the mutual consent of the Company, Sponsor and Polar. All Capital Calls funded by Polar shall
not accrue interest and are repayable by the Sponsor at the closing of the Company’s initial business combination. At the option
of Polar, all Capital Calls funded by Polar may be repaid by the Company through the issuance of 1 share of Class A Common Stock for each
$10 of the outstanding Capital Calls funded by Polar. Sponsor is also responsible to reimburse Polar for its reasonable attorney’s
fees incurred in connection with the Subscription Agreement up to $5,000. In the event, a business combination does not occur and the
Company’s liquidates, then all Capital Calls funded by Polar out of cash held in the Sponsor’s bank accounts and/or the Company’s
bank accounts, excluding the Company’s Trust Account. The Sponsor Loans shall not accrue interest and shall be repaid by the Company
at the closing of the business combination.
In consideration of the funds received, the Company
will issue, at the closing of its business combination, to Polar one (1) shares of the company’s Class A Common Stock for each dollar
Polar funds through the Capital Calls (“Subscription Shares”). The Subscription Shares shall not be subject to any transfer
restrictions or any other lock-up provisions, earn outs, or other contingencies. The Subscription Shares (i) to the extent feasible and
in compliance with all applicable laws and regulations shall be registered as part of any registration statement issuing shares before
or in connect ion with the Business Combination Closing or (ii) if no such registration statement is filed in connection with the Business
Combination Closing, shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity
following the Business Combination Closing, which shall be filed no later than 30 days after the Business Combination Closing and declared
effective no later than 90 days after the Business Combination Closing. The Sponsor shall not sell, transfer, or otherwise dispose of
any securities owned by the Sponsor until the Subscription Shares have been transferred to the Investor and the registration statement
has been made effective.
In the event the Sponsor of the Company default
in their obligations under the Subscription Agreement (a “Default”), then the Sponsor shall be required to transfer to Polar
0.1 share of Class A Common Stock or Class B Common Stock for each $1 that Polar has funded under the Capital Calls as of the date of
such Default and shall be required repeat such issuance for each month the such Default continues.
On September 6, 2023,
the Company held a special meeting (the “Special Meeting”) of stockholders. At the Special Meeting, the Company’s
stockholders were asked to vote on the following items: (i) a proposal to amend (the “Second Extension Amendment”)
the Company’s amended and restated certificate of incorporation, as amended (the “Charter”), to extend the date by
which the Company has to consummate a business combination (the “Extension”) for up to nine (9) additional one (1) month
extensions or from September 7, 2023 up to June 7, 2024 (the “Extended Termination Date”) in exchange for the Company
depositing the lesser of $20,000 and $0.02 for each outstanding share of common stock sold in the Company’s initial public
offering into the Trust Account as defined in the Charter for each one-month extension. Adoption of the Charter Amendment Proposal
required approval by the affirmative vote of at least a majority of the Company’s outstanding shares of common stock, (ii) a
proposal to elect one (1) director, David Brosgol, to serve until 2026 annual meeting and until his successor has been duly elected
and qualified or until his earlier resignation, removal or death. Adoption of the Directors Proposal required approval by the
affirmative vote of at least a majority of the Company’s outstanding shares of common stock, and (iii) a proposal to ratify
the appointment of WithumSmith+Brown PC, as the independent registered public accounting firm for the year ending December 31, 2023.
Adoption of the Auditor Proposal required approval by the affirmative vote of at least a majority of the Company’s outstanding
shares of common stock. In connection with the stockholders’ vote at the Annual Meeting, 1,847,662 shares were tendered for
redemption in exchange for a total redemption payment of $19,208,848. On September 7, 2023, the Company deposited $20,000 in the
Trust Account to extend the Business Combination Period from September 7, 2023 to October 7, 2023. In October 2023, the Company
deposited $20,000 in the Trust Account to extend the Business Combination Period from October 7, 2023 to November 7, 2023. Additionally, on September 6, 2023, the Company recorded an additional
$192,088 of excise tax liability.
