| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and principles of Consolidation The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These statements should be read in conjunction with Sunergy’s audited financial statements for the fiscal year ended December 31, 2023 as included with the Company’s Form 8 -K Our condensed consolidated financial statements include the accounts of Zeo Energy Corp., the accounts of Sunergy Renewables, LLC, Sun First Energy, LLC, Sunergy Solar LLC and Sunergy Roofing and Construction, Inc., all wholly owned subsidiaries, and ESGEN Opco, a variable interest entity (“VIE”) for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. The December 31, 2023 balances reported herein are derived from the condensed consolidated financial statements of Sunergy as included with the Company’s Current Report on Form 8 -K Restatement to Previously Reported Financial Statements On November 13, 2024, the audit committee of the board of directors of Zeo Energy Corp. (the “Company”), after discussion with the management of the Company, concluded that (i) the Company’s previously issued financial statements for the fiscal years ended December 31, 2023 and 2022 included in the Company’s Form 8 -K SEC on March 20, 2024 and as amended on March 25, 2024 and August 19, 2024 (the “8 -K -Q -Q -Q -Q -4 -Q -Qs -1 -1 During the preparation of the Company’s unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2024, the Company’s management identified the following misstatements, to the Company’s financial statements: • • -term -term -of-use • • This Note discloses the nature of the restatement adjustments and discloses the cumulative effects of these adjustments included in the Original S -4 Impact to the condensed consolidated statement of operations for the three months ended September 30, 2023
As reported
Adjustment
As restated
Cost of goods sold (exclusive of depreciation and amortization shown below)
$ 28,950,493
$ (8,477,406
)
$ 20,473,087
Depreciation and amortization
$ 524,461
$ (3,172
)
$ 521,289
Sales and marketing
$ 764,828
$ 7,830,817
$ 8,595,645
General and administrative
$ 3,693,550
$ 609,303
$ 4,302,853
Total operating expenses
$ 33,933,332
$ (40,458
)
$ 33,892,874
(Loss) Income from operations
$ 3,960,834
$ 40,458
$ 4,001,292
Interest expense
$ (295
)
$ (10,101
)
$ (10,396
)
Total other income (expense), net
$ 8,856
$ (10,101
)
$ (1,245
)
Net income
$ 3,969,690
$ 30,357
$ 4,000,047
Impact to the condensed consolidated statement of operations for the nine months ended September 30, 2023
As reported
Adjustment
As restated
Cost of goods sold (exclusive of depreciation and amortization shown below)
$ 68,204,199
$ (18,958,478
)
$ 49,245,721
Depreciation and amortization
$ 1,446,626
$ (15,144
)
$ 1,431,482
Sales and marketing
$ 1,805,308
$ 18,008,671
$ 19,813,979
General and administrative
$ 8,846,154
$ 869,904
$ 9,716,058
Total operating expenses
$ 80,302,287
$ (95,047
)
$ 80,207,240
(Loss) Income from operations
$ 6,402,733
$ 95,047
$ 6,497,780
Interest expense
$ (39,838
)
$ (23,082
)
$ (62,920
)
Total other income (expense), net
$ (32,856
)
$ (23,082
)
$ (55,938
)
Net income
$ 6,369,877
$ 71,965
$ 6,441,842
Impact to the condensed consolidated statement of changes in redeemable noncontrolling interests and members’ equity for the three and nine months ended September 30, 2023
As reported
Adjustment
As restated
Retained earnings
Net income prior to the business combination
$ 1,602,939
$ 9,798
1,612,737
Balance, March 31, 2023
$ 1,556,598
$ 9,798
$ 1,566,396
Net income prior to the business combination
$ 797,249
$ 31,809
$ 829,058
Balance, June 30, 2023
$ 1,992,528
$ 41,607
$ 2,034,135
Net income prior to the business combination
$ 3,969,690
$ 30,357
$ 4,000,047
Balance, September 30, 2023
$ 3,200,342
$ 71,964
$ 3,272,306
Total Stockholders’ Equity
Net income prior to the business combination
$ 1,602,939
$ 9,798
$ 1,612,737
Balance, March 31, 2023
$ 32,712,462
$ 9,798
$ 32,722,260
Net income prior to the business combination
$ 797,249
$ 31,809
$ 829,058
Balance, June 30, 2023
$ 33,259,392
$ 41,607
$ 33,189,999
Net income prior to the business combination
$ 3,969,690
$ 30,357
$ 4,000,047
Balance, September 30, 2023
$ 34,356,206
$ 71,964
$ 34,428,170 Impact to the condensed consolidated statement of cash flows for the nine months ended September 30, 2023
As reported
Adjustment
As restated
Cash Flows from Operating Activities
Net Income
$ 6,369,877
$ 71,965
$ 6,441,842
Adjustment to reconcile net loss to cash used in operating activities:
Depreciation and amortization
$ 1,446,626
$ (79,906
)
$ 1,366,720
Non-cash operating lease expense
$
—
$ 399,610
$ 399,610
Non-cash finance lease expense
$
—
$ 64,762
$ 64,762
Changes in operating assets and liabilities:
Operating lease
$ 9,721
$ (399,611
)
$ (389,890
)
Net cash used in operating activities
$ 5,609,528
$ 56,820
$ 5,666,348
Cash flows from Investing Activities
Purchase of property, plant and equipment
$ (907,563
)
745,795
$ (161,768
)
Net cash provided by investing activities
$ (907,563
)
745,795
$ (161,768
)
Cash flows from Financing Activities
Issuance of debt
$ 938,003
$ (745,793
)
$ 192,210
Repayments of finance lease
$
—
$ (56,822
)
$ (56,822
)
Net cash provided by financing activities
$ (2,624,251
)
$ (802,615
)
$ (3,426,866
)
Non-cash transactions
Right-of-use assets obtained in exchange for operating lease liabilities
$
—
$ 653,663
$ 653,663
Right-of-use assets obtained in exchange for finance lease liabilities
$
—
$ 682,365
$ 682,365
