10-Q 1 port-20230930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           .

Commission File Number 001-41150

Southport Acquisition Corporation

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

85-3483780
(I.R.S. Employer
Identification Number)

1745 Grand Avenue
Del Mar, California
(Address of principal executive offices)

92014
(Zip Code)

Registrant’s telephone number, including area code: (917) 503-9722

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, $0.0001 par value, and one-half of one warrant

PORT.U

The New York Stock Exchange

Class A common stock, par value $0.0001 per share

PORT

The New York Stock Exchange

Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50, subject to adjustment

PORT.W

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 13, 2023, there were 8,350,065 shares of Class A common stock and 1,550,000 shares of Class B common stock of the registrant issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

1

Condensed Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

1

Condensed Statements of Operations for the three and nine months ended September 30, 2023 and 2022

2

Condensed Statements of Changes in Common Stock Subject to Possible Redemption and Stockholders’ Deficit for the three and nine months ended September 30, 2023 and 2022

3

Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

5

Notes to Condensed Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures Regarding Market Risk

31

Item 4.

Controls and Procedures

31

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings.

33

Item 1A.

Risk Factors.

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

33

Item 3.

Defaults Upon Senior Securities.

34

Item 4.

Mine Safety Disclosures.

34

Item 5.

Other Information.

34

Item 6.

Exhibits.

34

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SOUTHPORT ACQUISITION CORPORATION

CONDENSED BALANCE SHEETS

September 30, 2023

December 31, 

    

(unaudited)

    

2022

ASSETS

 

  

 

  

Current Assets:

 

  

 

  

Cash

$

2,351,814

$

50,858

Prepaid expenses

 

2,500

 

227,594

Total Current Assets

 

2,354,314

 

278,452

Non-Current Assets:

Marketable securities held in Trust Account

 

44,122,831

 

237,984,513

Total Non-current Assets

44,122,831

237,984,513

TOTAL ASSETS

$

46,477,145

$

238,262,965

LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT

 

  

 

  

Current liabilities:

 

  

 

  

Accrued expenses

$

2,148,668

$

681,395

Accounts payable

 

216,121

 

97,987

Accrued offering costs

 

184,047

 

184,047

Due to related party

287,889

244,550

Excise tax liability

1,976,947

Total Current Liabilities

 

4,813,672

 

1,207,979

Non-current liabilities:

 

 

Warrant liability

 

1,253,000

 

527,050

Total Non-current Liabilities

 

1,253,000

 

527,050

TOTAL LIABILITIES

 

6,066,672

 

1,735,029

Commitments and Contingencies (Note 8)

 

  

 

  

Class A common stock subject to possible redemption; 200,000,000 shares authorized; 4,150,065 and 23,000,000 shares issued and outstanding subject to possible redemption at redemption value as of September 30, 2023 and December 31, 2022, respectively

 

44,122,831

 

237,984,513

Stockholders’ Deficit

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding

 

 

Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 4,200,000 issued and outstanding (excluding 4,150,065 shares subject to possible redemption) as of September 30, 2023 and none issued and outstanding (excluding 23,000,000 shares subject to possible redemption) as of December 31, 2022

 

420

 

Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 1,550,000 and 5,750,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

155

 

575

Additional paid-in capital

 

335,986

 

Accumulated deficit

 

(4,048,919)

 

(1,457,152)

Total Stockholders’ Deficit

 

(3,712,358)

 

(1,456,577)

TOTAL LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT

$

46,477,145

$

238,262,965

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

1

SOUTHPORT ACQUISITION CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the Three Months

For the Nine Months

Ended

Ended

September 30, 

September 30, 

    

2023

    

2022

    

2023

    

2022

Operating costs:

Insurance expense

$

$

129,063

$

227,594

$

387,189

Administrative expense

 

7,845

 

25,895

128,248

 

101,395

Legal and accounting expenses

 

56,330

 

82,705

211,771

 

429,833

Franchise tax expense

 

50,411

 

50,411

149,589

 

149,589

Listing fees

21,250

63,750

63,750

153,874

Bank fees

 

1,927

 

685

5,726

 