Effective as of October 13, 2023, the Company,
IAC Merger Sub Inc., a Florida corporation (“Merger Sub”) and Alpha Modus, Corp., a Florida corporation (“Alpha Modus”),
entered into a business combination agreement and plan of merger (the “AM BCA”) pursuant to which Merger Sub will merge with
and into Alpha Modus with Alpha Modus as the surviving corporation and becoming a wholly owned subsidiary of the Company. The Board of
Directors of the Company (the “Board”) has unanimously approved and declared advisable the AM BCA, the Merger and the other
transactions contemplated thereby (the “Proposed Transactions”). A copy of the AM BCA is filed as Exhibit 2.1 in the current
report on Form 8-K dated October 17, 2023.
In connection with entering into the AM BCA, in
October 2023, the Company formed IAC Merger Sub Inc, a Florida corporation.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
References
to the “Company,” “Insight Acquisition Corp.,” “Insight,” “our,” “us” or
“we” refer to Insight 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 interim 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
Some of the statements contained in this
Quarterly Report on Form 10-Q may constitute “forward-looking statements” for purposes of the federal securities laws. Our
forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes,
beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
The forward-looking statements contained
in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential
effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, the following risks, uncertainties (some of which are beyond our control) or other factors:
|
● |
we
have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective; |
|
● |
our
ability to select an appropriate target business or businesses; |
|
● |
our
ability to complete a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the “Business Combination”); |
|
● |
our
expectations around the performance of a prospective target business or businesses; |
|
● |
our
success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial Business
Combination; |
|
● |
our
officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or
in approving our initial Business Combination; |
|
● |
our
potential ability to obtain additional financing to complete our initial Business Combination; |
|
● |
our
pool of prospective target businesses; |
|
● |
our
ability to consummate an initial Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic; |
|
● |
the
ability of our officers and directors to generate a number of potential Business Combination opportunities; |
|
● |
our
public securities’ potential liquidity and trading; |
|
● |
the
use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
|
● |
the
trust account not being subject to claims of third parties; |
|
● |
our
financial performance following our initial public offering (“IPO”); and |
|
● |
the
other risks and uncertainties discussed herein, in our filings with the SEC and in our final prospectus relating to our IPO, filed
with the SEC on September 2, 2021. |
Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable securities laws.
Overview
We are a blank check company incorporated
in Delaware on April 20, 2021. We were formed for the purpose of effecting a Business Combination that we have not yet identified.
Our sponsor is Insight Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”).
Our registration statement for our IPO
was declared effective on September 1, 2021. On September 7, 2021, we consummated an IPO of 24,000,000 Units (and with respect
to the Class A common stock included in the Units being offered, the “Public Shares”), generating gross proceeds of
$240.0 million, and incurring offering costs of approximately $17.5 million, of which approximately $12.0 million and
approximately $668,000 was for deferred underwriting commissions and offering costs allocated to derivate warrant liabilities, respectively.
Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) of 7,500,000
and 1,200,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”),
to the Sponsor and Cantor Fitzgerald & Co. and Odeon Group, LLC, respectively, for an aggregate of 8,700,000 Private Placement
Warrants, at a price of $1.00 per Private Placement Warrant, generating proceeds of $8.7 million.
Upon the closing of the IPO and the Private
Placement, $241.2 million ($10.05 per Unit) of the net proceeds of the sale of the Units in the IPO and of the Private Placement
Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental
Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning
of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations,
as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution
of the Trust Account as described below.
Our management has broad discretion with
respect to the specific application of the net proceeds of the IPO 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.
If the Company is unable to complete a
Business Combination by June 7, 2023 (the “Combination Period”), which may be extended by our board of directors in their
sole discretion on a monthly basis up to and including to September 7, 2023, and further extended to June 7, 2024, we 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 (which interest shall be net of taxes payable and 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 Stockholders’ rights as stockholders (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 remaining stockholders and the board of directors,
liquidate and dissolve, 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.