Use of Estimates The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP requires it to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Some of the more significant estimates include fair value of warrant liabilities, redemption value of non -controlling The Company bases its estimates and assumptions on historical experience and other factors, including the current economic environment and on various other judgements that it believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment could have a material effect on the financial condition and results of future operations in future periods. Segments Information Operating segments are defined as components of an enterprise for which separate discrete financial information is evaluated regularly by our chief executive officer, who is the chief operating decision maker (“CODM”), in deciding how to allocate resources and assess performance. The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. Accordingly, the Company operates and manages its business as one operating and reportable segment. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. The carrying value of the Company’s savings accounts is included in cash and cash equivalents and approximates the fair value. Accounts receivable, net of allowance for credit losses Accounts receivable is presented at the invoiced receivable amounts, less any allowance for any potential expected credit loss amounts, and do not bear interest. The Company estimates allowance for credit losses based on the creditworthiness of each customer, historical collections experience, forward looking information and other information including the aging of the receivables. This analysis resulted in an allowance for credit losses as of September 30, 2024, and December 31, 2023 of $3,145,168 and $862,580, respectively. The Company had no write -offs Significant judgement is involved in determination of the collectability of accounts receivable. Management assesses the reasonability of collectability of accounts receivable on a quarterly basis to record the allowance for credit losses. In September 2024, based on a reassessment of creditworthiness of customers, historical collections experience, forward looking information and other information including the aging of the receivables, the Company revised its estimate of allowance for credit losses. This change in estimate has been accounted for prospectively in accordance with ASC 250 Accounting Changes and Error Corrections Prepaid installation costs Prepaid installation costs include costs incurred prior to completion of installations of solar systems. Such costs include the cost of engineering, permits, governmental fees, and other related solar installation costs. These costs are charged to Cost of goods sold when each installation is completed. Prepaid expenses and other current assets Prepaid expenses and other current assets consist of employee advances, advanced sales commissions, prepaid insurance, and other current assets. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable. The Company maintains its cash and cash equivalent balances in highly rated financial institutions, which at times may exceed federally insured limits. The amounts over these insured limits as of September 30, 2024, and December 31, 2023 were $4,080,061 and $6,979,011, respectively. The Company mitigates this concentration of credit risk by monitoring the credit worthiness of the financial institutions. No losses have been incurred to date on any deposits. The Company performs periodic credit evaluations of its customers’ financial condition and also monitors the financial condition of the financial counterparties that finance customer transactions and generally does not require collateral. No one customer or financing counterparty exceeded 10% of accounts receivable as of September 30, 2024, and December 31, 2023. Inventories Inventories are primarily comprised of solar panels and other related items necessary for installations and service needs. Inventories are accounted for on a first -in-first-out -average Property, equipment and other fixed assets Property, equipment and other fixed assets are carried at cost less accumulated depreciation and includes expenditures that substantially increase the useful lives of existing property and equipment. Maintenance, repairs, and minor renovations are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the related costs and accumulated depreciation are removed from their respective accounts, and any difference between the sale proceeds and the carrying amount of the asset is recognized as a gain or loss on disposal in the condensed consolidated Statements of Operations. Software that is developed for internal use and is accounted for pursuant to ASC 350 -40 , Intangibles, Goodwill and Other -Internal-Use Software -use -use -line Depreciation is computed using the straight -line The estimated useful lives and depreciation methods are reviewed at each year -end Impairment of long-lived assets Management reviews each asset or asset group for impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable, and at least annually. No impairment provisions were recorded by the Company during the three and nine months ended September 30, 2024, and 2023. Business Combinations The Company accounts for an acquisition as a business combination if the assets acquired and liabilities assumed in the transaction constitute a business in accordance with ASC Topic 805. Such acquisitions are accounted using the acquisition method by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, and any non -controlling Where the set of assets acquired and liabilities assumed doesn’t constitute a business, it is accounted for as an asset acquisition where the individual assets and liabilities are recorded at their respective relative fair values corresponding to the consideration transferred. Goodwill Goodwill is recognized and initially measured as any excess of the acquisition -date -date