1,864

Total expenses

 

137,763

 

352,509

786,678

 

1,223,744

Loss from operations

 

(137,763)

 

(352,509)

(786,678)

 

(1,223,744)

Other income (loss):

 

  

 

 

Change in fair value of warrant liability

 

(325,000)

 

593,000

(725,950)

 

14,872,000

Financing expense

(135,986)

(522,948)

Dividend income on marketable securities held in Trust Account

731,196

1,065,967

6,120,704

1,399,231

Other income

270,210

1,658,967

4,871,806

16,271,231

Income before provision for income taxes

132,447

1,306,458

4,085,128

15,047,487

Provision for income taxes

(142,965)

(1,253,934)

Net (loss) income

$

(10,518)

$

1,306,458

2,831,194

15,047,487

Weighted average shares outstanding of redeemable Class A common stock

 

4,150,000

 

23,000,000

15,197,646

 

23,000,000

Basic and diluted net (loss) income per share, redeemable Class A common stock (see Note 2)

$

(0.15)

$

0.05

0.20

0.54

Weighted average shares outstanding of non-redeemable Class A and Class B common stock

 

5,750,000

 

5,750,000

5,750,000

 

5,750,000

Basic and diluted net income (loss) per share, non-redeemable Class A and Class B common stock (see Note 2)

$

0.11

$

0.01

(0.05)

0.47

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

2

SOUTHPORT ACQUISITION CORPORATION

CONDENSED STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT

(UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

    

Class A common stock

Subject to possible

Additional

Total

Redemption

Class A common stock

Class B common stock

Paid-in

Accumulated

Stockholders’

Shares

    

Amount

  

  

Shares

   

Amount

   

Shares

    

Amount

    

Capital

    

Deficit

    

Deficit

Balance – January 1, 2023

 

23,000,000

$

237,984,513

$

5,750,000

$

575

$

$

(1,457,152)

$

(1,456,577)

Remeasurement of Class A common stock subject to possible redemption

 

 

2,525,300

 

 

(2,525,300)

 

(2,525,300)

Net income

1,184,465

1,184,465

Balance – March 31, 2023

23,000,000

240,509,813

5,750,000

575

(2,797,987)

(2,797,412)

Sponsor conversion of Class B common stock

4,200,000

420

(4,200,000)

(420)

Sponsor capital contribution for non-redemption agreements

386,961

386,961

Redemption of Class A common stock

(18,849,935)

(197,694,657)

Trust Account withdrawal for tax payments

(460,000)

460,000

460,000

Remeasurement of Class A common stock subject to possible redemption

2,864,208

(386,961)

(2,477,247)

(2,864,208)

Net income

 

 

 

 

1,657,247

 

1,657,247

Balance – June 30, 2023

 

4,150,065

45,219,364

4,200,000

420

1,550,000

155

(3,157,987)

(3,157,412)

Excise tax liability

(1,976,947)

(1,976,947)

Sponsor cash capital contribution

200,000

200,000

Sponsor capital contribution for non-redemption agreements

135,986

135,986

Trust Account withdrawal for tax payments

(1,827,729)

1,827,729

1,827,729

Remeasurement of Class A common stock subject to possible redemption

731,196

(731,196)

(731,196)

Net loss

(10,518)

(10,518)

Balance – September 30, 2023

4,150,065

$

44,122,831

4,200,000

$

420

1,550,000

$

155

$

335,986

$

(4,048,919)

$

(3,712,358)

3

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(UNAUDITED)

Class A common stock

Subject to possible

Additional

Total

Redemption

Class A common stock

Class B common stock

Paid-in

Accumulated

Stockholders’

      

Shares

      

Amount

  

   

Shares

     

Amount

     

Shares

    

Amount

    

Capital

    

Deficit

    

Deficit

Balance – January 1, 2022

23,000,000

$

234,600,690

$

5,750,000

$

575

$

$

(24,256,277)

$

(24,255,702)

Remeasurement of Class A common stock subject to possible redemption

 

 

22,304

 

 

 

 

 

(22,304)

 

(22,304)

Net income

 

 

 

 

 

 

 