We intend to effectuate our initial Business
Combination using cash from the proceeds of our IPO and the sale of the Private Placement Warrants, our shares, debt or a combination
of cash, equity and debt.
The issuance of additional shares in a
Business Combination:
|
● |
may
significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in
the Class B common stock resulted in the issuance of Class A common stock on a greater than one-to-one basis upon conversion
of the Class B common stock; |
|
● |
may
subordinate the rights of holders of Class A common stock if preference shares are issued with rights senior to those afforded
our Class A common stock; |
|
● |
could
cause a change in control if a substantial number of our Class A common stock are 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 officers
and directors; |
|
● |
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; and |
|
● |
may
adversely affect prevailing market prices for our Class A common stock. |
Similarly,
if we issue debt or otherwise incur significant debt, 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 Class A common stock; |
|
● |
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 Class A common stock 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. |
Proposed Business Combination
On April 3, 2023, Insight Acquisition Corp.,
a Delaware corporation (the “Company”), Avila Amalco Sub Inc., an Alberta corporation (“Amalco Sub”) and Avila
Energy Corporation, an Alberta corporation (“Avila”), entered into a Business Combination Agreement (the “Avila BCA”)
pursuant to which the Company will acquire Avila for consideration of shares of the Company following its redomicile into the Province
of Alberta (as further explained below). The terms of the Avila BCA, which contains customary representations and warranties, covenants,
closing conditions and other terms relating to the mergers and the other transactions contemplated thereby, are summarized below. The
Company’s entry into the Avila BCA was previously disclosed in the Company’s Current Report on Form 8-K, which was filed on
April 4, 2023, and is incorporated herein by reference.
Recent Developments
On August 10, 2023, the Company and Avila entered
into a Letter Agreement providing for the mutual termination of the Avila BCA. The Letter Agreement provides for the mutual release of
claims against the other party and also provides that Avila will pay to SPAC $300,000 in partial reimbursement of expenses incurred by
SPAC in connection with the Avila BCA (the “Avila Payment”). The Avila Payment is due and payable as follows: 1) up to $300,000
immediately upon Avila’s receipt of net proceeds from any financing, public or private, in excess of U.S. $3,000,000, -or- (2)
(i) $50,000 by December 1, 2023, (ii) $100,000 by February 1, 2024 and (iii) $150,000 by April 1, 2024.
As previously disclosed, on March 29, 2023, the Company entered into a forward share purchase agreement
(the “Forward Share Purchase Agreement”) with Avila, Meteora Special Opportunity Fund I, LP, Meteora Capital Partners, LP
and Meteora Select Trading Opportunities Master, LP (collectively, “Seller”) for an OTC Equity Prepaid Forward Transaction
(the “Forward Purchase Transaction”). The Forward Share Purchase Agreement was terminated as a result of the termination of
the Avila BCA on August 10, 2023, as described above.
On August 30, 2023, the Company, Sponsor and Polar
Multi-Strategy Master Fund (“Polar”), an investor, entered into an agreement (the Subscription Agreement”) in which
Polar has agreed to fund the Sponsor up to $1,000,000, pursuant to written draw down requests (a “Capital Call”), and the
Sponsor will in turn loan such funds to the Company, to cover the Company’s working capital expenses (each a “Sponsor Loan”).
In September 2023, Polar funded Sponsor $150,000 under the Subscription Agreement and the Sponsor loaned the Company $150,000 from Polar.
All subsequent Capital Calls are subject to the mutual consent of the Company, Sponsor and Polar. All Capital Calls funded by Polar shall
not accrue interest and are repayable by the Sponsor at the closing of the Company’s initial business combination. At the option
of Polar, all Capital Calls funded by Polar may be repaid by the Company through the issuance of 1 share of Class A Common Stock for each
$10 of the outstanding Capital Calls funded by Polar. Sponsor is also responsible to reimburse Polar for its reasonable attorney’s
fees incurred in connection with the Subscription Agreement up to $5,000. In the event, a business combination does not occur and the
Company’s liquidates, then all Capital Calls funded by Polar out of cash held in the Sponsor’s bank accounts and/or the Company’s
bank accounts, excluding the Company’s Trust Account. The Sponsor Loans shall not accrue interest and shall be repaid by the Company
at the closing of the business combination.