Intangible assets subject to amortization Intangible assets include tradenames, customer lists and non -compete -line Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. The Company evaluates the recoverability of intangible assets by comparing their carrying amounts to future net undiscounted cash flows expected to be generated by the intangible assets. If such intangible assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the intangible assets exceeds the fair value of the assets. The Company determines fair value based on discounted cash flows using a discount rate commensurate with the risk inherent in the Company’s current business model for the specific intangible asset being valued. No impairment charges were recorded for the three and nine months ended September 30, 2024, and 2023. Leases The Company evaluates the contracts it entered into to determine whether such contracts contain leases at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee. When the arrangements include lease and non -lease Operating Leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. Operating leases are included in the line items right -of-use -current -line For leases with a lease term of less than one year (short -term -line -term Finance leases Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. Lease cost for finance leases where the Company is the lessee includes the amortization of the ROU asset, which is amortized on a straight -line -line Warrant Liabilities The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 815 -40 Derivatives and Hedging -40 -40 -measurement Accrual for Probable Loss Contingencies In the normal course of business, the Company is involved in various claims and legal proceedings. A liability is recorded for such matters when it is probable that a loss has been incurred and the amounts can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. Legal costs associated with loss contingencies are expensed as incurred. Revenue Recognition The Company accounts for its revenue in accordance with ASC 606, Revenue from Contracts with Customers -step • • • • • The Company recognizes and records revenue from its operations upon completion of installation for both solar system installations and roofing installations. In connection with the sales and installation, a signed contract between the Company and the purchaser defines the duties and obligations of each party. The contract is specific as to the duties and responsibilities which govern the accounting for these transactions. Once the Company’s performance obligations are met with installation completed, according to the signed contract, the Company’s obligations are completed, and title is transferred to the buyer. The Company believes its performance obligation is completed once the installation of the solar panels is completed, which is prior to the customer receiving permission to operate the solar panels from the local utility company. The Company records sales revenue at this point in time in its accounting records. Many of the Company’s customers finance their obligations with third parties. In these situations, the finance company deducts their financing fees and remits the net amount to the Company. Revenue recorded is equal to the contract amount signed by the purchaser, net of the financing fees. The Company incurs several costs associated with the installation prior to its completion. In accordance with ASC 340, Other Assets and Deferred Costs, -related
For the three months ended
For the nine months ended
2024
2023
2024
2023
Solar systems installations, gross
$ 24,120,570
$ 50,904,324
$ 69,727,470
$ 115,213,716
Financing fees
(4,890,020
)
(14,941,988
)
(17,394,944
)
(33,726,283
)
Solar systems installations, net
19,230,550
35,962,336
52,332,526
81,487,433
Roofing installations
427,355
1,931,830
2,263,807
5,217,587
Total net revenues
$ 19,657,905
$ 37,894,166
$ 54,596,333
$ 86,705,020
Contract liabilities The Company receives both customer lender advances and, when the customer does not utilize third -party The following table summarizes the change in contract liabilities:
September 30,
December 31,
Contract liabilities, beginning of the period
$ 5,223,518
$ 1,149,047
Revenue recognized from amounts included in contract liabilities at the beginning of the period
(5,223,518
)
(1,149,047
)
Cash received prior to completion of performance obligation
601,681
5,223,518
Contract liabilities, as of the end of the period
$ 601,681
$ 5,223,518
Contract acquisition costs The Company pays sales commissions to sales representatives based on a percentage of the sales contracts entered into by the customer and the Company. Payment is made to the sales representative once installation is completed. Such costs are included as sales and marketing on the condensed consolidated statements of operations. Since sales commission payments are subject to completion of the installation, payment is made commensurate with the recognition of revenue from the sale, and therefore the full expense is incurred as the Company does not have any remaining performance obligations. Earnings per share The Company reports both basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted average number of shares of Class A Common Stock outstanding and excludes the dilutive effect of warrants, stock options, and other types of convertible securities. Diluted earnings per share is calculated based on the weighted average number of shares of Class A Common Stock outstanding and the dilutive effect of warrants and other types of participating securities are included in the calculation. Dilutive securities are excluded from the diluted earnings per share calculation if their effect is anti -dilutive Prior to the Business Combination, the