10,369,840

 

10,369,840

Balance – March 31, 2022

 

23,000,000

234,622,994

 

5,750,000

575

$

(13,908,741)

(13,908,166)

Remeasurement of Class A common stock subject to possible redemption

310,960

(310,960)

(310,960)

Net income

3,371,189

3,371,189

Balance – June 30, 2022

23,000,000

234,933,954

5,750,000

575

(10,848,512)

$

(10,847,937)

Remeasurement of Class A common stock subject to possible redemption

1,065,967

(1,065,967)

(1,065,967)

Gain on waiver of deferred underwriting fee

8,050,000

8,050,000

Net income

1,306,458

1,306,458

Balance – September 30, 2022

23,000,000

$

235,999,921

$

5,750,000

$

575

$

$

(2,558,021)

$

(2,557,446)

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

4

SOUTHPORT ACQUISITION CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Nine Months

Ended

September 30, 

2023

2022

Cash Flows Used in Operating Activities:

    

    

Net income

$

2,831,194

$

15,047,487

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

Accrued dividend on marketable securities held in Trust Account

(188,262)

(435,286)

Change in fair value of warrant liabilities

 

725,950

 

(14,872,000)

Sponsor capital contribution for non-redemption agreements

522,948

Changes in operating assets and liabilities:

 

 

Accounts payable and accrued expenses

 

1,585,407

 

177,243

Accrued offering costs

 

 

(611,443)

Due to related party

43,339

Prepaid expenses

 

225,094

 

(359,343)

Net cash provided by (used in) operating activities

 

5,745,670

 

(1,053,342)

Cash Flow Used in Investing Activities:

Purchases of marketable securities held in Trust Account

(5,932,442)

(963,945)

Proceeds from marketable securities held in Trust Account

199,982,385

Net cash provided by (used in) investing activities

194,049,943

(963,945)

Cash Flows from Financing Activities:

 

 

Payment to Class A common stockholders for redemptions

(197,694,657)

Cash capital contribution from Sponsor

200,000

Repayment of amounts due from related party

 

 

83,581

Payments made by related party on behalf of the Company

156,550

Net cash (used in) provided by financing activities

 

(197,494,657)

 

240,131

Net Change in Cash

 

2,300,956

 

(1,777,156)

Cash – Beginning of period

 

50,858

 

1,950,543

Cash – End of period

$

2,351,814

$

173,387

Supplemental Non-Cash Investing and Financing Activities:

 

 

Remeasurement of Class A common stock subject to possible redemption

$

6,120,704

$

1,399,231

Trust Account withdrawal for tax payments

$

(2,287,729)

$

Excess fair value of Class B common stock transferred by Sponsor

$

522,948

$

Excise tax liability

$

1,976,947

$

Gain on waiver of deferred underwriting fee

$

$

8,050,000

Supplemental Cash Flow Information:

Cash paid for taxes

$

$

57,644

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

5

SOUTHPORT ACQUISTION CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

(UNAUDITED)

Note 1.Description of Organization and Business Operations

Southport Acquisition Corporation (the “Company”) is a blank check company formed in Delaware on April 13, 2021. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2023, the Company had not yet commenced any operations. All activity from inception through September 30, 2023 related to the Company’s formation, initial public offering (the “IPO”), and pursuit of a target company to effect a Business Combination.

The registration statement for the Company’s IPO was declared effective on December 9, 2021. On December 14, 2021, the Company consummated the IPO, which involved the Company’s sale of 23,000,000 units (the “Units”) at $10.00 per Unit, generating gross proceeds of $230,000,000, which is discussed in Note 3. The 23,000,000 Units sold by the Company include 3,000,000 Units purchased by the underwriter for the IPO pursuant to the full exercise of its option to purchase up to 3,000,000 additional Units to cover over-allotments. Simultaneously with the closing of the IPO, the Company consummated the private sale of an aggregate of 11,700,000 warrants (the “Private Placement Warrants”) to Southport Acquisition Sponsor LLC (the “Sponsor”) at a price of $1.00 per Private Placement Warrant, generating proceeds to the Company of $11,700,000.