In consideration of the funds received, the Company
will issue, at the closing of its business combination, to Polar one (1) shares of the company’s Class A Common Stock for each dollar
Polar funds through the Capital Calls (“Subscription Shares”). The Subscription Shares shall not be subject to any transfer
restrictions or any other lock-up provisions, earn outs, or other contingencies. The Subscription Shares (i) to the extent feasible and
in compliance with all applicable laws and regulations shall be registered as part of any registration statement issuing shares before
or in connect ion with the Business Combination Closing or (ii) if no such registration statement is filed in connection with the Business
Combination Closing, shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity
following the Business Combination Closing, which shall be filed no later than 30 days after the Business Combination Closing and declared
effective no later than 90 days after the Business Combination Closing. The Sponsor shall not sell, transfer, or otherwise dispose of
any securities owned by the Sponsor until the Subscription Shares have been transferred to the Investor and the registration statement
has been made effective.
In the event the Sponsor of the Company default
in their obligations under the Subscription Agreement (a “Default”), then the Sponsor shall be required to transfer to Polar
0.1 share of Class A Common Stock or Class B Common Stock for each $1 that Polar has funded under the Capital Calls as of the date of
such Default and shall be required repeat such issuance for each month the such Default continues.
The foregoing description of
the Subscription Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the actual
agreement, a copy of which is attached hereto as Exhibit 10.10 and incorporated herein by reference.
Effective as of October 13, 2023, the Company, IAC Merger Sub Inc.,
a Florida corporation (“Merger Sub”) and Alpha Modus, Corp., a Florida corporation (“Alpha Modus”), entered into
a business combination agreement and plan of merger (the “AM BCA”) pursuant to which Merger Sub will merge with and into Alpha
Modus with Alpha Modus as the surviving corporation and becoming a wholly owned subsidiary of the Company. The Board of Directors of the
Company (the “Board”) has unanimously approved and declared advisable the AM BCA, the Merger and the other transactions contemplated
thereby (the “Proposed Transactions”). A copy of the AM BCA is filed as Exhibit 2.1 in the current report on Form 8-K dated
October 17, 2023.
Liquidity and Going Concern
As of June 30, 2023, we had approximately
$144,600 in our operating bank account for operating expenses, and working capital deficit of approximately $2,839,000.
Our liquidity needs prior to the consummation
of the IPO were satisfied through the payment of $25,000 from the Sponsor to cover for certain offering costs on behalf of the Company
in exchange for issuance of the Founder Shares, and the loan from the Sponsor of approximately $163,000 under the Note. We repaid $157,000
of the Note balance on September 7, 2021 and repaid the remaining balance of approximately $6,000 in full on September 13,
2021, at which time the Note was terminated. Subsequent to the consummation of the IPO, our liquidity has been satisfied through the
net proceeds from the consummation of the IPO and the Private Placement held outside of the Trust Account. In addition, 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”).
As of June 30, 2023 and December 31, 2022, there were no amounts outstanding under any Working Capital Loans.
In connection with our assessment of going
concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company had until
November 7, 2023 (or up to June 7, 2024 in the event the Company extends such date to the fullest extend), to consummate a Business
Combination (the “Combination Period”). It is uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of
the Company. We have determined that the insufficient liquidity as well as the mandatory liquidation, should a Business Combination not
occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern.
We intend to complete a Business Combination by close of business on June 7, 2024. No adjustments have been made to the carrying amounts
of assets or liabilities should the Company be required to liquidate after June 7, 2024.