membership structure of Sunergy Renewable, LLC included membership units. In conjunction with the closing of the Business Combination, the Company effectuated a recapitalization whereby all membership units were converted to common units of ESGEN OpCo, LLC, and Zeo Energy Corp. implemented a revised class structure including Class A Common Stock having one vote per share and economic rights and Class V Common Stock having one vote per share and no economic rights. The Company has determined that the calculation of loss per unit for periods prior to the Business Combination would not be meaningful to the users of these consolidated financial statements. As a result, loss per share information has not been presented for periods prior to the Business Combination. Stock-based Compensation The Company recognizes an expense for stock -based Fair value of Financial Instruments Fair value is the price that would be received to sell an asset, or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). We classify fair value balances based on the observability of those inputs. The three levels of the fair value hierarchy are as follows:
Level 1 —
Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 —
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data.
Level 3 —
Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement. 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. The Company establishes the fair value of its assets and liabilities using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a fair value hierarchy based on the inputs used to measure fair value. The recorded amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accrued expenses, advanced funding, accounts payable, and debt approximate fair value due to their relatively short maturities. Redeemable Noncontrolling Interests Noncontrolling interests represent the portion of ESGEN OpCo, LLC that Zeo Energy Corp. controls and consolidates but does not own. The noncontrolling interests were created as a result of the Business Combination and represent 33,730,000 common units issued by Zeo Energy Corp. to the prior investors. As of the Close of the Business Combination, Zeo Energy Corp. held a 13.0% interest in ESGEN OpCo, LLC with the remaining 87.0% interest held by ESGEN OpCo, LLC’s prior investors. The prior investors’ interests in ESGEN OpCo, LLC represent a redeemable noncontrolling interest. At its discretion, the members have the right to exchange their common units in ESGEN OpCo, LLC (along with the cancellation of the paired shares of Zeo Energy Corp. or the Class V Common Stock) for either shares of Class A Common Stock on a one -to-one As the redeemable noncontrolling interests are redeemable upon the occurrence of an event that is not solely within the Company’s control, the Company classifies redeemable noncontrolling interests as temporary equity. The redeemable noncontrolling interests in common units were initially measured at the ESGEN OpCo, LLC prior investors’ share in the net assets of the Company upon consummation of the Business Combination. Subsequent remeasurements of the Company’s redeemable noncontrolling interests are recorded as a deemed dividend each reporting period, which reduces retained earnings, if any, or additional paid -in Redeemable Convertible Preferred Units The Company records redeemable convertible preferred units at fair value on the dates of issuance, unless an exception applies, net of issuance costs. The redeemable convertible preferred units have been classified outside of stockholders’ (deficit) equity as temporary equity on the accompanying condensed consolidated balance sheets because the shares contain certain redemption features that are not solely within the control of the Company. See Note 10 — Redeemable Noncontrolling Interests and Equity. Because the Class A convertible preferred units are held by the Sponsor at the OpCo level, the preferred units are presented as a noncontrolling interests on the condensed consolidated balance sheets. Income Taxes Zeo Energy Corp. is a corporation and thus is subject to United States (“U.S.”) federal, state and local income taxes. ESGEN OpCo, LLC is a partnership for U.S. federal income tax purposes and therefore does not pay United States federal income tax. Instead, the ESGEN OpCo, LLC unitholders, including Zeo Energy Corp., are liable for U.S. federal income tax on their respective shares of ESGEN OpCo, LLC’s taxable income. ESGEN OpCo, LLC is liable for income taxes in those states which tax entities classified as partnerships for U.S. federal income tax purposes. We use the asset and liability method of accounting for income taxes for the Company. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss (“NOL”) and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the results of operations in the period that includes the enactment date. The realizability of deferred tax assets is evaluated quarterly based on a “more likely than not” standard and, to the extent this threshold is not met, a valuation allowance is recorded. 