UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Explanatory Note
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Item 4.02. Non-Reliance on Previously Issued Financial Statements.
The management of the Company, in consultation with its advisors, identified an accounting error in the previously issued financial statements as of and for the quarterly period ended March 31, 2023. On August 14, 2023, the Company’s audit committee concluded, after discussion with the Company’s management and its advisors, that the Company’s unaudited financial statements as of and for the quarterly period ended March 31, 2023 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2023 should no longer be relied upon due to the error described below and should be restated.
In connection with the preparation of the Company’s condensed consolidated financial statements as of and for the period ended June 30, 2023, management identified a presentation error made in its March 31, 2023 condensed consolidated financial statements. The Company determined that the value of the convertible promissory notes were incorrectly adjusted to fair value instead of being booked at par. The Company determined that, as a result, there should be a reversal of the change in value of the convertible notes as previously disclosed. The Company determined that the convertible notes required bifurcation under ASC 815-15-25-7. Management evaluated the conversion option contained within the convertible notes and determined their value to be de minimis. As a result, the Company recorded the value of the convertible notes at par.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”; the Company evaluated the changes and determined that the related impact was material to previously presented financial statements.
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The impact of the restatement on the Company’s unaudited condensed consolidated financial statements is reflected in the following table:
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Condensed Consolidated Balance Sheet for the three months ended March 31, 2023 (unaudited) | ||||||||||||
| Convertible Promissory Note - Related Party | $ | 257,014 | $ | 1,882,986 | $ | 2,140,000 | ||||||
| Additional paid in capital | $ | 563,136 | $ | (563,136 | ) | $ | - | |||||
| Accumulated deficit | $ | (15,207,806 | ) | $ | (1,319,850 | ) | $ | (16,527,656 | ) | |||
| Total Liabilities | $ | 15,881,107 | $ | 1,882,986 | $ | 17,764,093 | ||||||
| Total Stockholders’ Equity (deficit) | $ | (14,643,951 | ) | $ | (1,882,986 | ) | $ | (16,526,937 | ) | |||
| Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 (unaudited) | ||||||||||||
| Change in fair value of convertible promissory notes | $ | 1,319,850 | $ | (1,319,850 | ) | - | ||||||
| Total other income (expense) | $ | 909,732 | $ | (1,319,850 | ) | $ | (410,118 | ) | ||||
| Income before provision for income taxes | $ | 81,106 | $ | (1,319,850 | ) | $ | (1,238,744 | ) | ||||
| Net Income (loss) | $ | (374,842 | ) | $ | (1,319,850 | ) | $ | (1,694,692 | ) | |||
| EPS: | ||||||||||||
| Weighted avg shares outstanding, Class A common stock | 21,188,697 | - | 21,188,697 | |||||||||
| Basic and diluted net loss per share, Class A common stock | $ | (0.01 | ) | (0.05 | ) | (0.06 | ) | |||||
| Weighted avg shares outstanding, Class B common stock | 7,187,500 | - | 7,187,500 | |||||||||
| Basic and diluted net loss per share, Class B common stock | $ | (0.01 | ) | (0.05 | ) | (0.06 | ) | |||||
| Condensed Consolidated Statement of Equity for the three months ended March 31, 2023 (unaudited) | ||||||||||||
| Proceeds received in excess of initial fair value of Convertible Promissory Note | $ | 563,136 | $ | (563,136 | ) | $ | - | |||||
| Net Income (loss) | $ | (374,842 | ) | $ | (1,319,850 | ) | $ | (1,694,692 | ) | |||
| Accretion for Class A common stock to redemption amount- APIC | $ | (2,355,234 | ) | $ | - | $ | (2,355,234 | ) | ||||
| Accumulated Deficit | $ | (15,207,806 | ) | $ | (1,319,850 | ) | $ | (16,527,656 | ) | |||
| Total Stockholders Equity (deficit) | $ | (14,643,951 | ) | $ | (1,882,986 | ) | $ | (16,526,937 | ) | |||
| Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2023 (unaudited) | ||||||||||||
| Net (loss) income | $ | (374,842 | ) | $ | (1,319,850 | ) | $ | (1,694,692 | ) | |||
| Change in fair value of convertible promissory note | $ | (1,319,850 | ) | $ | 1,319,850 | $ | - | |||||
| Non Cash: | ||||||||||||
| Proceeds received in excess of initial fair value of Convertible Promissory Note - Shares at initial borrowing | $ | 563,136 | $ | (563,136 | ) | $ | - | |||||
The Company’s management has concluded that in light of the error described above, a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of March 31, 2023.
The Company’s management and audit committee have discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with its independent registered public accounting firm.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Arrowroot Capital Acquisition Corp. | ||
| (Registrant) | ||
| September 1, 2023 | By: | /s/ Thomas Olivier |
| Name: | Thomas Olivier | |
| Title: | Chief Financial Officer | |
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