Risks and Uncertainties
Management continues to evaluate the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative
effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable
as of the date of the condensed financial statements. The condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
In February 2022, the Russian Federation
and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United
States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these condensed financial statements. The specific impact on the
Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed
financial statements.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR
Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases
of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations
occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from
which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time
of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market
value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain
exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide
regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any share redemption or other share
repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject
to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination,
extension vote or otherwise will depend on a number of factors, including (i) the fair market value of the redemptions and repurchases
in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the
nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not
in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content
of regulations and other guidance from the Treasury.
The Company held a meeting on March 6, 2023 where the stockholders
voted to approve a proposal to amend the Company’s amended and restated certificate of incorporation to extend the Combination Period,
from March 7, 2023, monthly for up to six additional months at the election of the Company, ultimately until as late as September 7, 2023
(the “Extension”, and such extension date the “Extended Date”). In connection with the March 6, 2023 meeting,
21,151,393 shares of the Company’s common stock were redeemed with a total redemption payment of $215,621,387. As a result, the
Company booked a liability of $2,156,214 for the excise tax based on 1% of shares redeemed during the reporting period. For interim periods,
an entity is not required to estimate future stock repurchases and stock issuances to measure its excise tax obligation. Rather, an entity
can generally record the obligation on an as-incurred basis. In other words, the excise tax obligation recognized at the end of a quarterly
financial reporting period is calculated as if the end of the quarterly period was the end of the annual period for which the excise tax
obligation is payable.
Pursuant to the AM BCA, (i) in the event the business
combination contemplated by the AM BCA occurs, then the surviving company shall pay the Company’s excise tax liability; (ii) if
Alpha Modus does not obtain its shareholders approval of the business combination, or Alpha Modus breaches the AM BCA, then Alpha Modus
will be responsible to pay the Company’s excise tax liability; and (iii) if an Alpha Modus material adverse effect occurs and the
business combination does not close, or if Alpha Modus fails to close the business combination for any reason other than a material breach
by the Company, then Alpha Modus will be responsible to pay the Company’s excise tax liability. In all other circumstances the Company
will be responsible to pay the Company’s excise tax liability, except if the Company liquidates prior to December 31, 2023, in which
event there will be no excise tax liability. The Company will not use any of the funds held in the Trust Account and any additional amounts
deposited into the Trust Account, as well as any interest earned thereon, to pay for the Company’s excise tax liability. In addition,
because the excise tax would be payable by the Company and not by the redeeming holders, the mechanics of any required payment of the
excise tax by the Company have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a
Business Combination and in the Company’s ability to complete a Business Combination.
Results of Operations
Our entire activity since inception up
to June 30, 2023 was in preparation for our formation, he IPO and search for a business combination target. We will not generate any
operating revenues until the closing and completion of our initial Business Combination.
For the three months ended June 30, 2023,
we had net loss of approximately $258,000, which consisted of approximately $420,000 of loss on change in the fair value of derivative
liabilities, approximately $416,000 in general and administrative costs, approximately $75,000 in general and administrative costs –
related party, approximately $50,000 franchise tax expenses and approximately $44,000 of income tax expense, partially offset by approximately
$630,000 investments held in Trust Account and approximately $117,000 of gain on change in the fair value of forward purchase agreement
liability.
For the three months ended June 30, 2022,
we had net income of approximately $2.8 million, which consisted of approximately $3.0 million of gain change in the fair value of derivative
warrant liabilities and approximately $187,000 of unrealized gains on investments held in Trust Account, partially offset by approximately
$340,000 in general and administrative costs and approximately $49,000 franchise tax expenses.
For the six months ended June 30, 2023,
we had net income of approximately $637,000, which consisted of approximately $2.5 million of gain on investments held in Trust
Account, approximately $273,000 in other income, and approximately $78,000 of gain on change in the fair value of the forward purchase
agreement liability, partially offset by approximately $596,000 of loss on change in the fair value of derivative liabilities, approximately
$923,000 in general and administrative costs, approximately $150,000 in general and administrative costs – related party, approximately
$100,000 franchise tax expenses and approximately $460,000 income tax expense.