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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. Management has evaluated the Company’s tax positions, including its previous status as a pass -through no Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. The open tax years for U.S. federal and state income tax purposes are 2019 and forward. The Company has calculated the provision for income taxes during the interim reporting period by applying an estimate of the Annual Effective Tax Rate (AETR) for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Our effective tax rate (ETR) from continuing operations was 1.5% and 0% for the three months ended September 30, 2024 and September 30, 2023, respectively, and 2.7% and 0% for the nine months ended September 30, 2024 and September 30, 2023, respectively. The ETR for the three and nine months ended September 30, 2024 differs from statutory rates primarily due to the non -controlling Tax Receivable Agreement In conjunction with the consummation of the Transactions, Zeo Energy Corp entered into a Tax Receivable Agreement (the “TRA”) with ESGEN Opco, LLC and certain ESGEN Opco, LLC members (the “TRA Holders”). Pursuant to the TRA, Zeo Energy Corp. is required to pay the TRA Holders 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Business Combination as a result of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Exchangeable OpCo Units pursuant to the exercise of the OpCo Exchange Rights or a Mandatory Exchange and (ii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments it makes under the Tax Receivable Agreement. All such payments to the TRA Holders are the obligations of Zeo Energy Corp., and not that of ESGEN Opco, LLC. As of September 30, 2024, there have been no exchanges of ESGEN Opco, LLC units for Class A Common Stock of Zeo Energy Corp. and, accordingly, no TRA liabilities currently exist. Future exchanges will result in incremental tax attributes and potential cash tax savings for Zeo Energy Corp. The associated liability for the Tax Receivable Agreement will be recorded as a decrease to additional paid -in -establish New Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In November 2023, the FASB issued ASU No. 2023 -07 -Improvements -07 -07 -07 In December 2023, the FASB issued ASU No. 2023 -09 -09 -09 -09 | Note 2 — Significant Accounting Policies Basis of Presentation The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. Emerging Growth Company Status 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. 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 a company can elect to opt out of the extended transition period and comply with the requirements that apply to non -emerging Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company’s 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 no Marketable Securities and Cash Held in Trust Account As of December 31, 2023, investments held in the Trust Account consisted of interest bearing demand deposits. As of December 31, 2022, substantially all of the assets held in the Trust Account were held in U.S. Money Market Funds. Such investments are presented on the condensed balance sheets at fair value at the end of the reporting period. Interest, dividends, gains and losses resulting from the change in fair value of these investments 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. Fair Value Measurement The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to its short -term 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 • • • 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”. The Company’s derivative instruments are recorded at fair value on the balance sheet with changes in the fair value reported in the statements of operations. Derivative liabilities are classified on the balance sheets as current or non -current -cash Warrant Liabilities The Company accounts for the Public and Private Placement warrants issued in connection with the Public Offering in accordance with the guidance contained in ASC Topic 815 -40 -measurement -measurement Net (Loss) Income Per Ordinary Share The Company has two classes of shares, which are referred to as redeemable Class A ordinary shares and non -redeemable The earnings per share presented in the statement of operations is based on the following:
Year Ended
Year Ended
Net (loss) income
$ (3,001,194
)
$ 14,334,250
Accretion of temporary equity to redemption value
6,167,983
(3,984,431
)
Net income including accretion of temporary equity to redemption value
$ 3,166,789
$ 10,349,819
Year Ended
Year Ended
Redeemable
Non-redeemable
Redeemable
Non-redeemable
Basic and diluted net (loss) income per share
Numerator:
Allocation of net (loss) income including accretion of temporary equity
$ 1,140,044
$ 2,026,745
$ 8,279,855
$ 2,069,964
Allocation of accretion of temporary equity to redemption value
(6,167,983
)
—
3,984,431
—
Allocation of net (loss) income
$ (5,027,939
)
$ 2,026,745
$ 12,264,286
$ 2,069,964
Denominator:
Weighted-average shares outstanding
3,821,284
6,900,000
27,600,000
6,900,000
Basic and diluted net (loss) income per share
$ (1.32
)
$ 0.29
$ 0.44
$ 0.30 Net (loss) income per share is computed by dividing net (loss) income by the weighted average number of ordinary shares outstanding during the period. The Company has not considered the effect of the 27,840,000 ordinary shares issuable upon exercise of the Public Warrants and Private Placement Warrants in the calculation of diluted (loss) income per share, since the exercise of such warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti -dilutive Class A Ordinary Shares Subject to Possible Redemption The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480. Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including shares 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) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares sold in the IPO feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. The Company has made a policy election in accordance with ASC 480 -10-S99-3A -in -in Income Taxes ASC Topic 740, “Income Taxes”, requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC Topic 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not 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. There were no The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2023 and 2022, there were no Recent Accounting Pronouncements Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. |
