Business Context and Reporting Period
Company: Insight Acquisition Corp. (Note: Request metadata listed "Alpha Modus Holdings, Inc.", but the filing text identifies the registrant as Insight Acquisition Corp.)
Filing Type: Form 8-K (Current Report)
Date: March 4, 2022
Context: The Company is a Delaware corporation formed to effect a business combination (SPAC). This filing addresses a material accounting error regarding the classification of Public Shares and the calculation of earnings per share (EPS) in previously issued financial statements.
Key Financial Metrics
This filing is a non-reliance notice and does not contain updated revenue, profit, cash flow, or debt figures. The filing references the following financial constraints and classifications:
- Net Tangible Assets Requirement: The Company must maintain net tangible assets of at least $5,000,001 to consummate a business combination.
- Share Classification: Public Shares were previously classified as permanent equity but are being reclassified as temporary equity under ASC 480.
- EPS Calculation: The method for calculating earnings per share is being revised to allocate income and losses pro rata between share classes.
Material Changes Versus Prior Period
The filing identifies a material quantitative misstatement in the following previously issued documents:
- Audited balance sheet as of September 7, 2021 (filed September 13, 2021).
- Unaudited financial statements for the three months ended September 30, 2021 (filed November 15, 2021).
- Note 2 of the Quarterly Report on Form 10-Q for the period ended September 30, 2021.
Nature of Change: Management revised its interpretation of net tangible assets to include temporary equity. Consequently, Public Shares subject to redemption must be reclassified from permanent equity to temporary equity. This adjustment impacts the initial carrying value of Class A common stock, additional paid-in capital, and accumulated deficit.
Guidance, Outlook, Risks, and Contingencies
Management Commentary: The Audit Committee concluded that the misstatements were material on a quantitative basis and that a reasonable person's judgment would have been influenced by the error. The Company determined it must restate the affected financial statements rather than merely revising disclosures.
Contingencies and Actions:
- Non-Reliance: Investors should no longer rely on the Audited Balance Sheet, Q3 Financials, or the audit report by WithumSmith+Brown, PC included in the September 2021 filings.
- Future Filings: The Company intends to file an amended Form 10-Q for the quarter ended September 30, 2021, to reflect the reclassification. The restatement of the Audited Balance Sheet will be set forth in a subsequent filing.
- Risk: The error involved the fundamental classification of equity, which affects the Company's reported financial position and EPS metrics.
Important Facts for Investor Verification
- Verify the upcoming Amended Form 10-Q for the quarter ended September 30, 2021, to review the restated financial position.
- Monitor for the subsequent filing containing the restated Audited Balance Sheet as of September 7, 2021.
- Confirm the updated EPS calculation methodology in future reports, which will allocate income/losses pro rata between share classes.
- Review the impact of the reclassification on the Company's ability to meet the $5,000,001 net tangible asset threshold required for a business combination.