For the six months ended June 30, 2022,
we had net income of approximately $6.2 million, which consisted of $6.9 million gain on change in the fair value of derivative warrant
liabilities and approximately $129,000 of unrealized gains on investments held in Trust Account, partially offset by approximately $753,000
in general and administrative costs and approximately $98,000 franchise tax expenses.
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private
Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock 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), are entitled to registration rights pursuant to a registration and stockholder rights agreement signed prior
to the consummation of the IPO. These holders are 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
The underwriters were entitled to an underwriting
discount of $0.20 per unit, or $4.8 million in the aggregate, paid upon the closing of the IPO. An additional fee of $0.50 per unit,
or $12.0 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will
become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement. On April 3, 2023, the Company received a waiver from one of the
underwriters of its Initial Public Offering pursuant to which such underwriter waived all rights to $5.4 million of its $8.4 million
deferred underwriting commissions payable upon completion of an initial Business Combination. In connection with this waiver, the underwriter
also agreed that the remainder of the deferred underwriting fee of $3.0 million will be payable upon the consummation of the business
combination. As of June 30, 2023 and December 31, 2022, $6,600,000 and $12,000,000 were outstanding under deferred underwriting
fee payable, respectively.
Services Agreement
On September 1, 2021, we entered into
an agreement with the Sponsor, pursuant to which we agreed to pay the Sponsor a total of $10,000 per month for office space, secretarial
and administrative services provided to or incurred by members of our management team until the earlier of the consummation of a Business
Combination and the Company’s liquidation. For the three and six months ended June 30, 2023, we incurred approximately $30,000
and $60,000, respectively, under the services agreement in the condensed statements of operations. For the three and six months ended
June 30, 2022, we incurred approximately $30,000 and $60,000, respectively, under the services agreement in the condensed statements
of operations. As of June 30, 2023 and December 31, 2022, $100,000 and $40,000, respectively, was included in accrued expenses—related
party on the condensed balance sheets.
The board of directors has also approved
payments of up to $15,000 per month, through the earlier of the consummation of our initial Business Combination or our liquidation,
to members of our management team for services rendered to us. In addition, the Sponsor, executive officers and directors, or any of
their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such
as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee reviews
on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or the Company’s or their affiliates.
For the three and six months ended June 30, 2023, we incurred approximately $45,000 and $90,000, respectively, under the services agreement
in the condensed statements of operations. For the three and six months ended June 30, 2022, we incurred approximately $45,000 and $90,000,
respectively, under the services agreement in the condensed statements of operations. As of June 30, 2023 and December 31, 2022,
$235,000 and $45,000, respectively, was included in due to related party on the condensed balance sheets.
Critical Accounting Estimates
The preparation of condensed financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
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 financial statements, and the reported amounts of income and expenses during the period reported.
Actual results could materially differ from those estimates. The Company has not identified any critical accounting estimates.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial
statements.
Off-Balance Sheet Arrangements
As of June 30, 2023 and December 31,
2022, we did not have any off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
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, the condensed financial statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of public company effective dates.
Additionally, we are in the process of
evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions
set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required
to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, (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 executive
compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our
IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and
Procedures
Under the supervision and with the participation
of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation
of the effectiveness of our disclosure controls and procedures as of the end of the fiscal period ended December 31, 2022, 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 have concluded that during the period covered by this report, our disclosure controls and procedures were
not effective as of June 30, 2023 due to the Company’s inability to timely file the Annual Report on Form 10-K for the year ended
December 31, 2022, and the subsequent March 31, 2023 Form 10-Q as well as the current June 30, 2023 Form 10-Q, which resulted in a material
weakness.