Following the closing of the IPO on December 14, 2021, $234,600,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States, which will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination, (ii) the redemption of any Public Shares (as defined in Note 3) properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (a) to modify the substance or timing of the Company’s obligation to provide its public stockholders the right to have their Public Shares redeemed in connection with an initial Business Combination or to redeem 100% of the Public Shares if the Company does not complete the initial Business Combination within the Combination Period (as defined below) or (b) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, and (iii) the redemption of the Company’s Public Shares if the Company is unable to complete the initial Business Combination within 18 months from December 14, 2021 or during any extended time that the Company has to consummate its initial Business Combination beyond such 18-month period. On June 9, 2023, the Company held a special meeting of stockholders (the “Special Meeting”) where the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to extend the time that the Company has to consummate its initial Business Combination (the “Extension”) from June 14, 2023 to September 14, 2023 (the “Extended Date”) and to allow the board of directors of the Company, without another stockholder vote, to elect to further extend the date to consummate an initial Business Combination after the Extended Date up to six times, by an additional month each time, up to March 14, 2024 (the “Extension Amendment Proposal”), providing the Company a 21-month period (or up to 27-month period) from the closing of the IPO to consummate its initial Business Combination (the “Combination Period”).

Prior to the Special Meeting, on May 25, 2023, the Company and the Sponsor entered into voting and non-redemption agreements (the “Non-Redemption Agreements”) with unaffiliated third parties in exchange for such third parties agreeing (i) not to redeem an aggregate of 4,000,000 shares of Class A common stock sold in its initial public offering (the “Non-Redeemed Shares”) in connection with the Special Meeting and (ii) to vote in favor of the Extension Amendment Proposal and the Extension at the Special Meeting (other than with respect to certain shares acquired or to be acquired pursuant to the Non-Redemption Agreements). In exchange for the foregoing commitments, the Sponsor agreed to transfer to such third parties an aggregate of up to 1,499,996 shares of Class B common stock held by the Sponsor, with 500,000 of such shares to be transferred to such third parties promptly upon consummation of the Extension, and an additional 166,666 shares to be transferred to such third parties monthly beginning on September 14, 2023 and up to, and including, February 14, 2024, if the board of directors of the Company elects to further extend the deadline to consummate an

6

initial Business Combination at or prior to such date, in each case, if such third parties continue to hold such Non-Redeemed Shares through the Special Meeting.

In connection with the Special Meeting and the entry into the Non-Redemption Agreements, on May 25, 2023, pursuant to the terms of the amended and restated certificate of incorporation of the Company, the Sponsor converted 4,200,000 shares of the Company’s Class B common stock held by it on a one-for-one basis into shares of the Company’s Class A common stock. After giving effect to such conversion, the Company had an aggregate of 27,200,000 shares of Class A common stock issued and outstanding, comprised of 4,200,000 shares held by the Sponsor and not subject to possible redemption and 23,000,000 shares of Class A common stock subject to possible redemption, and 1,550,000 shares of Class B common stock issued and outstanding.

In connection with the vote to approve the Extension Amendment Proposal, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.49 per share of Class A common stock, for an aggregate redemption amount of $197,694,657. As a result of the redemptions, 4,150,065 shares of Class A common stock were issued and outstanding and subject to possible redemption. Continental Stock Transfer & Trust Company (the “Trustee”) processed the redemptions and withdrew the $197,694,657 payable to the holders redeeming 18,849,935 shares of Class A common stock on July 7, 2023.

On September 11, 2023, the board of directors of the Company approved the extension of the date by which the Company must consummate an initial Business Combination from September 14, 2023 to October 14, 2023 (the “First Extension”). The First Extension is the first of six one-month extensions permitted under the Company’s amended and restated certificate of incorporation. On October 11, 2023, the board of directors of the Company approved the further extension of the date by which the Company must consummate an initial Business Combination from  October 14, 2023 to November 14, 2023 (the “Second Extension”). The Second Extension is the second of six one-month extensions permitted under the Company’s amended and restated certificate of incorporation (see Note 11).

