Business context and reporting period
This is Insight Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2022. The request metadata names Alpha Modus Holdings, Inc., but the filing identifies Insight Acquisition Corp. as the registrant; verify that this is the intended filing. Insight is a special purpose acquisition company (SPAC) formed to pursue a business combination. It had not begun operating activities or generated operating revenue by quarter-end.
Financial performance and position
| Metric | Three months ended June 30, 2022 | Six months ended June 30, 2022 |
|---|---|---|
| Revenue | No operating revenue | No operating revenue |
| General and administrative expense | $339,509 | $752,586 |
| Franchise tax expense | $49,315 | $98,132 |
| Operating loss | $388,824 | $850,718 |
| Net income | $2,834,276 | $6,213,773 |
| Basic and diluted earnings per share | $0.09, Class A and Class B | $0.21, Class A and Class B |
Net income chiefly reflected noncash gains from decreases in the fair value of warrant liabilities ($3.0 million in the quarter; $6.9 million for six months), plus trust-account investment gains ($186,500 and $128,821, respectively). These gains offset operating expenses; they do not indicate operating profitability. Margins are not meaningful given the absence of revenue.
At June 30, total assets were $242.1 million, including $241.3 million in the trust account. Cash outside the trust was $126,504, versus $877,937 at December 31, 2021. Total liabilities were $16.1 million, including $12.0 million of deferred underwriting commissions payable only if a business combination closes and $3.9 million of warrant liabilities. No working-capital loans were outstanding. Stockholders’ deficit was $15.2 million. The trust held $10.05 per redeemable public share.
Operating cash use was $666,433 for the six months; cash declined by $751,433 to $126,504 after $85,000 of financing-related cash outflow. The filing states working capital of approximately $563,000, while the reported current assets and current liabilities imply approximately $480,000; this difference merits verification.
Material changes versus comparable periods
The filing does not provide a prior-year second-quarter comparison: its comparative 2021 results cover only April 20, 2021 (inception) through June 30, 2021. That period reported a $39,833 net loss. The six-month 2022 net income primarily reflects warrant-liability remeasurement, not recurring business operations. From December 31, 2021 to June 30, 2022, cash fell, trust investments increased modestly, and derivative liabilities declined from $10.8 million to $3.9 million.
Outlook, risks and unusual items
- Management intended to complete a business combination by March 7, 2023, the 18-month deadline after the IPO. Failure to do so requires redemption of public shares and liquidation. Management states that the deadline, limited liquidity and uncertainty of completing a transaction raise substantial doubt about the company’s ability to continue as a going concern.
- COVID-19 and the Russia-Ukraine conflict and related sanctions could affect the company’s search or a prospective target; the filing says the impact was not determinable.
- The company had no identified target disclosed in this report and no assurance it could complete a transaction. Potential transaction financing could dilute shareholders or add debt and related risks.
- A prior material weakness involving accounting for redeemable Class A shares was reported as remediated as of June 30, 2022. Management concluded disclosure controls were effective; no material quarterly changes to internal control were reported.
- The filing reports no legal proceedings and no material subsequent events through issuance. It also notes proposed SEC SPAC rules could increase transaction costs or affect the ability to complete a combination.
Important facts for investors to verify
- Confirm that this Insight Acquisition Corp. filing, rather than an Alpha Modus Holdings filing, is the intended document.
- Reconcile stated working capital of approximately $563,000 with balance-sheet current assets and liabilities, which imply approximately $480,000.
- Verify Class B share counts: the balance sheet and notes report 6.9 million shares at June 30, while the cover page reports 6.0 million issued and outstanding as of August 15, 2022.
- Assess available cash outside the trust, transaction funding needs and the feasibility of completing a business combination by March 7, 2023.
- Distinguish warrant fair-value gains from recurring operating results and consider redemption, dilution, deferred underwriting fees and liquidation terms.