Disclosure controls and procedures are
designed to ensure that information required to be disclosed by us in our 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 our management, including our principal executive officer and principal financial officer or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal
Controls Over Financial Reporting
As required by SEC rules and regulations
implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in
accordance with U.S. GAAP.
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of
our internal control over financial reporting as of June 30, 2023. In making these assessments, management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).
Based on our assessments and those criteria, management determined that our internal controls over financial reporting were not effective
as of June 30, 2023 due to the deficiencies noted above.
Changes in Internal Control over Financial
Reporting
There were no changes in our internal control
over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal
quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management intends to remediate the identified material weakness by implementing a more timely reporting schedule and incorporating additional
reviews of the financial statement support for future quarters.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results
to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with
the SEC on April 19, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations
or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business
or results of operations. Except as set forth below, as of the date of this Quarterly Report, there have been no material changes to
the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on April 19, 2023, except we may disclose changes
to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are filed or furnished
as a part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
Exhibit Number |
|
Description |
2.1(1) |
|
Business Combination Agreement, dated as of April 3, 2023, by and among Insight Acquisition Corp., Avila Amalco Sub Inc. and Avila Energy Corporation |
2.2(4) |
|
Business
Combination Agreement, dated as of October 13, 2023, by and among Insight Acquisition Corp., IAC Merger Sub Inc. and Alpha Modus,
Corp. |
3.1(2) |
|
Amended and Restated Certificate of Incorporation of Insight Acquisition Corp. |
3.2(5) |
|
Amendment to Amended and Restated Certificate of Incorporation of Insight Acquisition Corp. |
3.3
(3) |
|
Bylaws of Insight Acquisition Corp. |
10.1(1) |
|
Amended and Restated Sponsor Support Agreement, dated as of April 3, 2023, by and among Insight Acquisition Corp., Avila Energy Corporation and founding stockholders of Insight Acquisition Corp. |
10.2(1) |
|
Form of Company Support & Lock-Up Agreement, dated as of April 3, 2023, by and among Avila Energy Corporation, Insight Acquisition Corp. and certain stockholders of Avila Energy Corporation |
10.3(1) |
|
Amended and Restated Registration Rights Agreement, dated as of April 3, 2023, by and among Insight Acquisition Corp., Avila Energy Corporation and IPO underwriters of Insight Acquisition Corp. |
10.4(1) |
|
Forward Share Purchase Agreement dated as of March 29 2023, by and among Insight Acquisition Corp., Avila Energy Corporation, Meteora Special Opportunity Fund I, LP, Meteora Capital Partners, LP and Meteora Select Trading Opportunities Master, LP |
10.5(4) |
|
Stockholder Support Agreement, dated as of October 13, 2023, by and among Insight Acquisition Corp., Alpha Modus, Corp. and Insight Acquisition Sponsor LLC |
10.6(4) |
|
Stockholder Support Agreement, dated as of October 13, 2023, by and among Insight Acquisition Corp., Alpha Modus, Corp. and The Alessi 2020 Irrevocable Trust |
10.7(4) |
|
Lock-Up Agreement, dated as of October 13, 2023, by and among Alpha Modus, Corp., Insight Acquisition Corp. and Insight Acquisition Sponsor LLC |
10.8(4) |
|
Confidentiality and Lock-Up Agreement, dated as of October 13, 2023, by and among Alpha Modus, Corp., Insight Acquisition Corp., and the Stockholder Parties |
10.9(4) |
|
Amended and Restated Registration Rights Agreement, dated as of October 13, 2023, by and among Insight Acquisition Corp., Alpha Modus, Corp., Insight Acquisition Sponsor LLC and IPO underwriters of Insight Acquisition Corp. |
10.10* |
|
Subscription Agreement, dated August 30, 2023, by and between Insight Acquisition Corp., Insight Acquisition Sponsor, LLC and Polar Multi-Strategy Master Fund. |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** |
|