Risks and Uncertainties

Management is currently evaluating the impact of the Russia-Ukraine war, the war in Israel, rising interest rates and increased inflation, and recent proposals by the Securities and Exchange Commission (the “SEC”) for new rules and amendments affecting special purpose acquisition corporations like the Company and has concluded that while it is reasonably possible that such matters could have a negative effect on the Company’s financial position, cash flows, results of its operations and/or search for a target company, the specific impacts are not readily determinable as of September 30, 2023. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from whom 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 has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The IR Act applies only to repurchases that occur after December 31, 2022.

On July 7, 2023, 18,849,935 shares of Class A common stock were redeemed by the Company’s stockholders for a total of $197,694,657 in connection with the stockholder vote to approve the Company’s Extension Amendment Proposal. The Company evaluated the classification and accounting of the stock redemption under ASC 450, “Contingencies”. ASC 450 states that when a loss contingency exists, the likelihood that the future events will confirm the loss or impairment of an asset or the incurrence of a liability can range from probable to remote. A contingent liability must be reviewed at each reporting period to determine appropriate treatment. The Company evaluated the current status and probability of completing an initial Business Combination as of September 30, 2023 and determined that a contingent liability should be calculated and recorded. As of September 30, 2023, the Company recorded $1,976,947 of excise tax liability calculated as 1% of shares redeemed.

7

Going Concern

As of September 30, 2023 and December 31, 2022, the Company had cash of $2,351,814 and $50,858, respectively, and working capital deficit of $2,459,358 and $929,527, respectively. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that these financial statements are issued. Management plans to address this uncertainty through capital contributions or working capital loans whereby, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors can, but are not obligated to, loan the Company funds as may be required (see Note 5). However, there is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful within the Combination Period.

Note 2.Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on May 30, 2023, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2022 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The interim results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

8

Use of Estimates

The preparation of the 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 financial statements and the reported amounts of revenues and expenses during the reporting period.

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

Cash 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 $2,351,814 and $50,858 of cash and no cash equivalents as of September 30, 2023 and December 31, 2022, respectively.

Marketable Securities Held in Trust Account

Following the closing of the IPO on December 14, 2021, an amount of $234,600,000 from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrants was placed in the Trust Account and may be invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of the initial Business Combination; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to provide its public stockholders the right to have their Public Shares redeemed in connection with an initial Business Combination or to redeem 100% of the Public Shares if the Company does not complete the initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity; and (iii) the redemption of the Company’s Public Shares if the Company is unable to complete the initial Business Combination within the Combination Period.

In connection with the vote to approve the Extension Amendment Proposal, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.49 per share of Class A common stock, for an aggregate redemption amount of $197,694,657. The Trustee redeemed $197,694,657 of marketable securities held in the Trust Account to pay the holders redeeming 18,849,935 shares of Class A common stock on July 7, 2023.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement” (“ASC 820”), approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.

Fair Value Measurements

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

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

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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.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. As of September 30, 2023 and December 31, 2022, derivative liabilities are comprised of the warrant liability of $1,253,000 and $527,050, respectively.

Warrant Liability

The Company accounts for warrants for the Company’s common stock that are not indexed to its own shares as liabilities at fair value on the balance sheet. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital.

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature 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, common stock is classified as stockholders’ equity. The Company’s 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, at September 30, 2023 and December 31, 2022, 4,150,065 and 23,000,000 shares of Class A common stock subject to possible redemption is presented, at redemption value, as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet, respectively.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated deficit. On June 9, 2023, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.49 per share of Class A common stock, for an aggregate redemption amount of $197,694,657. For the three and nine months ended September 30, 2023, the Company has recorded (depreciation) accretion of $(1,096,533) and $3,832,975, respectively, and recorded a share redemptions payable amount of $197,694,657 to remeasure the value of Class A common stock subject to possible redemption value to $44,122,831.

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As of September 30, 2023 and December 31, 2022, the Class A common stock, classified as temporary equity in the condensed balance sheets, are reconciled in the following tables:

Gross proceeds from initial public offering

    

$

230,000,000

Less:

 

Proceeds allocated to public warrants

 

(10,060,000)

Offering costs allocated to Class A common stock subject to possible redemption

 

(13,325,704)

Add:

 

Remeasurement of Class A common stock subject to possible redemption

 

27,986,394

Class A common stock subject to possible redemption, December 31, 2021

234,600,690

Remeasurement of Class A common stock subject to possible redemption

 

3,383,823

Class A common stock subject to possible redemption, December 31, 2022

237,984,513

Remeasurement of Class A common stock subject to possible redemption

2,525,300

Class A common stock subject to possible redemption, March 31, 2023

240,509,813

Share redemptions payable

(197,694,657)

Trust Account withdrawal for tax payments

(460,000)

Remeasurement of Class A common stock subject to possible redemption

2,864,208

Class A common stock subject to possible redemption, June 30, 2023

45,219,364

Trust Account withdrawal for tax payments

(1,827,729)

Remeasurement of Class A common stock subject to possible redemption

731,196

Class A common stock subject to possible redemption, September 30, 2023

$

44,122,831

Income Taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2023. The Company did not timely file its 2022 federal and state tax returns which could result in significant payments, accruals or material deviation from its position, other.

Net Income (Loss) Per Common Stock

The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share”. The condensed statements of operations include a presentation of income per Class A redeemable common stock and income (loss) per non-redeemable common stock following the two-class method of income per common stock. In order to determine the net income (loss) attributable to both the Class A redeemable common stock and non-redeemable common stock, the Company first considered the total income allocable to both sets of stock. This is calculated using the total net income less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the Class A common stock subject to possible redemption was treated as dividends paid to the public stockholders. Subsequent to calculating the total income (loss) allocable to both sets of stock, the Company split the amount to be allocated using the weighted average shares outstanding ratio for the Class A redeemable common stock and for the non-redeemable Class A and Class B common stock for the three and nine months ended September 30, 2023 as a result of shareholder redemptions. For the three and nine months ended September 30, 2022, the Company split the amount to be allocated using a ratio of 80% for the Class A redeemable common stock and 20% for the non-redeemable common stock, reflective of the respective participation rights.

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The following table reflects the calculation of basic and diluted net income (loss) per common stock (in dollars, except per share amounts):

    

For the Three Months Ended

September 30, 2023

Net loss

$

(10,518)

Plus: Trust Account withdrawals for tax payments

1,827,729

Less: Remeasurement of Class A redeemable shares to redemption value

 

(731,196)

Net income excluding accretion of Class A redeemable shares to redemption value from remeasurement and Trust Account withdrawals for tax payments

$

1,086,015

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For the Three Months Ended

 

September 30, 2023

 

Class A

Class A and Class B

    

Redeemable Shares

    

Non-redeemable shares

    

Total

 

Total number of shares

4,150,065

5,750,000

9,900,065

Weighted average shares ratio

 

42

%

58

%

100

%

Net income allocated based on weighted average shares ratio

$

(4,409)

$

(6,109)

$

(10,518)

Plus: Trust Account withdrawals for tax payments based on weighted average shares ratio

766,176

1,061,553

1,827,729

Less: Remeasurement of Class A redeemable shares to redemption value based on weighted average shares ratio

 

(306,514)

 

(424,682)

 

(731,196)

Less: Accretion applicable to Trust Account withdrawals for tax payments

(1,827,729)

(1,827,729)

Plus: Accretion applicable to remeasurement of Class A redeemable shares to redemption value

 

731,196

 

 

731,196

Total (loss) income based on weighted average shares ratio

$

(641,280)

$

630,762

$

(10,518)

Weighted average shares outstanding

 

11,360,423

 

5,750,000

 

  

Basic and diluted net (loss) income per share

$

(0.15)

$

0.11

 

  

    

For the Nine Months Ended

September 30, 2023

Net income

$

2,831,194

Plus: Trust Account withdrawals for tax payments

2,287,729

Less: Remeasurement of Class A redeemable shares to redemption value

 

(6,120,704)

Net income excluding accretion of Class A redeemable shares to redemption value from remeasurement and Trust Account withdrawals for tax payments

$

(1,001,781)