Certification of Principal 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 Principal 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-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document. |
101.SCH* |
|
Inline
XBRL Taxonomy Extension Schema Document. |
101.CAL* |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* |
|
Inline
XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* |
|
Inline
XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase Document. |
104* |
|
Cover
Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document, which is contained in Exhibit
101). |
* |
Filed
herewith. |
** |
Furnished
herewith. |
(1) |
Incorporated
by reference to the Current Report on Form 8-K of Insight Acquisition Corp. filed with the Securities and Exchange Commission on
April 4, 2023 (Commission File No. 001-40775). |
(2) |
Incorporated
by reference to the Current Report on Form 8-K of Insight Acquisition Corp. filed with the Securities and Exchange Commission on
September 7, 2021 (Commission File No. 001-40775). |
(3) |
Incorporated
by reference to the Form S-1 of Insight Acquisition Corp. filed with the Securities and Exchange Commission on August 11, 2021
(Registration Number 333-258727). |
(4) |
Incorporated
by reference to the Current Report on Form 8-K of Insight Acquisition Corp. filed with the Securities and Exchange Commission on
October 17, 2023 (Commission File No. 001-40775). |
(5) |
Incorporated
by reference to the Current Report on Form 8-K of Insight Acquisition Corp. filed with the Securities and Exchange Commission on
September 8, 2023 (Commission File No. 001-40775). |
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 hereunto duly authorized.
Dated: October 25, 2023 |
INSIGHT ACQUISITION CORP. |
|
|
|
|
By: |
/s/ Jeff Gary |
|
Name: |
Jeff Gary |
|
Title: |
Chief Executive Officer and Chief Financial Officer |
|
|
Dated: October 25, 2023 |
INSIGHT ACQUISITION CORP. |
|
|
|
|
By: |
/s/ Michael Singer |
|
Name: |
Michael Singer |
|
Title: |
Executive Chairman
(Principal Executive Officer) |
34
Insight Acquisition Corp. /DE
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WHEREAS, SPAC is a special
purpose acquisition company that closed on its initial public offering on September 7, 2021, initially with 18 months to complete an initial
business combination (the “De-SPAC”);
WHEREAS, on March 6, 2023
SPAC held an extraordinary general meeting during which SPAC’s shareholders approved a proposal to extend the date by which the
SPAC must consummate the De-SPAC from March 7, 2023 to September 7, 2023 (the “Extension”);
WHEREAS, Sponsor is seeking
to raise up to $1,000,000 from existing SPAC investors which will in turn be loaned by the Sponsor to the SPAC to cover working capital
expenses (“SPAC Loan”);
WHEREAS, pursuant to the terms
and conditions of this Agreement, Investor has agreed to fund up to $1,000,000 (the “Investor Capital Contribution”);
WHEREAS, SPAC intends to pay
all principal under the SPAC Loan to Sponsor at the closing of the De-SPAC transaction (the “De-SPAC Closing”), in
accordance with Section 1.3 below, and the Investor will be entitled to receive such proceeds received by the Sponsor; and
NOW, THEREFORE, in consideration
of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties,
covenants and agreement contained in this Agreement, and intending to be legally bound hereby, the Parties agree as follows:
Each Party hereby represents and warrants to each
other Party as of the date of this Agreement and as of the Closing that:
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES ACT. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I) THEY SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED AND ANY APPLICABLE STATE SECURITIES ACT, OR (II) AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.”
The SPAC shall take all steps necessary in order
to remove the legend referenced in the preceding paragraph from the Subscription Shares and Sponsor Shares immediately following the earlier
of (a) the effectiveness of a registration statement applicable to the Subscription Shares and Sponsor Shares or (b) any other applicable
exception to the restrictions described in the legend occurs.
The Parties have caused this
Agreement to be duly executed and delivered, all as of the date first set forth above.
In connection with the Quarterly Report
of Insight Acquisition Corp. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Michael Singer, Executive Chairman of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
In connection with the Quarterly Report
of Insight Acquisition Corp. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Jeff Gary, Chief Financial Officer, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: