正如向美國證券交易所提交的那樣 2024年7月22日佣金。

登記第333-279908號

聯合國
證券交易委員會

華盛頓，特區20549

修正案第2號
到

形式 S-1

登記聲明
下
1933年證券法

伊利諾州， Inc.

（確切的章程中規定的註冊人名稱）

德拉瓦			7372			85-3961600
（州或其他司法管轄區成立或組織）			（初級標準工業分類代碼號）			（國稅局僱主識別號）

6701 民主大道，Suite 300

貝塞斯達，馬里蘭州20817
(650) 248-9874

（地址，包括登記人主要行政辦公室的郵政編碼和電話號碼（包括地區代碼）

哈里什奇丹巴蘭
執行長
6701民主大道，Suite 300

貝塞斯達，馬里蘭州20817

(650) 248-9874

(Name, 服務代理人的地址（包括郵政編碼）和電話號碼（包括地區代碼）

複本致：

喬什 Holleman
埃里克·布蘭查德
保羅·亞歷山大
Cooley LLP
賓夕法尼亞大道西北1299號，700套房

華盛頓，特區20004
(202) 842-7800

近似開始向公眾出售的日期：
本登記聲明宣布生效期間或之後不時發布。

如果根據第415條，在本表格上登記的任何證券均應延遲或連續發售 1933年證券法，勾選以下方框。☒

如果本表格是為根據證券法第462(B)條登記發行的額外證券而提交的，請查閱下列方框中列出之前生效的證券法註冊表編號獻祭。☐

如果本表格是根據證券法第462(C)條提交的生效後修正案，請勾選以下方框並列出證券法登記聲明同一發行的較早生效的登記聲明編號。☐

如果本表格是根據證券法第462(D)條提交的生效後修正案，請勾選以下方框並列出證券法登記聲明同一發行的較早生效的登記聲明編號。☐

表明通過勾選標記註冊人是大型加速申請者、加速申請者、非加速申請者、較小的報告公司、或者一家新興的成長型公司。請參閱“大型加速檔案伺服器”、“加速檔案伺服器”、“較小檔案伺服器”的定義交易法第120億2條中的“報告公司”和“新興成長型公司”。

大型加速檔案管理器	☐	加速的檔案管理器	☐
非加速歸檔	☒	規模較小的報告公司。	☒
		新興成長型公司：	☒

如果新興成長型公司，用複選標記表示註冊人是否已選擇不使用延長的過渡期來遵守根據證券法第7(A)(2)(B)條提供的任何新的或修訂的財務會計準則。☐

註冊人特此在必要的一個或多個日期修改本註冊聲明，以將其生效日期推遲到註冊人應提交進一步的修正案，明確規定本登記聲明此後將根據根據19《證券法》第8(A)條的規定，或直至註冊說明書於證券公司而交易所委員會根據上述第8(A)條行事，可決定。

這個這份初步招股說明書中的資訊不完整，可能會被更改。我們和出售證券的持有人都不能出售這些證券證券，直至提交給美國證券交易委員會的註冊聲明生效。這份初步招股說明書不是出售這些證券的要約，也不是在要約或出售這些證券的任何司法管轄區尋求購買這些證券的要約是不允許的。

主題將於2024年7月22日完成

初步招股書

向上至22,624,975股認股權證行使時可發行的普通股

向上至100,774,669股普通股

2024年可轉換票據股票

“)以清償可轉換票據支付給這些投資者，(B)6,787,500股普通股(“

創始人股份“)(其中160,000人後來被由保薦人轉讓給ARRW的現任和前任董事)，最初於在ARRW首次公開發行之前向保薦人進行的私募；(C)82,091股普通股(“氣象局股票“)以每股10.00美元的公允價值向某些投資者發行，根據與某些投資者作為該等投資者不行使與股東大會有關的贖回權的代價在企業合併(定義見下文)之前，(D)3,763,378股普通股(“出借人股份“) 以每股10.00美元的公允價值價格向Venture Lending&Leending IX，Inc.(“風險貸款“)及 WTI Fund X，Inc.(WTI基金X與風險貸款一起，貸款人“)根據《與In2vate，L.L.C.，iLearningEngines，Inc.的貸款檔案的第二次總括修正案(僅限於股票發行普通股)和貸款人，作為修訂WTI貸款協定下攤銷時間表的部分代價企業合併前(定義見下文)和企業合併後全額償還所有未償債務根據(1)iLearningEngines Inc.與Venture Lending&Leending之間於2020年12月30日簽訂的貸款和擔保協定 IX，Inc.(The“2020年貸款協定

“)，(2)iLearningEngines之間的貸款和擔保協定，日期為2021年10月21日 Inc.、Venture Lending&Leending IX，Inc.和WTI Fund X，Inc.(2021年貸款協定“)；及(3)貸款和安全協定，日期為2023年10月31日，由iLearningEngines Inc.和WTI Fund X，Inc.(The2023年貸款協定“ 與2020年貸款協定和2021年貸款協定一起，WTI貸款協定“)，(E)460,384股普通股(“流動資本份額“)發給贊助商，作為償還4,510,000美元的代價 (相當於每股9.80美元)，這是當時無擔保本票項下未償債務的一部分發行給ARRW，(F)78,730股普通股(“未歸屬股份“)可在歸屬和分派時發行最初授予的限制性股票單位 ILearningEngines Inc.不收取現金成本(“舊式iLearningEngine“)，並由本公司承擔，並轉換為受限根據合併協定與普通股有關的股票單位，不向接受者支付任何費用 (“假定的RSU)，(G)8,250,000股普通股(“認股權證股份“)由保薦人取得於行使私人配售認股權證時可按購買價8,250,000元(相等於每股1元)發行 (H)71,508,370股普通股(包括4,727,199股可發行普通股在歸屬的RSU結算時)(“控制權股份“)以公允價值價格發行予若干董事及高級職員每股10.00美元作為此類股票的合併代價，該股票最初由Legacy iLearningEngines向該等董事和高級管理人員發行作為企業合併前向Legacy iLearningEngines提供的就業和服務的對價，(I)511,073股普通股(“BTIG股票“)，根據BTIG修正案以每股5.87美元的價格發行聘書(“BTIG修正案)，日期為2024年3月27日，由ARRW和BTIG，LLC(BTIG“)、與支付某些企業合併交易費用有關，(J)1,022,146股普通股(風險因素使用所得測定報價市場證券和股息政策信息管理層的財務狀況和運營結果的討論和分析我們業務管理執行補償某些關係及關聯方交易主要企業主銷售企業主描述我國證券材料美國聯邦所得稅後果證券 ACt對轉售我們證券的限制規劃分配的法律事務專家變化在註冊人的認證會計師中哪裡您可以找到更多資訊未經審核形式濃縮合併財務信息新iLearningEngine“ 或者是“公司“)，以前簽訂的某項合併和重組協定和計劃，日期為自2023年4月27日起(經修訂，“合併協議“)，與特拉華州一家公司Arac Merge Sub，Inc. 以及ArrowRoot收購公司的全資子公司(“併購特殊目的子公司和特拉華州的iLearningEngines Inc. 公司(“舊式iLearningEngine“)。2024年4月16日，公司完成合並交易合併協定(下稱“合併協定”)預期業務合併“)合併子公司與遺產公司合併並併入遺產公司 ILearningEngine以單獨的公司存在合併子公司停止和遺留iLearningEngines作為一個整體在合併中存活本公司的全資子公司。隨著業務合併的完成，ARRW從ArrowRoot更名收購公司更名為iLearningEngines，Inc.和Legacy iLearningEngines將其名稱從iLearningEngines Inc.更名為iLearningEngines 控股公司

除非上下文中另有說明，在本招股說明書中，提及“公司”、“iLearningEngines”、“我們”、“ “我們”、“我們的”和類似的術語指的是iLearningEngines，Inc.(F/k/a ArrowRoot Acquisition Corp.)及其合併後的子公司(包括傳統iLearningEngines)。所指的“ARRW”是指合同完成前的前身公司企業合併的。

特殊關於前瞻性陳述的說明

一些人本招股說明書中包含的許多陳述均構成聯盟證券法所指的前瞻性陳述。前瞻性陳述涉及預期、信念、預測、未來計劃和戰略、預期事件或趨勢以及關於非歷史事實的事項的類似表述。這些前瞻性陳述包括關於我們的意圖、信念和當前的預期和預測，除其他事項外，涉及我們的運營結果、財務狀況、流動性、前景、增長、戰略和我們經營的市場。在某些情況下，您可以識別這些前瞻性陳述通過使用諸如“展望”、“相信”、“期望”、“潛力”、“繼續”等術語， “可能”、“將”、“應該”、“可能”、“尋求”、“大概”、“預測” “打算”、“計劃”、“估計”、“預期”或這些詞的否定形式或其他類似的單字或短語。

這個本招股說明書中包含的前瞻性陳述反映了我們對業務合併和未來事件的當前看法，以及受到許多已知和未知的風險、不確定性、假設和可能導致其實際結果的環境變化的影響與任何前瞻性陳述中所表達的內容大不相同。不能保證交易和事件被描述的事情將會按照描述的方式發生(或者它們根本不會發生)。由於一些已知和未知的風險和不確定性，我們的實際結果或表現可能與這些前瞻性陳述所表達或暗示的大不相同。一些人可能導致實際結果不同的因素包括：●我們的能夠認識到業務合併的預期收益，這些收益可能會受到競爭以及我們以盈利方式增長和管理增長的能力的影響；

●我們的有能力保持我們的普通股和權證在納斯達克資本市場上市，以及此類證券的潛在流動資金和交易情況；「是指在收盤時簽訂的某些修訂和重述的註冊權協議由iLearningEngines、贊助商成員、Legacy iLearningEngines的某些前股東共同發起。

ARRW” 或「竹芋

」是指Arrowroot Acquisition Corp.（因相關原因更名為「iLearningEngines，Inc」隨著業務合併的完善）。

ARRW IPO

「是指ARRW於2021年3月4日完成的首次公開募股。

ARRW 單位

「指我們的股權證券，每份證券由一股A類普通股和一份可贖回令的一半組成。業務組合「指合併協議中設想的交易，包括合併等。

關閉

” 意味著業務合併的結束。

關閉日期

	」意味著4月16日
2024年，收盤日期。	ii
共同股票	iii
「是指我們普通股的股份，每股面值0.0001美金。	v
DGCL	1
” 指德拉瓦州一般公司法。	4
第四本票	7
“指本金為2,000,000美元、以保薦人Arrowroot為受益人的無擔保本票於2023年6月13日發佈。	55
IPO	56
“ 指ArrowRoot首次公開募股ArrowRoot Units，於2021年3月4日完成。	57
首次公開募股(IPO) 本票	58
指保薦人於2020年12月21日向本公司簽發的無擔保本票本公司可借入本金總額不超過300,000元的債券。	89
遺贈 ILearningEngines	102
“指iLearningEngines Holdings，Inc.，一家特拉華州的公司，根據業務合併，成為iLearningEngines，Inc.的直接全資子公司，除非上下文另有規定，否則是其合併子公司。	110
合併	126
“ 指ARRW的直接全資子公司Sub與Legacy iLearningEngines合併，並與Legacy iLearningEngines合併作為倖存的實體繼續存在。	131
合併協定	133
指截至2023年4月27日與合併子公司簽訂的某些合併重組協定和計劃和Legacy iLearningEngines。	137
合併子	146
指ARRW的全資子公司、特拉華州公司Arac Merge Sub，Inc.。	151
私配售認股權證	152
指保薦人就ARRW IPO以私募方式購買的8,250,000份認股權證交易與ARRW IPO的結束同時進行。	155
期票備註	155
“統稱為IPO本票、第一本票、第二本票、第三本票和第四期本票。	156
公共權證	157
“指作為ARRW IPO中出售的ARRW單位組成部分的14,374,975份認股權證，每份認股權證均可行使，根據其條款，每股普通股的行使價為11.50美元。	158
SEC	“ 指的是美國證券交易委員會。
第二本票	“指本金為500,000美元、以保證人ArrowRoot為受益人的無擔保本票 2023年2月23日。
證券法	F-1
“指經修訂的19美國證券法。	申辦者

“ 指的是特拉華州的有限責任公司ArrowRoot Acquisition LLC。權證“ 指私募認股權證及公開認股權證。

二零二四年可轉換票據購買協定

」意味著

可轉換票據購買協定與投資者簽訂的傳統iLearningEngines(“

三月投資者

“)2024年3月21日，根據該決議，除其他事項外，Legacy iLearningEngines向3月投資者發行並出售了2024年可轉換票據(定義如下) 本金總額為700,000美元。2024年4月16日，Legacy iLearningEngines簽訂了2024年可轉換票據購買協定與某些投資者(統稱為“

4月的投資者與3月份的投資者一起，”

二零二四年可轉換票據投資者“)，據此，除其他事項外，Legacy iLearningEngines發行並出售給4月份的投資者 2026年10月到期的可轉換票據(“2024年可轉換票據●我們依賴我們的渠道合作夥伴創造大量收入，如果我們失敗了為了擴大和管理我們的分銷渠道，我們的收入可能會下降，而我們的增長前景可能會受到影響。●如果我們無法成功引入新功能或服務並進行增強對於我們的平臺或產品，我們的業務和運營結果可能會受到不利影響。●我們目標企業客戶，向這些客戶銷售涉及可能不存在的風險或者，對較小實體的銷售在較小程度上存在。●真實或者我們的平臺和產品中發現的錯誤、故障或錯誤可能會對我們的業務、經營結果、財務狀況和增長前景。●不正確或者不恰當地實施或使用我們的平臺和產品可能會導致客戶不滿並損害我們的業務、運營結果、財務狀況和增長前景。●如果我們無法確保我們的平臺與各種軟體應用程式集成其他人開發的，包括我們的集成合作夥伴，我們可能會變得不那麼有競爭力而且我們的行動結果可能會受到損害。

●

我們的未償債務可能會對我們的財務狀況和我們的能力產生不利影響運營我們的業務並追求我們的業務戰略，我們可能無法產生有足夠的現金流來履行我們的償債義務。

●

我們依靠我們客戶的數據集。如果我們不能獲得或利用這些數據規定或法規限制它這樣做，我們的業務、財務狀況和結果可能會對業務造成不利影響。

●

我們受到與數據隱私和安全相關的嚴格和不斷變化的義務的約束。我們的實際或被認為不遵守此類義務可能會導致監管機構調查或訴訟；訴訟；罰款和處罰；中斷我們的業務運營；聲譽損害；收入或利潤損失；客戶或銷售損失；以及其他不利業務後果。

●

任何未能獲得、維護、保護或執行我們的知識產權和專有權利可能會削弱我們保護我們專有技術和我們品牌的能力。

認股權證的行使價

每股11.50美元，可按本文所述進行調整。

收益的使用

假設所有現金認股權證全部行使，我們將從行使認股權證中獲得總計約26020美元的萬。我們預期將行使認股權證所得款項淨額(如有)用作一般公司用途。由於有關行使認股權證的不確定性，我們在本招股說明書中討論的預計流動資金需求均不假設從行使認股權證所獲得的任何收益。我們的公開認股權證和私募認股權證的行使價為每份認股權證11.50美元，這超過了截至本招股說明書日期我們普通股的交易價格。我們相信，認股權證持有人行使其認股權證的可能性，以及我們將獲得的現金收益數額，取決於我們普通股的交易價格。只要我們普通股的交易價格低於每股11.50美元，這意味著認股權證“沒錢了”，我們相信認股權證的持有者就不太可能行使他們的認股權證。此外，如果我們的認股權證是在“無現金基礎上”行使的，我們從行使這種認股權證中獲得的現金金額將會減少。私募認股權證可以現金或“無現金”方式行使。公共認股權證只能以現金形式行使，前提是有一份有效的聲明，登記在行使認股權證後可發行的普通股的股份。如果沒有當時生效的註冊聲明，則根據證券法規定的註冊豁免，此類認股權證可在“無現金基礎上”行使。見標題為“”的部分

所得款項用途

普通股和認股權證的轉售

出售證券持有人發行的普通股

我們正在登記本招股說明書中指定的出售證券持有人或其許可受讓人的轉售，總計100,774,669股普通股，包括：

●的數據為8,0,532。 2024年發行的可轉換票據股票，總購買價為29,414,500美元(相當於每股價格3.美元)，令人滿意應付給該等投資者的可轉換票據；

●*6,787,500 方正股份(其中160,000股後來由保薦人轉讓給ARRW的現任和前任董事)最初在ARRW首次公開募股之前，以每股約0.004美元的價格向保薦人進行私募發行；

●*82,091 以每股10.00美元的公允價值價格向某些投資者發行的氣象股票，作為不行使贖回的代價投資者與企業合併前股東大會有關的權利；

●的數據為3,763,378。按公允價值每股10.00美元發行的出借人股票，部分作為修訂攤銷時間表的對價根據WTI貸款協定，在企業合併前和企業合併後，全額償還 WTI貸款協定下的未償債務；

●的股票價格為460,384英鎊。作為償還4,510,000美元(相當於每股9.80美元)的代價而發行的營運資金股票，代表向ARRW發行的無擔保本票項下當時未償債務的一部分；

●*78,730 在歸屬和結算限制性股票單位時可發行的普通股，這些股票最初是由Legacy iLearningEngines免費授予接受者的；

●*71,508,370 以每股10.00美元的公允價值向若干董事及高級職員發行的控制權股份，作為該等公司的合併代價最初由Legacy iLearningEngines向這些董事和高級管理人員發行的股票，作為僱用和提供服務的代價在業務合併之前提交給Legacy iLearningEngines；

●*511,073 根據BTIG修正案以每股5.87美元的價格發行的普通股，與付款有關一定的企業合併交易費用；

●的數據為1,022,146。為支付遞延承銷佣金而發行的普通股，總金額為6,000,000美元根據費用修改協定，與交易有關的每股5.87美元的價格；

●公司股價下跌221,465英鎊。根據庫利費用協定以每股5.87美元的價格發行的普通股，與支付企業合併交易費用；以及

●*8,250,000 保薦人以8,250,000美元(相當於每股1美元)的收購價購入的普通股，可發行於私人配售認股權證獲行使時，每股價格為11.50美元。

鑑於普通股的數量相當大，根據本招股說明書出售證券持有人而登記的潛在轉售，出售證券持有人出售股份持有大量股份，或市場上認為出售大量股份的證券持有人有意出售股票，可能會增加我們普通股的市場價格的波動性，或者導致公眾的顯著下降我們普通股的交易價格。即使我們的交易價格大大低於每股10.00美元，在ARRW的首次公開募股中提供的單位，其購買者將其ARRW股票交換為我們的普通股本招股說明書中描述的業務組合，出售證券持有人可能仍有動力出售我們的股票是因為他們購買股票的價格大大低於我們的公眾投資者或我們普通股的當前交易價格。雖然某些出售證券的持有人可能會經歷投資於我們普通股的正回報率因此，公共證券持有人可能不會經歷類似的由於購買價格和交易價格不同而購買的證券的回報率。例如，基於關於我們的普通股在2024年7月18日的收盤價為每股10.49美元(

繼續向新的行業和市場推介和銷售我們的產品；

●

繼續為我們的平臺開發新產品和新功能，並成功地進一步優化我們現有的產品和基礎設施；

●

成功確定並收購或投資於我們認為可以補充或擴展我們的平臺；以及

●

iii

增加在全球範圍內提高我們的品牌知名度，並成功地與其他公司競爭。

我們可能無法成功實現這些目標中的任何一個，因此，我們很難預測未來的運營結果。如果我們用來規劃業務的假設是不正確的，或者隨著市場的變化而發生變化，或者如果我們無法為了保持一致的ARR或關鍵運營和業務指標的改進，我們的股價可能會波動，這可能會很困難以實現並保持盈利能力。

在……裡面此外，我們預計將繼續在以下方面投入大量財政和其他資源：

●

我們的專門的數據集和技術基礎設施，包括系統架構、可擴展性、可用性、性能和安全性；

●

我們的銷售和營銷組織以吸引我們的現有和潛在客戶，增加品牌知名度，並推動我們產品的採用；

●

產品開發，包括對我們產品開發團隊的投資和開發我們平臺的新產品和新功能以及在進一步優化方面的投資我們現有的產品和基礎設施；

●收購或戰略投資；●

我們的全球業務和持續擴張；以及

“●●

“直接向最終客戶和/或通過渠道合作夥伴銷售的收入組合、收入成本和毛利率的波動包括我們的戰略聯盟;●我們擴大第三方雲基礎設施提供商容量的投資時間和金額;●

“季節性;●

“與現有基礎設施和產品投資相關的新產品和功能投資;●

“客戶購買的時間;●

“因預期我們或我們的競爭對手推出新產品或增強產品而導致採購決策出現波動或延遲;●

“客戶預算及其預算周期和採購決策時間的變化;●,我們控制成本的能力，包括我們的運營費用;

“●運營費用的支付金額和時間，特別是銷售和營銷以及研發費用，包括佣金;

“●非現金費用的金額和時間，包括基於股票的補償、善意損失和其他非現金費用;

“與我們的競爭對手相比，我們利用商機和應對競爭壓力的能力可能由於我們的債務水準而受到損害；以及●

“我們借入額外資金或為債務再融資的能力可能有限。我們的未償債務所造成的限制可能會限制我們運營業務、執行增長戰略以及為我們未來的運營或資本需求提供資金的能力，或者從事其他經營活動。

“這些公約限制了我們的能力，以及其他事物，以：●

“招致額外的債務；●

“授予資產留置權；●

“出售或處置資產；●

“與其他公司合併、收購或者進行其他投資；●

“清算或解散自己；從事非相關行業的業務；或●

“支付股息或進行其他分配在旋轉過程中違反任何契約在適用的補救期限內未以其他方式放棄或補救的貸款協定將導致違約事件，這可能觸發我們債務的加速，並可能導致我們未來可能產生的其他債務的加速或違約，這可能會對我們的業務、運營結果和財務狀況產生實質性的不利影響。在發生此類事件時在循環貸款協定下發生違約的情況下，適用的貸款人可以選擇終止其承諾，並宣佈所有未償還的貸款，連同應計和未付利息以及任何到期和應付的費用和其他義務，和/或行使其權利根據管理我們的循環貸款協定或任何適用法律的貸款檔案和補救措施。我們在輪換制度下的義務貸款協定以本公司、iLearningEngines Holdings，Inc.和In2vate，L.L.C.的幾乎所有資產為抵押。

“如果我們無法償還或以其他方式再融資當這些貸款到期時，適用的貸款人可以對授予他們的抵押品進行擔保，以確保這種債務，這可以迫使我們破產或清算。如果適用的貸款人加速償還我們的貸款，我們和我們的子公司可能沒有足夠的資產來償還這些債務。循環貸款協定或行使項下到期金額的任何加速由適用的貸款人行使其權利和補救措施，可能會對我們的業務產生實質性的不利影響。這些限制可能會影響我們的成長能力根據我們的戰略。

“此外，未來任何債務的條款我們可能會招致更多額外的限制性契約。我們可能無法繼續遵守這些公約。在這種情況下，我們不能向您保證我們將能夠從貸款人那裡獲得豁免或修改契諾。不利的媒體報道可能會對我們的業務、品牌形象或聲譽。

“不利的宣傳或媒體報道我們、我們的隱私實踐、我們的社交媒體活動、數據安全洩露或違規、產品更改、產品或服務質量或功能、訴訟或監管活動，或關於我們的合作夥伴、我們的用戶、我們的員工或其他公司在無論此類宣傳或媒體報道的真實性如何，我們的行業都可能對我們的品牌形象或聲譽產生實質性的不利影響。如果我們不能保護我們的品牌形象或聲譽，我們可能會對規模、人口統計、參與度、和我們用戶基礎的忠誠度，導致收入減少，我們平臺的安裝減少(或我們平臺的安裝增加)，或較慢的用戶增長率。對我們品牌或聲譽的損害也可能對教育機構的意願產生不利影響。和企業合作夥伴使用我們的產品和平臺，這反過來可能會減緩或減少我們的收入增長。此外, 如果證券分析師或投資者認為任何媒體對我們的報道是負面的，我們普通股的價格可能會大幅下降。受到不利影響。上述任何一項都可能對我們的業務、財務狀況和經營結果產生重大不利影響。我們依賴於來自客戶的數據集。如果我們不是能夠獲得或使用此類數據集，或法規限制我們這樣做，我們的業務、財務狀況和運營結果可能會受到不利影響。

“我們的平臺目前依賴於來自我們的渠道合作夥伴和客戶，以及我們專有的人工智慧、數據和機器學習算法，以優化我們的自動化產品。例如，到目前為止，我們已經投資超過1.52億美元購買專有數據集來培訓我們的模型，我們計劃未來繼續購買戰略數據集。我們的渠道合作夥伴和客戶可能會對我們使用此類數據施加限制，提高他們為這些數據向我們收取的價格，完全拒絕將數據授權給我們或將數據授權給我們的競爭對手。如果我們無法使用來自我們的任何渠道合作夥伴和客戶、我們的業務、財務狀況和運營結果的數據可能會受到實質性的不利影響。我們目前的業務範圍是國際化的，而且我們計劃進一步擴大地理範圍，帶來各種運營挑戰。

“我們目前在國際上運營，並且有一個元件我們的增長戰略的一部分涉及進一步擴大我們的業務和國際客戶基礎。美國以外的客戶截至2023年12月31日、2022年12月31日和2021年12月31日，分別創造了57%、66%和81%的收入。在美國以外，我們在國際上有業務存在，包括在印度和阿拉伯聯合酋長國。我們正在繼續適應制定進一步應對國際市場的戰略，但不能保證這樣的努力會取得預期的效果效果。例如，我們預計我們將需要與新的合作夥伴建立關係，以便向某些國家擴張，如果我們不能識別、建立和維持這樣的關係，我們可能就無法執行我們的擴張計劃。截至2024年5月，我們有101名全職員工全球428名合同制員工，既可以由我們的渠道合作夥伴提供，也可以直接與iLearningEngines簽約。雖然我們的總部位於馬利蘭州的貝塞斯達，但我們的員工目前是遠端優先。這使我們能夠找到合適的人才來服務我們的用戶，無論身在何處。在美國，我們在阿拉斯加、康涅狄格州、伊利諾伊州、馬利蘭州、俄克拉荷馬州、德克薩斯州和弗吉尼亞州，這使我們的員工可以進行面對面和遠端工作。這種方法仍然是一種優勢我們的招聘努力，特別是在其他公司開始要求員工返回辦公室或接受減薪的情況下。我們的非美國員工分佈在澳大利亞、印度、英國和阿拉伯聯合酋長國。我們希望我們的國際在可預見的未來，隨著我們繼續在現有和新的國際市場尋找機會，活動將繼續增長，這將需要管理層的大量關注和財政資源的投入。

“我們現在和未來的國際業務運營涉及各種風險，包括：●

“國際企業對我們的平臺和產品的供應和採用速度慢於預期；●特定國家或者地區的政治、監管或者經濟條件的變化；●需要針對特定國家調整我們的產品並使其本地化；●催收應收賬款難度加大，付款週期較長；●貿易關係、法規或法律的潛在變化；●我們沒有設計和維護正式的治理政策、程式和控制實現對企業行為的完整、準確、及時的審核和記錄。在2023年，我們沒有遵守定期貸款的某些條款要求設立單獨的銀行賬戶，以持有2,000,000美元，與運營現金分開如果業務合併不是完善的，董事會和執行團隊的正式會議記錄，如批准，使用年內發出的回應股數目。此外，應該有審查和批准所有金融交易的證據，而不是目前被記錄在案。

●

我們沒有設計和維護正式的政策、程式和對重大合規性的控制用法律法規實現完整、準確、及時的工資稅申報和繳納。這種物質上的弱點導致因未及時報告和支付債務而支付罰款和罰金。此外，在2023年，我們推遲了2022年聯盟和州所得稅申報單的提交，這是在延長的最後期限之後。

我們還注意到以下缺陷，我們認為這些缺陷是重大缺陷。顯著的缺陷是缺陷，或者財務報告內部控制方面的缺陷，對實體發起、根據公認的會計原則可靠地授權、記錄、處理或報告財務數據更有可能的是，對實體財務報表的錯誤陳述不僅僅是無關緊要的未被實體的內部控制阻止或檢測到。

●

我們做到了沒有設計和維護對資訊技術(IT)的有效控制與財務準備相關的資訊系統的一般控制發言。具體地說，我們沒有設計和維護用戶訪問控制以確保適當職責分離，充分限制用戶和特權訪問財務資源將應用程式、程式和數據提供給適當的公司人員。這一缺陷可能會影響保持有效的職責分工以及依賴資訊技術的有效性控制(如解決重大錯報風險的自動控制或更多斷言，以及支持有效性的it控件和基礎數據。系統生成的數據和報告)，這可能導致錯誤陳述，可能會影響所有不會被預防或發現的財務報表賬目和披露。我們不會對部門內的所有用戶帳戶執行定期審查以驗證訪問許可權是適當的。如果發現不適當的用戶許可權，應採取糾正措施被視為撤消或修改訪問許可權。完成這項評價的檔案應也會得到維護。此外，管理層有責任評估所有第三方服務提供者包括評估服務組織控制，其中可能包括審查一份SOC報告，以核實對財務報告的相關控制並在對服務組織和此類控制進行了適當的測試。管理層的審查 SOC報告的一部分還應評估我們在確保實現相關控制目標的地方。目前，管理層已經沒有執行這樣的任務，我們認為這是對周圍環境控制不足的跡象財務報告是內部控制的一個重大缺陷。

我們正在設計和實施措施，以改善我們對財務報告的內部控制，以糾正這些問題物質上的弱點和重大缺陷。雖然我們正在設計和實施措施來補救這些實質性的弱點和重大缺陷，我們無法預測這些措施的成功與否，也無法預測我們對這些措施的評估結果時間到了。我們不能保證這些措施將彌補內部控制的缺陷或其他重大缺陷。否則，我們在財務報告內部控制方面的重大缺陷將不會在未來被髮現。我們未能執行對財務報告保持有效的內部控制可能會導致我們財務報表中的錯誤，從而可能導致重述我們的財務報表或導致我們未能履行我們的報告義務。

如果我們不能維持一個有效的系統關於財務報告的披露控制和內部控制，我們編制及時和準確財務報表的能力或遵守適用的法規可能會受到損害。

作為一家上市公司，我們必須遵守符合薩班斯-奧克斯利法案的要求，其中包括我們保持有效的披露控制和財務報告的程式和內部控制。我們繼續發展和完善我們的披露控制和其他程式。旨在確保我們在提交給美國證券交易委員會的報告中被要求披露的資訊被記錄、處理、在美國證券交易委員會規則和表格中規定的期限內匯總和報告，以及需要在根據交易所法案收集報告，並傳達給我們的管理層，包括我們的主要高管和財務人員警官們。此外，在2023年6月，我們的註冊會計師事務所同意與美國證券交易委員會就某些事項達成和解與數百個特別專案的審計工作有關的系統性質量控制失誤和違反審計標準目的收購公司(“SPAC”)客戶最遲從2020年開始，一直持續到2022年。我們正在積極地正在監控情況，但目前不認為此和解會影響我們的財務報表或舊版iLearningEngines 財務報表。

我們必須繼續完善我們的內部控制在財務報告上。我們的管理層將被要求對我們的內部控制的有效性進行正式評估根據薩班斯-奧克斯利法案第404(A)條的財務報告，我們未來可能被要求包括一份證明我國獨立註冊會計師事務所出具的財務報告內部控制報告。實現合規在規定的時間內滿足這些要求，我們將參與記錄和評估我們的內部控制的過程在財務報告方面，這既昂貴又具有挑戰性。在這方面，我們將需要繼續投入內部資源，可能會聘請外部顧問，並採用詳細的工作計劃來評估和記錄我們內部控制的充分性財務報告，通過測試驗證控制是否按照檔案規定運行，並實施持續的報告和改進財務報告內部控制流程。我們有可能不能在規定的時間內得出結論期間或根本沒有，我們對財務報告的內部控制是有效的，根據薩班斯-奧克斯利法案第404節的要求。

任何未能執行和保持有效的財務報告的披露控制和程式以及內部控制，包括確定一種或多種材料弱點，可能導致投資者對我們的財務報表和報告的準確性和完整性失去信心，這將可能會對我們普通股的市場價格產生不利影響。此外，我們可能會受到該公司的制裁或調查我們普通股上市的交易所，美國證券交易委員會等監管部門。

我們的普通股和認股權證的價格可能會波動。

我們普通股和認股權證的價格由於各種因素，過去大幅波動，未來可能繼續波動，包括但不限於：●我們所在行業的變化；●我們產品和服務的銷售量和銷售時間；

●

現有或新的有競爭力的產品或技術的成功；

●

我們或我們行業中的其他人推出的新服務、產品或產品增強以及涉及的其他發展我們的競爭對手;

●

我們或我們的競爭對手宣布重大收購、戰略合作夥伴關係、合資企業、合作或資本承諾;

●

美國和其他國家的監管或法律動態;

●

有關我們的智慧財產權或其他專有權的發展或爭議;

●

關鍵人員的招聘或離職;

●

對財務業績、開發時間表或證券分析師建議的估計的實際或預期變化;

●

我們或被認為與我們相似的公司的財務業績存在差異;

●

證券分析師發布有關我們或我們的競爭對手或我們的行業的研究報告;

●

公眾對我們的新聞稿、我們的其他公開公告和我們向美國證券交易委員會提交的檔案的反應；

●

我們或我們的競爭對手未能滿足分析師的預測或我們或我們的競爭對手可能給出的指導面向市場;

●

公司註冊證書和附例包括條款可能會在未經同意的情況下延遲或阻止控制權的變更或管理層的變更我們的董事會。這些規定包括：

●

董事選舉沒有累積投票，限制了少數股東選舉董事候選人的能力;

●

我們的董事會有權選舉董事來填補因董事會擴大而產生的空缺或股東無故或無故辭職、死亡或撤職董事，這阻止了股東能夠填補我們董事會的空缺；

●

我們董事會有能力決定是否發行我們的優先股，並決定價格和其他這些股份的條款，包括優先股和投票權，未經股東批准，可能被用來大幅稀釋敵意收購方的所有權；

●

通過書面同意禁止股東採取行動，迫使股東在年度會議或特別會議上採取行動。我們股東的利益；

●

股東特別會議只能由董事會主席、首席執行官召集的要求高管或董事會，這可能會推遲我們的股東強制考慮提案的能力或採取行動，包括罷免董事；

●

限制董事和高級管理人員的責任，並為其提供賠償；

●

控制股東會議的舉行和安排的程式；

●

規定了交錯董事會，董事會成員分為三個級別，任期一段時間自各自被任命或當選之日起三年；

●

授予以662/3%的流通股投票權的讚成票罷免董事的能力有表決權的我們的普通股；

●

客戶C

客戶D

止年度

2023年12月31日止年度 2022年12月31日

止年度

2021年12月31日

客戶A客戶A客戶B

客戶B

客戶D		客戶C

客戶C		客戶C

客戶D		客戶D

止三個月		3月31日，

淨（損失）收入		利息開支所得稅費用（福利）.”

折舊及攤銷

EBITDA		其他費用交易成本認購證負債公允價值變化可轉換票據公允價值變化債務消滅損失

調整EBITDA

截至12月31日的一年，

（美金單位：千）

淨（損失）收入

利息開支

所得稅費用（福利）

折舊及攤銷

EBITDA收入成本毛利

運營費用：		銷售、一般和管理費用

研發費用		總運營支出營運收入.”

其他費用：		利息開支

認購證負債公允價值變化		可轉換票據公允價值變化

NM		債務貧困損失

NM		其他費用NM匯兌虧損

NM		其他費用總計

所得稅（費用）福利前淨（損失）收入NM所得稅（費用）福利

淨（損失）收入

NM - 沒有意義

比較截至2024年和2023年3月31日的三個月

收入按地理區域

三截至

3月31日，

（美金以千計）

變化

% 變化

印度

百分比收入

北美國

百分比收入

其他

百分比收入

總收入

三截至

3月31日，

(美元) (以千計)

變化

% 變化

銷售，一般及行政開支

收入的百分比

銷售，截至2024年3月31日的三個月，一般和行政費用增加了960萬美元，增幅為30.4% 截至2023年3月31日的三個月，主要是由於新業務開發費用成本、營銷成本、交易成本，以及與更大管道相關的概念驗證開發成本，與增長預測保持一致。此外，以成功為基礎與贏得新的直接合同相關的佣金也有所增加。

研究和開發費用

三截至

3月31日，

(美元) (以千計)

變化

% 變化

研發費用

收入的百分比

研發與截至2024年3月31日的三個月相比，截至2024年3月31日的三個月的支出增加了850萬美元，增幅為29.8% 2023年3月31日，主要是與新AI數位資產開發、現有AI數位資產維護相關的研發活動包括監測、機器學習/人工智慧模型改進、增強、數據驗證和測試以及品質保證活動。這是保持我們的產品優勢、建立競爭壁壘和推動未來增長所必需的。

其他收入和支出

興趣費用

三截至的月份

3月31日，

(美元) (以千計)

變化

% 變化

利息開支

收入的百分比

利息與截至2024年3月31日的三個月相比，截至2024年3月31日的三個月的支出增加了40萬美元，增幅為25.1%。 2023年，主要是由於技術合作夥伴的利息支出增加。

變化論權證責任的公允價值

三截至

3月31日，

(美元) (以千計)

變化

公平的變化認股權證法律責任的價值

收入的百分比

變化在截至2024年3月31日的三個月中，權證負債的公允價值增加了1,480萬美元，增幅為5,299.3% 截至2023年3月31日的三個月。關於2020年定期貸款、2022年定期貸款、2023年定期貸款和經修訂的定期貸款公司向出借人發行認股權證，以購買我們的股票，這些認股權證可以是普通股或優先股根據逮捕令的條款。認股權證被歸類為按公允價值列賬的負債，因為存在某些認沽權利。這可能使我們有義務在未來基於我們無法控制的事件回購認股權證。

變化可轉換票據的公允價值

三截至

3月31日，

(美元) (以千計)

變化

%變化

評估值變動可轉換票據價值

收入的百分比

變化截至2024年3月31日的三個月，可轉換債務的公允價值與截至2024年3月31日的三個月相比增加了550美金 2023年3月31日。公司選擇了可轉換票據的公允價值期權。公司於2023年4月27日發行可轉換票據 2024年3月21日和2024年3月21日，而截至2023年3月31日，無未發行可轉換票據。

損失債務清償

三截至

3月31日，

（美金以千計）

變化

% 變化

債務消滅損失

收入的百分比

損失截至2024年3月31日的三個月與截至3月的三個月相比增加了1000美金 2023年31日。公司修訂後的定期貸款協議被核算為本期債務消滅，無此類事件發生在2023年。

收入稅收（NPS）福利

三截至

3月31日，

（美金以千計）

變化

% 變化

所得稅（費用）受益

收入的百分比

收入截至2024年3月31日的三個月的稅收費用為120加元，而截至3月的三個月的所得稅福利 2023年31日為20萬美金，主要是由於認購證和可轉換票據的公允價值出現負變化以及與WTI債務修正案相關的債務消除損失，出於稅收目的，該損失被歸類為永久差異。

比較截至2023年、2022年和2021年12月31日的年份

年截至12月31日，

量變化

% 變化

（美金單位：千）

2023 vs 2022年

2022 vs 2021年

2023 vs 2022年

2022 vs 2021年

收入成本收入毛利潤

操作費用：

銷售，一般和管理費用

研究開發費用

總業務費用

操作收入

其他（費用）收入：

興趣費用

變化以認購證負債的公允價值計算

變化可轉換票據的公允價值

其他費用

總其他費用，淨額

淨所得稅（費用）福利前收入

收入稅（費用）福利

淨（損失）收入

NM - 沒有意義

比較截至2023年12月31日及2022年12月31日止年度

收入按地理區域

年告一段落

12月31日，

（美金以千計）

變化

% 變化

印度

百分比收入

北美國

百分比收入

其他

百分比收入

總收入

（美金以千計）

變化

% 變化

評估值變動可轉換票據價值

收入的百分比

變化可轉換債務的公允價值是由於截至2023年12月31日止年度發行了價值1740加元的可轉換票據。公司選舉可轉換票據的公允價值選擇權。2022年沒有發行可轉換票據。

收入稅收（NPS）福利

年結束

12月31日，

（美金以千計）

變化

% 變化

所得稅（費用）受益

收入的百分比

收入截至2023年12月31日止年度的稅收費用為220日元，而截至2022年12月31日止年度的所得稅福利為 600美金發票，主要是由於收入和營運收入增加以及被視為永久差異的項目的增加到應稅收入。

比較截至2022年和2021年12月31日的年份

收入

年告一段落

12月31日，

(美元) (以千計)

變化

% 變化

印度

收入的百分比

北美

收入的百分比

其他

百分比收入的百分比

總收入

全球收入

全球與截至2021年12月31日的年度相比，截至2022年12月31日的年度收入增加了9,130美元萬或41.9%，主要因為有16份新合同。請參閱下面按地區對更改的進一步討論。

印度

收入在印度，在截至2022年12月31日的一年中，與截至2021年12月31日的一年相比，主要增加了1,170美元的萬或9.2% 通過向我們現有客戶追加銷售1,170美元的萬。

北美國

收入在截至2022年12月31日的一年中，北美地區的萬比截至2021年12月31日的年度增加了6820美元，增幅為142.1%，主要是因為通過VAR銷售的15個新合同增加到我們現有的5,370美元的客戶群萬，以及其餘的增長是要向我們的現有客戶追加銷售1,450美元的萬。

其他

收入在包括中東和歐洲在內的其他地區，截至2022年12月31日的一年中，萬增長了1,150美元，增幅為26.3% 截至2021年12月31日的年度，主要是由於通過VAR銷售的一份新合同增加到我們現有的客戶群 430美元的萬，其餘的增長是由於向我們的現有客戶追加銷售710美元的萬。

年結束

12月31日，

（美金以千計）

變化

% 變化

評估值變動擔保責任價值

收入的百分比

的截至2022年12月31日止年度，與截至12月31日止年度相比，認購證負債的公允價值變化增加了30加元 2021年31日。與2020年定期貸款和2021年定期貸款有關，我們向貸方發行了購買我們股票的認購證，該股票可以根據認購證的條款行使普通股或優先股。該逮捕令作為一項負債承擔按其公允價值計算，因為某些看跌權可能迫使我們根據事件在未來回購該等認購權這些超出了我們的控制範圍。

收入稅開支

年結束

12月31日，

（美金以千計）

變化

% 變化

所得稅利益（費用）

收入的百分比

●

共同創建課程：

設計和實施結合組織內容的定製課程在複雜的人工智慧建議的推動下，擁有豐富外部資源的庫。

●

擴充和策劃內容：

智慧AI標籤，組織和整理相關內容以豐富內容企業學習課程，包括人工智慧生成的測驗和問題，以增加內容和提高記憶力。

●

內容攝取：

強大而多功能的人工智慧引擎，瞭解上下文和適用性靈活接收多媒體內容，包括文檔、音頻和視頻。

●

知識書架：支持

通過提供來自數位環境的高質量內容來增強學習庫和第三方存儲庫。

●

外部系統集成：支持

多功能應用程式編程接口(API)組合與領先的企業和學術管理系統、通信平臺和內容提供商無縫結合，帶來結構化將數據整合到知識雲和工作流中。

●

工作流程方面的培訓：

在工作和工作流程中提供培訓，以創建共享團隊體驗和開啟協作學習。

●

混合學習：支持

通過現場網路會議將電子學習與第三方講師指導的在線培訓相結合或脫機模式。

●

測試和評估：支持

靈活的人工智慧驅動的測試，具有多種問題類型，支援人工智慧主導的評分，評估和“深入”報告。

●

白色標籤：是

定製靈活的標籤解決方案以反映客戶品牌，並實施在客戶端域上使用他們的徽標。

●

儀錶板和報告：支持

為學員、培訓人員、管理人員和學習人員提供詳細報告的完整存儲庫和發展領導人跟蹤進展和合規情況。

●

通知：不

可配置的通知，便於跟蹤內容分配和測試。

資訊情報部門。

資訊智慧助力學習通過深度集成、無代碼工作流程和AI畫布實現企業用戶體驗。我們的人工智慧助理，配置了針對行業特定需求，通過加速、增強對話、流程和決策並使其自動化，幫助實現應用轉型。企業可以通過我們的AI助手利用資訊智慧，這些助手嵌入在整個員工的多個接觸點和用戶行程，使企業能夠為客戶提供個性化服務，並做出預測性和預防性決策基於即時數據洞察。我們的資訊智慧目標客戶是尋求節省成本的大中型公司使用老化的企業資源規劃、客戶關係管理或文檔管理系統，這些系統難以實現自動化。資訊智慧的主要功能包括：

●

知識雲：未來

經過整理的機構知識儲存庫，收集自廣泛的內部和外部來源，由與連接的企業來源的廣泛集成提供支持。

●

AI畫布：中國

創建個性化的用戶旅程和粒度個性化，同時定義高級人工智慧主導的實時模型。

●

人工智慧推薦引擎：

人工智慧策展和增強能夠更快、更「智能」課程創建。

●

人工智慧專家協助：

將過程中學習和行業用例相結合，提供專家支持，按需提供援助。

●

人工智慧自動化引擎：

基於認知的自適應測試、輔助評分以及流程和任務自動化這可以帶來學習和過程的好處。

●

人工智慧企業搜索：

簡單的人工智慧嵌入企業內容存儲庫，實現強大的索引搜索用於上下文和相關的學習。

●

企業整合：

易於實施的AI Canvas可提供多租戶和強大的可擴展性，輕鬆與企業後台系統集成。

●

ILE 360 -結果評分卡：

360-具有管理儀錶板的企業結果學位視圖以及學習者和培訓者的分數。

●

我們相信主要競爭因素在我們的市場中包括能夠提供：

●

動態人工智慧驅動的功能和工作流程;

●

嵌入工作流程中的高度先進和複雜的內容增強和建議;

●

跨多個用例的靈活性和可擴展性，並實現跨企業的端到端集成;

●

徹底的結構化和非結構化數據理解;

●

如果沒有深入的企業集成，就無法複製特定於公司的數據集;

●

定價和合同條款;

●

客戶關係;

●

品牌聲譽;

●

隱私和安全;以及

●

董事和執行官

下表列出了姓名、年齡以及截至2024年5月1日我們的董事和執行官的職位：

名稱

年齡

位置

執行官

Puthugramam「Harish」Chidambaran

執行長兼主席

賽義德·法爾漢·納克維

財務長兼財務主管

巴拉克里希南·阿拉卡爾

總裁、首席業務官兼董事

大衛·塞繆爾斯

首席法律官、執行副總裁-企業事務兼秘書

羅摩克里希南·帕拉米斯瓦蘭

高級副總裁-技術和產品

非雇員董事

馬修·巴格

主任

布魯斯·梅爾曼

審查和批准聘請我們的獨立審計師執行審計服務和任何允許的非審計服務；

●

審查內部控制政策和程式的充分性和有效性，包括與獨立的審計師，管理層關於我們內部審計職能的責任、預算、人員配置和有效性的計劃，以及審查和批准我們的內部審計負責人(如果成立)；

●

年度審計計劃，包括審計活動的範圍和所有關鍵的會計政策和可供我們使用的做法；

●

至少每年獲取和審查(如果適用的證券交易所上市要求)或其他確定的情況，由我們的獨立審計師提交的一份報告，說明獨立審計師的內部質量控制程式和任何重大問題由最近的內部質量控制審查、同行審查或政府或專業人員的任何詢問或調查提出當局；

●

根據法律要求，監督我們的獨立審計師的合夥人在我們的參與團隊中的輪換；

●

至少每年一次，審查可能被合理認為與委員會獨立性有關的關係，收到審查獨立審計師的一封信，確認他們的獨立性，討論任何此類關係的潛在影響，評估並以其他方式採取適當行動來監督我們的獨立審計師的獨立性；

●

審查我們的年度和季度財務報表和報告，包括“管理層討論和分析財務狀況和經營成果“和”風險因素“，並討論報表並向我們的獨立審計師和管理層提交報告；

●

與我們的獨立審計師和管理層一起審查與會計原則和財務有關的重大問題報表列報及與財務控制和關鍵會計的範圍、充分性和有效性有關的事項政策；

●

與管理層和我們的獨立審計師一起審查任何收益公告、披露和其他財務資訊以及引導；

●

建立程式，審查、保留和調查我們收到的有關財務控制、會計、審計或者其他事項；

●

審查和批准與我們的整體薪酬戰略和政策相關的公司目標；

●

每年審查和批准我們的高級管理人員和其他高級管理人員的薪酬和其他僱用條件管理層，由薪酬委員會酌情決定；

●

審查和批准支付或獎勵給非僱員董事會成員的補償類型和金額；

●

管理我們的股權激勵計劃和其他福利計劃；

●

審查和批准任何僱傭協定的條款、遣散費安排、控制權保護的變更、賠償與我們的執行官員和其他高級管理層成員在薪酬方面達成的協定和任何其他實質性安排委員會的酌處權；

●

審查並為我們的董事和高級管理人員建立適當的保險範圍；

●

在“薪酬討論與分析”的標題下，與管理層審查和討論我們的披露應向美國證券交易委員會提交的定期報告或委託書，只要此類報告或委託書中包含此類說明；

●

在我們的年度委託書中編寫美國證券交易委員會要求的高管薪酬年度報告；

●

審查我們與風險管理和冒險激勵相關的員工薪酬做法和政策，以確定如果此類補償政策和做法合理地可能對我們產生實質性的不利影響；

●

如有必要，為我們的董事和高管建立和監督股權指導方針或適當的；

姓名、主要職位

財政

年

薪津

花紅

股票

獎

選項

獎

非股權

激勵計劃

補償

所有其他

補償

總

哈里什·奇丹巴蘭

總裁兼執行長

S.法爾漢·納克維

財務長兼企業發展主管

巴拉克里希南·阿拉卡爾

某些iLearningEngines關係和關聯方交易-總監購買協議

「有關董事購買協議的更多信息。

期權大獎

股票獎勵

名稱

授出日期

數量

證券

底層

未行使

選項

行使

數量

證券

底層

未行使

選項

不可行使

選項

行使

價格

選項

到期

日期數量： 股份或 .”

單位

的股票

沒有

既得

市場

值

股份或

單位

的股票

沒有

既得

哈里什·奇丹巴蘭

S.法爾漢·納克維

巴拉克里希南·阿拉卡爾

獎項。

2020年計劃規定授予激勵性股票期權(“

ISO

)、非法定股票期權(“

國家體育組織

“)、限制性股票獎勵、限制性股票單位獎勵、股票增值權和其他股票授予iLearningEngines的員工、董事和顧問，這些員工、董事和顧問提供的服務 ILearningEngines。

授權股份。

主題根據某些市值調整，截至2023年12月31日，iLearningEngines普通股的總股份數量根據2020年計劃，根據非限定股票獎勵可能發行的股票為1000萬股。

受根據2020年授予的獎勵的股份到期或終止而未結算或以現金而不是以股票結算的計劃不會減少股票數量可根據2020年計劃發放。此外，任何重新獲得的用於支付預扣義務的股份將再次可用於根據2020年計劃發佈。此外，如果根據股票獎勵發行的任何股票被沒收回iLearningEngines或回購由於未能滿足或有或有條件需要授予，則被沒收或回購的股票將恢復原狀根據2020年計劃，一次又一次地可供發行。

計劃管理。

這個 2020計劃由iLearningEngines董事會或iLearningEngines董事會正式授權的委員會管理，要在2020年規劃中扮演“管理者”的角色。在符合2020年計劃規定的情況下，管理人在其酌情決定權獲獎的人、此類獎項的規模及其所有條款和條件。管理員擁有有權解釋和解釋2020年計劃的條款和根據該計劃授予的獎項。管理員也可以委託給 ILearningEngines的一名或多名高級管理人員有權：(1)指定員工(高級管理人員除外)接受指定獎勵；(2)確定獎勵的股份數量。

根據2020年計劃，署長還一般地有權在任何有不利影響的參與者同意下：(A)減少行使、購買、或任何懸而未決的裁決的執行價格；。(B)取消任何懸而未決的裁決並授予其他獎勵、現金或其他代價；或(C)根據公認會計被視為重新定價的任何其他行為原則。

限制性股票單位獎。

受限股票單位獎勵是根據管理人通過的限制性股票單位獎勵協定授予的。限制性股票單位獎可以作為iLearningEngines董事會可以接受並允許的任何形式的法律代價而授予根據適用法律。限制性股票單位獎勵可以通過現金、股票交割、現金和股票相結合的方式進行結算。由管理人適當，或以限制性股票單位獎勵協定中規定的任何其他形式的對價。另外，可就限制性股票單位獎勵所涵蓋的股票計入股息等價物。除非在適用的獎勵協定，未歸屬的限制性股票單位獎勵將在參與者連續服務因任何原因終止。

截至2023年12月31日，RSU將收到根據2020年計劃，iLearningEngines普通股的流通股為7138,438股。在限制性股票單位下授予RSU 管理人通過的獎勵協定。

資本結構的變化。

在……裡面如果iLearningEngines的資本結構發生特定類型的變化，如資本重組、股票拆分、反向股份分立、重組、合併、合併、分立、合併、回購或者換股，適當調整將根據2020年計劃可能交付的股票數量和類別和/或數量、類別和行權價格每一項未償還獎勵所涵蓋的股份。

企業交易。

2020年計劃規定，在發生公司交易時，獎勵將由管理員決定，管理員將可對此類獎勵採取下列一項或多項行動：

●

安排由尚存或收購的公司承擔、延續或取代股票獎勵；

●

安排將iLearningEngines持有的任何回購或回購權利轉讓給尚存或正在收購的公司；

●

加快股票獎勵的授予，並規定如果在生效時或之前沒有行使(如果適用)股票獎勵，則終止股票獎勵符合條件的交易的時間；

●

安排iLearningEngines持有的任何回購或回購權利失效；

●

在向參與者發出書面通知後，終止或取消或安排終止或取消股票獎勵在交易生效時間之前未歸屬或未行使的程度；以及

●

支付相當於下列數額的超額款項：(A)股票獎勵持有人本應獲得的財產價值在行使授權書時，超過(B)，超過該持有人就行使授權書應支付的任何行使權價格。

管理員沒有義務處理所有股票獎勵或股票獎勵的一部分以相同的方式進行，並且沒有義務以相同的方式對待所有參與者。

根據2020年計劃，公司交易是通常是：(1)出售iLearningEngines的全部或幾乎所有資產；(2)出售或處置至少50%的iLearningEngines已發行證券；(3)iLearningEngines沒有在交易中倖存下來；或(4)合併或整合，其中iLearningEngines確實在交易中存活下來，但 ILearningEngines在緊接此類交易之前發行的普通股被轉換或交換為其他財產交易的優點。

控制權的變化。

在……裡面除此之外，管理人可以在個人授獎協定中規定，授獎將受到額外的加速在控制權發生變化時的歸屬和可行使性。根據2020年計劃，控制的變化意味著發生任何以下事件中的一種：(I)iLearningEngines的所有權發生變化，這發生在任何一個人或超過一個人作為一個團體，獲得iLearningEngines股票的所有權，佔總投票權的50%以上 ILearningEngines股票的所有權，但由於私人融資而導致的iLearningEngines股票所有權的任何變化經iLearningEngines董事會批准的iLearningEngines將不被視為控制權變更；(Ii)是否有完善的涉及本公司的合併、合併或類似交易，並在緊接該等合併、合併或類似交易後，緊接該公司之前的股東並不擁有(A)超過50%的未償還有投票權證券在該等合併、合併或類似交易中，尚存實體的尚未行使的總投票權或(B)或更多在該合併、合併或類似交易中，尚存實體的母公司尚未行使的表決權合計超過50%，在每一種情況下，在緊接該交易之前其所有權的比例大體相同；或(Iii) 出售、租賃、獨家許可或以其他方式處置公司及其子公司的全部或幾乎所有合併資產。

計劃修訂或終止。

ILearningEngines的董事會有權修改、更改、暫停或終止2020年計劃，前提是此類行動不損害現有權利任何未經參與者書面同意的參與者。某些重大修訂還需要iLearningEngines的批准股東。在2020計劃暫停期間或終止後，不得根據該計劃授予股票獎勵。

在生效時間，優秀的iLearningEngine 2020計劃下的RSU由New iLearningEngines承擔，並轉換為覆蓋New iLearningEngines股票的限制性股票單位普通股。限制性股票單位繼續受2020年計劃條款的約束。不得在下列條件下作出進一步的獎勵 2020計劃。

2024年股權激勵計劃

2024年4月，我們的董事會通過了，我們的股東 ILearningEngines 2024股權激勵計劃已獲批准

支付

為這類購買是通過工資扣除進行的。我們相信，通過為符合條件的員工提供機會來增加他們的專有對新iLearningEngines的成功感興趣，ESPP將激勵接受者為新iLearningEngines做出最大努力並幫助他們專注於創造符合以下要求的長期價值

的

利益我們股東的利益。

本節總結了某些主要功能摘要參考了ESPP全文，對全文進行了限定。

股票儲備。

跟隨企業合併的完善，新iLearningEngine普通股可發行的最大數量根據ESPP，新iLearningEngines普通股的數量不會超過已發行和已發行普通股的2%(2%) 新iLearningEngines普通股的股票在緊隨收盤後確定。這個號碼在此稱為“初始股票儲備”，視新iLearningEngines的特定變化而調整。大寫。預留發行的新iLearningEngines普通股數量將於1月1日自動增加從2025年1月1日到2034年1月1日，每一歷年，增加New iLearningEngines總股數的1% 上一歷年12月31日已發行的股本；但在任何該等增發日期之前，新的iLearningEngines董事會可能會決定不會有1月1日

增長速度在該日曆年的股份儲備金中，或該日曆年的股份儲備金的增加將是較少數目的普通股的股份比其他情況下會出現的更多。如果根據ESPP授予的購買權在未行使的情況下終止，沒有根據此類購買權購買的新iLearningEngines普通股將再次可以根據 ESPP。

計劃管理。

這個新的iLearningEngines董事會或其正式授權的委員會將有權管理ESPP。ESPP實施後通過一系列授予合格員工購買New iLearningEngines Common股票購買權的產品在此類發行過程中指定日期的股票。根據ESPP，計劃管理員可以指定持續時間不超過超過27個月，並可在每次發售中指定較短的購買期。每個產品將有一個或多個購買日期參與發售的員工將購買哪些新iLearningEngines普通股。在以下條件下的供品在某些情況下，ESPP可能被終止。

薪水單扣減。

一般來說，新iLearningEngines僱用的所有正式員工，包括高管或由New iLearningEngines的任何指定附屬公司提供，將有資格參與ESPP，並可能正常情況下提供資金通過工資扣減，購買新的iLearningEngines普通股，最高可達其收入的15%(如ESPP所定義) 根據ESPP。除非計劃管理員另有決定，否則將購買新的iLearningEngines普通股

為

員工以相同的每股價格參與職工持股計劃的賬目至並不少於以下兩者中較少者：(I)新iLearningEngines普通股首日公平市值的85% 發行的交易日期；或(Ii)新iLearningEngines普通股在#日的公平市值的85% 購買。

限制。

員工在參與計劃管理員確定的ESPP之前，可能必須滿足以下一項或多項服務要求，包括：(1)每週習慣受僱20小時以上；(2)習慣受僱時間超過每週20小時每歷年五個月；或(三)連續就業一段時間(不超過兩年)。沒有員工可能根據ESPP以超過25,000美元的價格購買基於公平市場的新iLearningEngines普通股新iLearningEngines普通股的每股價值在發行開始時，每年此類購買權都是未償還的。最後，如果僱員在根據ESPP被授予任何購買權之後，沒有資格獲得此類權利，根據第424(D)節的規定，該員工對新iLearningEngines 5%或以上的股本擁有投票權或投票權或價值代碼。

資本結構的變化。

在……裡面新iLearningEngines通過股票拆分、合併、整合、重組、資本重組、再註冊、股票股利、現金以外的財產股利、大額非經常性現金股利、清算股利、股份合併、換股、變更公司結構或者其他類似的股權重組交易，計劃管理人將對：(I)根據ESPP保留的股份類別和最大數量進行適當調整； (Ii)股份儲備每年可自動增加的股份類別及最高數目；。(Iii)類別；。及適用於所有已發行股份及購買權的最高股份數目及收購價；及(四)類別以及正在進行的發行中受購買限制的股票數量。

公司交易。

提供後擁有的百分比

階段 1成長基金，LLC系列3 NP，TO 3類

艾倫·哈森弗

我學習投資2，LLC

店 Credit，LLC

埃里克·史蒂文斯

凱文·馬拉斯科

羅賓·布拉德伯里

充分有限責任公司

查理·法拉

丹·普萊斯埃迪·b。艾倫愛德華·法拉

伊萊恩·阿蘇利安

加里·科爾曼

孟德爾·梅爾澤

彼得·卡霍爾

三一 Lane Capital LLC D系列小布拉迪1， LLC羅納德·斯盧克

奇普·道格拉斯（威廉·P·道格拉斯）

JR岡德克

魯迪·斯盧克

阿蒂利奧·塞爾凱拉

巴巴·瑞安

馬克·洛厄里

詹姆斯·韋弗

約書亞·W羅傑斯

麥可·奧爾

扎克·阿蘇利安

Lexy 道格拉斯不可撤銷的信託

瑞安 R.道格拉斯不可撤銷信託基金

保羅斯科特和伊莉莎白·斯科特，JTWOS

阿諾德·梅

奧布里·斯穆特

阿什利·阿蘇利安

阿蘇利安家庭基金會

克里斯汀·泰勒·阿蘇利安

蘿拉·薩烏德

傑弗里·莫里斯

John F.霍爾韋

約瑟夫·加洛

凱文·庫克

羅伯特 D. Mashal Living Trust日期：2020年6月16日

YP Holdings LLC

張麗華

米萊昂 Holdings LLC

亞歷克斯皮特

大衛愛潑斯坦

莫妮卡 Maliga

尼克達菲爾德

Priya 平托羅比愛德華茲羅傑達菲爾德沙夫納 HaqueTraci Maxey風險 Lending & Leason IX，Inc.”).

WTI X基金公司

竹芋 Acquisition LLC

彼得·庫珀

迪克森娃娃

高拉夫·希隆

威爾·森普爾

Meteora 特殊機會基金I，LP

Meteora Capital Partners，LP

Meteora 選擇交易機會大師，LP

巴拉·克里希南

法爾漢·納克維

拉姆·帕拉米斯瓦蘭

MRB Capital LLC

布魯斯·梅爾曼

哈里什·奇丹巴蘭

普雷塔·奇丹巴蘭

Cantor 菲茨傑拉德公司

庫利 LLP

BTIG， LLC

不到百分之一。

David W.鮑姆，擔任Stage 1 Growth Fund，LLC的管理成員系列3 NP，TO 3類，對該實體的持股擁有投票權和/或處置權。

David Villmow，I Learning Investment 2，LLC的經理，對該實體的持股擁有投票權和/或處置權。

James F. Hartle，III，作為Shop Credit，LLC的執行成員，對該實體的持股擁有投票權和/或處置權。

David·維爾莫作為Full Sender LLC的經理，擁有投票權和/或對這種實體的持有權的處置權。

Salil S.Pitroda，三一萊恩資本管理成員 D系列有限責任公司對此類實體的持股擁有投票權和/或處置權。

David·維爾莫作為LittleBrady1，LLC的經理，擁有投票權和/或對這種實體的持有權的處置權。

詹妮弗·P·道格拉斯，作為Lexy A Douglas不可撤銷的受託人信託，對該實體的持股擁有投票權和/或處置權。

詹妮弗·P·道格拉斯，作為瑞安·R·道格拉斯的受託人不可撤銷信託，對該實體的持股擁有投票權和/或處置權。

由保羅·斯科特和伊麗莎白·斯科特持有的股份組成享有生存權的聯名承租人。

艾倫·阿舒裡安，作為阿舒裡安家庭基金會的董事，對該實體的持股擁有投票權和/或處置權。

羅伯特·D·馬沙爾，羅伯特·D·馬沙爾生活信託基金的受託人日期為2020年6月16日的信託基金對該實體持有的股份擁有投票權和/或處置權。

作為YP Holdings LLC的經理，Michael Yurkowsky擁有投票權和/或對該實體的持有權的處置權。

邁克爾·波林作為Milleon Holdings LLC的經理，擁有投票權和/或對該實體的持有權的處置權。

包括根據RSU可發行的80,613股普通股，其中11,756股普通股可根據尚未歸屬的RSU發行。

包括根據RSU可發行的1,612股普通股，其中806股普通股可根據尚未歸屬的RSU發行。

包括2,014股根據RSU可發行的普通股，其中1,007股普通股可根據尚未歸屬的RSU發行。

包括30,230股根據RSU可發行的普通股，其中15,115股普通股可根據尚未歸屬的RSU發行。

包括40,307股根據RSU可發行的普通股，其中3,359股普通股可根據尚未歸屬的RSU發行。

包括9,068股根據RSU可發行的普通股，其中4,534股普通股可根據尚未歸屬的RSU發行。

包括根據RSU可發行的70,536股普通股，其中35,268股普通股可根據尚未歸屬的RSU發行。

包括20,153股根據RSU可發行的普通股，其中3,359股普通股可根據尚未歸屬的RSU發行。

包括根據RSU可發行的7,052股普通股，其中3,526股普通股可根據尚未歸屬的RSU發行。

的營業地址這樣的人是104La Mesa Drive，Suite 102，Portola Valley，CA 94028。WesTech Investment Advisors LLC是管理成員這樣的人。David是WesTech Investment Advisors LLC的首席執行官，莫裡斯·韋爾德加是該公司的董事會主席和也有權投資或投票這些證券。

由460,384名營運資金組成方正股份6,627,500股。ArrowRoot收購 LLC由兩位經理馬修·薩菲伊和託馬斯·奧利維爾管理，因此，馬修·薩菲伊和託馬斯·奧利維爾擁有投票權和投資權謹慎行事。

Metora Capital，LLC是出售證券持有人的註冊投資顧問。這些股份由維卡斯·米塔爾控制，他作為出售證券持有人的管理成員，擁有投票權和對報告證券的投資能力。出售證券持有人的地址是1200N Federal Hwy，#200，Boca Raton FL 33432。

由3,043,980股可在既有RSU結算時發行的股份組成。

由1,360,760股可在既有RSU結算時發行的股份組成。

由322,459股可在既有RSU結算時發行的股份組成。

馬修·巴格，我們的董事會成員，是是MRB Capital LLC的成員，對MRB Capital LLC直接持有的股份擁有唯一的投票權和投資酌處權。

Cf&co是一家註冊的經紀交易商，公司地址為：紐約東59街110號，郵編：10022。Cf集團管理公司(“CFGM”) 是Cantor Fitzgerald，L.P.(“CFLP”)的管理普通合夥人，並直接或間接控制管理 Cantor Fitzgerald Securities(“CFS”)的普通合夥人，後者間接是CF&CO的大股東。霍華德先生 Lutnick是CFGm的董事長兼首席執行官，也是CFGM的唯一股東受託人。CFLP間接持有多數股權擁有CFS的所有權權益，因此亦間接持有CF&CO的大部分所有權權益。因此， CFLP、CFGm、CFS和Lutnick先生均可被視為對CF&CO直接持有的證券擁有實益所有權。除任何金錢利益外，上述每一實體或個人均不承認對申報股份的任何實益所有權。他們可能直接或間接地在其中擁有。前述內容本身不應被解釋為CFLP任何人的承認， CFGm、CFS或Lutnick先生關於直接實益擁有的證券的實益所有權。股份的數量在本次發行前實益擁有的包括作為對所提供服務的補償而發行的普通股在合併期間。在收購股份時，CF&CO沒有直接或間接地與任何人分銷此類證券。

Cooley LLP的業務地址是55 Hudson Yards，New York，NY 10001-2157.

BTIG，LLC是一家註冊經紀交易商，擁有註冊地址地址：加利福尼亞州舊金山，布什街350號，9樓，郵編：94104。BTIG，LLC對證券擁有唯一投票權和處置權保持住。本次發行前實益擁有的股份數量包括作為補償而發行的普通股。在合併期間提供的服務。在收購股份時，BTIG，LLC沒有直接或間接地，與任何人分銷此類證券。

描述：我們的證券

以下是材料術語的摘要並不是對這類證券的權利和優先權的完整概括，僅供參考。我們的公司註冊證書、我們的章程和在此描述的認股權證，作為註冊聲明的證物這份招股說明書就是其中的一部分。我們敦促您閱讀我們的公司註冊證書、我們的章程和與授權證相關的檔案完整地描述我們證券的權利和優先權。

授權股票和未償還股票

我們的公司註冊證書授權發行7.1億股我們的股本，包括(A)7億股普通股，具有面值每股0.0001美元；及(B)10,000,000股優先股，每股面值0.0001美元。截至2024年4月16日，我們的已發行普通股約有134,970,114股，沒有已發行的優先股。

投票權

除法律另有規定或另有規定外在任何系列優先股的任何指定證書中，我們普通股的持有者擁有所有投票權選舉我們董事的權力和所有其他需要股東採取行動的事項。我們普通股的持有者是在股東投票表決的所有事項上，每持有一股股份有一票的權利。

紅利

受我們優先選擇的持有者權利的約束我們普通股的持有者持有我們的公司註冊證書中的股票和任何其他條款，該證書可能會不時修改將有權在以下情況下以現金、股票或財產的形式獲得股息和其他分派：董事會可酌情決定不時動用我們的資產或可合法使用的資金。見“-

優先考慮庫存

有關我們優先股持有人的股息權的更多資訊，請參見下文。

清算、解散和清盤

演練認股權證持有人因其他原因未能獲得公眾全部潛在價值的認股權證期限權證以確定和實現公共權證的期權價值組成部分。這個公式是為了補償公眾權證持有人因要求權證持有人行使公有認股權證而喪失認股權證的期權價值部分在事件發生後30天內發出公共逮捕令。布萊克-斯科爾斯模型是一種公認的估計公平市場的定價模型沒有某一工具的報價市場價格的價值。

其他條款

這個公眾

權證

根據認股權證協定以註冊形式發行作為權證代理的大陸股票轉讓信託公司和ARRW之間。認股權證協定規定，條款可在未經任何持有人同意的情況下修改公共認股權證的條款，以糾正任何含糊之處或更正任何有缺陷的條款，但需要當時尚未發行的認股權證的至少過半數持有人的批准，才能做出任何不利的改變影響公有權證註冊持有人的利益。

認股權證可在移交時行使於到期日或之前於認股權證代理人辦事處遞交認股權證證書，行使表在背面按說明填寫並簽立的認股權證的一面，連同行使價款的全額付款(或無現金支付) 根據適用的基準)，以保兌的或官方的銀行支票，支付給我們，為正在行使的公共認股權證的數量。公眾權證持有人沒有普通股持有人的權利或特權以及任何投票權，直到他們行使其認股權證和獲得我們的普通股。在我們的普通股在行使公共認股權證時發行後，每個持有人將就股東表決的所有事項，每持有一股記錄在案的股份，有權投一票。

行權時不會發行零碎股份公共認股權證。如果在行使公共認股權證時，持有人將有權獲得股份的零星權益，在行使時，我們將向下舍入向權證持有人發行的普通股的最接近的整數數量。私募股權認購證除如下所述，私募認股權證的條款和規定與公開認股權證的條款和規定相同。

的

私募認股權證(包括行權時可發行的普通股私募認股權證)在2024年5月16日之前不得轉讓、轉讓或出售(

但依據有限度的我們的高級管理人員和董事以及與私募初始購買者有關聯的其他個人或實體除外認股權證

)。此外，我們的私募認股權證持有人有權某些登記權，這些權利在上文的“-

*註冊權

和私人配售認股權證只要由保薦人或其獲準受讓人持有，本公司將不予贖回。贊助商，或其獲準受讓人可選擇在無現金基礎上行使私募認股權證。如果私募配售認股權證由保薦人或其獲準受讓人以外的持有人持有，認股權證可由本公司贖回在所有贖回情況下，並可由持有人行使，其基礎與在ARRW中出售的單位所包括的權證相同首次公開募股。對私募配售認股權證條款的任何修訂或認股權證協定的任何條款私募認股權證將需要當時未償還私募認股權證數量的至少50%的持有人投票搜查令。

如果私募認股權證持有人選擇為了在無現金的基礎上行使它們，他們將支付行使價格，交出他或她或其對該數量股票的認股權證。普通股等於通過除以(X)認股權證標的普通股股數的乘積獲得的商數，乘以權證的“公平市價”(定義見下文)與權證行使價格的差額乘以(Y)公允價值市場價值。就這些目的而言，“公允市場價值”是指普通股#年報告的平均收盤價。截至向權證代理人發出行權證通知之日前第三個交易日止的10個交易日。

轉讓代理和授權代理

新iLearningEngines Common的調用代理新iLearningEngines公開認股權證和私募認股權證的股票和認股權證代理是大陸股票轉讓公司& 信託公司。

上市
箭根已申請

列表

新iLearningEngines普通股和新的iLearningEngine在納斯達克資本市場上公開認股權證，代碼分別為“AILE”和“AILEW”。

我們的轉讓代理和令狀代理

我們普通股的轉讓代理和我們認股權證的代理人是大陸股票轉讓信託公司。大陸股票轉讓信託公司地址是道富廣場一號，紐約30層，郵編：10004。交易所上市我們的普通股和公共認股權證已上市關於納斯達克資本市場，分別以AILE和AILEW為代碼。

材質聯合各州聯盟所得稅後果下面的討論是材料的摘要美國聯盟所得稅考慮因素一般適用於購買、擁有和處置我們的普通股，招股說明書涉及(包括我們在行使私募和公開認股權證時可發行的普通股)和購買，私募認股權證的行使、處置及失效。就本討論而言，私募認股權證為在此稱為我們的“認股權證”，普通股和私募認股權證統稱為在這裡作為我們的“證券”。我們證券的所有潛在持有人應就以下事項諮詢他們的稅務顧問購買、所有權、行使、處置和失效的美國聯盟、州、地方和非美國稅收後果，如適用，我們的證券。這一討論並不是對與購買、所有權、行使、處置和失效有關的所有潛在的美國聯盟所得稅後果，我們的證券。本摘要以經修訂的1986年《國內收入法》(以下簡稱《法》)的現行規定為依據，根據該條例頒佈的現有美國財政部法規，發佈的行政聲明和美國國稅局的裁決服務(“

IRS“)和司法判決，均於本招股說明書日期生效。這些當局可能會有變化和不同的解釋，可能具有追溯力。任何變化或不同的解釋都可能改變本討論中描述的對持有者的稅收後果。不能保證法院或國稅局不會對此提出質疑或更多在此描述的稅收後果，我們沒有獲得，也不打算獲得關於美國的裁決。聯盟所得稅對我們證券的購買、所有權、行使、處置或失效的持有者(如果適用)的後果。在此討論中，我們假設持有者持有我們的證券作為第1221條所指的“資本資產”。《守則》(一般指為投資而持有的財產)。本討論並不涉及美國聯盟所得稅的所有方面可根據特定持有人的個人情況與該持有人相關，也不涉及特殊稅務會計根據守則第451(B)條規定的規則、任何替代最低標準、醫療保險繳費、遺產稅或贈與稅後果、以下任何方面美國州稅、地方稅或非美國稅，或任何其他美國聯邦稅法。本討論也不涉及相關的後果適用於受特別稅務規則約束的持有人，例如擁有或被視為擁有超過5%股本的持有人(除以下具體列出的範圍)，積累收益以逃避美國聯盟所得稅的公司，免稅組織，政府組織、銀行、金融機構、投資基金、保險公司、經紀商、交易商或證券交易商，商品或貨幣、受監管的投資公司或房地產投資信託基金、擁有“功能貨幣”的人除美元、符合納稅條件的退休計劃外，持有或接受我們證券的持有者根據員工的行權股票期權或其他作為補償，持有我們的證券的持有者作為對沖、跨境或其他降低風險策略的一部分，轉換交易或其他綜合投資，持有人被視為根據推定出售條款出售我們的證券《守則》、被動型外國投資公司、受控制的外國公司以及某些前美國公民或長期居民。”.

此外，本討論並未涉及合夥企業(或在美國聯盟所得稅中被視為合夥企業的實體或安排)的稅務處理或通過這種合夥關係持有我們證券的人。如果合夥，包括被視為合夥的任何實體或安排出於美國聯盟所得稅的目的，持有我們的證券，美國聯盟所得稅對待此類合夥企業的合夥人將一般取決於合作夥伴的地位和夥伴關係的活動。此類合作夥伴和夥伴關係應諮詢其關於購買、擁有、行使、處置和失效我們證券的稅務後果的稅務顧問。為了這次討論的目的，“美國持有人“是指我們證券的實益所有人(合夥或被視為合夥的實體或安排除外用於美國聯盟所得稅目的)即用於美國聯盟所得稅目的：.

●是美國公民或居民的個人；●在美國創建或組織的公司或為美國聯盟所得稅目的而被視為公司的實體或根據美國或其任何州或哥倫比亞特區的法律；●其收入應繳納美國聯盟所得稅的遺產，無論其來源如何；或”.

●

如果(A)美國法院可以對信託的管理進行主要監督，並且一個或多個美國人有權控制信託的所有重大決定，或(B)根據適用的法律，信託具有有效的選擇美國財政部法規將被視為美國人。

在本次討論中，“非美國持有人“是我們證券的實益持有人，既不是美國持有人，也不是合夥企業，也不是實體或安排作為合夥企業，用於美國聯盟所得稅目的。

適用於美國持有者的稅收考慮

分配徵稅

如果我們支付分配或進行建設性分配 (不包括我們股票的某些分配或收購我們股票的權利)給我們普通股的美國持有者，這樣的分配通常將構成美國聯盟所得稅的股息，從我們當前或累積的收入中支付，並且利潤，根據美國聯盟所得稅原則確定。超過我們當前和累積收益和利潤的分配將構成資本返還，適用於並降低(但不低於零)美國持有者的調整後稅收以我們的普通股為基礎。任何剩餘的盈餘將被視為出售或以其他方式處置普通股時實現的收益並將按照“

適用於美國持有者 - 收益或虧損的稅務考慮普通股的出售、應稅交換或其他應稅處置

」下面。

我們支付給美國持有者的應納稅股息如果滿足所需的持有期，公司一般將有資格獲得所收到的股息扣除。除某些例外情況外 (包括就投資利息扣除限制而言被視為投資收入的股息)，並提供一定的持有量如果滿足期限要求，我們向非公司美國持股人支付的股息通常將構成“合格股息” 這將按長期資本利得的最高稅率徵稅。如果持有期要求未得到滿足，公司可能沒有資格獲得所收到的股息扣除，並且其應納稅所得額將等於全部股息。非公司股東可按一般所得稅率而非優惠稅率繳稅。這適用於合格的股息收入。

銷售、應稅交換或其他應稅項目的損益普通股的處置

美國持有者通常會確認收益或出售、應稅交換或其他應稅處置普通股的損失。任何此類收益或損失都將是資本收益或損失。如果美國持有者對如此處置的普通股的持有期超過一年，則為長期資本收益或損失。確認的損益金額一般等於(1)現金金額與公允價值之和在這種處置中收到的任何財產的市值以及(2)美國持有者在這樣處置的普通股中的調整後的納稅基礎的。美國持有者在其普通股中調整後的納稅基礎通常等於美國持有者購買此類股票的成本普通股(或，如果是在行使認股權證時收到的普通股，則為美國持股人的初始基礎股票，如下所述)，減去被視為資本回報的任何先前分配。非公司確認的長期資本利得美國持有者通常有資格享受降低的稅率。如果美國持有者持有如此出售的普通股的期限一年或以下，出售股份或其他應稅處置的任何收益將受到短期資本利得處理的影響。並將按普通所得稅稅率徵稅。資本損失的扣除是有限制的。

鍛鍊一份授權書

除如下所述，關於無現金行使認股權證，美國持有者一般不會確認應稅收益或損失在行使現金認股權證時。美國持有者在行使時收到的普通股份額中的初始納稅基礎一般情況下，權證的價值將等於美國持有人購買權證的成本和行使權證的成本之和該認股權證的價格。目前尚不清楚美國持有者是否在行使認股權證將於認股權證行使之日或權證行使日的翌日開始生效；然而，在這種情況下，持有期將不包括美國持有人持有認股權證的時間。

在……裡面在某些情況下，認股權證可在無現金的基礎上行使。美國聯盟所得稅對權證行使的處理在無現金的基礎上，這一點尚不清楚，可能與上述後果不同。無現金鍛鍊有可能是一項應納稅的事件。敦促美國持有者就行使無現金認股權證的後果諮詢他們的稅務顧問基礎，包括他們的持有期和在行使認股權證時收到的普通股的納稅基礎。

銷售，權證的交換、贖回或到期

vt.在.的基礎上出售、交換(非行使)、贖回或權證到期，美國持有者將確認應稅收益或損失金額等於(1)該處分或到期時變現的金額與(2)美國持有者的權證中調整後的計稅依據。美國持有人在其權證中調整後的納稅基礎通常與美國持有人的相同收購成本，增加該美國持有者在收入中包括的任何推定分配的金額(如下所述在“下”

適用於美國持有者的稅收考慮 - 可能的建設性分配

”). 如果美國持有人持有該令狀超過處置或到期時一年。

如果如果許可證在未行使的情況下失效，美國持有人通常會承認相當於該持有人調整後的資本損失令狀中的稅基。任何此類損失通常將是資本損失，如果持有該令狀，則將是長期資本損失一年多由於該憑證的期限超過一年，因此美國持有人的資本損失將被視為長期資本損失。資本損失的扣除受到一定的限制。

可能建設性分配的每份令狀的條款規定調整可行使的普通股股份數量，或在某些情況下，令狀的行使價格，如「部分所討論的那樣●

穿過出售證券持有人根據規則10b5-1根據根據本招股說明書進行發行時已生效的《交易所法案》，以及規定定期出售其證券的任何適用的招股說明書補充檔案以此類交易計劃中描述的參數為基礎；

●短的銷售量；●

分佈出售證券持有人的僱員、成員、有限合夥人或證券持有人；●穿過買入或結算期權或其他套期保值交易，無論是通過期權交換或其他；

●

通過質押擔保債務和其他債務；

●

延遲交貨安排；●至或通過承銷商或經紀自營商；

●在……裡面根據證券法第415條規則定義的“在市場上”發行，在談判價格，按銷售時的現行價格或按與此有關的價格現行市場價格，包括直接在國家證券交易所進行的銷售或通過交易所或其他類似產品以外的做市商進行的銷售通過銷售代理；●

在……裡面私下協商的交易；●在……裡面期權交易；

馬庫姆“)，獨立的註冊會計師事務所，以會計和審計專家的身分出現在本文其他地方，並得到該事務所的授權。這個 ArrowRoot收購公司截至2023年12月31日和2022年12月31日的合併財務報表，以及當時結束的年度，本招股說明書和註冊說明書中的內容已由WithumSmith+Brown，PC審核 (“

Withum“)，獨立註冊會計師事務所，如其報告所述(該包括一段關於ArrowRoot收購公司S繼續作為持續經營企業的能力的解釋性段落)，出現在本招股說明書和註冊說明書的其他地方，幷包括在依賴該報告的權威像會計和審計專家這樣的公司。變化登記人的認證會計

在……上面 2024年4月16日，董事會批准Marcum LLP(“馬庫姆“)作為我們的獨立註冊公眾審計本公司截至2024年12月31日年度的綜合財務報表的會計師事務所。馬庫姆之前在業務合併前擔任Legacy iLearningEngines的獨立註冊會計師事務所。

因此，使用Smith+Brown，PC(“

Withum

	“)，ARRW在營業前的獨立註冊會計師事務所合併，於2024年4月16日被告知，它將被解僱，由Marcum取而代之，成為我們的獨立註冊公共會計堅定。 Withum‘s 截至2023年12月31日和2022年12月31日的綜合資產負債表報告，相關的綜合經營報表，股東的截至2023年12月31日、2023年12月31日和2022年12月31日止年度的權益和現金流量以及財務報表的相關附註(合計，《大賽》		財務報表 “)沒有任何不利意見或放棄意見，也沒有保留意見或對不確定性、審計範圍或會計原則進行修改，但對我們是否有能力繼續一家持續經營的公司。
	(%)		(%)
在.期間從2020年11月5日(開始)到2023年12月31日以及隨後的過渡期到2024年4月16日，沒有：(I)與Withum在任何會計原則或做法、財務報表披露等問題上存在分歧或經審核的範圍或程式，如果不能使Withum滿意地解決這些分歧，則會導致Withum參考與其報告有關的分歧的主題事項，或(2)第304(A)(1)(V)項所界定的須報告的事件《交易法》規定的S-k。	16.7%	在.期間從2020年11月5日(成立)到2023年12月31日，以及到2024年4月16日的過渡期，我們沒有就(I)將會計原則適用於已完成或已完成的特定交易向Marcum諮詢或建議的；或可能在我們的財務報表上提出的審計意見的類型，並且沒有書面報告或口頭建議馬庫姆提供給我們的，馬庫姆得出結論，這是我們在就會計問題做出決定時考慮的一個重要因素，審計或財務報告問題；或(Ii)該術語所描述的存在分歧的任何事項在交易法下的S-k條例第304(A)(1)(Iv)項和S-k條例第304項下的相關指示中交易法，或交易法下S-k條例第304(A)(1)(V)項中定義的須報告事件。	21.5%
我們我已向Withum提供了我們針對4月提交的Form 8-k表格中第4.01項所作披露的副本 2024年22日，並要求維瑟姆向我們提交一封致美國證券交易委員會的信，聲明是否同意所做的聲明我們對本報告中關於表格8-k的專案4.01的答覆，如果不是，請說明它不同意的方面。一封來自 Withum作為本招股說明書的附件16.1附於本文件。	13.5%	在哪裡您可以找到更多資訊	17.7%
我們已根據證券法以S-1表格向美國證券交易委員會提交了關於以下公司發行的證券的登記聲明這份招股書。本招股說明書是註冊說明書的一部分，並不包含登記聲明及其證物。如欲進一步瞭解本公司及本招股說明書所提供的證券，我們請您參考註冊聲明及其展品。本招股說明書所載有關任何合約內容的陳述或所提及的任何其他檔案不一定完整，在每一種情況下，我們都請您參考合同或其他檔案的副本作為登記聲明的證物提交的檔案。這些陳述中的每一種都受本參考文獻的所有方面的限制。你可以在美國證券交易委員會的網站www.sec.gov上閱讀我們的美國證券交易委員會備案檔案，包括註冊聲明。	11.3%	3月31日，	13.0%
截至	10.3%	3月31日，	11.8%

	截至 3月31日，		iLearningEngines Inc.（歷史） Arrowroot Acquisition Corp.（歷史）		交易會計調整備考合併
	(%)		(%)		(%)
資產	19.3%	易變現資產	17.4%	現金	22.8%
一	16.0%	B	17.0%	應收帳款	20.2%
合約資產	11.7%	預付費用	14.9%	預繳所得稅	13.1%
易變現資產總額	11.9%	非易變現資產	14.3%	信託帳戶中持有的現金和投資	11.0%
-	-	一	10.3%	-	-

應收技術合作夥伴款項

其他資產遞延稅項資產遞延交易成本

B非易變現資產總額總資產負債

	流動負債應付帳款
應計費用	2024		2023
長期債務的流動部分，淨	$	478,941	$	357,282

	未經審核的形式凝結合併餘額片截至2024年3月31日
（美金單位：千）	2023		2022		2021
截至	$	447,343	$	313,667	$	224,332

3月31日， 截至

3月31日，

截至 3月31日，iLearningEngines Inc.（歷史）

Arrowroot Acquisition Corp.（歷史）交易會計調整備考合併

	合約負債應付薪津稅
	2024			2023
貸款重組		132	%		125	%

	其他流動負債
	2023			2022			2021
應付消費稅		125	%		117	%		139	%

本票-關聯方

遠期購買協議責任

可轉換商業本票-相關黨

流動負債總額

非流動負債

	可換股票據令狀責任
	2024			2023
G	$	(25,935	)	$	451
n		1,986			1,588
支付給技術合作夥伴		1,222			(152	)
其他非流動負債		54			26
應付延期承保費		(22,673	)		1,913
非流動負債總額		-			60
總負債⁽¹⁾		1,060			26
承諾和意外情況		15,118			280
可能贖回的A類普通股，0.0001美金面值		5,465			-
H		10,041			-
O	$	9,011		$	2,279

	承諾和意外情況總額
	2023			2022			2021
	股權
股東（赤字）權益	$	(4,407	)	$	11,466		$	2,521
普通股：面值0.0001美金		6,274			6,614			5,047
未經審核的形式凝結合併餘額片		2,157			(5,975	)		32
截至2024年3月31日		128			77			-
（美金單位：千）		4,152			12,182			7,600
截至		45			21			3
3月31日，		-			-			39
截至 ⁽¹⁾		4,280			709			159
3月31日，		771			(248	)		83
截至		14,147			-			-
3月31日，	$	23,395		$	12,664		$	7,884

(1)	iLearningEngines Inc.（歷史）

Arrowroot Acquisition Corp.（歷史）

交易會計調整

備考合併 Kb類普通股，面值0.0001美金借記資本公積

B F e H

J K

n預付遠期購買協議

累計赤字 B

e J股東（赤字）權益總額權益總額

負債和權益總額

請參閱隨附的未經審計的形式精簡注釋合併財務信息。

未經審計的形式濃縮合併報表操作截至2024年3月31日的三個月（美金單位：千）

為

日止期間

3月31日，為日止期間

三月 31,

為日止期間三月 31,

iLearningEngine Inc.（歷史）Arrowroot Acquisition Corp.（歷史）

交易會計調整

備考合併

收入

收入成本毛利業務費用

銷售、一般和管理費用

BB研發費用總運營支出

營運收入（虧損）

利息開支

認購證負債公允價值變化

可轉換票據公允價值變化

貧困損失

匯兌虧損

減少延期承銷費

信託帳戶中持有的現金和投資賺取的利息

不贖回對價

所得稅費用前淨虧損

	所得稅（費用）福利 JJ						淨虧損每股普通股淨虧損-基本和稀釋			加權平均已發行普通股-基本和稀釋
每股淨虧損，A類普通股-基本和稀釋	2024			2023			A類普通股加權平均發行股數 - 基本及攤薄			每股淨虧損，b類普通股-基本和稀釋
b類普通股加權平均發行股數 - 基本及攤薄	$	124,935		$	93,980		$	30,955			32.9	%
請參閱隨附的未經審計的形式精簡注釋合併財務信息。		38,714			31,551			7,163			22.7	%
未經審計的形式濃縮合併報表操作		86,221			62,429			23,792			38.1	%
截至2023年12月31日的年度
（美金單位：千）		41,223			31,612			9,611			30.4	%
為		37,099			28,582			8,517			29.8	%
止年度		78,322			60,194			18,128			30.1	%
十二月 31,		7,899			2,235			5,664			253.4	%
為
止年度		(1,986	)		(1,588	)		(398	)		25.1	%
十二月 31,		(15,118	)		(280	)		(14,838	)		5,299.3	%
為		(5,465	)		-			(5,465	)		止年度
十二月 31,		(10,041	)		-			(10,041	)		iLearningEngine
Inc.（歷史）		-			(60	)		60			Arrowroot Acquisition Corp.（歷史）
交易會計調整		(2	)		(8	)		6			備考合併
收入		(32,612	)		(1,936	)		(30,676	)		1,584.5	%
收入成本		(24,713	)		299			(25,012	)		毛利
業務費用		(1,222	)		152			(1,374	)		銷售、一般和管理費用
AA	$	(25,935	)	$	451		$	(26,386	)		BB

研發費用

總運營支出

營運收入（虧損）

	利息開支 ee
DD	2024			2023			認購證負債公允價值變化		FF
GG	$	51,873		$	34,795		$	17,078		49.1	%
可轉換票據公允價值變化		41.5	%		37.0	%
hh	$	54,317		$	45,011		$	9,306		20.7	%
遠期購買協議公允價值變更		43.5	%		47.9	%
會	$	18,745		$	14,174		$	4,571		32.2	%
信託帳戶中持有的現金和投資賺取的利息		15.0	%		15.1	%
其他收入	$	124,935		$	93,980		$	30,955		32.9	%

所得稅(費用)利益前淨虧損

所得稅（費用）福利

淨虧損

每股普通股淨虧損-基本和稀釋

加權平均已發行普通股-基本和稀釋

每股淨虧損，A類普通股-基本和攤薄

A類普通股加權平均流通股 -基本的和稀釋的

	每股淨虧損，B類普通股--基本和攤薄 B類普通股加權平均流通股 -基本的和稀釋的
見未經審計的備考表格附註綜合財務資訊。	2024			2023			關於未經審計備考簡明附註的修訂披露綜合財務資訊			附註：1.列報依據
企業合併正在核算中作為根據公認會計準則進行的反向資本重組，iLearningEngines已被確定為會計收購人，主要是由於iLearningEngines將控制新的iLearningEngines。在這種會計方法下，而ArrowRoot是合法的為了財務報告的目的，它被視為“被收購的”公司。相應地，企業合併被視為相當於iLearningEngines為ArrowRoot的淨資產發行股票，同時進行資本重組。這個 Arrowroot的淨資產按歷史成本列報，未記錄商譽或其他無形資產。業務之前的運營它們的組合是iLearningEngines。	$	38,714		$	31,551		$	7,163			22.7	%
以下未經審計的形式簡明合併截至2024年3月31日的資產負債表假設業務合併發生在2024年3月31日。未經審計的備考表格濃縮了截至2024年3月31日止三個月的合併經營報表及經審計的形式簡明綜合經營報表截至2023年12月31日的年度向業務合併提出形式上的效力，猶如其已於1月1日完成， 2023年。		69.0	%		66.4	%		2.6	%

未經審計的備考壓縮合並餘額截至2024年3月31日的報表和截至2024年3月31日的三個月的未經審計的形式簡明合併經營報表以及截至2023年12月31日的年度，編制時使用了以下內容，並應結合以下內容閱讀：

●

ILearningEngines截至2024年3月31日的未經審計簡明綜合資產負債表和截至2024年3月31日的相關附註，包括在本表格S-1的其他部分。

●

	十二月 31, 預計淨虧損
加權平均股價突出、基本和稀釋	2024			2023			普通股股東應佔每股基本虧損和稀釋後每股淨虧損			AS 已發行的14,374,975股公募認股權證和8,250,000股私募認股權證都是現金外的，包括它們在庫存股方法下會有反攤薄作用，則不計入每股攤薄虧損的計算。
32,151,912 在收盤時，新iLearningEngine的限制性股票和6954,620個RSU的流通股不在計算範圍內因為它們的納入將是反稀釋的。	$	41,223		$	31,612		$	9,611			30.4	%
不包括1,019,999股需註銷的股票。若本公司於(I)2024年4月15日或之前償還定期貸款，則90%的貸款重組股份將被註銷；(Ii)2024年5月1日，則80%的貸款重組股份將被註銷；及(Iii)2024年7月1日，則50%的貸款重組股份將被註銷。		33.0	%		33.6	%		(0.6	)%

指數財務報表

箭根收購公司。

	頁面未經審計的財務 ILEARNINGENGINES，Inc.聲明(前身為ArrowRoot收購公司)：
截至2024年3月31日(未經審計)和2023年12月31日的簡明綜合資產負債表	2024			2023			截至2024年3月31日和2023年3月31日的三個月未經審計的合併業務簡明報表			截至2024年3月31日和2023年3月31日的三個月未經審計的股東赤字綜合變動表
截至2024年3月31日和2023年3月31日的三個月未經審計的現金流量表簡明合併報表	$	37,099		$	28,582		$	8,517			29.8	%
未經審計簡明合併財務報表附註		29.7	%		30.4	%		(0.7	)%

頁面

ArrowRoot收購公司經審計的財務報表：

獨立特許會計師事務所報告

	截至2023年和2022年12月31日的合併資產負債表伊利諾州寧根根尼斯公司
（原名Arrowroot Acquisition Corp.）	2024			2023			濃縮合併資產負債表			3月31日，
12月31日，	$	1,986		$	1,588		$	398			25.1	%
資產		1.6	%		1.7	%		(0.1	)%

（未經審計）

易變現資產

	現金預付費用
預繳所得稅	2024			2023			易變現資產總額			% 信託帳戶中持有的現金和投資
總資產	$	15,118		$	280		$	14,838			5,299.3	%
A類普通股票可能受到賠償和股東缺陷的責任		12.1	%		0.3	%		11.8	%

流動負債

應付帳款和應計費用

	應付消費稅本票-關聯方
遠期購買協議責任	2024			2023		可轉換商業本票-關聯方			流動負債總額
應付延期承保費	$	5,465		$	-	$	5,465			認股權證負債
總負債		4.4	%		-		4.4	%

承諾和意外情況

可能贖回的A類普通股，美金

	面值; 和
已發行和發行股票約為美金	2024			2023		和$			截至2024年3月31日和2023年12月31日的每股贖回價值
股東赤字	$	10,041		$	-	$	10,041			優先股，美金
面值;		8.0	%		-		8.0	%

授權股份;

沒有一

	截至2024年3月31日和2023年12月31日已發行或未償還 A類普通股，美金
面值;	2024			2023			授權股份，			沒有一
截至2024年3月31日和2023年12月31日，已發行和未發行（不包括可能贖回的1，017，030和4，445，813）	$	(1,222	)	$	152		$	(1,374	)		b類普通股，美金
面值;		(1.0	)%		0.2	%		(1.2	)%

授權股份;

截至2024年3月31日和2023年12月31日已發行和發行股票

	借記資本公積									累計赤字						股東赤字總額
A類普通股票可能受到賠償和股東違約的總負債	2023			2022			2021			隨附註釋是未經審核簡明綜合財務報表			ILEARNINENGINES，Inc.			（原名Arrowroot Acquisition Corp.）			濃縮合併運營報表
（未經審計）	$	420,582		$	309,170		$	217,867		$	111,412		$	91,303			36.0	%		41.9	%
為止三個月		132,154			93,890			64,834			38,264			29,056			40.8	%		44.8	%
三月 31,		288,428			215,280			153,033			73,148			62,247			34.0	%		40.7	%
一般及行政費用
經營虧損		140,897			105,966			74,434			34,931			31,532			33.0	%		42.4	%
其他（損失）收入：		128,544			97,436			70,913			31,108			26,523			31.9	%		37.4	%
認購證負債公允價值變動		269,441			203,402			145,347			66,039			58,055			32.5	%		39.9	%
免除延期承保佣金的收益		18,987			11,878			7,686			7,109			4,192			59.9	%		54.5	%
不贖回對價
利息發票-商業本票		(6,274	)		(6,614	)		(5,047	)		340			(1,567	)		5.1	%		31.0	%
現金和投資賺取的利息保存在信託帳戶中		(771	)		248			(83	)		(1,019	)		331			其他（損失）收入總額，淨			所得稅撥備前損失
所得稅撥備		(14,147	)		-			-			(14,147	)		-			淨虧損			加權平均流通股， A類普通股
每股基本和稀釋淨虧損，A類普通股		(45	)		(21	)		(3	)		(24	)		(18	)		加權平均流通股， b類普通股			每股基本和稀釋淨虧損，b類普通股
隨附註釋是未經審計的簡明綜合財務報表。		(21,237	)		(6,387	)		(5,133	)		(14,850	)		(1,254	)		ILEARNINENGINES，Inc.			24.4	%
（原名Arrowroot Acquisition Corp.）		(2,250	)		5,491			2,553			(7,741	)		2,938			濃縮合併變更聲明股東赤字			（未經審計）
截至2024年3月31日的三個月		(2,157	)		5,975			(32	)		(8,132	)		6,007			類一			共同股票
類 B	$	(4,407	)	$	11,466		$	2,521		$	(15,873	)	$	8,945			共同股票			額外

實收

積累

總

	股東股份
量	2023			2022			股份		量
資本	$	162,854		$	138,048		$	24,806		18.0	%
赤字		38.7	%		44.7	%
赤字		194,886			116,112			78,774		67.8	%
餘額-2024年1月1日（已審計）		46.4	%		37.5	%
A類普通股的加入可能存在贖回		62,842			55,010			7,832		14.2	%
減少延期承銷費		14.9	%		17.8	%
不贖回協議的考慮	$	420,582		$	309,170		$	111,412		36.0	%

淨虧損

餘額-2024年3月31日（未經審計）

截至2023年3月31日的三個月

A類普通股

b類

普通股

額外

實收

積累

	總股東
股份	2023			2022			量			股份
量	$	132,154		$	93,890		$	38,264			40.8	%
資本		68.6	%		69.6	%		(1.0	)%

赤字

餘額-2023年1月1日（已審計）

A類普通股的加入須贖回

	淨虧損餘額-2023年3月31日（未經審計）
隨附註釋是未經審計的簡明綜合財務報表。	2023			2022			ILEARNINENGINES，Inc.			（原名Arrowroot Acquisition Corp.）
簡明綜合現金流量表	$	140,897		$	105,966		$	34,931			33.0	%
（未經審計）		33.5	%		34.3	%		(0.8	)%

止三個月

三月 31,

	經營活動產生的現金流：淨虧損
調整以調節淨虧損與經營中使用的淨現金活動：	2023			2022			減少延期承銷費			不贖回對價
信託帳戶中持有的投資賺取的利息	$	128,544		$	97,436		$	31,108			31.9	%
認購證負債公允價值變動		30.6	%		31.5	%		(0.9	)%

經營資產和負債變化：

預付費用

預付所得稅

	應計費用應付所得稅
所用現金淨額經營活動	2023			2022			投資活動的現金流：			信託帳戶現金投資
從信託帳戶提取現金用於支付特許經營權課徵義務	$	6,274		$	6,614		$	340			5.1	%
從信託帳戶提取現金與贖回的聯繫		1.5	%		2.1	%		0.6	%

提供的淨現金通過投資活動

融資活動產生的現金流：

	商業本票收益-關聯方不可轉換商業本票收益-關聯方
可轉換商業本票收益-相關黨	2023			2022			普通股贖回			所用現金淨額融資活動
現金淨變化	$	(771	)	$	248		$	(1,019	)		現金-期末
現金-期末		(0.2	)%		0.1	%		(0.3	)%

非現金投資和融資活動：

減少延期承銷費

	不贖回對價補充現金流信息：
(前身為ArrowRoot收購公司。)	2023			2022		未經審計的簡明綜合財務報表附註報表			2024年3月31日
業務合併	$	(14,147	)	$	-	$	(14,147	)		2023年4月27日，本公司(前身為作為ArrowRoot收購公司)與以下人士訂立合併重組協定及計劃(下稱“合併協定”) ARAC合併子公司，是特拉華州的一家公司，也是ArrowRoot收購公司的全資子公司(“合併子”)，以及特拉華州公司iLearningEngines Inc.(“Legacy iLearningEngines”)。
合併協定規定，除其他外，在符合條款和條件的情況下，將發生以下交易(連同其他交易合併協定預期的：		(3.4	)%		於業務合併結束時(“結束”)，根據經修訂的特拉華州一般公司法(“DGCL”)，Merge Sub將與Legacy iLearningEngines合併並併入Legacy iLearningEngines，Merge Sub的獨立法人地位將終止，而Legacy iLearningEngines將成為尚存的法團(“尚存公司”)和公司的全資附屬公司(“合併”)；以及		(3.4	)%

由於合併(其中包括)，iLearningEngines的普通股流通股(受Legacy Legacy iLearningEngines股權獎勵、庫存股和異議股份約束的股份除外)將被註銷，以換取獲得相當於(X)(I)基本購買價(定義如下)減去(Ii)公司獎勵金額(定義如下)的美元價值減去(Iii)在緊接生效時間之前發行和發行的公司認股權證的總行使價(定義見合併協定)的若干尚存公司普通股的權利。*減去(Iv)票據餘額總額(定義見合併協定)除以(Y)$

。“基本購買價格”指的是等於$的金額。

	。“公司獎勵金額”是指(X)可向Legacy iLearningEngines證券持有人(為免生疑問，不包括公司可轉換票據持有人)發行的公司A類普通股數量，且Legacy iLearningEngines和公司在交易結束前至少兩(2)個工作日同意向某些私募投資者和非贖回股東發行(金額將相等向這些投資者和非贖回股東發行的所有此類股份的%，其餘部分由保薦人出資)，乘以(Y)$
本公司董事會(以下簡稱“董事會”) 是否(I)批准並宣佈合併協定和企業合併為可取的，以及(Ii)決定建議批准公司股東的合併協定及相關事項。	2023			2022			合併協定以清償為準或放棄某些慣常的成交條件，除其他外，包括(1)批准企業合併和相關協定以及本公司和Legacy iLearningEngines各自股東之間的交易，(Ii)註冊聲明的有效性公司提交的與企業合併有關的S-4表格，(Iii)等待期屆滿或終止根據《哈特-斯科特-羅迪諾反托拉斯改進法》，(四)沒有任何禁令、命令、法規、規則或條例禁止或禁止完成合並；(V)公司至少有$			結算時的有形資產淨值和(Vi) 獲批准於納斯達克上市尚存公司的普通股將於合併。
公司義務的其他條件為完成合並，除其他事項外，(I)Legacy iLearningEngines應已履行所有公約在所有重大方面，及(Ii)雙方之間不會發生任何重大不利影響(定義見合併協定) 合併協定的簽訂日期和結束日期。	$	(2,157	)	$	5,975		$	(8,132	)		遺留iLearningEngines的其他條件完成合並的義務包括，除其他外，(I)公司應已履行所有契諾在所有重大方面：(Ii)雙方之間不會發生收購重大不利影響(定義見合併協定) 合併協定和完成的日期以及(Iii)信託賬戶中可用現金的金額，幾乎所有本公司首次公開招股及私募認股權證所得款項已存入公眾股東，連同在公司或Legacy iLearningEngines之前的某些私募投資的收益完成合並，並遵守合併協定中規定的扣減和條件，包括對公司的某些扣減交易費用，至少等於或大於$
ILEARNINGENGINES，Inc.		(0.5	)%		1.9	%		(2.4	)%

(前身為ArrowRoot收購公司。)

未經審計的簡明綜合財務報表附註報表

2024年3月31日

	合併協定包含額外的契約，除其他外，包括規定(I)當事各方在結束之前在正常過程中開展各自的業務， (Ii)各方不得就某些替代交易招攬、啟動任何談判或訂立任何協定；。(Iii)遺產 ILearningEngines編制並向公司交付某些已審計和未經審計的遺留簡明合併財務報表 ILearningEngines，(Iv)本公司編制及提交S-4表格註冊說明書，並採取若干其他行動以獲取需要公司股東批准有關企業合併的某些建議，以及(V)各方盡最大努力從政府機構獲得必要的批准。 2024年4月16日，ArrowRoot收購公司。 (現在稱為iLearningEngines，Inc.)是我們的前身，是特拉華州的一家公司，完成了之前宣佈的業務合併根據截至2023年4月27日ArrowRoot收購的特定合併和重組協定和計劃公司、Arac Merge Sub，Inc.(合併子公司)和Legacy iLearningEngines。合併子公司與Legacy iLearningEngines合併隨著合併子公司的獨立存在和Legacy iLearningEngines作為全資子公司生存下來公司的成員。隨著業務合併的結束，ArrowRoot收購公司更名為iLearningEngines，有關更多資訊，請參見2024年4月22日提交給美國證券交易委員會的8-K表格。
流動性和持續經營	2022			2021			2021年12月29日，公司發行了一份無擔保與保薦人的可轉換本票(“第一本票”)，保薦人據此同意借出公司本金總額不超過$		。發行時，$
在鈔票上註明了額外的$	$	138,048		$	126,371		$	11,677		9.2	%
抽籤日期為2022年3月17日。2022年4月21日，公司提取了剩餘的美元		44.7	%		58.0	%
根據第一張期票的條款注意。在這一提款之後，全額$	$	116,112		$	47,953		$	68,159		142.1	%
第一張期票下的可用現金尚未支付。沒有剩餘的資金了在第一張期票項下可用於今後的提款。截至2024年3月31日和2023年12月31日，美元		37.5	%		22.0	%
都是傑出的在這張第一張本票項下。	$	55,010		$	43,543		$	11,467		26.3	%
第一張本票以保薦人的批准，不承擔利息。本票的本金餘額將在下列日期中最早的日期支付：本公司完成其初始業務合併或(Ii)本公司清盤生效之日(該日、 “到期日”)。在公司完成其初始業務合併的情況下，保薦人可以選擇將第一張本票項下未償還本金的全部或任何部分轉換為該數目的認股權證的到期日 (“營運資金認股權證”)相當於被轉換的第一張本票本金的部分按$		17.8	%		20.0	%
，向上舍入到最接近的整數。營運資金認股權證的條款(如果有的話)將與本公司於首次公開發售時發行的私募認股權證，如首次公開募股日期為2021年3月1日，並提交給美國證券交易委員會，包括適用的轉讓限制。第一個本票受慣例違約事件的影響，其中某些違約事件的發生會自動觸發未付本金第一張本票的餘額和與第一張本票立即到期有關的所有其他應付款項，以及應付款項。	$	309,170		$	217,867		$	91,303		41.9	%

2023年2月23日，公司發行了一份無擔保本金金額為#美元的本票

以保薦人(“第二張期票”)為受益人，已獲資助保薦人在簽立第二張本票時全額付款。第二張本票不能轉換為營運資金認股權證或根據其條款提供的任何其他擔保。截至2024年3月31日和2023年12月31日，該公司擁有

傑出的本第二期期票項下的餘額。

ILEARNINGENGINES，Inc.

(前身為ArrowRoot收購公司。)

未經審計的簡明綜合財務報表附註報表

2024年3月31日

與公司的批准有關延長日期的股東在特別會議上，保薦人向公司發行了一張到期的無擔保本票公司完成初始業務合併時(“第三期本票”)。遵循延期建議獲得批准後，贊助商資助了$

每股，可予調整(見附註8)。私募認股權證的部分收益加入首次公開募股的收益存放在信託賬戶中。如果公司沒有在以下時間完成業務合併在合併期間，出售信託戶口內持有的私募認股權證所得款項將用作贖回公開股份(受適用法律要求的約束)，以及私募認股權證的到期將一文不值。

	Ilearninggenines，公司 (前身為ArrowRoot收購公司。)
未經審計的簡明綜合財務報表附註報表	2022			2021			2024年3月31日			附註5.關聯方交易
創始人股份	$	93,890		$	64,834		$	29,056			44.8	%
2020年11月，贊助商購買了		69.6	%		70.2	%		(0.6	)%

公司B類普通股的股份(“方正股份”)，總價為$

。後來， 2020年12月，公司實施了4股中5股的拆分，據此又增加了一筆

B類普通股股份已發行，導致總計

方正股份已發行並已發行。方正股份包括總計最高可達

	方正股份因承銷商超額配售未完全行使而遭沒收或部分，以便方正股票的數量在折算後的基礎上大約等於公司已發行股票的百分比和首次公開發行後的已發行普通股。2021年1月，贊助商將
方正股份分給每個人三家董事提名者中，沒有一家在承銷商的超額配售選擇權被沒有完全行使。由於承銷商被選舉全面行使其2021年3月4日的超額配售選擇權，	2022			2021			沒有			方正股份目前被沒收。
將創辦人的股份轉讓給公司董事被提名者屬於財務會計準則委員會第718主題“薪酬-股票薪酬”(“ASC718”)的範圍。在……下面根據ASC 718，與股權分類獎勵相關的基於股票的薪酬在授予日按公允價值計量。創建者根據業績條件(即企業合併的發生)，股票有效轉讓。補償與方正股份相關的費用僅在符合適用條件的情況下才確認在這種情況下的會計文獻。基於股票的薪酬將在考慮企業合併之日確認很可能(即企業合併完成後)的金額等於創辦人股份數乘以授予日期每股公允價值(除非後來修改)。	$	105,966		$	74,434		$	31,532			42.4	%
贊助商已同意，除有限的例外情況外，不得轉讓、轉讓或出售創始人的任何股份，直至(A)在企業完成一年後發生的較早者合併和(B)企業合併後，(X)如果A類普通股的最後報告銷售價格等於或超過 $		34.3	%		34.2	%		0.1	%

每股(按股票拆分、股票資本化、重組、資本重組等調整後)

包銷協議

	承銷商有權獲得遞延費用。共$ 每單位，或$
總體而言。遞延費用將從持有的金額中支付給承銷商僅在公司完成業務合併的情況下，在符合承銷協定條款的情況下，信託賬戶。	2022			2021			2024年3月27日，公司與康託·菲茨傑拉德簽署了一項減費協定，承銷商在協定中被沒收			%的用戶延期承銷佣金導致減少#美元
帶著剩餘的$	$	97,436		$	70,913		$	26,523			37.4	%
這是延期支付的業務合併。美元的減少		31.5	%		32.5	%		(1.0	)%

導致從免除遞延承銷佣金中獲益 $

記為應在損益表上支付的承銷費的減少和$

已記入累計赤字。

	合併協議如附註1中更詳細地描述的，4月1日 2023年27日，本公司簽訂合併協定。
合併	2022			2021			合併協定規定，除其他外，在符合條款和條件的情況下，將發生以下交易(連同其他交易合併協定預期的)：			於結束時，根據DGCL，Merge Sub將與Legacy iLearningEngines合併及併入Legacy iLearningEngines，Merge Sub的獨立法人地位將終止，而Legacy iLearningEngines將成為尚存的法團及本公司的全資附屬公司；及
作為合併的結果，iLearningEngines的普通股流通股(受Legacy iLearningEngines股權獎勵、庫存股和異議股份約束的股份除外)將被註銷，以換取相當於(X)(I)基本購買價(定義如下)減去(Ii)公司激勵金額(定義如下)的總和，加上(Iii)在緊接生效時間之前發行和發行的公司認股權證的總行使價(定義見合併協定)的若干尚存公司普通股的權利。減去(Iv)票據餘額總額(定義見公司可轉換票據(定義見合併協定))除以(Y)$	$	6,614		$	5,047		$	1,567			31.0	%
。“基本購買價格”指的是等於$的金額。		2.1	%		2.3	%		(0.2	)%

。“公司獎勵金額”是指(X)可向Legacy iLearningEngines證券持有人(為免生疑問，不包括公司可轉換票據持有人)發行的公司A類普通股數量，且Legacy iLearningEngines和公司在交易結束前至少兩(2)個工作日同意向某些私募投資者和非贖回股東發行(金額將相等

向這些投資者和非贖回股東發行的所有此類股份的%，其餘由保薦人出資)，乘以(Y)$

	說明7.股東的赤字優先股
公司獲授權簽發	2022			2021			面值為美金的優先股			具有此類指定、權利和優先順序的每股由公司董事會不時決定。截至2024年3月31日和2023年12月31日，已有
沒有	$	248		$	(83	)	$	331			已發行或發行的優先股。
A類普通股		0.1	%		的公司有權發布			0.1	%

面值為美金的A類普通股

每股持有人

	A類普通股票每股有一票投票權 .截至2024年3月31日和2023年12月31日，已有
和	2022			2021			股份分別已發行和發行的A類普通股，可能會贖回並呈列為臨時股權。			b類普通股
的公司有權發布	$	5,975		$	(32	)	$	6,007			面值為美金的b類普通股股票
每股持有人		1.9	%		b類普通股票每股有一票投票權			1.9	%

一旦認股權證可行使，本公司可要求贖回認股權證以換取現金：

●

全部而不是部分;

●售價為$每張搜查令；●不少於

提前幾天向每位憑證持有人發出書面贖回通知;以及

●

當且僅當普通股的收盤價等於或超過$

每股(作為調整後的股票拆分、股票資本化、重組、資本重組等)

a內交易日

-自認股權證可行使後至本公司向認股權證持有人發出贖回通知前三個工作日結束的交易日。

如果和何時認股權證可以通過以下方式贖回為換取現金，即使無法登記標的證券或使標的證券符合資格，公司仍可行使贖回權根據所有適用的州證券法出售。

如果公司要求公開認股權證贖回，如上所述，其管理層將有權要求任何希望行使公共認股權證的持有人這樣做認股權證協定中所描述的“無現金基礎”。可發行A類普通股的行權價格和發行數量在行使公共認股權證時，可在某些情況下進行調整，包括在派發股息的情況下，非常分紅或資本重組、重組、合併或合併。但是，除非如下所述，公共認股權證不會以低於行使價的價格發行普通股進行調整。此外，在任何情況下，本公司都不需要以現金淨額結算公開認股權證。如果公司無法在合併期內完成業務合併，並且本公司清算信託賬戶中持有的資金，認股權證持有人將不會收到任何此類資金他們也不會從公司持有的信託賬戶以外的資產中獲得任何分配尊重此類公共授權證。因此，公開認股權證可能會到期變得毫無價值。

此外，如果(X)公司發佈了額外的為籌集資金而發行的A類普通股或股權掛鉤證券的股票，與其首次公開募集的以低於美元的發行價或有效發行價進行業務合併

每股A類普通股(發行時) 價格或有效發行價由公司董事會真誠確定，如果是任何此類發行，保薦人或其關聯公司，不考慮保薦人或該關聯公司(視情況適用)持有的任何方正股份，發行前)(“新發行價”)，(Y)該等發行的總收益超過

可用於為公司最初的業務合併提供資金的股權收益總額的%及其利息初始業務合併完成之日(扣除贖回)，以及(Z)成交量加權平均公司A類普通股自下一個交易日起20個交易日內的價格公司完成其初始業務合併(該價格，“市值”)低於$

每股，行權認股權證的價格將調整為(最接近的)等於

用現金支付。在截至2024年3月31日的三個月內，公司提取了一筆$

信託賬戶的利息收入支付特許經營稅和所得稅以及$

與贖回有關。

下表提供有關以下內容的資訊本公司截至2024年3月31日和12月31日按公允價值經常性計量的資產和負債， 2023，並顯示公司用來確定該公允價值的估值投入的公允價值層次：

描述

水平

3月31日，

12月31日，

	資產：信託賬戶中的現金和投資
負債：	2024			2023
認股權證法律責任--公開認股權證	$	(3,610	)	$	(2,200	)
認股權證負債-私募認股權證	$	(9	)	$	-
遠期購房協定	$	(2,329	)	$	2,937

	認股權證作為負債入賬。根據美國會計準則815-40，並在附帶的未經審計的簡明綜合餘額中的認股權證負債內列報床單。認股權證負債在開始時按公允價值計量，並按經常性基礎計量，並按公允價值變動列示。未經審計的簡明綜合經營報表內認股權證負債的公允價值變動。
私募認股權證的估值方式為修正的布萊克·斯科爾斯期權定價模型，該模型被認為是公允價值計量的第三級。修改後的布萊克·斯科爾斯模型在確定私募認股權證公允價值時使用的主要不可觀察的輸入是預期波動率普通股。於首次公開發售日期之預期波動率乃根據可見公開認股權證定價計算。在沒有確定目標的可比“空白支票”公司上。截至後續估值日期的預期波動率是從公司自己的公共認股權證定價中隱含的。用蒙特卡羅類比方法對交易會進行了評估在沒有可見交易價格的期間，使用與所用相同的預期波動率計算的認股權證的價值在衡量私募認股權證的公允價值時。在認股權證與於有關單位內，公開認股權證的收市價被用作公開認股權證於各相關日期的公允價值。測量公權證脫離單位後的公權證由於使用了可觀察對象而被歸類為1級活躍市場中的市場報價。	2023			2022			2021
ILEARNINGENGINES，Inc.	$	(16,166	)	$	(8,943	)	$	(8,234	)
(前身為ArrowRoot收購公司。)	$	(24	)	$	161		$	(18	)
未經審計的簡明綜合財務報表附註報表	$	22,097		$	5,231		$	6,729

2024年3月31日

遠期購買協議的衡量標準為

股票價格為美金

每股這被視為第3級公允價值計量，因為價格基於合同不基於反映報價的可觀察輸入的金額。

修改後的布萊克斯科爾斯的關鍵輸入 3級令的模型如下：

輸入

3月31日，

12月31日，

公眾股票市場價格

無風險利率

股息率

行使價

波動

至到期期限（年）

下表列出了第3級擔保憑證負債的公允價值：

私人

放置

截至2024年1月1日的公允價值

公平值變動

截至2024年3月31日的公允價值

私人

我們根據PCAOB的標準進行審計。這些標準要求我們計劃和執行審核以獲得關於合併財務報表是否沒有重大錯報的合理保證，無論是由於錯誤還是舞弊。本公司並無被要求對其財務報告的內部控制進行審計，我們也沒有受聘進行審計。作為一部分在我們的審計中，我們被要求瞭解財務報告的內部控制，但不是為了表達關於公司財務報告內部控制有效性的意見。因此，我們不表達這樣的意見。

我們審計包括執行程式以評估合併財務報表重大錯誤陳述的風險，是否由於錯誤或欺詐，並執行應對這些風險的程式。此類程式包括在測試的基礎上檢查證據有關綜合財務報表中的金額和披露。我們的審計還包括評估會計原則管理層所使用的重大估計，以及評估合併財務報表的整體列報方式。我們相信我們的審計為我們的意見提供了合理的基礎。

我們自2020年以來一直擔任本公司的審計師。

/S/WithumSmith+Brown，PC

新紐約州紐約市

四月 1,2024

PCAOB 100號

箭根收購公司。

綜合資產負債表

12月31日，

資產

易變現資產

現金

預付費用

預付所得稅

總易變現資產

現金和信託賬戶中的投資

總資產

負債， A類普通股可能面臨贖回和股東虧損

電流負債

帳戶應付和應計費用

收入應課徵額

消費應課徵額

承兌注-關聯方

向前購買協議責任

可換股商業本票-關聯方

總流動負債

遞延應付承保費

令負債

總負債

承諾和應急預案

可能贖回的A類普通股，美金

面值;

和

已發行和發行股票約為美金

和$

截至2023年12月31日和2022年12月31日的每股贖回價值

股東赤字

優先股，美金

面值;

授權股份;

沒有一

截至2023年和2022年12月31日已發行或未償還

A類普通股，美金

面值;

授權股份，

沒有一

截至2023年和2022年12月31日，已發行和未發行（不包括可能贖回的4，445，813和28，750，000份）

b類普通股，美金

面值;

授權股份;

截至2023年和2022年12月31日已發行和發行股票

積累赤字

總股東赤字

總 A類普通股票可能受到賠償和股東缺陷的責任

的隨附附註是合併財務報表的組成部分。

竹芋 ACQUISITION Corp.

綜合經營報表

止年度

12月31日，

止年度

12月31日，

一般及行政開支

損失經營

其他收入（費用）：

變化以認購證負債的公允價值計算

遠期收購協議

興趣費用-商業本票

興趣通過信託帳戶中持有的現金和投資賺取

總其他收入（費用），淨額

（損失）所得稅撥備前的收入

提供所得稅

淨（損失）收入

加權平均流通股，A類普通股

A類普通股每股基本和稀釋淨（損失）收益加權平均流通股，b類普通股

b類普通股每股基本和稀釋淨（損失）收益

的隨附附註是合併財務報表的組成部分。竹芋 ACQUISITION Corp.

綜合股東虧損變動說明

為截至2023年和2022年12月31日的年份類一

共同股票

類 B共同股票

額外

實收積累

總

股東股份

量

股份量

資本

赤字赤字

平衡 - 2022年1月1

吸積可能贖回的A類普通股淨收入

平衡 - 2022年12月31日

吸積可能贖回的A類普通股消費贖回普通股應繳稅款

淨損失

平衡 - 2023年12月31日的隨附附註是合併財務報表的組成部分。

竹芋 ACQUISITION Corp.

綜合現金流量表止年度

12月31日，

止年度 12月31日，

現金運營活動的流量：

淨（損失）收入

調整將淨（損失）收入與經營活動中使用的淨現金進行調節：

興趣通過信託帳戶中持有的現金和投資賺取變化以認購證負債的公允價值計算

遠期收購協議

變化在經營資產和負債方面：預付費用

預付所得稅

應計費用收入應課徵額

淨經營活動所用現金

現金投資活動的流量：投資現金存入信託帳戶

現金從信託帳戶提取以支付特許經營稅和所得稅

現金因贖回而從信託帳戶中提取淨投資活動提供的現金

現金融資活動的流量：

收益來自商業本票-關聯方收益來自可轉換商業本票-關聯方

贖回普通股

淨融資活動提供的現金（用於）淨現金變動

現金 - 今年年初

現金 - 今年年底補充現金流信息：

現金繳納所得稅

這個合併協定規定，除其他事項外，根據合併協定的條款和條件，下列交易將發生(連同合併協定預期的其他交易(“業務合併”)：在企業結束時合併(“關閉”)，根據經修訂的特拉華州公司法(“DGCL”)， Merge Sub將與iLearningEngines合併，合併Sub和iLearningEngines的獨立公司將停止存在將是尚存的法團(“尚存的公司”)及本公司的全資附屬公司(“合併”)；和

作為合併的結果，除其他事項外，iLearningEngines的普通股流通股(受iLearningEngines股權獎勵的股份、庫存股和持不同意見的股份除外)將被註銷，以換取獲得相當於(X)(I)基本購買價(定義如下)、

減去*(Ii)公司獎勵金額的美元價值(定義如下)，

加上

*(Iii)在緊接生效時間前已發行及未償還的本公司認股權證(定義見合併協定)的行使總價，減去

*(Iv)票據結餘總額(定義見合併協定)

除以

(Y)$

。“基本購買價格”指的是等於$的金額。

。“公司獎勵金額”指(X)iLearningEngines證券持有人(為免生疑問，不包括公司可轉換票據持有人)在收盤時可向iLearningEngine證券持有人發行的公司A類普通股數量，iLearningEngine和公司在收盤前至少兩(2)個工作日同意向某些私募投資者和非贖回股東發行A類普通股(金額將等於

向此類投資者和非贖回股東發行的所有此類股份的%，其餘由保薦人出資)，

乘以。

(Y)$

這個公司董事會(以下簡稱“董事會”)已(一)批准並宣佈可取的合併協定和業務合併和(Ii)決議建議本公司股東批准合併協定及相關事項。

箭根收購公司。注意到合併財務報表

十二月 2023年3月31日

注意 5.關聯交易創始人股份

在……裡面 2020年11月，贊助商購買了

公司B類普通股股份(“方正股份”) 總價為$。隨後，於2020年12月，本公司進行了4股換5股的股票拆分，據此其他內容

發行了B類普通股，產生了總計

方正股份已發行並已發行。方正股份包括總計高達方正股份可被沒收，但承銷商的超額配售沒有全部或部分行使，因此方正股票的數量在折算後的基礎上將大致相等

首次公開招股後公司已發行及已發行普通股的百分比。2021年1月，贊助商將

方正向三名董事提名人中的每一人配售股份，如果承銷商的超額配售選擇權沒有全部行使。由於承銷商被選為充分行使其超額配售選項2021年3月4日，沒有

方正股份目前被沒收。

這個將創辦人的股份轉讓給公司的董事被提名人屬於財務會計準則委員會第718主題“薪酬-股票”的範圍補償“(”ASC 718“)。根據ASC 718，與股權分類獎勵相關的基於股票的薪酬是衡量的按授予日的公允價值計算。方正股份的有效轉讓取決於業績條件(即指企業合併)。與方正股份相關的薪酬支出只有在可能的業績條件下才會確認在這種情況下，在適用的會計文獻下發生的。基於股票的薪酬將在該日期確認企業合併被認為是可能的(即，在企業合併完成後)，金額等於創始人股票乘以授予日期的每股公允價值(除非隨後進行修改)。這個發起人已同意，除有限的例外情況外，在較早的情況發生之前，不會轉讓、轉讓或出售任何方正股份 (A)企業合併完成後一年及(B)企業合併後，(X)如最後一次報告 A類普通股售價等於或超過$

每股(根據股票拆分、股票資本化、重組、資本重組等)

任何交易日內 -至少開始交易日期間

生意結束後的幾天合併，或(Y)公司完成清算、合併、股本交換或其他類似交易的日期這使得所有公共股東都有權將他們的普通股換取現金、證券或其他財產。

行政性支持協定這個公司於2021年3月4日通過公司完成業務的較早日期簽訂了一項協定合併及其清算，向贊助商支付總計$

BTIG 收費協議

2023年7月25日，BTIG，LLC（「BTIG」）與公司達成達成一份書面協議（「BTIG承諾書」），根據該協議，公司聘請BTIG擔任財務顧問與業務合併的聯繫。注意 7.股東的赤字

優選股票

公司有權發布 面值為美金的優先股

每股港幣公司董事會可能不時確定的指定、權利和偏好。截至 2023年和2022年，有

沒有已發行或發行的優先股。

類普通股

公司有權發布 面值為美金的A類普通股

每股持有人

A類普通股每股有權獲得一票

. 2023年12月31日和2022年12月31日，有

和

分別已發行和發行的A類普通股股份，可能會被贖回並呈列作為臨時股權。

類 b普通股

公司有權發布

面值為美金的b類普通股股票

遞延稅資產，扣除免稅額

竹芋 ACQUISITION Corp.

注意到合併財務報表

十二月 2023年31日

收入稅收準備金包括以下內容：

年結束

12月31日，

年結束

12月31日，

聯邦

電流

遞延

狀態

電流

遞延

變化估值津貼

收入稅項撥備

截至2023年和2022年12月31日，公司擁有美金

和$

分別可用於抵消未來應稅收入的美國聯邦和州淨營運虧損結轉的金額。

波動

Term 至到期（年）

的下表呈列第三級擔保憑證負債公允價值的變化：

私人

放置

截至2023年1月1日的公允價值

公平值變動

截至2023年12月31日的公允價值

私人

放置

截至2022年1月1日的公允價值

公平值變動

截至2022年12月31日的公允價值

轉入/轉出第1級、第2級或第3級的轉移在估值技術或方法發生變化的報告期末確認。有

沒有

截至2023年12月31日和2022年12月31日止年度，從第3級測量轉移至第1級。

有截至2023年12月31日，遠期購買協議的公允價值沒有變化。

注意 11.後續事件

的公司評估了資產負債表日後直至合併日期發生的後續事件和交易財務報表已發布。根據此次審查，公司沒有發現任何後續事件（以下除外）需要在合併財務報表中進行調整或披露。

公司批准額外提款總計為美金

截至

3月31日，

2024年（未經審計）

12月31日，

資產

易變現資產：

現金

受限制現金

應收帳款，扣除信用損失撥備後分別為510美金和336美金

合約資產

預付費用

易變現資產總額

應收技術合作夥伴款項

應收關聯方

其他資產

遞延所得稅資產，淨額

遞延交易成本

總資產

負債和股東赤字

流動負債：

應付帳款

應計費用

長期債務的流動部分，淨

合約負債

應付薪津稅

貸款重組股份負債

其他流動負債

流動負債總額

可換股票據

令狀責任

長期債務，淨

次級支付給技術合作夥伴

其他非流動負債

總負債

股東赤字：

普通股面值0.0001美金：200，00，000股授權股：2024年3月31日和2023年12月31日已發行和發行的95，782，605股

借記資本公積

累計赤字

股東赤字總額

負債總額和股東赤字

隨附註釋是這些簡明合併財務報表。ILEARNINENGINES，Inc.和子公司濃縮合併運營報表（未經審計）(In千，份額和每股金額除外）.”

100

止三個月

3月31日，

收入

收入成本

毛利

運營費用：

銷售、一般和管理費用

研發費用

總運營支出

營運收入

其他費用：

利息開支

認購證負債公允價值變化

可轉換票據公允價值變化

債務貧困損失

101

其他費用

匯兌虧損

其他費用總計

所得稅前淨（損失）收入	所得稅（費用）福利	淨（損失）收入
*每股淨（虧損）收益-基本和稀釋*
加權平均已發行普通股-基本	55	加權平均已發行普通股-稀釋
隨附註釋是這些簡明合併財務報表。	42	ILEARNINENGINES，Inc.和子公司
股東赤字變化的濃縮合併報表（未經審計）	56	(In數千人，股份金額除外）
額外	61	總
普通股	52	實收
積累
股東^{(1) (3)}	66	股份
量⁽²⁾	55	資本
赤字	56	赤字
2023年12月31日餘額⁽¹⁾	61	淨虧損
2024年3月31日餘額^(1)(2)(3)	73	額外

(1)

總

(2)

普通股

(3)

實收

積累

股東

股份

量

資本

赤字

102

2022年12月31日餘額

淨收入

2023年3月31日餘額

隨附註釋是這些簡明合併財務報表。

ILEARNINENGINES，Inc.和子公司

簡明綜合現金流量表（未經審計）

(In數千）

止三個月

3月31日，

經營活動中使用的現金流量：

淨（損失）收入

將淨（損失）收入與經營活動中使用的淨現金流量進行調節的調整：

103

折舊及攤銷

債務發行成本攤銷

遞延稅的變化

附屬應付技術合作夥伴的利息加記

認購證負債公允價值變化

可轉換票據公允價值變化

債務貧困損失

當前預期信用損失撥備

經營資產和負債變化：

應收帳款

應收關聯方

104

合約資產

預付費用和其他易變現資產

應收技術合作夥伴款項

應付帳款

應計費用和其他負債

合約負債

應付薪津稅

遞延交易成本

經營活動使用的淨現金流量

投資活動產生的現金流量：

購買財產和設備

投資活動使用的淨現金流量

融資活動產生的現金流量：

105

定期貸款收益

償還定期貸款

可轉換票據收益

融資活動提供的淨現金流量（用於）

現金淨變化

現金，年初

現金，期末

此外，修正案規定，如果公司提前支付修改後的定期貸款，則根據公司的選擇，公司可以預付金額的50% 本應在預付款日期後通過發行若干新公司股票而應計的預定但未支付的利息支付通過(A)(X)未支付的預定利息付款和(Y)2.75的乘積除以(B)按成交量加權得到的普通股緊接發行日前七(7)個交易日內新公司普通股的平均價格。

貸款重組股份被確定為最初按公允價值計量的負債，隨後在收益中計入公允價值變動。貸款重組股份的初始公允價值被確定為2.8億美元萬。提供了貸款重組股份。在隨附的綜合資產負債表中的“貸款重組份額負債”內。曾經有過於2024年3月27日釐定的初始公允價值日期至2024年3月31日之間的公允價值並無變動。

這項修正案被計算在內作為美國公認會計準則下的債務清償，本公司於年內因清償債務而錄得1,000美元萬損失隨附的簡明綜合經營報表。

公司選擇入賬用於公允價值期權項下的經修訂定期貸款。根據公允價值選擇，餘額隨後按公允價值計量。對於公允價值發生變化的每個報告期，包括因特定工具信用風險而發生的變化，計入收益。經修訂定期貸款的初始公允價值被確定為2,600美元萬，修訂日期為2024年3月27日和2024年3月31日：

修訂後的定期貸款

(In數千）

2024年3月27日的公允價值

因特定工具信用風險導致的定期貸款公允價值變動

公允價值剩餘變動

截至2024年3月31日的公允價值

2024年4月18日，公司使用現金和159,379股新公司普通股的組合，全額預付修訂後的定期貸款。根據時間安排在預付款中，815,999股貸款重組股份被註銷。

債務契約遵從性

公司的2020年， 2021年和2023年的定期貸款受契約條款的約束。與及時提交工資稅申報單有關的違反公約行為和失敗作為修正案的一部分，作為修正案的一部分，各自貸款人免除了200億美元的萬限制性現金。由於獲得的豁免，截至2024年3月31日，該公司遵守了所有債務契約。

權證

以下是日程表 2023年12月31日至2024年3月31日期間已發行及未償還認股權證的變動情況：

單位

截至2023年12月31日未完成

已發行的認股權證

截至2024年3月31日的未償債務

的公允價值權證負債是使用期權定價模型確定的，見附註11，公允價值計量，以在假設擔保責任。

貸款重組股份負債

關於2020年的任期貸款，2021年定期貸款，2023年定期貸款，公司截至2023年12月31日的公允價值接近本金價值。對於向技術合作夥伴支付的附屬付款，公司確定公允價值接近於3月的本金價值 2024年12月31日和2023年12月31日。現列載2023年及2024年可換股票據及貸款重組股份負債按每個呈列期間的公允價值計算。

2023年的公允價值和2024年可轉換票據、貸款重組股份負債和修訂定期貸款採用基於情景的方法進行估計，該方法考慮每個方案中的轉換功能和相關收益。

106

中使用的第3級輸入截至2024年3月31日，經修訂的定期貸款的估值模型包括：

2024年3月31日

兌換活動

預付方

4月15日，

預付方

5月1日，

預付方

七月一日，

堅持住-

成熟性

私下出售

貼現價差

概率

期限匹配無風險利率

中使用的第3級輸入截至2024年3月31日的2024年可轉換票據的估值模型包括：

2024年3月31日

贖回事件

De-SPAC

交易

持有-

成熟

概率

活動日期時間（年）

折扣價差

無風險利率

折扣收益率

使用的3級輸入截至2024年3月31日和2023年12月31日的2023年可轉換票據的估值模型包括以下內容：

2024年3月31日

贖回事件

De-SPAC

交易

持有-

成熟

概率

活動日期時間（年）

折扣價差

107

無風險利率

折扣收益率

2023年12月31日

贖回事件

股權

融資

De-SPAC

交易

持有-

成熟

概率

活動日期時間（年）

折扣價差

無風險利率

折扣收益率

認購證的公允價值負債和貸款重組股份負債使用期權定價模型確定，該模型利用以下第3級輸入：

2024年3月31日

私人銷售場景（5% 可能性）

SPAC場景（95%的可能性）

波動

無風險利率

股息率

6.94美金期權的行使價

10.14美金期權的行使價

缺乏市場流通性折讓

Term

0.75年

0.04年

股權價值

股權價值源自貼現現金流的加權平均值、指導公司法和交易方法。

2023年12月31日

私人銷售場景（10% 可能性）

SPAC場景（90%的可能性）

波動

無風險利率

股息率

6.94美金期權的行使價

10.14美金期權的行使價

Term

1.0年

108

0.1年

股權價值

股權價值源自貼現現金流的加權平均值、指導公司法和交易方法。

公司負債按經常性基準按公允價值計量的公允價值等級分類如下。

2024年3月31日

1級

2級

3級

總

(In數千）

負債

認股權證負債

修改後的定期貸款

2023年可轉換票據

2024年可轉換票據

貸款重組股份負債

總負債

2023年12月31日1級2級

3級

總

109

(In數千）

負債

令狀責任

2023年可轉換票據

總負債

下表總結了以下活動公司按公允價值計量的第三級負債：

令狀責任

可換股票據

貸款重組

修改後的定期貸款

(In數千）

截至2023年12月31日餘額

發行

公平值變動

截至2024年3月31日餘額

在結束的三個月里 2024年3月31日和2023年3月31日，第1級和第2級之間沒有轉移，也沒有轉入和轉出第3級。

12.承諾和應急預案

意外開支

公司對以下專案進行評估任何可能並可合理估計的或有損失的潛在影響。截至2024年3月31日，沒有發生或有損失錄製好了。	而該公司則沒有預計任何正在進行的問題的解決將對其運營結果、財務狀況或關於現金流，必須指出的是，這些問題的最終結果仍然不確定。在出現不利解決方案的情況下在上述一個或多個或有事件中，可能會對公司的財務狀況、經營結果或現金流。公司將繼續監督這些事項，並在必要時披露未來財務報表中的任何重大發展或變化。	購承擔 ($)⁽¹⁾		本公司簽訂了一項與主要客戶簽訂的長期軟體許可合同，於2018年開始生效，將於2024年6月到期，但須附加續訂5年。該合同的年價值為5,030美元萬。作為協定的一部分，該公司安裝其軟體許可證在客戶的服務器上，作為交換，客戶每年支付訪問軟體許可證和相關維護的費用服務。此外，該公司還與客戶簽訂了購買客戶最終用戶數據的單獨合同。此數據對於公司開發和使用其下一代人工智慧平臺至關重要。每年的價格是這一數據採集金額約為3,000美元萬。 ($)		軟體許可的銷售而購買客戶的最終用戶數據被視為不同和獨立的交易。此外，軟體許可可以單獨取消合同和數據採集合同，而不影響另一份合同任何一方需提前12個月通知取消的合同。由於數據採集的不同性質以公允價值獲得並主要用於研發目的的客戶，即從軟體產生的收入許可合同是按總額確認的。相反，與數據採集相關的費用也在以毛為基礎，歸類為研究和開發費用。財務顧問協定 ($)		本公司有一筆財務資金與指定的財務顧問簽訂諮詢協定，以協助未來的股權籌資活動。根據根據協定條款，財務顧問將獲得基於以下結構的補償：對於股權募集，包括低於公司股權資本的多數，財務顧問將有權獲得相當於總收入5.0%的費用股權募集所得收益。 ($)		在股權的情況下融資佔公司股本的大部分，財務顧問的薪酬將根據以下各項中較大的一項：固定費用為350美元萬。股權總價值的1.0%最高可籌集10美元億，外加1.5%的額外部分股權募集總價值超過10美元的億。 ($)		這些補償條款概述了財務顧問在成功完成股權籌資活動的基礎上有權獲得費用。對於非股權交易具體的費用可以在逐筆交易的基礎上進行協商，以確保財務顧問的薪酬與考慮到股權募集的規模和意義，考慮到公司的股權資本和資金總額養大的。 2024年3月27日，公司財務顧問修改了財務諮詢協定，規定以現金全額支付任何根據財務顧問協定所欠諮詢費或其他費用或開支，本公司將向財務顧問支付7,500,000美元現金或新公司股份，由本公司全權酌情決定。截至2024年3月31日和2023年12月31日，財務顧問的目前還不可能支付費用，支付的金額也無法確定。因此，不會在壓縮合並資產負債表，用於財務顧問協定中概述的潛在補償。 ($)⁽²⁾		訴訟 ($)
該公司參與了在正常業務過程中發生的訴訟。預計此類訴訟不會對公司的財務狀況產生實質性影響經營狀況、經營結果和現金流。	2023		360,000		—		—		—		—		53,145		413,145
13.關聯方交易記錄	2022		360,000		—		—		—		—		53,145		413,145

相關應收賬款聚會	2023		300,000		—		—		—		—		48,366		348,366
該公司有突出的截至2023年12月31日，董事應收賬款50萬，與公司代表公司發生的費用有關董事的身分。	2022		275,000		—		—		—		—		48,366		323,366

2024年2月，公司全額收取各董事應收關聯方款項。截至2024年3月31日，沒有未償還的餘額。	2023		325,000		—		—		—		—		—		325,000
ILEARNINENGINES，Inc.和子公司	2022		325,000		—		—		—		—		—		325,000

(1)	綜合資產負債表(In數千人，股份金額除外）截至12月31日，

110

(2)

資產

易變現資產：

現金

受限制現金

應收帳款，扣除信用損失撥備後分別為336美金和0美金

合約資產

預付費用

易變現資產總額

應收技術合作夥伴款項

應收關聯方其他資產遞延所得稅資產，淨額遞延交易成本總資產

負債和股東赤字流動負債：應付帳款

111

應計費用^{長期債務的流動部分，淨}合約負債^{應付薪津稅}其他流動負債流動負債總額可換股票據

令狀責任

長期債務，淨

次級支付給技術合作夥伴

其他非流動負債

總負債

股東赤字：

112

普通股面值0.0001美金：200，00，000股授權股：2023年12月31日和2022年12月31日已發行和發行的95，782，605股

借記資本公積累計赤字股東赤字總額總負債及股東赤字隨附註釋是這些合併財務報表。ILEARNINENGINES，Inc.和子公司 綜合經營報表

		(In千，份額和每股金額除外）								截至12月31日的一年，
收入	收入成本	毛利運營費用：銷售、一般和管理費用研發費用總運營支出營運收入 (#)		其他（費用）收入：利息開支認購證負債公允價值變化可轉換票據公允價值變化其他費用其他費用總額，淨額 (#)		所得稅（費用）福利前淨（損失）收入所得稅（費用）福利淨（損失）收入 ($)		每股淨（虧損）收益-基本每股淨（虧損）收益-稀釋加權平均已發行普通股-基本		加權平均已發行普通股-稀釋隨附註釋是這些合併財務報表。 ILEARNINENGINES，Inc.和子公司股東赤字變化綜合報表 (In數千人，股份金額除外）額外 (#)⁽¹⁾			總普通股實收積累股東股份量 ($)⁽²⁾
資本	8/12/2021		—		—		—		—		34,225,600	⁽³⁾		342,256,000
赤字	8/12/2021		—		—		—		—		1,387,979	⁽⁴⁾		13,879,790
	8/12/2021		—		—		—		—		300,000	⁽⁵⁾		3,000,000
赤字	8/12/2021		—		—		—		—		2,775,957	⁽⁶⁾		27,759,570
	8/12/2021		—		—		—		—		1,000,000	⁽⁷⁾		10,000,000

(1)	2021年1月1日餘額關聯方出資 —發行股票換取現金.”

(2)

淨收入

(3)	2021年12月31日餘額

(4)	收購發行股份淨收入 —2022年12月31日餘額淨虧損

(5)	2023年12月31日餘額隨附註釋是這些合併財務報表。 —ILEARNINENGINES，Inc.和子公司綜合現金流量表

(6)	(In數千）截至2013年12月31日的年度， —經營活動中使用的現金流量：淨（損失）收入

(7)	為調節淨利潤與經營活動中使用的淨現金流量而進行的調整：折舊及攤銷 —股份補償費用債務貼現和債務發行成本攤銷

113

遞延稅款撥備

附屬應付技術合作夥伴的利息加記

認購證負債公允價值變化

可轉換債務公允價值變化信貸損失準備金經營資產和負債變化：

應收帳款

應收關聯方

合約資產

預付給客戶

預付費用和其他易變現資產

應收技術合作夥伴款項

應付帳款

114

應計費用和其他流動負債

合約負債次級支付給技術合作夥伴應付薪津稅

遞延交易成本

經營活動使用的淨現金流量

投資活動提供的現金流（用於）：

添置物業及設備

業務收購獲得的現金

115

投資活動提供的淨現金流量（用於）：

融資活動提供的現金流：

定期貸款收益

償還定期貸款可轉換票據收益其他融資活動

融資活動提供的淨現金流量：

現金淨變化

現金和限制性現金，年初

現金和限制性現金，年底

現金流量信息補充披露：

年內支付的利息現金

116

非現金投資融資信息補充披露：

發行認購普通股的認購權

發行股權以收購In2vate，LLC

應計交易成本

註銷可轉換票據的出資

現金和限制性現金的對賬現金受限制現金

年末現金總額和限制性現金

隨附註釋是這些合併財務報表。

ILEARNINGENGINES，Inc.及附屬公司
綜合財務報表附註
(#)

1.自然業務和演示的基礎⁽¹⁾

5,657,788

(1)	ILearningEngines，Inc.(共同及其子公司，總部設在美利堅合眾國馬利蘭州的公司，於2010年11月17日在特拉華州註冊成立。該公司提供專注於人工智慧(AI)平臺關於學習的自動化和使組織能夠大規模推動關鍵任務成果。人工智慧學習和參與平臺具有基於雲的、移動的、離線的和多媒體功能，可用於提供高度個性化的學習和參與模塊。該公司開發了一個過程中學習平臺，使組織能夠在日常流程中提供學習活動。

截至2013年12月31日的年度內， 2021年，公司管理層註冊成立了iLearningEngines FZ-LLZ(“Ile Dubai”)，這是一家自由貿易區公司在迪拜開發區。該實體的目標是發展Ile在中東的客戶。伊萊迪拜在Ile的指導和監督下運營。該公司已確定它在Ile Dubai擁有可變權益並且是主要受益人，因此公司將迪拜島合併為可變權益實體(“VIE”)。截至2013年12月31日的年度內， 2021年，本公司收購了iLearningEngines India Private Limited的多數股權，iLearningEngines India Private Limited是根據印度法律(“Ile India”)。此次收購的目標是為Ile India培養員工和支持運營在印度，通過Ile India招聘人才和員工，供公司內部使用。Ile India在這一指導下運營以及對Ile的監管。公司已確定它在Ile India擁有可變權益，是主要受益者，因此該公司已將Ile India合併為VIE。截至2013年12月31日的年度內， 2022年，公司將iLearningEngines Australia註冊為全資子公司。這家子公司的目標是開發新的澳大利亞、紐西蘭和東南亞的銷售和渠道合作夥伴。

截至2013年12月31日的年度內， 2022年，公司收購了風險管理和學習平臺提供商In2vate，LLC(“In2vate”)的全部已發行股權。

建議的業務合併

2023年4月27日，公司與ArrowRoot收購訂立合併重組協定及計劃(“合併協定”) 納斯達克(Sequoia Capital：ARRW)(以下簡稱“箭根”)，一家特殊目的收購公司(以下簡稱“SPAC”)和Arac Merge Sub，公司是特拉華州的一家公司，也是ArrowRoot的直接全資子公司(“合併子”)。在完成合並時合併後的公司將更名為“iLearningEngines，Inc.”。並將在納斯達克上市，新的股票代碼為“愛樂”。ArrowRoot已同意收購所有未償還的公司的股權。交易的完成取決於某些慣常的監管同意和股東的批准。 ArrowRoot和公司的。

呈列基準

117

隨附的合併財務報表是按照美利堅合眾國普遍接受的會計原則編制的 (“美國公認會計原則”)和美國證券交易委員會(“美國證券交易委員會”)的規則和條例。合併後的財務報表包括iLearningEngines，Inc.及其子公司的賬目。

改敘某些重新分類已經做出了與前一時期的列報一致的說明。風險和不確定性

●第2級-根據可觀察到的其他投入進行估值比第1級中包括的報價，如活躍市場中類似工具的報價，相同或相似非活躍市場中的工具，或其投入或重大價值驅動因素可觀察到或可以觀察到的基於模型的估值可觀察到的市場數據證實了這一點。●3級-基於不可觀察到的輸入進行估值。這些估值需要做出重大判斷。估值的可獲得性技術和可觀察到的投入可能會有所不同，並受到各種因素的影響，包括資產或負債的類型，無論是資產或負債是新的，尚未在市場上建立，以及交易特有的其他特徵。至估值基於在市場上不太可觀察或不可觀察的模型或投入的程度，公允的確定價值需要更多的判斷。這些估計值不一定代表由於不能合理確定的未來情況的發生。由於估值的內在不確定性，那些估計價值可能大大高於或低於資產或負債的現成市場所使用的價值。公允價值中的水準公允價值計量的整體等級是基於對公允價值有重要意義的最低水準的投入價值衡量的整體。

公允價值期權(“FVO”) 選本公司簽訂了一項 2023年4月27日的可轉換票據購買協定，本文簡稱可轉換票據，現已入賬在下文討論的“公允價值期權選擇”項下。

在財務會計下準則委員會(“FASB”)會計準則編纂(“ASC”)主題815，衍生工具和對沖，(“ASC” 815“)，可能需要將包含嵌入特徵和/或選項的金融工具從該金融工具中分離出來託管並確認為單獨的衍生資產或負債，分支衍生資產或負債最初按截至交易發佈日的估計公允價值，然後按每個報告期的估計公允價值重新計量資產負債表日期。

或者，FASB ASC主題 825，金融工具，(“ASC 825”)規定“公允價值期權”(“FVO”)選擇。在……裡面在這方面，ASC 825-10-15-4規定提供FVO選舉(在ASC 825-10-15-5未禁止的範圍內) 指金融工具，其中該金融工具最初按交易發行日的估計公允價值計量然後按每個報告期資產負債表日的估計公允價值重新計量，估計的在經營報表中確認為其他收入或費用的公允價值。可轉換債券的估計公允價值調整票據在隨附的綜合報表中可轉換票據的公允價值變動內列於單行專案。運營(由ASC 825-10-50-30(B)規定)。此外，根據ASC 825-10-45-5的要求，在公允價值的一部分調整歸因於特定於工具的信用風險的變化，這一部分將被確認為其他綜合收益(“保監處”)(並無就可換股票據作出該等調整)。在……下面所述的公允價值期權選擇本公司呈列可換股票據的全部公允價值變動，包括與利息支出有關的構成部分，列在合併業務報表標題為“變動”的單行專案內以可轉換票據的公允價值計算“。可轉換債券的公允價值截至2023年12月31日的票據為3,150美元萬，並在合併資產負債表的“可轉換票據”中列報。有關可轉換票據的更多細節，請參閱附註7。

延遲交易費用

本公司直接招致以及截至2023年12月31日的年度與擬議中的與ArrowRoot合併相關的增量交易成本。交易記錄 4,000美元萬的成本已遞延並資本化到綜合資產負債表上的遞延交易成本專案 2023年12月31日。在完善了合併後，這些成本將計入股東赤字，作為由此產生的額外實收資本的減少關於合併的問題。如果與ArrowRoot的合併後來被取消，公司將審查遞延交易成本的減值。截至2023年12月31日，110億美元萬和160億美元萬的未付交易成本包括在應付貿易賬戶和應計費用分別列於合併資產負債表中。

股份酬金

本公司記錄薪酬根據ASC主題718，與基於股份的獎勵有關的費用，薪酬調整--股票薪酬

118

(“ASC 718”)，據此，本公司於授予日以獎勵的估計公允價值為基礎計量補償成本。補償成本為在授標的必要服務期內，通常是授權期，以直線方式予以確認。沒收在它們發生時都會被計算在內。收入確認

公司確認收入根據ASC主題第606條。

應付帳款

其他流動負債

承擔負債總額

假設淨資產總額

商譽代表超額按收購淨資產的公允價值支付的代價，並計入合併餘額中的其他資產床單。商譽的分配價值主要涉及現有勞動力的價值和預期的協同效應公司現有職能。被收購公司的經營結果包括在公司的合併報表中從收購之日起的收入。商譽可在15年內為納稅目的攤銷。

4.應計利潤費用

下表列出了截至2023年12月31日和2022年12月31日的應計費用構成：

截至

12月31日，

(In數千）

應計所得稅

其他應計費用

總其他應計費用包括應計專業服務費、應計利息、應計薪酬和福利，以及其他流動負債。

5.移動技術合作夥伴2019年，公司進入與技術合作夥伴簽訂的主協定(MA)，允許按季度對技術收取的金額進行淨額結算來自最終用戶的合作夥伴，對照技術合作夥伴向公司提供和支付的服務的成本。金融管理專員有一個初始任期為五年，可自動續期五年。

2021年1月1日，公司修改了與技術合作夥伴的利率，從12個月LIBOR利率加2.0%改為固定利率3.99%，通過 2023年12月31日。在2023年12月31日之後，公司將與技術合作夥伴的利率修改為固定利率截至2024年12月31日，利率為5.99%。在十週年之前，公司不需要償還任何未償還的餘額或應計利息終止並購交易的生效日期。截至這些合併財務報表的日期，金融管理專員尚未終止。

119

下表總結了技術合作夥伴向公司收取的費用在收入成本、銷售成本、一般成本和行政成本中列示截至2022年12月31日的年度綜合經營報表中的費用和研究與開發費用和2021年：

12月31日，(In數千）收入成本

銷售、一般和管理費用

研發費用

從屬應付致技術合作夥伴2020年12月30日，結合注6 -債務中描述的2020年定期貸款發行，公司與技術合作夥伴達成一份次級協議，根據該協議，支付給技術合作夥伴的款項從屬於2020年和2021年定期貸款。

12月31日，(In數千）

期初餘額應計利息次級支付給技術合作夥伴與之相關的利息費用截至2023年12月31日、2022年12月31日止年度，向技術合作夥伴支付的次級款項每年為170盧比，以及 2021.應收賬款淨額技術合作夥伴在執行之後根據從屬協定，本公司和技術合作夥伴恢復按季度計算收藏品和服務成本提供與上述定義相同的利率條件。

12月31日，(In數千）應收技術合作夥伴的年初餘額

按技術合作夥伴分類的收藏

120

技術合作夥伴提供的服務成本公司與技術合作夥伴之間的現金淨轉移

應收技術合作夥伴的期末餘額6.債務下表呈列截至2023年12月31日和2022年12月31日公司債務組成：12月31日，

(In數千）2020年定期貸款

2021年定期貸款2023年定期貸款其他貸款減去：債務貼現減：當前部分.

121

債務的長期部分合同利息費用截至2023年12月31日、2022年12月31日止年度，與長期債務相關的金額為250日元、200萬美金和110日元，和2021年。截至12月的年度，債務發行成本攤銷分別為210日元、320日元和220日元分別為2023年、2022年和2021年。年度到期日總計截至12月31日的年度，未來五年每年的長期債務義務如下：截至12月31日的一年，

長期的 債務

(In數千）總

定期貸款和令狀發布2020年12月30日，本公司與Venture Lending&Leating IX，Inc.訂立貸款及擔保協定(“2020定期貸款”)。 (“2020貸款人”)，據此，2020貸款人向本公司提供合共一項定期貸款安排本金為1,000美元萬。與2020年有關定期貸款，公司向2020年貸款人的關聯公司Venture Lending&Leating IX，LLC發行認股權證，購買433,597份本公司股份(“2020年認股權證”)。2020年權證被歸類為負債並按其公允價值入賬。因為存在某些看跌期權，可能會迫使本公司在未來回購2020年權證，基於以下事件不在本公司的控制範圍之內。2020年權證的行使價為每股6.94美元，可行使至7月 2036年3月31日。如果公司參與一輪優先股融資，認股權證也將可以行使行使價格等於任何一輪優先股融資的最低每股價格的優先股。2020年的授權列於2023年12月31日和2022年12月31日合併資產負債表的權證負債專案內。截至2023年12月31日，2020年定期貸款加權平均實際利率為32.4%。2021年10月21日，本公司訂立貸款及擔保協定(“2021年定期貸款”，連同2020年定期貸款協定，與Venture Lending&Leending IX，Inc.和WTI Fund X，Inc.簽訂的《定期貸款協定》(統稱為《2021年貸款人“)，據此，2021年貸款人向本公司提供本金總額的定期貸款安排 2,000美元萬。2023年1月10日，該公司第四次動用了2021年5億美元的定期貸款萬。2021年定期貸款利息為年息11.5%。本公司於2021年定期貸款發生債務貼現，與以下引用的認股權證。截至2023年12月31日，2021年定期貸款加權平均實際利率為19.1%。

關於2021年定期貸款，公司向2021年貸款人的關聯公司Venture Lending&Leending IX，LLC和WTI Fund X，LLC發行認股權證，以購買440,021股本公司普通股(“2021年認股權證”)，其中55,005股於2023年發行，涉及這筆5億美元的萬將於2023年1月10日提取2021年的定期貸款。2021年認股權證被歸類為負債，並記錄在其公允價值，因為存在某些認沽權利，可能會迫使本公司在未來回購2021年認股權證，基於不在公司控制範圍內的事件。2021年權證的行權價為每股6.94美元，可以行使一直到2037年7月31日。如果公司參與一輪優先股融資，認股權證也將可以行使對於行使價格等於任何一輪優先股融資的最低每股價格的優先股。2021年權證在2023年12月31日和2022年12月31日合併餘額的權證負債細目中列示床單。2023年10月31日，公司與WTI Fund X，Inc.(“2023年貸款人”)簽訂貸款和擔保協定，根據該協定，2023年貸款人提供向本公司提供本金總額為1,000萬的定期貸款(“2023年定期貸款”)。在10月 2023年3月31日，公司提取了本金為1,000美元的全部萬。關於2023年定期貸款，本公司發行了 2023年貸款機構WTI Fund X的附屬公司WTI Fund X LLC認股權證購買220,681股普通股。2023年的權證有行權價每股10.14美元，可行使至2038年10月31日。截至2023年12月31日，2023年定期貸款的有效利率是35.9%。

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公司的2020年， 2021年和2023年定期貸款受契約條款的約束，根據該條款，公司必須及時繳納和申報所有稅款並在每個財務報告年度結束後六個月內提交經審計的合併財務報表。“公司”(The Company) 在截至2020年12月31日的一年內，沒有支付或提交就業工資稅申報單。“公司”(The Company) 也沒有在規定的時間內提交截至2022年12月31日和2021年12月31日的年度經審計的合併財務報表句號。此外，公司沒有按照《公約》的要求，在一個單獨的銀行賬戶中保留200億美元的萬作為限制性現金。 2023年定期貸款條款，截至2023年12月31日的年度。由於這些違反契約條款的行為，2020、2021和2023年的貸款人根據合同有權要求立即償還2020年、2021年和2023年的未償還定期貸款，但同意放棄描述的每一種違反聖約的行為。因此，長期債務的當前部分在合併後的資產負債表僅代表在每個資產負債表日期的12個月內合同到期的本金付款。以下是日程表 2022年1月1日至2023年12月31日期間已發行和未償還權證的變化情況：單位截至2021年12月31日未完成

已發行的認股權證截至2022年12月31日未完成

已發行的認股權證截至2023年12月31日未完成

7.敞篷車備註本公司簽訂了一項 2023年4月27日與ArrowRoot Capital達成的可轉換票據購買協定，為擬議的業務合併提供資金注1--業務性質和列報依據。可轉換票據應計入單利，按日累算以拖欠利息為基準，年利率為15.0%，直至累計利息超過本金的25.0%，並按此後年利率為8.0%。相當於未償還本金餘額乘以2.75的乘積之和，或47.9美元於2023年12月31日，該等票據的未付應計利息將於到期日及任何違約事件的發生，如協定中所定義。可換股票據可發行，本金總額為截至2023年12月31日，最高可支付5,000美元萬現金，其中1,740美元萬已支取。可轉換票據於 2025年10月27日，除非在到期日之前根據其條款提前轉換、贖回或回購。

根據可轉換汽車的條款票據購買協定，可轉換票據將在4月27日後包括以下情況下可轉換為股票， 2023年：

●在發生股權融資時，貸款人可以選擇將可轉換票據交換為在這種股權融資中發行的股權證券的數量，等於票據餘額除以在這種融資中的股權價格股權融資和●

在符合條件的De-SPAC交易完成之前，可轉換票據應自動全部轉換為公司普通股，從而使貸款人有權獲得一定數量的股份等於紙幣餘額除以10美元。此外，根據根據票據購買協定，公司可以不經持有人同意，以現金形式預付等額的可轉換票據到票據餘額，在2025年10月27日之前的任何時間。截至2023年12月31日，可轉換票據的公允價值於截至該年度止年度，可換股票據的公允價值相應變動為增加1,410美元萬 2023年12月31日。8.以股份為基礎補償2021年8月12日，公司通過2020年股權激勵計劃(《計劃》)。根據《規則》授予的限制性股票單位總數截至2023年12月31日和2022年12月31日的計劃分別為8,338,438和7,138,438。該獎項為期四年。自受僱日期起計為期一年的懸崖歸屬要求，並受下述流動性事項撥備所規限。截至2023年12月31日和 2022年12月31日，公司擁有39,883,388股已發行的限制性股票獎勵，公司創始人以10 自流動資金事件發生之日起的年度服務要求(定義如下)(“方正限制性股份”)及與前僱員發行的360,290股限制性股票，其中服務要求在授予日被視為已滿足(一起與方正限售股(簡稱“限售股”)。公司40,243,678股已發行限制性股票在公司的所有分派中與普通股平等參與，因為這些限制性股票的持有人有權不可沒收的股息權。每一個RSU和受限股份都受控制權變更條款的約束；有效登記根據修訂後的19證券法(“證券法”)發表的聲明；在納斯達克全球精選直接上市市場或紐約證券交易所；或本公司完成與SPAC的合併或合併，而尚存公司的普通股根據《證券法》規定的有效註冊聲明在公開發行中公開交易(統稱為， “流動性事件”)。

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非既得利益相關單位概述並披露其歸屬取決於截至2023年12月31日的年度的流動性事件的限制性股票以下是：

股份加權平均^{贈與日期交易會} 值

股份單位截至2022年1月1日未歸屬

授予截至2022年12月31日未歸屬授予截至2023年12月31日未歸屬

股份加權平均

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贈與日期交易會價值

限售股截至2022年1月1日未歸屬授予截至2022年12月31日未歸屬

授予截至2023年12月31日未歸屬未識別的總數截至12月31日，這些獎勵的歸屬取決於流動性事件的實現，其補償費用為17610美金， 2023.這些RSU的歸屬而限制性股票取決於流動性事件，這些事件被認為在實際發生之前不太可能發生，因此，在發生任何流動性事件之前，不會確認基於股份的薪酬支出。

9.收入稅

收入前的（損失）收入稅收費用（福利）包括以下內容（以千計）：

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截至12月31日，

國內外國所得稅（福利）費用前淨（損失）收入

條款的組成部分所得稅（福利）如下（以千計）：

截至12月31日，

當前費用：

聯邦

狀態

外國

經常費用總額：

遞延費用（福利）：

聯邦

狀態

外國

遞延福利總額：

所得稅費用總額（福利）：

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公司的對帳法定所得稅率與公司實際所得稅率之比如下：

截至12月31日，

聯邦法定稅率影響：

州稅，扣除聯邦稅收優惠

永久性差異

FDII條款

國外利差

證券公允價值變化

各州費率的變化股票薪酬

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估值津貼變化

實際稅率

有關遞延所得稅與以下相關的資產餘額（單位：千）：截至12月31日，

遞延所得稅資產：

聯盟、州和地方淨營業虧損結轉工資稅163J不準予利息

資本化R&D費用

應計費用估值備抵前的遞延所得稅資產總額遞延稅務負債：

其他

481(A)調整

估值免稅額前遞延稅項負債總額

128

估值免稅額

淨遞延稅資產截至2023年12月31日， 2022年和2021年，公司的聯盟淨營業虧損分別為1,450萬美元、2,630萬美元和3,780萬美元，分別進行了分析。截至2023年12月31日、2023年12月31日和2022年12月31日，公司的國家淨營業虧損(NOL)結轉為26.7美元 3740萬美元和3740萬美元。聯盟淨營業虧損結轉可以無限期結轉，按80%的應稅比例結轉收入限制。結轉的國家淨營業虧損將於2037年開始到期。截至2023年12月31日，該公司擁有 NOL結轉10美元萬，主要與澳大利亞有關。截至2022年12月31日，沒有外國NOL結轉。截至2023年12月31日，公司有90美元的利息支出結轉用於美國所得稅目的萬。整個90美元的萬有一個無限期的結轉句號。這些結轉是可用的，但受某些限制，以抵消未來的應稅收入。

未來將實現的存在暫時性差額和淨營業虧損結轉的稅收優惠最終取決於是否存在足夠的結轉期內的應納稅所得額。截至2023年12月31日、2023年12月31日和2022年12月31日，公司進行了評估，以確定是否需要估值津貼。該公司考慮了所有現有的證據，包括積極和消極的證據，包括本年度和前幾年的經營業績。除澳大利亞司法管轄區外，公司決定未來的應稅收入是可能的，並決定了所有遞延稅項資產更有可能變現。因此，自2023年12月31日起，公司不再保留澳大利亞司法管轄區以外的估值津貼。

《減稅和就業法案》 (“TCJA”)導致在第174節中對研發支出的處理方式發生了重大變化。在納稅年度內從2021年12月31日之後開始，納稅人被要求將所有已支付或發生的研發支出資本化和攤銷與他們的貿易或業務有關。具體地說，總部位於美國的研發活動的成本必須在五年內攤銷此外，外國研發活動的成本必須在15年內攤銷-這兩種方式都使用年中公約。在.期間截至2023年12月31日的年度，公司將450萬美元的海外研發費用資本化，用於所得稅目的。根據國內稅法第382條，如果一家公司經歷了所有權變更，該公司使用其變更前的能力 NOL結轉和其他變動前稅收屬性抵消其變動後收入可能是有限的。該公司尚未完成評估是否發生了“所有權變更”或自Ile以來是否發生了多次所有權變更的研究成為第382節所界定的“虧損公司”。未來公司股權的變化，這可能不在Ile的控制之下，可能會引發“所有權變更”。此外，未來的股權發行或收購將股權作為收購價格組成部分的公司可能會導致“所有權變更”。如果“所有權變更” 已經發生或將來發生的情況下，NOL結轉或其他稅務屬性的利用可能受到限制，這可能導致未來對公司的納稅義務增加。關於公司利潤的計算納稅義務涉及處理在適用複雜的聯邦稅收和稅收法規方面的不確定性本公司經營或開展業務的多個州。ASC 740規定，不確定的稅收狀況帶來的稅收優惠可在審查後更有可能維持立場的情況下予以承認，包括任何有關的決議上訴或訴訟程式，根據技術是非曲直。公司記錄不確定根據美國會計準則第740條將納稅列為負債，並在公司的判斷發生變化時調整這些負債。對以前沒有的新資訊進行評估的結果。由於其中一些不確定性的複雜性，最終解決方案可能導致的付款與公司目前對未確認資產的估計大不相同稅收優惠負債。這些差異將在新稅期內反映為所得稅費用的增加或減少資訊是可用的。截至2023年12月31日、2023年12月31日及2022年12月31日，本公司並未在本公司的財務報表。本公司確認利息以及與隨附的合併經營報表中所得稅費用行未確認的稅收優惠有關的處罰。截至2023年12月31日和2022年12月31日，合併資產負債表上不計入應計利息或罰金。一開始的和解未確認稅項準備的期末金額如下：截至12月31日的一年，(In數千）年初的或有稅收總額

稅收或有事項總額的減少

截至年底的或有稅收總額公司提交納稅申報單按照其經營所在司法管轄區稅法的規定。在正常業務過程中，公司將接受檢查聯盟和州司法管轄區，在適用的情況下。目前沒有懸而未決的稅務審查。.”

10.中國網每股(虧損)收益每項基本淨(虧損)收益股份是根據期內已發行普通股的加權平均數計算的。稀釋後每股淨(虧損)收益是使用期間已發行普通股的加權平均數和普通股等價物的加權平均數來計算的。BASIC和的計算本報告所述期間公司已發行普通股的每股攤薄淨(虧損)收益和加權平均股份如下所示：截至12月31日的一年，(In千，份額和每股金額除外）每股基本淨(虧損)收益：.”

淨（損失）收入分配給參與證券的收益普通股股東應佔淨(虧損)收入-基本每股攤薄淨(虧損)收益：普通股股東應佔淨(虧損)收入-基本

2019年可轉換票據的利息支出

普通股股東應佔淨(虧損)收入-攤薄計算中使用的份額：加權平均流通普通股稀釋證券的加權平均效應：假設2019年可轉換票據的轉換稀釋加權平均已發行普通股普通股股東每股淨(虧損)收益：

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基本

稀釋

沒有宣佈分紅或在截至2023年12月31日、2022年及2021年12月31日止年度內累積普通股。對其含有不可沒收股息權的限制性股票，從而符合參與證券的定義，它要求普通股股東在該期間可獲得的收益在普通股和參與證券之間進行分配。根據他們各自獲得股息的權利，就好像該期間的所有收入都已分配一樣。未分配淨虧損按照合同條款向參股證券轉讓。公司已發行的加權平均限售股截至12月31日的三個年度，2023年、2022年和2021年分別為40,243,678，40,243,678和15,656,445。不包括該公司下列證券，基於每個期末的未償還金額，通過計算稀釋淨(虧損)收益而列報在所示期間內歸屬於普通股股東的每股收益，因為將其包括在內將產生反稀釋效果：截至12月31日的一年，購買普通股的認股權證股份單位激勵或有對價可換股票據.”

限售股

庫存股方法被應用於權證，其影響在年內是反攤薄的。截至2023年12月31日和2022年12月31日。因此，它們被排除在稀釋每股收益的計算之外。

RSU受制於流動性事件下的歸屬條件，如附註8-股票所述以薪酬為基礎。由於這些證券被視為或有可能發行的股票，而或有事項最終沒有得到滿足在報告期內，它們被排除在列報期間的每股攤薄淨收益(虧損)計算之外。

截至年末，應付給發起人的或有對價所涉的或有事項尚未滿足報告期。因此，這些股份已被排除在各期間每股稀釋淨(虧損)收益的計算之外。呈上了。IF轉換方法被應用於可轉換票據，其中的影響是反稀釋的截至2023年12月31日的年度。因此，它們被排除在稀釋每股收益的計算之外。截至去年12月底止年度的每股攤薄收益不包括限制性股份。 2023年31日，因為納入此類股份的影響將是反稀釋的。

11.美國薪水單應繳稅金

該公司尚未支付或提交從開始到2020年12月31日的任何時期的就業工資稅報稅表。聯盟和州預繳稅金、僱主自公司成立至2023年12月31日的工資稅、罰款和利息責任以及相關罰款和利息計入綜合資產負債表的應付工資稅內。總負債為300萬美元，截至2023年12月31日和2022年12月31日分別為280萬美元。這些應計專案的相關費用被記錄下來。在合併經營報表中計入銷售、一般和行政費用。

12.廣交會價值測量

公司的財務狀況工具包括認股權證負債、2020年定期貸款、2021年定期貸款、2023年定期貸款、其他貸款、可轉換票據和次級貸款支付給技術合作夥伴。

賬面價值和估計公司2020年定期貸款、2021年定期貸款、2023年定期貸款、其他貸款、可轉換票據和附屬債券的公允價值 2023年12月31日和2022年12月31日支付給技術合作夥伴的金額如下：

2023年12月31日

2022年12月31日

主要

金額

帳面

金額

公平值

130

主要

金額

帳面

金額

公平值

(In數千）

2020年定期貸款

2021年定期貸款

2023年定期貸款

可換股票據

131

其他貸款⁽¹⁾	次級應付技術合作夥伴關於2020年任期貸款、2021年定期貸款、2023年定期貸款、其他貸款和次級應付技術合作夥伴，公司得出了公允價值接近截至2023年和2022年12月31日的本金價值。可轉換債券的公允價值注釋是使用基於情景的方法進行估計的，該方法考慮了每個場景中的轉化特徵和相關回報。的截至2023年12月31日，可轉換票據估值模型中使用的第3級輸入數據包括以下內容： 2023年12月31日兌換活動股權融資 De-SPAC		交易持有至到期概率活動日期時間（年）折扣價差
無風險利率
折扣收益率⁽²⁾		96,764,327		71.7	%
認購證的公允價值負債是使用期權定價模型確定的，該模型利用了以下第3級輸入：		–		*
2023年12月31日		–		*
私人銷售場景		–		*
(10%可能性）		–		*
SPAC場景⁽³⁾		845,465		*
(90%可能性）⁽⁴⁾		1,323,291		*
波動⁽⁵⁾		7,005,793		5.2	%
無風險利率		–		*
股息率		–		*
6.94美金期權的行使價		105,938,876		78.5	%
10.14美金期權的行使價
Term⁽²⁾		96,764,327		71.7	%
1.0年⁽⁵⁾		7,005,793		5.2	%

0.1年

(1)

股權價值

(2)

股權價值源自加權平均值貼現現金流、指導公司方法和交易方法論。

(3)

12月31日，

(4)

波動

(5)

無風險利率

132

股息率

行使價

Term2.0年股權價值

股權價值源自貼現現金流的加權平均值、指導公司法和交易方法。

公司負債按經常性基準按公允價值計量的公允價值等級分類如下。

2023年12月31日

133

1級2級3級

	總									(In數千）
負債	令狀責任		可換股票據		總負債		2022年12月31日			1級		2級		3級		總
(In數千）⁽¹⁾		2,255,000		2,255,000		—		—			—		—		—		—
負債		1,100,000		1,100,000		—		—			—		—		—		—
令狀責任⁽²⁾		748,962		748,962		—		—			—		—		—		—
總負債⁽³⁾		330,000		330,000		—		—			—		—		—		—
下表總結公司按公允價值計量的第三級負債的活動：		275,000		275,000		—		—			—		—		—		—
令		206,250		206,250		—		—			—		—		—		—
責任		192,500		192,500		—		—			—		—		—		—
(In數千）⁽⁴⁾		165,137		165,137		—		—			—		—		—		—
截至2022年1月1日餘額		137,500		137,500		—		—			—		—		—		—
發行		137,500		137,500		—		—			—		—		—		—
公平值變動		137,500		137,500		—		—			—		—		—		—
截至2022年12月31日餘額		137,500		137,500		—		—			—		—		—		—
發行		137,500		137,500		—		—			—		—		—		—
公平值變動		137,500		137,500		—		—			—		—		—		—
截至2023年12月31日餘額		137,500		137,500		—		—			—		—		—		—
可換股		137,500		137,500		—		—			—		—		—		—
備註⁽⁵⁾		137,500		137,500		—		—			—		—		—		—
(In數千）⁽⁶⁾		117,012		117,012		—		—			—		—		—		—
截至2022年12月31日餘額		89,375		89,375		—		—			—		—		—		—
發行		82,500		82,500		—		—			—		—		—		—
公平值變動		82,500		82,500		—		—			—		—		—		—
截至2023年12月31日餘額		82,500		82,500		—		—			—		—		—		—
截至去年十二月底止年度 31年、2023年和2022年，1級和2級之間沒有調入，也沒有調出3級。		68,750		68,750		—		—			—		—		—		—
13.中國的承諾和或有事件		68,750		68,750		—		—			—		—		—		—
意外開支		68,750		68,750		—		—			—		—		—		—
公司對以下專案進行評估任何可能並可合理估計的或有損失的潛在影響。截至2023年12月31日和2022年12月31日，有沒有記錄或有損失。		55,000		55,000		—		—			—		—		—		—
而該公司則沒有預計任何正在進行的問題的解決將對其運營結果、財務狀況或關於現金流，必須指出的是，這些問題的最終結果仍然不確定。在出現不利解決方案的情況下在上述一個或多個或有事件中，可能會對公司的財務狀況、經營結果或現金流。		55,000		55,000		—		—			—		—		—		—
公司將繼續監督這些事項，並在必要時披露未來財務報表中的任何重大發展或變化。		55,000		55,000		—		—			—		—		—		—
購承擔		68,750		68,750		—		—			—		—		—		—
本公司簽訂了一項與主要客戶簽訂的長期軟體許可合同，於2018年開始生效，將於2024年6月到期，但須附加續訂5年。該合同的年價值為5,030美元萬。作為協定的一部分，該公司安裝其軟體許可證在客戶的服務器上，作為交換，客戶每年支付訪問軟體許可證和相關維護的費用服務。此外，該公司還與客戶簽訂了購買客戶最終用戶數據的單獨合同。此數據對於公司開發和使用其下一代人工智慧平臺至關重要。每年的價格是這一數據採集金額約為3,000美元萬。⁽⁷⁾		41,250		41,250		—		—			—		—		—		—
軟體許可的銷售而購買客戶的最終用戶數據被視為不同和獨立的交易。此外，軟體許可可以單獨取消合同和數據採集合同，而不影響另一份合同要求任何一方提前12個月通知取消的合同。由於數據採集的不同性質以公允價值獲得並主要用於研發目的的客戶，即從軟體產生的收入許可合同是按總額確認的。相反，與數據採集相關的費用也在以毛為基礎，歸類為研究和開發費用。⁽⁸⁾		41,250		41,250		—		—			—		—		—		—
這種會計處理方法準確反映這些交易的獨立性質，並確保適當確認與軟體許可和數據獲取活動。⁽⁹⁾		41,250		41,250		—		—			—		—		—		—
財務顧問協定		27,500		27,500		—		—			—		—		—		—
本公司有一筆財務資金與指定的財務顧問簽訂諮詢協定，以協助未來的股權籌資活動。根據根據協定條款，財務顧問將獲得基於以下結構的補償：		27,500		27,500		—		—			—		—		—		—
對於股權募集，包括低於公司股權資本的多數，財務顧問將有權獲得相當於總收入5.0%的費用股權募集所得收益。		27,500		27,500		—		—			—		—		—		—
在股權的情況下融資佔公司股本的大部分，財務顧問的薪酬將根據以下各項中較大的一項：⁽¹⁰⁾		27,500		27,500		—		—			—		—		—		—
固定費用為350美元萬。		27,500		27,500		—		—			—		—		—		—
股權總價值的1.0%最高可籌集10美元億，外加1.5%的額外部分股權募集總價值超過10美元的億。		27,500		27,500		—		—			—		—		—		—
這些補償條款概述了財務顧問在成功完成股權籌資活動的基礎上有權獲得費用。對於非股權交易具體費用可以在逐筆交易的基礎上進行協商，以確保財務顧問的薪酬與考慮到股權募集的規模和意義，考慮到公司的股權資本和資金總額養大的。		27,500		27,500		—		—			—		—		—		—
訴訟		27,500		27,500		—		—			—		—		—		—
該公司參與了在正常業務過程中發生的訴訟。預計此類訴訟不會對公司的財務狀況產生實質性影響經營狀況、經營結果和現金流。		27,500		27,500		—		—			—		—		—		—
14.關聯方交易		27,500		27,500		—		—			—		—		—		—
相關應收賬款聚會⁽¹¹⁾		27,500		27,500		—		—			—		—		—		—
本公司擁有未行使截至2023年12月31日和2022年12月31日，應收董事款項分別為50盧比和60盧比與公司代表董事發生的費用有關。⁽¹²⁾		24,750		24,750		—		—			—		—		—		—
2024年2月，公司收取每位董事應收關聯方的全部金額。收款後無餘額。		756,488		193,046		563,442		*			—		—		—		—
15.後續事件⁽¹³⁾		41,250		41,250		—		—			—		—		—		—
公司已評估 2023年12月31日之後至2024年4月22日（即這些合併財務報告的日期）的所有事件可以發表聲明。⁽¹⁴⁾		80,613		11,756
完成合並及相關交易⁽¹⁵⁾		1,612		806
2024年4月16日，(《閉幕》日期“)，本公司完成先前宣佈的合併，該合併由日期為2023年4月27日的合併協定(”空間“)提出交易“)。有關更多詳細資訊，請參閱注1。⁽¹⁶⁾		2,014		1,007
業務組合為根據美國公認會計原則，被計入反向資本重組。在這種會計方法下，儘管ArrowRoot發佈了 ILearningEngines，Inc.在業務合併中的流通股權益，ArrowRoot被視為“被收購” 用於財務報告目的的公司。因此，企業合併被視為公司發行股票的等價物收購ArrowRoot的淨資產，同時進行資本重組。ArrowRoot的淨資產按歷史成本列報，沒有已記錄的商譽或其他無形資產。在業務合併之前的業務將是公司的業務。⁽¹⁷⁾		30,230		15,115
與閉幕式有關在業務合併中，ArrowRoot收購公司(納斯達克代碼：ARRW)更名為“iLearningEngines，Inc.”。 (“新公司”)，並在納斯達克上市，新的股票代碼為“愛樂”。⁽¹⁸⁾		40,307		3,359
在截止日期，根據合併協定的條款進行的交易如下：⁽¹⁹⁾		9,068		4,534
目前的Ile股東在交易結束日擁有109,684,738股新公司普通股對於前Ile股票；⁽²⁰⁾		70,536		35,268
前Arrowroot公開股東在交易結束日擁有638,977股NewCo普通股作為交換對於前Arrowroot公開發行的股票；⁽²¹⁾		20,153		3,359
截至截止日期，Arrowroot的現任和前任附屬公司擁有8,674,617股NewCo普通股換取以前的ArrowRoot可轉換票據和期票；⁽²²⁾		7,052		3,526
可轉換票據-投資者(不包括ArrowRoot的關聯公司)擁有NewCo的11,551,784股結算日的普通股，以換取以前的ILE可轉換票據(見下文“可轉換票據購買協定” 對於在成交日簽訂的可轉換票據的部分)；⁽²³⁾		2,191,506		2,191,506		—		—			—		—		—		—
這家2020年、2021年和2023年的貸款機構在收盤時擁有4,419,998股新公司普通股根據定期貸款修正案確定的日期(詳情見下文“2020年、2021年和2023年定期貸款修正案”)。vt.在.的基礎上 2024年4月18日償還定期貸款，815,999股新公司普通股被取消。⁽²³⁾		1,571,872		1,571,872		—		—			—		—		—		—
購買可轉換票據協定⁽²⁴⁾		7,087,884		7,087,884		—		—			8,250,000		8,250,000		—		—
與SPAC有關該公司發行並轉換了價值2940英鎊的2024年可轉換票據。該公司發行了70美金的可轉換債券 2024年3月21日的票據和截止日期的2870便士的可轉換票據（統稱為「2024年可轉換票據」）。 2024年可轉換票據於截止日期轉換為NewCo的8，089，532股普通股。		40,000		40,000		—		—			—		—		—		—
2020年的修正案， 2021年和2023年定期貸款		40,000		40,000		—		—			—		—		—		—
2024年3月27日，伊利島簽訂了修訂2020、2021年和2023年定期貸款(“定期貸款”)的協定。根據修正案，定期貸款被修訂為：		40,000		40,000		—		—			—		—		—		—
修訂定期貸款攤銷時間表，以換取1,019,999股新公司普通股將於SPAC交易完成後發行(“貸款重組股份”)		40,000		40,000		—		—			—		—		—		—
終止2020年權證、2021年權證和2023年權證及相關的各自認沽權利作為交換，我們同意向2020年、2021年和2023年的貸款人提供總額為3399,999美元的貸款 SPAC交易完成後將發行的新公司普通股。⁽²⁵⁾		10,975		10,975		—		—			—		—		—		—
如果公司償還定期貸款於(一)2024年4月15日或之前，則90%的貸款重組股份將被註銷，(二)2024年5月1日，則80% 貸款重組股份將被註銷，以及(三)2024年7月1日，則貸款重組股份將被註銷50%。該公司於2024年4月18日償還了定期貸款，815,999股被註銷。⁽²⁵⁾		22,222		22,222		—		—			—		—		—		—
此外，修正案規定，如果本公司提前償還定期貸款，則根據本公司的選擇，本公司可以提前支付預定但未支付的利息支付，本應在預付款日期後通過發行若干新公司普通股而應計通過(A)(X)未支付的預定利息付款和(Y)2.75的乘積除以(B)新公司普通股的VWAP而獲得的股票在緊接發行日期前七(7)個交易日的股票。公司全額預付定期貸款 2024年4月18日，以現金和159,379股普通股的組合。⁽²⁵⁾		48,894		48,894		—		—			—		—		—		—
應付款項的議付給第三方供應商⁽²⁶⁾		3,043,980		3,043,980		—		—			—		—		—		—
2024年3月27日，公司財務顧問(見附註13)修訂了財務諮詢協定，規定以現金支付根據財務諮詢協定所欠的任何諮詢費或其他費用或費用的全額，公司將支付財務顧問7,500,000美元現金或新公司股票，由公司自行決定。⁽²⁷⁾		1,360,760		1,360,760		—		—			—		—		—		—
公司還進行了談判以幾種形式向其他第三方供應商支付賬款的特許權。優惠形式包括：(1)提供優惠應支付的總金額，(2)以普通股結算某些應付款項的選擇權，以及(3)訂立延期付款協定某些應付賬款。特許權於截止日期生效。⁽²⁸⁾		322,459		322,459		—		—			—		—		—		—
擬議的2024年股本激勵計劃⁽²⁹⁾		845,465		845,465		—		—			—		—		—		—
該公司提出了一項新的 2024年股權激勵計劃，該計劃於2024年4月1日獲得批准。		1,323,291		1,323,291		—		—			—		—		—		—
東西岸融資		77,964,895		50,373,997		27,590,898		20.4	%		—		—		—		—
2024年4月17日(《貸款》) 截止日期“)，Legacy iLearningEngines簽訂了貸款和擔保協定(”循環貸款協定“)，由Legacy iLearningEngines作為借款人(“借款人”)、貸款人一方(“貸款人”)和East 西岸，作為貸款人的行政代理和抵押代理(“代理”)。循環貸款協定規定 (一)本金總額高達4,000萬的迴圈信貸安排；及(二)手風琴貸款借款人根據借款人的選擇和條件將迴圈承諾額增加2,000萬美元代理人批准(統稱為“循環貸款”)。借款人在貸款結束時提取了4,000美元萬循環貸款日期，(X)用於全額償還借款人的定期貸款，(Y)用於一般企業用途。		18,799,432		14,238,418		4,561,014		3.4	%		—		—		—		—
《公約》規定的義務循環貸款協定以借款人幾乎所有資產的完美擔保權益為擔保，但某些資產除外根據循環貸款協定的條款，習慣上不包括財產。在貸款結束日，本公司和In2Vate， Legacy iLearningEngines的全資子公司、俄克拉荷馬州有限責任公司(擔保人)L.L.C. 與代理人訂立保證和保證協定(“保證”)，根據該協定，擔保人提供保證借款人在循環貸款協定下的債務，並提供了幾乎所有擔保人的擔保權益根據擔保條款，除某些習慣上被排除在外的財產外的資產。⁽³⁰⁾		1,022,146		1,022,146		—		—			—		—		—		—
適用的利率對於循環貸款，調整後的期限SOFR(利息期限為1個月或3個月，由借款人選擇)加3.50% 年利率，以調整後的期限SOFR下限4.00%為準。⁽³¹⁾		221,465		221,465		—		—			—		—		—		—
迴圈債券的到期日貸款期限為2027年4月17日。循環貸款協定包含習慣陳述和保證以及習慣肯定和消極契約，除其他外，包括對債務、留置權、投資、合併、處置、提前還款的限制其他債務、股息和其他分配。借款人還必須遵守以下金融契約，循環貸款協定中更充分地規定了(一)最低流動資金，(二)計劃的最低收入業績，(三) 最低固定費用覆蓋率和(Iv)最高槓桿率。⁽³²⁾		511,073		511,073		—		—			—		—		—		—

《循環貸款協定》還包括常規違約事件，包括未能在到期時支付本金、利息或某些其他金額、重大不準確陳述和擔保、違反契約、具體規定的交叉違約和與其他重大債務的交叉加速，某些破產和資不抵債事件、某些未撤銷的判決、擔保的重大無效或擔保權益的授予，重大不利影響和控制的變化，在某些情況下，受某些門檻和寬限期的限制。如果一個或多個事件如果違約發生並持續超過任何適用的補救期限，代理人可在持有多數貸款人同意的情況下，貸款和貸款承諾，或將在貸款人的要求下終止貸款人作出的承諾並宣佈本公司於循環貸款協定項下之所有債務將即時到期及應付。

(1)

部分 II

134

(2)	招股說明書中不需要的信息

(3)	項目13.發行和發行的其他費用。

(4)	這個下表列出了除承保折扣和佣金外，我方應支付的與下列各項有關的所有成本和費用被登記證券的出售。除美國證券交易委員會註冊費外，所有金額均為估計值。

(5)

量

(6)

SEC註冊費

(7)

公證費用和開支

(8)

法律費用和開支

(9)

雜項費用和支出

(10)

總支出

(11)	折扣，本招股說明書涵蓋的出售普通股股份所涉及的特許權、佣金和類似的出售費用將由出售證券的持有人承擔。我們將支付所有費用(折扣、優惠、佣金和類似銷售除外與股份在美國證券交易委員會登記有關的開支)，詳見上表估計。

(12)	專案14.對董事的賠償還有軍官。

(13)	部分經修訂的《特拉華州公司法》145條規定，公司可以賠償董事和高級管理人員以及其他僱員和個人的費用。 (包括律師費)、判決、罰款及為達成和解而實際及合理地招致的款項與任何受威脅、待決或已完成的訴訟、訴訟或法律程序有關，而在該訴訟、訴訟或法律程序中，該人是因以下原因而成為一方的該人是或曾經是登記人的董事、高級職員、僱員或代理人。DGCL規定，第145條不是不包括尋求賠償的人根據任何章程、協定、股東投票或不偏不倚的董事或其他。註冊人的公司註冊證書和章程規定由在DGCL允許的最大範圍內登記其董事和高級管理人員。

(14)	部分《香港特區政府合同法》第102(B)(7)條準許法團在其公司註冊證書中規定，法團的董事不得因違反董事受託責任而對公司或其股東承擔個人責任，但以下情況除外責任(1)違反董事對公司或其股東的忠誠義務，(2)作為或不作為非善意或涉及故意不當行為或明知違法；(三)非法支付股息或違法股票回購、贖回或其他分配；(4)董事派生不當個人利益的任何交易利益。註冊人的公司註冊證書在允許的最大範圍內規定了這種責任限制由DGCL提供。

(15)	這個註冊人已與每位董事及行政人員訂立賠償協定，以提供合約上的賠償。除了我們公司註冊證書中規定的賠償外。每一份賠償協定都規定了賠償以及由司法常務官墊付與其送達服務所引起的申索、訴訟或法律程序有關的某些開支及訟費註冊人，或應我們的要求，在適用的最大範圍內，作為高級職員或董事向其他實體提供服務法律。我們認為，這些條款和協議對於吸引合格董事是必要的。

(16)	這個註冊人還維持標準的保險單，在該保險單下為其董事和高級管理人員提供損失保險。以董事、高級管理人員的身分因失職或者其他不法行為而提出的索賠註冊人可向註冊人支付的款項及(2)註冊人可向該等高級人員及董事支付的款項根據註冊人公司註冊證書和附例中所載的任何賠償條款或以其他方式這是一個法律問題。

(17)	項目15.最近出售的未註冊證券。

(18)	這個以下列表列出了自2021年1月1日以來我們出售的所有未註冊證券的資訊：

(19)	(1)輸入 2020年11月，我們發行了總計5,750,000股ArrowRoot B類普通股，總認購價為30,000美元。在12月 2020年31日，我們實現了4取5的股票拆分，產生了7,187,500股ArrowRoot b類普通股；

(20)	(2)輸入 2021年3月，我們以每份認股權證1元的價格發行了8,250,000份認股權證供保薦人，產生8,250,000美元的總收入；

135

(21)	(3)輸入 2024年4月，基本上與交易結束同時，我們向2024年可轉換股票的持有人發行了8,0,532股普通股轉換原先根據2024年可換股票據以私募方式發行的2024年可換股票據時的票據採購協定；

(22)	(4)輸入 2024年4月，基本上與交易結束同時，我們根據不贖回條款向某些投資者發行了82,091股普通股與某些投資者達成協定，作為此類投資者不行使贖回權的對價；

(23)	(5)輸入於二零二四年四月，大體上與交易結束同時，吾等向保薦人發行460,384股普通股以供償還。全額償付向ARRW發行的無擔保本票項下的所有未償債務；

(24)	(6)輸入 2024年4月，基本上與成交同時，我們根據第二項規定向貸款人發行了4,419,998股普通股對貸款檔案的綜合修正，以In2vate，L.L.C.和貸款人為考慮因素修訂攤銷時間表根據業務合併前的WTI貸款協定。815,999股普通股隨後被註銷對In2vate，L.L.C.貸款檔案的第二次總括修正案；

(25)	(7)在 2024年4月，我們根據In2vate貸款檔案的第二次綜合修正案向貸款人發行了159,379股普通股，有限責任公司和貸款人作為全額償還WTI貸款協定下所有未償債務的對價；

(26)	(8)2024年6月，我們向BTIG，LLC發行了511,073股普通股根據BTIG修正案，每股5.87美元的價格，與支付某些企業合併交易有關費用；

(27)	(9)2024年6月，發佈1022,146 出售普通股予康託？菲茨傑拉德公司，以代替支付合共數額的遞延承銷佣金根據與交易有關的費用修訂協定，按每股5.87美元的價格支付6,000,000美元；及

(28)	(10)2024年6月，我們向Cooley LLP發行了221,465股普通股根據與支付企業合併交易有關的庫利費用協定，每股價格為5.87美元費用。

(29)	無上述交易涉及任何承銷商、承銷折扣或佣金或任何公開招股。我們相信每個人根據《證券法》第4(A)(2)條的規定，這些交易豁免了《證券法》的登記(和規則D)作為不涉及任何公開發行的發行人的交易或根據第701條頒佈《證券法》第3(B)款作為發行人根據下列規定的利益計劃和與賠償有關的合同進行的交易規則701。在每筆交易中，證券的接受者表示他們有意購買證券進行投資。僅限於並不是為了出售或與其任何分發有關的出售，並在股份上放置了適當的圖例在這些交易中簽發的證書。所有收件人都可以通過他們與我們的關係獲得有關以下內容的資訊我們。這些證券的出售是在沒有任何一般招攬或廣告的情況下進行的。

(30)	專案 16。展品和財務報表附表

(31)

註冊成立通過引用

(32)

號證物

136

描述

時間表/

表格

文件編號

表現出

備案

日期

ArrowRoot Acquisition Corp.、Arac Merge Sub，Inc.和iLearningEngines，Inc.之間的合併協定，日期為2023年4月27日。2023年5月2日ILearningEngines，Inc.第二次修訂和重新註冊的註冊證書。

2024年4月22日

iLearningEngines，Inc.修訂和重述章程

2024年4月22日

修訂和重述的註冊權協議，日期為2024年4月16日，由iLearningEngines，Inc.，Arrowroot Acquisition LLC的成員以及iLearningEngines，Inc.的某些前股東。

2024年4月22日

普通股證書樣本。

137

2024年4月22日

許可證樣本。

2024年4月22日

Arrowroot Acquisition Corp.於2021年3月4日簽署的令狀協議以及大陸股票轉讓與信託公司，作為授權書代理。2021年3月5日2020年收購iLearningEngines Inc.行使股票股份的授權書S-4/A2023年12月8日2021年收購iLearningEngines Inc.行使股票股份的授權書S-4/A

2023年12月8日

2023年收購iLearningEngines Inc.行使股票股份的授權書

S-4/A

2023年12月8日

形式限制性股票協議

2024年4月22日

138

意見 Cooley LLP

2024年6月3日

Arrowroot Acquisition Corp.簽署的贊助商支持協議形式iLearningEngines，Inc.，Arrowroot Acquisition LLC。以及iLearningEngines，Inc.的某些股東。

2023年9月5日Arrowroot Acquisition Corp.簽署的股東支持協議形式，iLearning Engines，Inc.以及iLearningEngines，Inc.的某些股東。

2023年9月5日10.3*+iHealthEngines Inc.於2011年1月1日簽訂的高管僱傭協議和哈里什·奇丹巴蘭

S-4/A

2023年12月8日

10.4*+

139

iLearningEngines Inc.簽訂的行政僱傭協議，日期為2019年2月20日和賽義德·法爾漢·納克維

S-4/A

2023年12月8日

併入通過引用

號證物

描述

日程安排/

形式

文件編號

表現出

備案

日期

10.5*+

iLearningEngines Inc.簽訂的行政僱傭協議，日期為2018年10月10日和巴拉克里希南·阿拉卡爾

S-4/A

2023年12月8日iLearningEngines FZ-LLC和Ramakrishnan Parameswaran簽署的就業錄取信，日期為2022年9月15日.

S-4/A

140

2023年12月8日

iLearningEngines Inc.簽訂的行政僱傭協議，日期為2023年10月12日和大衛·塞繆爾斯S-4/A2023年12月8日

iLearningEngines Inc. 2020年股權激勵計劃S-4/A2023年12月8日

iLearningEngines Inc.下的限制性股票單位協議和授予通知的格式2020年股權激勵計劃

S-4/A2023年12月8日iLearning Engines，Inc. 2024年股權激勵計劃。

2024年4月22日

2024年股權激勵計劃下股票期權授予通知書格式和股票期權協議格式。

2024年4月22日10.12*+2024年股權激勵計劃下限制性股票單位授予通知書格式和限制性股票單位協議格式。

141

2024年4月22日iLearning Engines，Inc. 2024年員工股票購買計劃。2024年4月22日

公司與其董事和高管簽訂的賠償協議形式。

2024年4月22日

10.15+

iLearningEngines Inc.之間簽訂的貸款和擔保協議，日期為2020年12月30日和Venture Lending & Leason IX，Inc.

S-4/A

2023年12月8日

10.16+#

iLearningEngines Inc.之間日期為2020年12月30日的貸款和擔保協議補充協議和Venture Lending & Leason IX，Inc.

S-4/A

2023年12月8日

iLearningEngines Inc.於2021年10月21日簽署的貸款和擔保協議第1號修正案和Venture Lending & Leason IX，Inc.

S-4/A2023年12月8日10.18+

142

貸款 iLearningEngines Inc.和安全協議，日期為2021年10月21日和Venture Lending & Leason IX，Inc.和 WTI Fund X，Inc.S-4/A2023年12月8日

10.19+#iLearningEngines Inc.與iLearningEngines Inc.之間於2021年10月21日簽訂的貸款和擔保協議的補充協議和Venture Lending & Leason IX，Inc.和WTI Fund X，Inc.S-4/A

2023年12月8日

10.20+

iLearningEngines Inc.簽訂的貸款和擔保協議，日期為2023年10月31日和WTI Fund X，Inc.

S-4/A2023年12月8日併入通過引用

號證物

143

描述

日程安排/

形式文件編號表現出

備案

日期10.21+#iLearningEngines Inc.與iLearningEngines Inc.之間於2023年10月31日簽訂的貸款和擔保協議補充協議和WTI Fund X，Inc.

S-4/A

144

2023年12月8日

10.22+#

iLearningEngines Inc.之間的智慧財產權安全協議，日期為2020年12月30日和Venture Lending & Leason IX，Inc.S-4/A2023年12月8日10.23+#iLearningEngines Inc.與iLearningInc.簽訂的智慧財產權安全協議，日期為2021年10月21日和Venture Lending & Leason IX，Inc.和WTI Fund X，Inc.S-4/A”, 2023年12月8日

10.24+#

iLearningEngines Inc.之間於2023年10月31日簽訂的智慧財產權安全協議，和WTI Fund X，Inc.

S-4/A

2023年12月8日

2023年可轉換票據購買協議格式。2023年9月5日2023年可轉換票據形式。

S-4/A

2024年1月5日

2024年可轉換票據購買協議格式。

2024年4月22日

145

10.28+

形式 2024年可轉換票據。

四月 2024年22月從屬協議的形式。2024年4月22日

10.30+#

貸款和擔保協議，日期為2024年4月17日，由iLearningEngines Holdings，Inc.，作為借款人、作為代理人的東西岸和貸方。

2024年4月22日

10.31+

iLearningEngines Holdings，Inc.於2024年4月17日簽署的智慧財產權安全協議和In2vate，LLC作為授予人，受益於East West Bank。

2024年4月22日

iLearningEngines Holdings，Inc.於2024年4月17日簽署的擔保和保證協議In2vate、LLC為債務人，East West Bank為貸方代理人。

2024年4月22日

隸屬協議，日期為2024年4月17日，由iLearningEngines Holdings，Inc和Experion Technology，FZ LLC簽署。

2024年4月22日

146

10.34+#

iLearningEngines Holdings，Inc.對貸款文件的第二次綜合修正案，作為借款人，以及In 2 vate，LLC，Venture Lending & Leanning IX，Inc.，和WTI Fund X，Inc.作為貸方。

2024年4月22日

Cantor Fitzgerald & Co.於2024年3月27日簽訂的費用減免協議，由Cantor Fitzgerald & Co.、Arrowroot Acquisition Corp.和iLearningEngines Inc.2024年4月22日瑞穗證券美國有限責任公司、iLearningEngines Inc.於2024年3月27日對日期為2020年6月5日的信函協議的第1號修正案和Arrowroot Acquisition Corp.

2024年4月22日

併入通過引用

號證物

描述

日程安排/

形式

文件編號

表現出備案日期

BTIG，LLC和Arrowroot Acquisition Corp.之間日期為2024年3月27日的信函協議修訂案

147

2024年4月22日

費用等值協議日期為2024年3月27日，由Cooley LLP、Arrowroot Acquisition Corp.和iLearningEngines Inc簽署2024年6月3日iLearningEngines，Inc.於2024年5月31日簽署的費用等效協議第1號修正案和Cooley LLPS-1/A2024年7月1日

遠期購買協議，日期：2023年4月26日

S-4/A

2023年11月6日

Polar Multi-Strategy Master Fund、Arrowroot Acquisition Corp.和iLearningEngines Inc.於2024年4月9日簽署的信函協議

S-1/A

2024年7月1日

iLearningEngines Holdings，Inc.之間的貸款和擔保協議第一修正案作為借款人、作為行政代理人的東西岸及其貸方

S-1/A2024年7月1日WithumSmith+Brown，PC致SEC的信。2024年4月22日iLearningEngines，Inc.子公司列表2024年4月22日^

獨立特許會計師事務所Marcum LLP的同意

148

23.2

WithumSmith+Brown，PC，獨立特許會計師事務所的同意庫利的同意 LLP（包含在圖表5.1中）2024年6月3日授權書(包括在簽名頁上)”

2024年6月3日

101.INS

內聯MBE實例文檔。

101.SCH

內聯MBE分類擴展架構文檔。

101.CAL

內聯MBE分類擴展計算Linkbase文檔。

101.DEF

內聯MBE分類擴展定義Linkbase文檔。

101.LAB

149

內聯MBE分類擴展標籤Linkbase文檔。

101.PRE內聯MBE分類擴展演示Linkbase文檔。封面交互式數據文件（格式為Inline BEP，包含在附件101中）。備案收費表2024年6月3日

提交在此。+這個根據S-k條例第601(A)(5)項，本協定的附表和證物已被省略。任何遺漏的附表的副本和/或展品將根據要求提供給美國證券交易委員會。

一定的根據法規S-k第601(B)(10)(Iv)項，本展品的部分內容已被省略，因為它們不是實質性的，註冊人視為私人或機密的資訊類型。註冊人同意提供未經編輯的補充應要求向美國證券交易委員會提供展品或其中任何部分的副本

表示管理合同或補償計劃或安排。

150

專案 17. 承諾

這個以下簽署的註冊人特此承諾

至在提出要約或出售的任何期間內，提交生效後的修正案致本註冊聲明：

至包括19證券法第10(A)(3)條規定的任何招股說明書；

至在招股說明書中反映在本註冊生效日期後發生的任何事實或事件聲明(或其最新的生效後修正案)，個別或在該集合代表本註冊中所述資訊的根本性變化聲明。儘管有上述規定，證券交易量的任何增加或減少要約(如果所要約證券的總美元價值不超過註冊)，以及與估計最高發行價的低端或高端有任何偏差範圍可以根據規則向委員會提交的招股說明書的形式反映 424(B)如果數量和價格的變化合計不超過20% 在《登記計算》中規定的最高總髮行價有效登記說明書中的“費用”表；以及

至包括與分配計劃有關的任何材料資訊在本註冊聲明中披露的資訊或對本註冊聲明中註冊聲明。

那, 為了確定根據19《證券法》所承擔的任何責任，變更生效後，包含招股說明書形式的，視為新登記與其中提供的證券及該等證券的發售有關的陳述屆時應被視為其首次真誠發售。

至藉在生效後作出的修訂而將以下任何證券從註冊中刪除在股票發行終止時仍未售出的已登記股票。

那, 為根據19《證券法》確定對任何買方的責任，根據規則第424(B)條提交的每份招股說明書，作為登記聲明的一部分發行，但根據規則4300億作出的註冊聲明或招股說明書除外依據規則430A提交的，應被視為註冊的一部分幷包括在註冊中報表自生效後首次使用之日起計算。然而，前提是沒有在註冊說明書或招股章程中作出的陳述，而該陳述是註冊的一部分聲明或在以引用方式併入或被視為併入作為註冊說明書一部分的註冊說明書或招股說明書將作為在第一次使用、取代或修改之前簽訂銷售合同的購買者在註冊說明書或招股章程中作出的任何陳述，而該陳述是在緊接該日期之前在任何該等檔案中作出的註冊陳述或作出的註冊聲明第一次使用。

那, 為確定註冊人根據19《證券法》所承擔的責任向證券初次分銷中的任何購買人、以下簽署的登記人在以下簽署的註冊人的首次證券發售中承擔這一責任至本註冊聲明，不論以何種承銷方式出售證券如果證券是以任何形式向買方提供或出售給買方的，在以下通信中，

任何以下簽署的註冊人與此次發行有關的初步招股說明書或招股說明書根據規則424要求提交的檔案；

任何由以下簽署人或其代表準備的與發行有關的免費招股說明書登記人或以下簽署的登記人使用或提及的登記人；

這個任何其他免費撰寫的招股說明書中包含材料的部分關於以下簽署的註冊人或其由或代表提供的證券的資訊下列簽署的登記人；及

任何以下簽署的註冊人在要約中提出的要約的其他通知購買者。

就目前而言因為根據19證券法產生的責任的賠償可以允許董事、高級管理人員和控制人根據前述規定，或以其他方式，登記人被告知，美國證券交易委員會認為這種賠償違反了19《證券法》所規定的公共政策，因此是不可執行的。在該事件中就該等法律責任提出的賠償申索(註冊人支付的費用除外) 董事，註冊人在任何訴訟、訴訟或法律程序的成功抗辯中的高級人員或控制人)由該董事、高級職員或控制人與正在登記的證券有關，除非註冊人認為其律師的問題已通過控制先例解決，向具有適當管轄權的法院提交問題他們的這種賠償違反了19證券法中所表達的公共政策，並將由最終裁決管轄這樣的問題。

簽名

根據要求根據《證券法》，登記人已正式促使本登記聲明由以下簽署人代表其簽署，正式授權，於2024年7月22日在馬利蘭州貝塞斯達舉行。

Ilearninggenines，公司

作者：

/S/ 哈裡什·奇丹巴蘭

151

姓名：

哈里什·奇丹巴蘭

標題：

執行長

根據《證券條例》的要求根據19《公民權利和政治權利國際法》，本登記書由下列人員以指定的身分在指定的日期簽署。

簽名

標題

日期

/S/哈裡什奇丹巴蘭語

首席執行官兼董事會主席

2024年7月22日

哈里什·奇丹巴蘭

（執行長）

財務長

152

2024年7月22日

法爾漢·納克維

（首席財務會計官）

主任

2024年7月22日

巴拉克里希南·阿拉卡爾

主任

2024年7月22日

馬修·巴格

主任

2024年7月22日

伊恩·戴維斯

主任

2024年7月22日

布魯斯·梅爾曼

主任

2024年7月22日

麥可·MoE

主任

2024年7月22日

託馬斯·奧利維爾

* 作者： /s/ Harish Chidambaran

哈里什·奇丹巴蘭

事實律師

II-8

S-1/A

真

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aile：FirstPromisoryNoteMember

aile：FirstPromisoryNoteMember

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aile：ThirdPromisoryNoteMember.美國公認會計準則：投資者會員

aile：ThirdPromisoryNoteMember

美國公認會計準則：投資者會員

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美國公認會計準則：投資者會員

aile：FourthPromisoryNoteMember

美國公認會計準則：投資者會員

aile：PromissionNotesMember

	aile：合併招聘會員		%
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us-gaap：OverAllotmentOptionMember⁽¹⁾		11,551,784		8.6	%
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(2)	aile：FounderSharesMember

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aile：FounderSharesMember

163

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Notes to Condensed Consolidated Financial Statements (Unaudited)	F-61

	Page
AUDITED FINANCIAL STATEMENTS OF ILEARNINGENGINES, INC.:
Report of Independent Registered Public Accounting Firm	F-76
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-77
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021	F-78
Consolidated Statements of Changes in Shareholders’ Deficit for the years ended December 31, 2023, 2022 and 2021	F-79
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021	F-80
Notes to Consolidated Financial Statements	F-81

F-1

ILEARNINGENGINES INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2024			December 31, 2023
ASSETS	(unaudited)
Current assets
Cash	$	26,757		$	145,669
Prepaid expenses		60,750			48,319
Prepaid income tax		16,795			65,585
Total Current Assets		104,302			259,573

Cash and investments held in Trust Account		10,788,134			46,744,889
TOTAL ASSETS	$	10,892,436		$	47,004,462

LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	5,481,646		$	4,099,162
Excise tax payable		2,472,591			2,472,591
Promissory note – related party		2,230,000			2,180,000
Forward purchase agreement liability		1,500,000			1,500,000
Convertible promissory notes – related party		2,780,000			2,620,000
Total Current Liabilities		14,464,237			12,871,753

Deferred underwriting fee payable		6,000,000			10,062,500
Warrant liabilities		4,072,500			1,810,000
Total Liabilities		24,536,737			24,744,253

Commitments and Contingencies
Class A common stock subject to possible redemption, $0.0001 par value; 1,017,030 and 4,445,813 shares issued and outstanding at approximately $10.61 and $10.51 per share redemption value as of March 31, 2024 and December 31, 2023, respectively		10,788,134			46,744,889

Stockholders’ Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding as of March 31, 2024 and December 31, 2023		—			—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized, none issued and outstanding (excluding 1,017,030 and 4,445,813 subject to possible redemption), respectively, as of March 31, 2024 and December 31, 2023		—			—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,187,500 shares issued and outstanding as of March 31, 2024 and December 31, 2023		719			719
Additional paid-in capital		410,772			—
Accumulated deficit		(24,843,926	)		(24,485,399	)
Total Stockholders’ Deficit		(24,432,435	)		(24,484,680	)
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT	$	10,892,436		$	47,004,462

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F-2

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For The Three Months Ended March 31,
	2024			2023

General and administrative expenses	$	1,545,279		$	828,626
Loss from operations		(1,545,279	)		(828,626	)

Other (loss) income:
Change in fair value of warrant liabilities		(2,262,500	)		(2,610,000	)
Gain from forgiveness of deferred underwriting commissions		184,844			—
Non-redemption consideration		(763,446	)		—
Interest Expense - Promissory Note		(33,736	)		—
Interest earned on cash and investments held in Trust Account		232,724			2,199,882
Total other (loss) income, net		(2,642,114	)		(410,118	)

Loss before provision for income taxes		(4,187,393	)		(1,238,744	)
Provision for income taxes		(48,790	)		(455,948	)
Net loss	$	(4,236,183	)	$	(1,694,692	)

Weighted average shares outstanding, Class A common stock		2,373,472			21,188,697

Basic and diluted net loss per share, Class A common stock	$	(0.44	)	$	(0.06	)

Weighted average shares outstanding, Class B common stock		7,187,500			7,187,500

Basic and diluted net loss per share, Class B common stock	$	(0.44	)	$	(0.06	)

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

F-3

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

	Class A Common Stock				Class B Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance – January 1, 2024 (audited)		—	$	—		7,187,500	$	719	$	—		$	(24,485,399	)	$	(24,484,680	)
Accretion of Class A common stock subject to possible redemption		—		—		—		—		(352,674	)		—			(352,674	)
Reduction of Deferred Underwriting Fee		—		—		—		—		—			3,877,656			3,877,656
Consideration for non-redemption agreement		—		—		—		—		763,446			—			763,446
Net loss		—		—		—		—		—			(4,236,183	)		(4,236,183	)
Balance – March 31, 2024 (unaudited)		—	$	—		7,187,500	$	719	$	410,772		$	(24,843,926	)	$	(24,432,435	)

FOR THE THREE MONTHS ENDED MARCH 31, 2023

	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – January 1, 2023 (audited)		—	$	—		7,187,500	$	719	$	—	$	(12,477,730	)	$	(12,477,011	)
Accretion of Class A common Stock Subject to Redemption		—		—		—		—		—		(2,355,234	)		(2,355,234	)
Net loss		—		—		—		—		—		(1,694,692	)		(1,694,692	)
Balance – March 31, 2023 (unaudited)		—	$	—		7,187,500	$	719	$	—	$	(16,527,656	)	$	(16,526,937	)

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

F-4

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31,
	2024			2023
Cash Flows from Operating Activities:
Net loss	$	(4,236,183	)	$	(1,694,692	)
Adjustments to reconcile net loss to net cash used in operating activities:
Reduction of Deferred Underwriting Fee		(184,844	)		—
Non-redemption consideration		763,446			—
Interest earned on investments held in Trust Account		(232,724	)		(2,199,882	)
Change in fair value of warrant liabilities		2,262,500			2,610,000
Changes in operating assets and liabilities:
Prepaid expenses		(12,431	)		(67,799	)
Prepaid income taxes		48,790			—
Accrued expenses		1,382,484			438,394
Income tax payable		—			455,948
Net cash used in operating activities		(208,962	)		(458,031	)

Cash Flows from Investing Activities:
Investment of cash in Trust Account		(160,000	)		(640,000	)
Cash withdrawn from Trust Account for payment of franchise tax obligations		40,050			40,050
Cash withdrawn from Trust Account in connection with redemptions		36,309,429			247,259,068
Net cash provided by investing activities		36,189,479			246,659,118

Cash Flows from Financing Activities:
Proceeds from promissory note - related party		50,000			—
Proceeds from non-convertible promissory note – related party		—			1,140,000
Proceeds from convertible promissory note – related party		160,000			—
Redemption of common stock		(36,309,429	)		(247,259,068	)
Net cash used in financing activities		(36,099,429	)		(246,119,068	)

Net Change in Cash		(118,912	)		82,019
Cash – Beginning of the period		145,669			145,980
Cash – End of the period	$	26,757		$	227,999

Non-Cash investing and financing activities:
Reduction of deferred underwriting fees	$	3,877,656		$	—
Non-redemption consideration	$	763,446		$	—

Supplementary cash flow information:
Cash paid for income taxes	$	—		$	367,000

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

F-5

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

iLearningEngines, Inc. formerly known as Arrowroot Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on November 5, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

The Company is not limited to a particular industry or sector for purposes of consummating a 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 March 31, 2024, the Company had not commenced any operations. All activity through March 31, 2024 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination, including activities in connection with the Business Combination (as defined and discussed below). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the cash held in the Trust Account (as defined below).

Financing

The registration statement for the Company’s Initial Public Offering was declared effective on March 1, 2021. On March 4, 2021, the Company consummated the Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 3,750,000 Units, at $10.00 per Unit, generating gross proceeds of $287,500,000.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,250,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Arrowroot Acquisition LLC (the “Sponsor”), generating gross proceeds of $8,250,000.

Transaction costs amounted to $16,392,714, consisting of $5,750,000 in cash underwriting fees, net of reimbursements, $10,062,500 of deferred underwriting fees and $580,214 of other offering costs.

Trust Account

Following the closing of the Initial Public Offering on March 4, 2021, an amount of $287,500,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), located in the United States and has been invested only 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 selected by the Company 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 and (ii) the distribution of the funds held in the Trust Account, as described below.

F-6

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Operations Prior to Business Combination with iLearningEngines Holdings Inc.

On February 28, 2023, the Company’s stockholders held a special meeting (the “Special Meeting”) and approved and adopted an amendment to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to extend the period of time for which the Company is required to consummate a Business Combination from March 4, 2023 (the “Original Termination Date”) to July 6, 2023 (the “Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the date (the “Termination Date”) to consummate an initial business combination on a monthly basis for up to seven times by an additional one month each time after the Charter Extension Date, by resolution of the Company’s board of directors (the “Board”) if requested by the Arrowroot Acquisition LLC (the “Sponsor”), and upon five days’ advance notice prior to the applicable Termination Date, until February 4, 2024 (each, an “Additional Charter Extension Date”) for a total of up to eleven months after the Original Termination Date, unless the closing of an initial Business Combination shall have occurred prior thereto (the “Extension”, such extension deadline, the “Extension Date”, and such proposal, the “Extension Proposal”). In connection with the Extension, shareholders holding 24,304,187 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account at a redemption price of approximately $10.17 per share. As a result, following the Special Meeting, approximately $247,259,068 in cash was removed from the Trust Account to pay such holders.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note, which Extension Funds were deposited into the Company’s Trust Account for its public stockholders, on January 5, 2024. This deposit enables the Company to extend the date by which it must complete its initial business combination from January 6, 2024 to February 6, 2024 (the “Seventh Extension”). The Seventh Extension is the final of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

On January 8, 2024, the Company received a notice (the “Annual Meeting Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company failed to hold an annual meeting of stockholders within 12 months after its fiscal year ended December 31, 2022, as required by Nasdaq Listing Rule 5620(a). In accordance with Nasdaq Listing Rule 5810(c)(2)(G), the Company had 45 calendar days (or until February 22, 2024) to submit a plan to regain compliance and, if Nasdaq accepts the plan, Nasdaq may grant the Company up to 180 calendar days from its fiscal year end, or until June 28, 2024, to regain compliance. The Company submitted a plan to regain compliance on February 22, 2024. While the compliance plan was pending, the Company’s securities continued to trade on Nasdaq. In connection with the closing of the Business Combination, Arrowroot Acquisition Corp. (NASDAQ: ARRW) changed its name to “iLearningEngines, Inc.” and is listed on the NASDAQ under the new ticker symbol “AILE”.

On February 2, 2024, the Company held a special meeting of stockholders (the “Extension Special Meeting”) to approve an amendment to the Company’s Certificate of Incorporation, as amended, (the “Charter Amendment”), to extend the Termination Date from February 4, 2024 to March 6, 2024 (the “Initial Subsequent Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate an initial business combination on a monthly basis up to five times by an additional one month each time after the Initial Subsequent Charter Extension Date (the Initial Subsequent Charter Extension Date, as further extended by the Company, the “Subsequent Extension Date”), by resolution of the Board, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until August 6, 2024, unless the closing of an initial business combination shall have occurred prior thereto (the “Subsequent Extension Proposal”). The stockholders of the Company approved the Subsequent Extension Proposal at the Extension Special Meeting and on February 2, 2024, the Company filed the Charter Amendment with the Delaware Secretary of State.

On February 2, 2024, the Company entered into a Non-Redemption Agreement (the “Non-Redemption Agreement”) with a certain public stockholder of the Company (the “Public Stockholder”) eligible to redeem its shares of the Company’s Class A common stock at the Company’s Extension Special Meeting. Pursuant to the Non-Redemption Agreement, the Public Stockholder agreed not to request redemption of 410,456 shares of Class A Common Stock (the “Non-Redeemed Shares”) in connection with the Extension Special Meeting. In consideration of the Public Stockholder entering into the Non-Redemption Agreement, immediately following the closing of Arrowroot’s initial business combination, the Sponsor agreed to forfeit 82,091 shares of Class B common stock (the “Class B Common Stock”), or 41,046 shares of Class B Common Stock in the event the initial business combination is consummated in February 2024, (“Forfeited Shares”). Pursuant to the terms of the Non-Redemption Agreement, Arrowroot agreed to issue to the Public Stockholder and the Public Stockholder agreed to acquire from Arrowroot, a number of newly-issued shares of common stock promptly following the consummation of Arrowroot’s initial business combination. As a result, the Company recorded $9.30 per share or $763,446 as an expense with a corresponding charge to additional paid-in capital to recognize the fair value of the shares transferred.

In connection with the vote to approve the Charter Amendment, the holders of 3,428,783 shares of Class A common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $10.59 per share, for an aggregate redemption amount of $36,309,429. After the satisfaction of such redemptions, the balance in the Company’s Trust Account was approximately $10.77 million.

F-7

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Business Combination

On April 27, 2023, the Company (formerly known as Arrowroot Acquisition Corp.) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with ARAC Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Arrowroot Acquisition Corp. (“Merger Sub”), and iLearningEngines Inc., a Delaware corporation (“Legacy iLearningEngines”).

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur (together with the other transactions contemplated by the Merger Agreement:

	(i)	at the closing of the Business Combination (the “Closing”), in accordance with the Delaware General Corporation Law, as amended (“DGCL”), Merger Sub will merge with and into Legacy iLearningEngines, the separate corporate existence of Merger Sub will cease and Legacy iLearningEngines will be the surviving corporation (the “Surviving Corporation”) and a wholly owned subsidiary of the Company (the “Merger”); and

	(ii)	as a result of the Merger, among other things, the outstanding shares of common stock of iLearningEngines (other than shares subject to Legacy Legacy iLearningEngines equity awards, treasury shares and dissenting shares) will be cancelled in exchange for the right to receive a number of shares of common stock of the Surviving Corporation equal to (x) the sum of (i) the Base Purchase Price (as defined below), minus (ii) the dollar value of the Company Incentive Amount (as defined below), plus (iii) the aggregate exercise price of the Company Warrants (as defined in the Merger Agreement) that are issued and outstanding immediately prior to the Effective Time, minus (iv) the aggregate amount of Note Balance (as defined in the Merger Agreement) divided by (y) $10.00. The “Base Purchase Price” means an amount equal to $1,285,000,000. The “Company Incentive Amount” means (x) the number of shares of the Company Class A Common Stock issuable to Legacy iLearningEngines securityholders (excluding, for the avoidance of doubt, the holders of Company Convertible Notes) at the Closing which Legacy iLearningEngines and the Company agree, at least two (2) business days prior to the Closing, to issue to certain private placement investors and non-redeeming stockholders (which amount will equal 82.03125% of all such shares issued to such investors and non-redeeming stockholders, with the remainder being contributed by the Sponsor), multiplied by (y) $10.00.

The Board of Directors of the Company (the “Board”) has (i) approved and declared advisable the Merger Agreement and the Business Combination and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of the Company.

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of the Company and Legacy iLearningEngines, (ii) effectiveness of the registration statement on Form S-4 to be filed by the Company in connection with the Business Combination, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) the absence of any injunction, order, statute, rule, or regulation enjoining or prohibiting the consummation of the Merger, (v) that the Company have at least $5,000,001 of net tangible assets upon Closing and (vi) receipt of approval for listing on Nasdaq the shares of common stock of the Surviving Corporation to be issued in connection with the Merger.

Other conditions to the Company’s obligations to consummate the Merger include, among others, that as of the Closing, (i) Legacy iLearningEngines shall have performed all covenants in all material respects and (ii) no Company Material Adverse Effect (as defined in the Merger Agreement) shall have occurred between the date of the Merger Agreement and Closing.

Other conditions to Legacy iLearningEngines’ obligations to consummate the Merger include, among others, that as of the Closing, (i) the Company shall have performed all covenants in all material respects (ii) no Acquiror Material Adverse Effect (as defined in the Merger Agreement) shall have occurred between the date of the Merger Agreement and Closing and (iii) the amount of cash available in the Trust Account into which substantially all of the proceeds of the Company’s initial public offering and private placement of its warrants have been deposited for the benefit of its public shareholders, together with the proceeds of certain private placement investments in the Company or Legacy iLearningEngines prior to closing and subject to the deductions and conditions set forth in the Merger Agreement, including deductions for certain the Company transaction expenses, is at least equal to or greater than $100,000,000.

F-8

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not solicit, initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Legacy iLearningEngines to prepare and deliver to the Company certain audited and unaudited condensed consolidated financial statements of Legacy iLearningEngines, (iv) the Company to prepare and file a registration statement on Form S-4 and take certain other actions to obtain the requisite approval of the Company’s stockholders of certain proposals regarding the Business Combination and (v) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.

On April 16, 2024, Arrowroot Acquisition Corp. (now known as iLearningEngines, Inc.), a Delaware corporation that is our predecessor, consummated the previously announced Business Combination pursuant to that certain Agreement and Plan of Merger and Reorganization, dated as of April 27, 2023, by and among Arrowroot Acquisition Corp., ARAC Merger Sub, Inc. (“Merger Sub”), and Legacy iLearningEngines. Merger Sub merged with and into Legacy iLearningEngines with the separate corporate existence of Merger Sub ceasing and Legacy iLearningEngines surviving the merger as a wholly owned subsidiary of the Company. In connection with the closing of the Business Combination, Arrowroot Acquisition Corp. changed its name to iLearningEngines, Inc. See the Form 8-K, filed with the SEC on April 22, 2024, for additional information.

Liquidity and Going Concern

On December 29, 2021, the Company issued an unsecured convertible promissory note (the “First Promissory Note”) with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $1,500,000. Upon issuance, $750,000 was drawn down on the note with an additional $200,000 drawn down on March 17, 2022. On April 21, 2022, the Company drew down the remaining $550,000 pursuant to the terms of the First Promissory Note. Following this drawdown, the full $1,500,000 available under the First Promissory Note was outstanding. There are no remaining funds available under the First Promissory Note for future drawdowns. As of March 31, 2024 and December 31, 2023, $1,500,000 were outstanding under this First Promissory Note.

The First Promissory Note is subject to the Sponsor’s approval and does not bear interest. The principal balance of the note will be payable on the earliest to occur of (i) the date on which the Company consummates its initial Business Combination or (ii) the date that the winding up of the Company is effective (such date, the “Maturity Date”). In the event the Company consummates its initial Business Combination, the Sponsor has the option on the Maturity Date to convert all or any portion of the principal outstanding under the First Promissory Note into that number of warrants (“Working Capital Warrants”) equal to the portion of the principal amount of the First Promissory Note being converted divided by $1.00, rounded up to the nearest whole number. The terms of the Working Capital Warrants, if any, would be identical to the terms of the private placement warrants issued by the Company at the time of its initial public offering, as described in the prospectus for the initial public offering dated March 1, 2021 and filed with the SEC, including the transfer restrictions applicable thereto. The First Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the First Promissory Note and all other sums payable with regard to the First Promissory Note becoming immediately due and payable.

On February 23, 2023, the Company issued an unsecured promissory note in the principal amount of $500,000 in favor of the Sponsor (the “Second Promissory Note”), which was funded in full by the Sponsor upon execution of the Second Promissory Note. The Second Promissory Note is not convertible into Working Capital Warrants or any other security pursuant to its terms. As of March 31, 2024 and December 31, 2023, the Company had $500,000 outstanding balance under this Second Promissory Note.

F-9

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

In connection with the approval by the Company’s stockholders of the Extension Date at the Special Meeting, the Sponsor issued to the Company an unsecured promissory note that matures upon the Company closing its initial Business Combination (the “Third Promissory Note”). Following the Extension Proposal being approved, the Sponsor funded $640,000 of the Third Promissory Note. Pursuant to the terms of the Third Promissory Note, on each Additional Charter Extension Date, the Sponsor must fund the lesser of (a) $160,000 or (b) $0.04 for each public share that is not redeemed in connection with the Special Meeting for an aggregate deposit of up to the lesser of (x) $1,120,000 or (y) $0.28 for each public share that is not redeemed in connection with the Special Meeting (if all seven additional monthly extensions are exercised). As of March 31, 2024 and December 31, 2023, the Company had $480,000 and $1,600,000 outstanding balance under this Third Promissory Note, respectively. Additionally, on January 5, 2024, the Company drew down an additional $160,000 pursuant to the Third Promissory Note. If the Company completes an initial Business Combination, the Company will, at the option of the Sponsor, repay the amounts loaned under the Third Promissory Note or convert a portion or all of the amounts loaned under such promissory note into warrants, which warrants will be identical to the private placement warrants issued in connection with the Company’s initial public offering. If the Company does not complete an initial Business Combination by the Subsequent Charter Extension Date, such promissory note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.

On June 13, 2023, the Company issued an unsecured promissory note (the “Fourth Promissory Note” and together with the First Promissory Note, the Second Promissory Note and the Third Promissory Note, the “Promissory Notes”) in the principal amount of $2,000,000 to the Sponsor. The Fourth Promissory Note bears interest at 15% per annum and matures upon closing of the Company’s initial Business Combination. In the event that the Company does not consummate an initial Business Combination, the Fourth Promissory Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven. The Fourth Promissory Note may be further drawn down from time to time prior to the Maturity Date upon request by the Company subject to the Sponsor’s approval. The Fourth Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Fourth Promissory Note and all other sums payable with regard to the Fourth Promissory Note becoming immediately due and payable. As of March 31, 2024 and December 31, 2023, the Company had a $750,000 and $1,200,000 principal outstanding under this Fourth Promissory Note, respectively. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024.

Notwithstanding the original terms of the Promissory Notes, the Company and Legacy iLearningEngines agreed, pursuant to the Merger Agreement, that if the Closing occurs, the Sponsor will have the option for the principal and interest outstanding under the Promissory Notes to be repaid in cash or convert into common stock of the Surviving Corporation at a price per share equal to $10.00 per share at the Closing; provided, however, that to the extent the Acquiror Transaction Expenses (as defined in the Merger Agreement) exceed $30,000,000 then the Promissory Notes will be settled by the conversion of an amount equal to the lesser of (i) the principal and interest outstanding under the Promissory Notes and (ii) the Excess Transaction Expenses (as defined in the Merger Agreement) into common stock of the Surviving Corporation at a price per share equal to $10.00 per share.

As of March 31, 2024, the Company had $26,757 of cash held outside its Trust Account for use as working capital, $10,788,134 in cash held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $14,359,935. As of March 31, 2024, $215,214 of the deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations. For the three months ended March 31, 2024, the Company withdrew an aggregate amount of $40,050 to pay income and franchise taxes and $36,309,429 in connection with redemption. In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company working capital loans, as defined below.

F-10

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated 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 consolidated 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 consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Emerging Growth Company

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 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 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 unaudited condensed consolidated 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.

F-11

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Use of Estimates

The preparation of the unaudited condensed consolidated 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

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 unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these unaudited condensed consolidated financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and 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 did not have any cash equivalents as March 31, 2024 and December 31, 2023.

Cash and Investments Held in Trust Account

Prior to the Special Meeting, the Company’s portfolio of cash and investments held in Trust Account was comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account were classified as trading securities. Trading securities are presented on the unaudited condensed consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these investments are included in interest earned on cash and investments held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. In connection with the Special Meeting, the Company liquidated its portfolio of investments held in the Trust Account and converted it into cash held in the Trust Account.

Offering Costs

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the unaudited condensed consolidated balance sheet date that are directly related to the Initial Public Offering. Offering costs associated with warrant liabilities were expensed as incurred in the unaudited condensed consolidated statements of operations. Offering costs associated with the Class A common stock issued were initially charged to temporary equity and then accreted to Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. Offering costs amounted to $16,392,714, of which $760,022 was allocated to the warrant liabilities and charged to the unaudited condensed consolidated statements of operations.

F-12

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at redemption value. Conditionally redeemable common stock (including common stock that features 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’ deficit. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of the Company’s unaudited condensed consolidated balance sheets.

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. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital and accumulated deficit.

As of March 31, 2024 and December 31, 2023, the Class A common stock subject to possible redemption reflected in the unaudited condensed consolidated balance sheets is reconciled in the following table:

Gross proceeds	$	287,500,000
Less:
Proceeds allocated to Public Warrants		(13,081,250	)
Class A common stock issuance costs		(15,632,692	)
Plus:
Remeasurement of carrying value to redemption value		31,531,449
Class A common stock subject to possible redemption at December 31, 2022		290,317,507
Less:
Redemption		(247,259,068	)
Plus:
Remeasurement of carrying value to redemption value		3,686,450
Class A common stock subject to possible redemption at December 31, 2023	$	46,744,889
Less:
Redemption		(36,309,429	)
Plus:
Remeasurement of carrying value to redemption value		352,674
Class A common stock subject to possible redemption at March 31, 2024	$	10,788,134

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriter of their over-allotment option in the amount of 3,750,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). The Public Warrants for periods where no observable traded price was available were valued using a Monte Carlo simulation. The Private Placement Warrants are valued using a modified Black-Scholes Option Pricing Model. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Public Warrants as of each relevant date (see Note 9).

F-13

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. ASC 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. As of March 31, 2024 and December 31, 2023, the Company’s deferred tax asset had a full valuation allowance recorded against it.

ASC 740-270-25-2 requires that an annual effective tax rate be determined, and such annual effective rate applied to year-to-date income in interim periods under ASC 740-270-30-5. The Company’s effective tax rate was 1.17% and (562.16%) for the three months ended March 31, 2024 and 2023, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three months ended March 31, 2024 and 2023, due to changes in fair value in warrant liability, the fair value in convertible promissory notes and the valuation allowance on the deferred tax assets.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Net Loss per Common Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Net income per common stock is computed by dividing net loss by the weighted average number of common stock outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from loss per common share as the redemption value approximates fair value.

The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 22,625,000 shares of Class A common stock in the calculation of diluted loss per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. As of March 31, 2024 and 2023, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented.

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

	For the Three Months Ended March 31,
	2024						2023
	Class A			Class B			Class A			Class B
Basic net loss per common stock
Numerator:
Allocation of net loss, as adjusted	$	(1,051,615	)	$	(3,184,568	)	$	(1,265,438	)	$	(429,254	)
Denominator:
Basic weighted average shares outstanding		2,373,472			7,187,500			21,188,697			7,187,500

Basic net loss per common share	$	(0.44	)	$	(0.44	)	$	(0.06	)	$	(0.06	)

F-14

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Concentration of Credit Risk

The Company has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Fair Value of Financial Instruments

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 accompanying unaudited condensed consolidated balance sheets, primarily due to their short-term nature, other than the warrant liabilities (see Note 9).

Recent Accounting Standards

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company has adopted ASU 2020-06. The adoption of ASU-2020-06 did not have an impact on the Company’s financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriters of their over-allotment option in the amount of 3,750,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one Public Warrant. Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8).

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 8,250,000 Private Placement Warrants, at a price of $1.00 per warrant, or $8,250,000 in the aggregate. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment (see Note 8). A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company did not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account would be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants would expire worthless.

F-15

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

In November 2020, the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $30,000. Subsequently, in December 2020 the Company effectuated a 5-for-4 stock split, pursuant to which an additional 1,437,500 shares of Class B common stock were issued, resulting in an aggregate of 7,187,500 Founder Shares issued and outstanding. The Founder Shares included an aggregate of up to 937,500 Founder Shares subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. In January 2021, the Sponsor transferred 40,000 founder shares to each of three Director nominees, none of which are subject to forfeiture in the event that the underwriters’ over-allotment option was not exercised in full. As a result of the underwriters’ election to fully exercise their over-allotment option March 4, 2021, no Founder Shares are currently subject to forfeiture.

The transfer of the Founders Shares to the Company’s director nominees is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founder Shares were effectively transferred subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified).

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Administrative Support Agreement

The Company entered into an agreement, commencing on March 4, 2021, through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $20,000 per month for office space, secretarial, and administrative support services. For the three months ended March 31, 2024, the Company incurred $60,000 in fees for these services. For the three months ended March 31, 2023, the Company incurred and paid $60,000 in fees for these services. There were $60,000 and $0 of fees outstanding for these services as of March 31, 2024 and December 31, 2023.

Promissory Notes — Related Parties

On December 21, 2020, the Sponsor issued an unsecured promissory note to the Company (the “IPO Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The IPO Promissory Note was non-interest bearing and payable on the earlier of (i) July 31, 2021, or (ii) the consummation of the Initial Public Offering. The outstanding balance under the IPO Promissory Note of $149,992 was repaid at the closing of the Initial Public Offering on March 4, 2021. No future borrowings are permitted.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Upon completion of the Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination had not closed, the Company could use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

F-16

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The Company has determined that bifurcation of a single derivative that comprises all of the fair value of the conversion feature (i.e., derivative instrument) is necessary under ASC 815-15-25-7 through 25-10. As a result, the derivative value was deemed to be de minimis at the issuance date and at each subsequent reporting date resulting in no change in the value of the derivative. The derivative will continue to be monitored and measured at each reporting period until the notes are settled.

On December 29, 2021, the Company issued its First Promissory Note with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $1,500,000. The note was issued in connection with advances the Sponsor may make in the future, to the Company for working capital expenses. Upon issuance, $750,000 was drawn down on the note with an additional $200,000 drawn down on March 17, 2022. On April 21, 2022, the Company drew down the remaining $550,000 pursuant to the terms of the First Promissory Note. Following this drawdown, the full $1,500,000 available under the First Promissory Note was outstanding. There are no remaining funds available under the First Promissory Note for future drawdowns.

In connection with the approval by the Company’s stockholders of the Extension Date at the Special Meeting, the Sponsor issued to the Company an unsecured promissory note that matures upon the Company closing its initial Business Combination (the “Third Promissory Note”). Following the Extension Proposal being approved, the Sponsor funded $640,000 of the Third Promissory Note. Pursuant to the terms of the Third Promissory Note, on each Additional Charter Extension Date, the Sponsor must fund the lesser of (a) $160,000 or (b) $0.04 for each public share that is not redeemed in connection with the Special Meeting for an aggregate deposit of up to the lesser of (x) $1,120,000 or (y) $0.28 for each public share that is not redeemed in connection with the Special Meeting (if all seven additional monthly extensions are exercised). As of March 31, 2024 and December 31, 2023, the Company had a $1,600,000 outstanding balance under this Third Promissory Note. Additionally, on January 5, 2024, the Company drew down an additional $160,000 pursuant to the Third Promissory Note. Upon completion of the Business Combination, the Company would, at the option of the Sponsor, repay the amounts loaned under the Third Promissory Note or convert a portion or all of the amounts loaned under such promissory note into warrants, which warrants will be identical to the private placement warrants issued in connection with the Company’s initial public offering. If the Company had not completed an initial Business Combination by the Subsequent Charter Extension Date, such promissory note would be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.

On June 13, 2023, the Company issued an unsecured promissory note in the principal amount of $2,000,000 in favor of the Sponsor (the “Fourth Promissory Note” and together with the First Promissory Note, the Second Promissory Note and the Third Promissory Note, the “Promissory Notes”), of which $700,000 was funded by the Sponsor upon execution of the Note. On September 27, 2023, the Company drew down an additional amount of $500,000 pursuant to the terms of the Fourth Promissory Note, after which $1,200,000 was outstanding under the Note. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024. There remains $750,000 available under the Note for future drawdowns. The Fourth Promissory Note bears interest at 15% per annum and matures upon closing of the Company’s initial business combination or the date that the winding up of the Company is effective (such date, the “Maturity Date”). The Fourth Promissory Note is not convertible into Working Capital Warrants or any other security. In the event that the Company had not consummated an initial business combination, the Fourth Promissory Note would be repaid only from funds held outside of the Trust Account established in connection with the Company’s initial public offering or will be forfeited, eliminated or otherwise forgiven. The Fourth Promissory Note may be further drawn down from time to time prior to the Maturity Date upon request by the Company subject to the Sponsor’s approval. The Fourth Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Fourth Promissory Note and all other sums payable with regard to the Fourth Promissory Note becoming immediately due and payable. As of March 31, 2024 and December 31, 2023, the Company had a $480,000 and $1,200,000 outstanding balance under this Fourth Promissory Note. As of March 31, 2024 and December 31, 2023, the Company incurred $33,736 and $89,408 of interest expense, respectively, which is included in Accrued Expenses on the balance sheet. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024.

Notwithstanding the original terms the Promissory Notes, the Company and Legacy iLearningEngines agreed, pursuant to the Merger Agreement, that if the Closing occurs, the Sponsor will have the option for the principal and interest outstanding under the Promissory Notes to be repaid in cash or convert into common stock of the Surviving Corporation at a price per share equal to $10.00 per share at the Closing; provided, however, that to the extent the Acquiror Transaction Expenses (as defined in the Merger Agreement) exceed $30,000,000, then the Promissory Notes will be settled by the conversion of an amount equal to the lesser of (i) the principal and interest outstanding under the Promissory Notes and (ii) the Excess Transaction Expenses (as defined in the Merger Agreement) into common stock of the Surviving Corporation at a price per share equal to $10.00 per share.

The Board approved a draw of an aggregate of $160,000 (the “First Extension Funds”) pursuant to the Third Promissory Note, between the Company and Arrowroot Acquisition LLC (the “Lender”), which First Extension Funds were deposited into the Company’s Trust Account on July 6, 2023. This deposit enabled the Company to extend the date by which it must complete its initial business combination from July 6, 2023 to August 6, 2023 (the “First Extension”). The First Extension was the first of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

F-17

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The Board approved a draw of an aggregate of $160,000 (the “Second Extension Funds”) pursuant to the Third Promissory Note, which Second Extension Funds were deposited into the Company’s Trust Account on August 4, 2023. This deposit enables the Company to extend the date by which it must complete its initial business combination from August 6, 2023 to September 6, 2023 (the “Second Extension”). The Second Extension is the second of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

The Board approved a draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Third Extension Funds”), which Third Extension Funds were deposited into the Company’s Trust Account on September 6, 2023. This deposit enables the Company to extend the date by which it must complete its initial business combination from September 6, 2023 to October 6, 2023 (the “Third Extension”). The Third Extension is the third of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

The Board approved a draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Fourth Extension Funds”), which Fourth Extension Funds were deposited into the Company’s Trust Account on October 4, 2023. This deposit enables the Company to extend the date by which it must complete its initial business combination from October 6, 2023 to November 6, 2023 (the “Fourth Extension”). The Fourth Extension is the fourth of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Fifth Extension Funds”), which Fifth Extension Funds were deposited into the Company’s Trust Account for its public stockholders on November 2, 2023. This deposit enables the Company to extend the date by which it must complete its initial business combination from November 6, 2023 to December 6, 2023 (the “Fifth Extension”). The Fifth Extension is the fifth of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Sixth Extension Funds”), which Sixth Extension Funds were deposited into the Company’s Trust Account for its public stockholders on December 2, 2023. This deposit enables the Company to extend the date by which it must complete its initial business combination from December 6, 2023 to January 6, 2024 (the “Sixth Extension”). The Sixth Extension is the sixth of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Seventh Extension Funds”), which Seventh Extension Funds were deposited into the Company’s Trust Account for its public stockholders on January 5, 2024. This deposit enables the Company to extend the date by which it must complete its initial business combination from January 6, 2024 to February 6, 2024 (the “Seventh Extension”). The Seventh Extension is the final of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination. The Note does not bear interest and matures upon closing of the Company’s initial business combination.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Eighth Extension Funds”), which Eighth Extension Funds were deposited into the Company’s Trust Account for its public stockholders on February 5, 2024. This deposit enables the Company to extend the date by which it must complete its initial business combination from February 6, 2024 to March 6, 2024 (the “Eighth Extension”). The Eighth Extension is the first of an additional five one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination. The Note does not bear interest and matures upon closing of the Company’s initial business combination.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note (the “Ninth Extension Funds”), which Ninth Extension Funds were deposited into the Company’s Trust Account for its public stockholders on March 5, 2024. This deposit enables the Company to extend the date by which it must complete its initial business combination from March 6, 2024 to April 6, 2024 (the “Ninth Extension”). The Ninth Extension is the second of an additional five one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination. The Note does not bear interest and matures upon closing of the Company’s initial business combination.

The Third Promissory Note does not bear interest and matures upon closing of the Company’s initial business combination. In the event that the Company had not consummated an initial business combination, the Third Promissory Note would be repaid only from funds remaining outside of the Company’s Trust Account, if any, or will be forfeited, eliminated, or otherwise forgiven. Up to $1,760,000 of the total principal amount of the Third Promissory Note may be converted, in whole or in part, at the option of the Lender into warrants of the Company at a price of $1.00 per warrant, which warrants will be identical to the private placement warrants issued to the Lender at the time of the initial public offering of the Company.

In the event that the Company had not consummated an initial business combination, the Note would be repaid only from funds remaining outside of the Company’s Trust Account, if any, or will be forfeited, eliminated, or otherwise forgiven. Up to $1,760,000 of the total principal amount of the Note may be converted, in whole or in part, at the option of the Lender into warrants of the Company at a price of $1.00 per warrant, which warrants will be identical to the private placement warrants issued to the Lender at the time of the initial public offering of the Company.

F-18

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Pursuant to the terms of the Merger Agreement by and among Arrowroot Acquisition Corp., ARAC Merger Sub, Inc. and Legacy iLearningEngines, at closing Arrowroot Acquisition LLC elected to settle $500,000 of the Acquiror Transaction Expenses (as defined in the Agreement) in cash and convert the balance of the Acquiror Transaction Expenses into shares of common stock of the New iLearningEngines (“New iLearningEngines Common Stock”).

Forward Purchase Agreement

On April 26, 2023, the Company and Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (“Polar”) entered into an agreement (“Forward Purchase Agreement”), pursuant to which, among other things, the Company agreed to purchase up to 2,500,000 shares from Polar at $10.77 per share (the “Initial Price”), which is $10.17 (the “Redemption Price”, plus $0.60). In exchange for the Company’s purchase of the shares, Polar agreed to waive redemption rights on the shares that Polar owns in connection with the Business Combination.

The Forward Purchase Agreement provides that at the closing of the Business Combination, the Company will pre-pay Polar for the forward purchase an amount equal to the sum of (x) the number of Class A Ordinary Shares owned by Polar on the day prior to the closing of a business combination multiplied by the Redemption Price (the “Polar Shares”) and (y) the proceeds from Polar’s purchase of a number of Class A Ordinary Shares of up to 2,500,000 shares less the Polar Shares (the “Prepayment Amount”).

The scheduled maturity date of the forward transaction is one year from the closing of the Business Combination (the “Maturity Date”), except that the Maturity Date may be accelerated if the shares trade under $2.00 for 10 out of 30 days or the shares are delisted by Nasdaq. Polar has the right to early terminate the transaction (in whole or in part) before the Maturity Date by delivering notice to the Company. If Polar terminates the Forward Purchase Agreement with respect to some or all of the shares prior to the Maturity Date, Polar will return an amount to the Company equal to the number of terminated shares multiplied by the Redemption Price. The Company can terminate the Forward Purchase Agreement prior to the redemption deadline if the Company pays Polar a $300,000 break-up fee. On the Maturity Date, the Company may be required to make a cash payment to Polar if Polar has not terminated the Forward Purchase Agreement in full equal to the number of shares (less any shares terminated prior to the Maturity Date) multiplied by $0.60.

Upon closing of the Business Combination, the Company agreed to pay $246,000 and shares of iLearningEngines have been issued as repayment for the Forward Purchase Agreement.

NOTE 6. COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. Although a number of vaccines for COVID-19 have been developed and are in the process of being deployed in certain countries, including the United States, the timing for widespread vaccination is uncertain, and these vaccines may be less effective against new mutated strains of the virus. The impact of this coronavirus continues to evolve and is affecting the economies of many nations, individual companies and markets in general and may continue to last for an extended period of time. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these unaudited condensed consolidated financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed consolidated financial statements.

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 of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which 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 (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.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.

F-19

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

Registration Rights

Pursuant to a registration rights agreement entered into on March 4, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggyback” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $10,062,500 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

On March 27, 2024, the Company signed a fee reduction agreement with Cantor Fitzgerald in which the underwriters forfeited 40.37% of the deferred underwriting commissions resulting in a reduction of $4,062,500 with a remaining $6,000,000 that is deferred and payable upon the business combination. The reduction of the $4,062,500 resulted in a gain from forgiveness of deferred underwriting commissions of $184,844 recorded as reduction of underwriting fee payable on the income statement and $3,877,656 was recorded to accumulated deficit.

Merger Agreement

As described in greater detail in Note 1, on April 27, 2023, the Company entered into the Merger Agreement.

The Merger

	(i)	At the Closing, in accordance with the DGCL, Merger Sub will merge with and into Legacy iLearningEngines, the separate corporate existence of Merger Sub will cease and Legacy iLearningEngines will be the surviving corporation and a wholly owned subsidiary of the Company; and

	(ii)	as a result of the Merger, among other things, the outstanding shares of common stock of iLearningEngines (other than shares subject to Legacy iLearningEngines equity awards, treasury shares and dissenting shares) will be cancelled in exchange for the right to receive a number of shares of common stock of the Surviving Corporation equal to (x) the sum of (i) the Base Purchase Price (as defined below), minus (ii) the dollar value of the Company Incentive Amount (as defined below), plus (iii) the aggregate exercise price of the Company Warrants (as defined in the Merger Agreement) that are issued and outstanding immediately prior to the Effective Time, minus (iv) the aggregate amount of Note Balance (as defined in the Company Convertible Notes (as defined in the Merger Agreement)) divided by (y) $10.00. The “Base Purchase Price” means an amount equal to $1,285,000,000. The “Company Incentive Amount” means (x) the number of shares of the Company Class A Common Stock issuable to Legacy iLearningEngines securityholders (excluding, for the avoidance of doubt, the holders of Company Convertible Notes) at the Closing which Legacy iLearningEngines and the Company agree, at least two (2) business days prior to the Closing, to issue to certain private placement investors and non-redeeming stockholders (which amount will equal 82.03125% of all such shares issued to such investors and non-redeeming stockholders, with the remainder being contributed by the Sponsor), multiplied by (y) $10.00.

The Board has (i) approved and declared advisable the Merger Agreement and the Business Combination and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of the Company. The consummation of the Business Combination is subject to certain conditions as further described in the Merger Agreement.

Sponsor Support Agreement

On April 27, 2023, concurrently with the execution of the Merger Agreement, the Company and Legacy iLearningEngines entered into an agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, in connection with the Closing, the Sponsor agreed to (i) vote all its shares of the Company common stock in favor of the Business Combination, (ii) discharge any Excess Transaction Expenses (as defined in the Merger Agreement) by payment in cash or elect, at the option of Sponsor, to have the Company discharge any Excess Transaction Expenses by payment in cash against a corresponding cancellation of shares of the Company common stock held by Sponsor (or any combination thereof), (iii) loan all amounts contemplated by the proxy statement filed by the Company on or about February 13, 2023, pursuant to which the Company stockholders approved the extension of the deadline by which the Company must complete its Business Combination to July 6, 2023, including any amounts required in connection with any additional extension of such deadline, (iv) contribute the Sponsor Incentive Shares (as defined in the Merger Agreement), (v) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution or similar protection with respect to the Class B common stock of the Company, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement, and (vi) agree to be bound by any restrictions on transfer set forth in the Company’s bylaws, in each case, on the terms and subject to the conditions set forth therein.

F-20

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The scheduled maturity date of the forward transaction is one year from the Closing of the Business Combination (the “Maturity Date”), except that the Maturity Date may be accelerated if the shares trade under $2.00 for 10 out of 30 days or the shares are delisted by Nasdaq. Polar has the right to early terminate the transaction (in whole or in part) before the Maturity Date by delivering notice to the Company. If Polar terminates the Forward Purchase Agreement with respect to some or all of the shares prior to the Maturity Date, Polar will return an amount to the Company equal to the number of terminated shares multiplied by the Redemption Price. the Company can terminate the Forward Purchase Agreement prior to the redemption deadline if the Company pays Polar a $300,000 break-up fee. On the Maturity Date, the Company may be required to make a cash payment to Polar if Polar has not terminated the Forward Purchase Agreement in full equal to the number of shares (less any shares terminated prior to the Maturity Date) multiplied by $0.60.

As of March 31, 2024 and December 31, 2023, the value of the Forward Purchase Agreement was $1,500,000. Upon closing of the Business Combination, the Company agreed to pay $246,000, and shares of New iLearningEngines Common Stock have been issued as repayment for the Forward Purchase Agreement.

BTIG Fee Agreement

On July 25, 2023, BTIG, LLC (“BTIG”) and the Company entered into a letter agreement (the “BTIG Engagement Letter”) pursuant to which the Company engaged BTIG as a financial advisor in connection with the Business Combination.

On March 27, 2024, the Company and BTIG amended the BTIG Engagement Letter (the “BTIG Amendment”), pursuant to which, in lieu of payment in cash of the full amount of any advisory fees or other fees and expenses owed under the BTIG Engagement Letter, the Company agreed to issue shares of New iLearningEngines Common Stock in an aggregate amount of approximately $3 million along with approximately $53,000 of expenses.

The number of BTIG Fee Shares to be so issued, transferred and delivered to BTIG in satisfaction of the Success Fee shall be equal to the greater of (a) the dollar amount of the Success Fee (less any portion of the Success Fee previously paid in cash, if any) divided by $10.00 and (b) the quotient obtained by dividing (x) the dollar amount of the Success Fee (less any portion of the Success Fee previously paid in cash, if any) by (y) the VWAP (as defined herein) of the New Common Stock over the seven (7) Trading Days immediately preceding the Initial Filing Date.

Goodwin Agreement

On March 25, 2024, Goodwin Proctor LLP (“Goodwin”) and the Company entered into an agreement pursuant to which the Company will pay $2,000,000 upon closing of the Business Combination and another $1,000,000 as a deferred payment before July 31, 2024. As of March 31, 2024 and December 31, 2023, the Company accrued $2,718,385 and $1,907,277, respectively.

Cooley Fee Agreement

On October 20, 2020, Cooley LLP and Arrowroot entered into a letter agreement (the “Cooley Engagement Letter”) pursuant to which Arrowroot engaged Cooley as a law firm in connection with the Business Combination. On March 27, 2024, Cooley and Arrowroot amended the Cooley Engagement Letter (the “Cooley Amendment”), to provide that, Arrowroot will pay to Cooley $2,000,000 in legal fees (the “Cooley Deferred Law Fee”) in the form of a certain number of shares (the “Cooley Fee Shares”). The Cooley Fee Shares will be issued in the form of shares of New iLearningEngines Common Stock (as defined below) in an amount of shares equal to the greater of (i) $2,000,000, divided by $10.00 and (ii) the quotient obtained by dividing (x) $2,000,000 by (y) the VWAP (as defined in the Cooley Amendment) of New iLearningEngines Common Stock over the seven (7) trading days immediately prior to the initial filing of the Resale Registration Statement (as defined in the Cooley Amendment). Under the Cooley Amendment, the combined company will be subject to, among others, certain obligations with respect to the filing of the resale registration statement and maintaining the continued effectiveness of the resale registration statement. As of March 31, 2024 and December 31, 2023, the Company accrued $1,205,451 and $1,187,272, respectively.

F-21

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 7. STOCKHOLDERS’ DEFICIT

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. As of March 31, 2024 and December 31, 2023, there were 1,017,030 and 4,445,813 shares of Class A common stock issued and outstanding, respectively, which are subject to possible redemption and presented as temporary equity.

Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of March 31, 2024 and December 31, 2023, there were 7,187,500 shares of common stock issued and outstanding.

Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders except as otherwise required by law.

The shares of Class B common stock will automatically convert into Class A common stock upon the consummation of a Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion, including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

NOTE 8. WARRANT LIABILITIES

As of March 31, 2024 and December 31, 2023, there were 14,375,000 Public Warrants outstanding. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The Public Warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the initial public offering and will expire five years after the completion of the initial Business Combination or earlier upon redemption or the Company’s liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

F-22

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Once the warrants become exercisable, the Company may call the warrants for redemption for cash:

	●	in whole and not in part;

	●	at a price of $0.01 per warrant;

	●	upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

	●	if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending three business days before the Company sends to the notice of redemption to the warrant holders.

If and when the warrants become redeemable by the Company for cash, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

As of March 31, 2024 and December 31, 2023, there were 8,250,000 Private Placement Warrants outstanding. Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

F-23

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 9. FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:

Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:

Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:

Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability.

As of March 31, 2024, assets held in the Trust Account were comprised of $10,788,134 in cash. As of December 31, 2023, assets held in the Trust Account were comprised of $46,744,889 in cash. During the three months ended March 31, 2024, the Company withdrew an amount of $40,050 in interest income from the Trust Account to pay franchise and income taxes and $36,309,429 in connection with redemptions.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description	Level		March 31, 2024		December 31, 2023
Assets:
Cash and investments held in Trust Account		1	$	10,788,134	$	46,744,889

Liabilities:
Warrant Liabilities – Public Warrants		1	$	2,587,500	$	1,150,000
Warrant Liabilities – Private Placement Warrants		3	$	1,485,000	$	660,000
Forward Purchase Agreement		3	$	1,500,000	$	1,500,000

The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying unaudited condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the unaudited condensed consolidated statements of operations.

The Private Placement Warrants are valued using a modified Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock. The expected volatility as of the initial public offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own Public Warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the public warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Placement Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the Public Warrants was used as the fair value of the Public Warrants as of each relevant date. The measurement of the Public Warrants after the detachment of the Public Warrants from the Units is classified as Level 1 due to the use of an observable market quote in an active market.

F-24

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

The Forward Purchase Agreement is measured at 2,500,000 shares at a price of $0.60 per share. This is considered to be a Level 3 fair value measurement as the price is based on a contractual amount which is not based on an observable input that reflects quoted prices.

The key inputs into the modified Black Scholes model for the Level 3 Warrants were as follows:

Input	March 31, 2024			December 31, 2023
Market price of public shares	$	10.85		$	10.47
Risk-free rate		4.21	%		3.81	%
Dividend yield		0.00	%		0.00	%
Exercise price	$	11.50		$	11.50
Volatility		0.0	%		0.0	%
Term to expiration (years)		0.04			0.25

The following tables present the changes in the fair value of Level 3 warrant liabilities:

	Private Placement
Fair value as of January 1, 2024	$	660,000
Change in fair value		825,000
Fair value as of March 31, 2024	$	1,485,000

	Private Placement Warrants
Fair value as of January 1, 2023	$	40,000
Change in fair value		950,000
Fair value as of March 31, 2023	$	990,000

Transfers to/from Levels 1, 2 or 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers from a Level 3 measurement to a Level 1 during the period ended March 31, 2024 and December 31, 2023.

There was no change in the fair value of the Forward Purchase Agreement as of March 31, 2024 and December 31, 2023.

NOTE 10. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events, other than below, that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.

F-25

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

On April 16, 2024 (the “Closing Date”), as contemplated in the Merger Agreement the Company consummated the merger transactions contemplated by the Merger Agreement, following the approval by Arrowroot’s stockholders at a special meeting of stockholders held on April 1, 2024 (the “ARRW Stockholder Meeting”), whereby Merger Sub merged with and into Legacy iLearningEngines with the separate corporate existence of Merger Sub ceasing (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”).

The Business Combination is being accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, although the Company issued shares for outstanding equity interests of Legacy iLearningEngines in the business combination, Arrowroot is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of the Company issuing stock for the net assets of Arrowroot, accompanied by a recapitalization. The net assets of Arrowroot is stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the business combination will be those of the Company.

In connection with the closing of the business combination, Arrowroot Acquisition Corp. (NASDAQ: ARRW) changed its name to “iLearningEngines, Inc.” and is listed on the NASDAQ under the new ticker symbol “AILE”.

As a result of the Merger and upon the Closing, among other things, (1) each share of Legacy iLearningEngines Common Stock issued and outstanding as of immediately prior to the Closing was exchanged for the right to receive the number of shares of common stock, par value $0.0001 per share, of New iLearningEngines equal to the exchange ratio of 0.8061480 (the “Exchange Ratio”) for an aggregate of 77,242,379 shares of New iLearningEngines Common Stock; (2) each share of Legacy iLearningEngines Common Stock held in the treasury of Legacy iLearningEngines was cancelled without any conversion thereof and no payment or distribution was or will be made with respect thereto; (3) each Vested RSU was cancelled and converted into the right to receive, subject to settlement and delivery in accordance with the Legacy iLearningEngines equity incentive plan, a number of New iLearningEngines Common Stock equal to the Exchange Ratio, for an aggregate of 5,675,890 shares of New iLearningEngines Common Stock; (4) each Unvested RSU was cancelled and converted into the right to receive a number of restricted stock units issued by the New iLearningEngines equal to the Exchange Ratio (“New iLearningEngines Converted RSU Award”), with each New iLearningEngines Converted RSU Award subject to the same terms and conditions as were applicable to the original Legacy iLearningEngines restricted stock unit award, for an aggregate of 78,730 shares of New iLearningEngines Common Stock subject to New iLearningEngines RSU Awards; (5) each share of vested Legacy iLearningEngines restricted stock was converted into the right to receive a number of shares of New iLearningEngines Common Stock equal to the Exchange Ratio, for an aggregate of 290,447 shares of New iLearningEngines Common Stock; (6) each share of unvested Legacy iLearningEngines restricted stock was converted into the right to receive a number of restricted shares of New iLearningEngines Common Stock (“New iLearningEngines Converted Restricted Stock”) equal to the Exchange Ratio, with substantially the same terms and conditions as were applicable to such unvested Legacy iLearningEngines restricted stock immediately prior to the Effective Time, which shares will be restricted subject to vesting on the books and records of Legacy iLearningEngines, for an aggregate of 32,151,912 shares of New iLearningEngines Converted Restricted Stock; and (7) each Convertible Note (as defined below) was converted into the right to receive a number of shares of New iLearningEngines Common Stock equal to the Note Balance (as defined in the Convertible Notes), divided by $10.00, for an aggregate of 13,060,608 shares of New iLearningEngines Common Stock.

In connection with the ARRW Stockholder Meeting (and related postponements) and the Business Combination, the holders of an aggregate of 460,114 shares of Arrowroot’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), exercised their right to redeem their shares for cash at a redemption price of approximately $10.36 per share, for an aggregate redemption amount of approximately $4.8 million. Upon the Closing, the Company received approximately $52.7 million in gross proceeds, comprising approximately $5.9 million from the Arrowroot trust account, approximately $17.4 million from the 2023 Convertible Notes (as defined below) and approximately $29.4 million from the 2024 Convertible Notes (as defined below).

F-26

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

On April 16, 2024, upon the filing of New iLearningEngines’ Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), each outstanding share of Arrowroot’s Class A Common Stock and Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) was redesignated into one validly issued, fully paid and non-assessable share of New iLearningEngines Common Stock. In addition, at the Closing, Arrowroot instructed its transfer agent to separate its public units into their component securities, and, as a result, Arrowroot’s public units no longer trade as a separate security and were delisted from The Nasdaq Stock Market LLC (“Nasdaq”).

After giving effect to the Business Combination and the conversion of each Convertible Note, there (i) were 134,970,114 issued and outstanding shares of New iLearningEngines Common Stock, consisting of the following: (a) 77,242,379 shares issued to holders of Legacy iLearningEngines common stock immediately prior to the Effective Time; (b) 32,442,359 shares issued to holders of Legacy iLearningEngines restricted stock awards immediately prior to the Effective Time; (c) 13,060,608 shares issued to the holders of convertible notes immediately prior to the Effective Time; (d) 556,886 shares held by former Arrowroot Class A Common Stockholders; (e) 6,705,409 shares held by former Arrowroot Class B Common Stockholders; (f) an aggregate of 4,419,998 shares issued to Venture Lending & Leasing IX, Inc. (“Venture Lending”) and WTI Fund X, Inc. (“WTI Fund X” and together with Venture Lending, the “Lenders”) pursuant to the Second Omnibus Amendment to Loan Documents with In2vate, L.L.C. and the Lenders; (g) an aggregate of 82,091 shares issued to certain investors pursuant to a non-redemption agreement with certain investors; and (h) an aggregate of 460,384 shares issued to the Sponsor; and (ii) warrants to purchase 22,624,975 shares of New iLearningEngines Common Stock, consisting of 14,374,975 public warrants, each exercisable for one share of New iLearningEngines Common Stock at a price of $11.50 per share, and 8,250,000 private warrants, each exercisable for one share of New iLearningEngines Common Stock at a price of $11.50 per share.

The Company negotiated concessions on accounts payable to other third-party vendors in several forms. The form of concessions include: (1) providing a discount to the total amount payable, (2) the option to settle certain payables in common stock, and (3) entering into a deferred payment agreement for certain payables. The concessions became effective on the Closing Date.

2023 Convertible Notes

Prior to the Closing, on April 27, 2023, Legacy iLearningEngines entered into a convertible note purchase agreement (the “2023 Convertible Note Purchase Agreement”), with certain investors (collectively, with all investors who may become party to the 2023 Convertible Note Purchase Agreement thereafter, the “2023 Convertible Note Investors”), pursuant to which, among other things, Legacy iLearningEngines issued and sold to the 2023 Convertible Note Investors convertible notes due in October 2025 (“2023 Convertible Notes”) with aggregate principal amount of $17,400,000, including to affiliates of the Sponsor. Each 2023 Convertible Note accrued interest at a rate of (i) 15% per annum until the aggregate accrued interest thereunder equals 25% of the principal amount of such note, and (ii) 8% per annum thereafter. Immediately prior to the consummation of the Business Combination, each 2023 Convertible Note automatically converted into 4,971,076 shares of Legacy iLearningEngines thereby entitling the holder thereof to receive, in connection with the consummation of the Business Combination, a number of shares New iLearningEngines Common Stock (rounded down to the nearest whole share) equal to (i) 2.75, multiplied by the outstanding principal under such 2023 Convertible Note, plus all accrued and unpaid interest thereon, divided by (ii) $10.00. A description of the 2023 Convertible Notes is included in the Proxy Statement/Prospectus in the section entitled “Certain Arrowroot Relationships and Related Party Transactions — Promissory Notes” beginning on page 126 of the Proxy Statement/Prospectus, which is incorporated herein by reference.

F-27

ILEARNINGENGINES, INC.

(FORMERLY KNOWN AS ARROWROOT ACQUISITION CORP.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

2024 Convertible Notes

In addition, on March 21, 2024, Legacy iLearningEngines entered into the 2024 convertible note purchase agreement (the “2024 Convertible Note Purchase Agreement”) with an investor (the “March Investor”), pursuant to which, among other things, Legacy iLearningEngines issued and sold a 2024 Convertible Note to the March Investor with an aggregate principal amount of $700,000. On April 16, 2024, Legacy iLearningEngines entered into the 2024 Convertible Note Purchase Agreement with certain investors (collectively, the “April Investors” and, together with the March Investor, the “2024 Convertible Note Investors”), pursuant to which, among other things, Legacy iLearningEngines issued and sold to the April Investors convertible notes due in October 2026 (“2024 Convertible Notes”) with an aggregate principal amount of $28,714,500. Each 2024 Convertible Note accrued interest at a rate of (i) 15% per annum until the aggregate accrued interest thereunder equals 25% of the principal amount of such note, and (ii) 8% per annum thereafter. Immediately prior to the consummation of the Business Combination, each 2024 Convertible Note automatically converted into shares of Legacy iLearningEngines thereby entitling the holder thereof to receive, in connection with the consummation of the Business Combination, a number of shares New iLearningEngines Common Stock (rounded down to the nearest whole share) equal to (i) 2.75, multiplied by the outstanding principal under such Convertible Note, plus all accrued and unpaid interest thereon, divided by (ii) $10.00. The price per share at which the Principal (as defined in the 2024 Convertible Notes), together with accrued but unpaid interest, on each 2024 Convertible Note converts into Incentive Shares (as defined in the 2024 Convertible Note Purchase Agreement) is referred to as the “Conversion Price” herein.

Revolving Loan Agreement

On April 17, 2024 (the “Loan Closing Date”), Legacy iLearningEngines entered into a Loan and Security Agreement (the “Revolving Loan Agreement”), by and among Legacy iLearningEngines as borrower (“Borrower”), the lenders party thereto (the “Lenders”) and East West Bank, as administrative agent and collateral agent for the Lenders (“Agent”). The Revolving Loan Agreement provides for (i) a revolving credit facility in an aggregate principal amount of up to $40.0 million and (ii) an uncommitted accordion facility allowing the Borrower to increase the revolving commitments by an additional principal amount of $20.0 at Borrower’s option and upon Agent’s approval (collectively, the “Revolving Loans”). Borrower drew $40.0 million in Revolving Loans on the Loan Closing Date, which was used (x) to repay in full Borrower’s existing indebtedness under the (i) Loan and Security Agreement, dated as of December 30, 2020, between Legacy iLearningEngines and Venture Lending & Leasing IX, Inc., (ii) Loan and Security Agreement, dated as of October 21, 2021, between Legacy iLearningEngines, and Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc. and (iii) Loan and Security Agreement, dated as of October 31, 2023, between Legacy iLearningEngines and WTI Fund X, Inc. (the “WTI Loan Agreements”) and which will be used for (y) for general corporate purposes.

The obligations under the Revolving Loan Agreement are secured by a perfected security interest in substantially all of the Borrower’s assets except for certain customary excluded property pursuant to the terms of the Revolving Loan Agreement. On the Loan Closing Date, the Company and In2Vate, L.L.C., an Oklahoma limited liability company (the “Guarantors”) and wholly-owned subsidiary of Legacy iLearningEngines entered into a Guaranty and Suretyship Agreement (the “Guaranty”) with the Agent, pursuant to which the Guarantors provided a guaranty of Borrower’s obligations under the Revolving Loan Agreement and provided a security interest in substantially all of the Guarantors’ assets except for certain customary excluded property pursuant to the terms of the Guaranty.

The interest rate applicable to the Revolving Loans is Adjusted Term SOFR (with an interest period of 1 or 3 months at the Borrower’s option) plus 3.50% per annum, subject to an Adjusted Term SOFR floor of 4.00%.

F-28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

Arrowroot Acquisition Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Arrowroot Acquisition Corp. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, if the Company is unable to raise additional funds to alleviate liquidity needs and complete a business combination by August 6, 2024 then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2020.

/s/ WithumSmith+Brown, PC

New York, New York

April 1, 2024

PCAOB Number 100

F-29

ARROWROOT ACQUISITION CORP.

CONSOLIDATED BALANCE SHEETS

	December 31, 2023			December 31, 2022
ASSETS
Current assets
Cash	$	145,669		$	145,980
Prepaid expenses		48,319			76,350
Prepaid income tax		65,585			—
Total Current Assets		259,573			222,330

Cash and investments held in Trust Account		46,744,889			290,737,917
TOTAL ASSETS	$	47,004,462		$	290,960,247

LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	4,099,162		$	1,063,841
Income tax payable		—			383,410
Excise tax payable		2,472,591			—
Promissory note – related party		2,180,000			—
Forward purchase agreement liability		1,500,000			—
Convertible promissory notes – related party		2,620,000			1,500,000
Total Current Liabilities		12,871,753			2,947,251

Deferred underwriting fee payable		10,062,500			10,062,500
Warrant liabilities		1,810,000			110,000
Total Liabilities		24,744,253			13,119,751

Commitments and Contingencies

Class A common stock subject to possible redemption, $0.0001 par value; 4,445,813 and 28,750,000 shares issued and outstanding at approximately $10.51 and $10.10 per share redemption value as of December 31, 2023 and 2022, respectively		46,744,889			290,317,507

Stockholders’ Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding as of December 31, 2023 and 2022		—			—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized, none issued and outstanding (excluding 4,445,813 and 28,750,000 subject to possible redemption), respectively, as of December 31, 2023 and 2022		—			—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,187,500 shares issued and outstanding as of December 31, 2023 and 2022		719			719
Accumulated deficit		(24,485,399	)		(12,477,730	)
Total Stockholders’ Deficit		(24,484,680	)		(12,477,011	)
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT	$	47,004,462		$	290,960,247

The accompanying notes are an integral part of the consolidated financial statements.

F-30

ARROWROOT ACQUISITION CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,			Year Ended December 31,
	2023			2022

General and administrative expenses	$	5,487,905		$	1,555,038
Loss from operations		(5,487,905	)		(1,555,038	)

Other income (expense):
Change in fair value of warrant liabilities		(1,700,000	)		11,881,250
Forward purchase agreement		(1,500,000	)		—
Interest expense - promissory note		(89,408	)		—
Interest earned on cash and investments held in Trust Account		3,492,690			3,945,497
Total other income (expense), net		203,282			15,826,747

(Loss) income before provision for income taxes		(5,284,623	)		14,271,709
Provision for income taxes		(564,005	)		(750,410	)
Net (loss) income	$	(5,848,628	)	$	13,521,299

Weighted average shares outstanding, Class A common stock		8,574,195			28,750,000

Basic and diluted net (loss) income per share, Class A common stock	$	(0.37	)	$	0.38

Weighted average shares outstanding, Class B common stock		7,187,500			7,187,500

Basic and diluted net (loss) income per share, Class B common stock	$	(0.37	)	$	0.38

The accompanying notes are an integral part of the consolidated financial statements.

F-31

ARROWROOT ACQUISITION CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – January 1, 2022		—	$	—		7,187,500	$	719	$	—	$	(23,181,522	)	$	(23,180,803	)
Accretion of Class A common stock subject to possible redemption		—		—		—		—		—		(2,817,507	)		(2,817,507	)
Net income		—		—		—		—		—		13,521,299			13,521,299

Balance – December 31, 2022		—		—		7,187,500		719		—		(12,477,730	)		(12,477,011	)
Accretion of Class A common stock subject to possible redemption		—		—		—		—		—		(3,686,450	)		(3,686,450	)
Excise tax payable attributable to redemption of common stock		—		—		—		—		—		(2,472,591	)		(2,472,591	)
Net loss		—		—		—		—		—		(5,848,628	)		(5,848,628	)
Balance – December 31, 2023		—	$	—		7,187,500	$	719	$	—	$	(24,485,399	)	$	(24,484,680	)

The accompanying notes are an integral part of the consolidated financial statements.

F-32

ARROWROOT ACQUISITION CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,			Year Ended December 31,
	2023			2022

Cash Flows from Operating Activities:
Net (loss) income	$	(5,848,628	)	$	13,521,299
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Interest earned on cash and investments held in Trust Account		(3,492,690	)		(3,945,497	)
Change in fair value of warrant liabilities		1,700,000			(11,881,250	)
Forward purchase agreement		1,500,000			—
Changes in operating assets and liabilities:
Prepaid expenses		28,031			438,203
Prepaid income tax		(65,585	)		—
Accrued expenses		3,035,321			(114,070	)
Income tax payable		(383,410	)		383,410
Net cash used in operating activities		(3,526,961	)		(1,597,905	)

Cash Flows from Investing Activities:
Investment of cash into Trust Account		(1,600,000	)		—
Cash withdrawn from Trust Account to pay franchise and income taxes		1,826,650			731,214
Cash withdrawn from Trust Account in connection with redemption		247,259,068			—
Net cash provided by investing activities		247,485,718			731,214

Cash Flows from Financing Activities:
Proceeds from promissory note – related party		2,180,000			—
Proceeds from convertible promissory note – related party		1,120,000			750,000
Redemption of common stock		(247,259,068	)		—
Net cash (used in) provided by financing activities		(243,959,068	)		750,000

Net Change in Cash		(311	)		(116,691	)
Cash – Beginning of the year		145,980			262,671
Cash – End of the year	$	145,669		$	145,980

Supplementary cash flow information:
Cash paid for income taxes	$	1,013,000		$	367,000

Non-cash investing and financing activities:
Excise tax payable attributable to redemption of common stock	$	2,472,591		$	—

The accompanying notes are an integral part of the consolidated financial statements.

F-33

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Arrowroot Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on November 5, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

As of December 31, 2023, the Company had not commenced any operations. All activity through December 31, 2023 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination, including activities in connection with the Business Combination (as defined and discussed below). The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the cash held in the Trust Account (as defined below).

On February 28, 2023, the Company’s stockholders held a special meeting (the “Special Meeting”) and approved and adopted an amendment to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to extend the period of time for which the Company is required to consummate a Business Combination from March 4, 2023 (the “Original Termination Date”) to July 6, 2023 (the “Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate an initial Business Combination on a monthly basis for up to seven times by an additional one month each time after the Charter Extension Date, by resolution of the Board if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until February 4, 2024 (each, an “Additional Charter Extension Date”) for a total of up to eleven months after the Original Termination Date, unless the closing of an initial Business Combination shall have occurred prior thereto (the “Extension”, such extension deadline, the “Extension Date”, and such proposal, the “Extension Proposal”). In connection with the Extension, shareholders holding 24,304,187 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account at a redemption price of approximately $10.17 per share. As a result, following the Special Meeting, approximately $247,259,068 in cash was removed from the Trust Account to pay such holders.

On February 2, 2024, the Company held a special meeting of stockholders (the “Extension Special Meeting”) to approve an amendment to Arrowroot’s amended and restated certificate of incorporation, as amended, (the “Charter Amendment”) to extend the Termination Date from February 4, 2024 to March 6, 2024 (the “Initial Subsequent Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate an initial business combination on a monthly basis up to five times by an additional one month each time after the Initial Subsequent Charter Extension Date (the Initial Subsequent Charter Extension Date, as further extended by Arrowroot, the “Subsequent Extension Date”), by resolution of the Company’s board of directors, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until August 6, 2024, unless the closing of an initial business combination shall have occurred prior thereto (the “Subsequent Extension Proposal”). The stockholders of the Company approved the Subsequent Extension Proposal at the Extension Special Meeting and on February 2, 2024, the Company filed the Charter Amendment with the Delaware Secretary of State.

Transaction costs amounted to $16,392,714, consisting of $5,750,000 in cash underwriting fees, net of reimbursements, $10,062,500 of deferred underwriting fees and $580,214 of other offering costs.

F-34

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding any deferred underwriting fees and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.

Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by the Subsequent Charter Extension Date and (c) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.

F-35

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The Company has until the Subsequent Charter Extension Date to complete a Business Combination (the “Combination Period”). If the Company has not completed a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Proposed Business Combination

On April 27, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ARAC Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and iLearningEngines, Inc., a Delaware corporation (“iLearningEngines”).

(i)

at the closing of the Business Combination (the “Closing”), in accordance with the Delaware General Corporation Law, as amended (“DGCL”), Merger Sub will merge with and into iLearningEngines, the separate corporate existence of Merger Sub will cease and iLearningEngines will be the surviving corporation (the “Surviving Corporation”) and a wholly owned subsidiary of the Company (the “Merger”); and

(ii)

as a result of the Merger, among other things, the outstanding shares of common stock of iLearningEngines (other than shares subject to iLearningEngines equity awards, treasury shares and dissenting shares) will be cancelled in exchange for the right to receive a number of shares of common stock of the Surviving Corporation equal to (x) the sum of (i) the Base Purchase Price (as defined below), minus (ii) the dollar value of the Company Incentive Amount (as defined below), plus (iii) the aggregate exercise price of the Company Warrants (as defined in the Merger Agreement) that are issued and outstanding immediately prior to the Effective Time, minus (iv) the aggregate amount of Note Balance (as defined in the Merger Agreement) divided by (y) $10.00. The “Base Purchase Price” means an amount equal to $1,285,000,000. The “Company Incentive Amount” means (x) the number of shares of the Company Class A Common Stock issuable to iLearningEngines securityholders (excluding, for the avoidance of doubt, the holders of Company Convertible Notes) at the Closing which iLearningEngines and the Company agree, at least two (2) business days prior to the Closing, to issue to certain private placement investors and non-redeeming stockholders (which amount will equal 82.03125% of all such shares issued to such investors and non-redeeming stockholders, with the remainder being contributed by the Sponsor), multiplied by (y) $10.00.

F-36

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of the Company and iLearningEngines, (ii) effectiveness of the registration statement on Form S-4 to be filed by the Company in connection with the Business Combination, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) the absence of any injunction, order, statute, rule, or regulation enjoining or prohibiting the consummation of the Merger, (v) that the Company have at least $5,000,001 of net tangible assets upon Closing and (vi) receipt of approval for listing on Nasdaq the shares of common stock of the Surviving Corporation to be issued in connection with the Merger.

Other conditions to the Company’s obligations to consummate the Merger include, among others, that as of the Closing, (i) iLearningEngines shall have performed all covenants in all material respects and (ii) no Company Material Adverse Effect (as defined in the Merger Agreement) shall have occurred between the date of the Merger Agreement and Closing.

Other conditions to iLearningEngines’s obligations to consummate the Merger include, among others, that as of the Closing, (i) the Company shall have performed all covenants in all material respects (ii) no Acquiror Material Adverse Effect (as defined in the Merger Agreement) shall have occurred between the date of the Merger Agreement and Closing and (iii) the amount of cash available in the Trust Account into which substantially all of the proceeds of the Company’s initial public offering and private placement of its warrants have been deposited for the benefit of its public shareholders, together with the proceeds of certain private placement investments in the Company or iLearningEngines prior to closing and subject to the deductions and conditions set forth in the Merger Agreement, including deductions for certain the Company transaction expenses, is at least equal to or greater than $100,000,000.

The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not solicit, initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) iLearningEngines to prepare and deliver to the Company certain audited and consolidated financial statements of iLearningEngines, (iv) the Company to prepare and file a registration statement on Form S-4 and take certain other actions to obtain the requisite approval of the Company’s stockholders of certain proposals regarding the Business Combination and (v) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.

Liquidity and Going Concern

On December 29, 2021, the Company issued an unsecured convertible promissory note (the “First Promissory Note”) with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $1,500,000. Upon issuance, $750,000 was drawn down on the note with an additional $200,000 drawn down on March 17, 2022. On April 21, 2022, the Company drew down the remaining $550,000 pursuant to the terms of the First Promissory Note. Following this drawdown, the full $1,500,000 available under the First Promissory Note was outstanding. There are no remaining funds available under the First Promissory Note for future drawdowns. As of December 31, 2023 and 2022, $1,500,000 and $1,500,000 were outstanding under this First Promissory Note, respectively.

On February 23, 2023, the Company issued an unsecured promissory note in the principal amount of $500,000 in favor of the Sponsor (the “Second Promissory Note”), which was funded in full by the Sponsor upon execution of the Second Promissory Note. The Second Promissory Note is not convertible into Working Capital Warrants or any other security pursuant to its terms. As of December 31, 2023, the Company had $500,000 outstanding balance under this Second Promissory Note.

F-37

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

In connection with the approval by the Company’s stockholders of the Extension Date at the Special Meeting, the Sponsor issued to the Company an unsecured promissory note that matures upon the Company closing its initial Business Combination (the “Third Promissory Note”). Following the Extension Proposal being approved, the Sponsor funded $640,000 of the Third Promissory Note. Pursuant to the terms of the Third Promissory Note, on each Additional Charter Extension Date, the Sponsor must fund the lesser of (a) $160,000 or (b) $0.04 for each public share that is not redeemed in connection with the Special Meeting for an aggregate deposit of up to the lesser of (x) $1,120,000 or (y) $0.28 for each public share that is not redeemed in connection with the Special Meeting (if all seven additional monthly extensions are exercised). As of December 31, 2023, the Company had $1,600,000 outstanding balance under this Third Promissory Note. Additionally, on January 5, 2024, the Company drew down an additional $160,000 pursuant to the Third Promissory Note. If the Company completes an initial Business Combination, the Company will, at the option of the Sponsor, repay the amounts loaned under the Third Promissory Note or convert a portion or all of the amounts loaned under such promissory note into warrants, which warrants will be identical to the private placement warrants issued in connection with the Company’s initial public offering. If the Company does not complete an initial Business Combination by the Subsequent Charter Extension Date, such promissory note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.

On June 13, 2023, the Company issued an unsecured promissory note (the “Fourth Promissory Note” and together with the First Promissory Note, the Second Promissory Note and the Third Promissory Note, the “Promissory Notes”) in the principal amount of $2,000,000 to the Sponsor. The Fourth Promissory Note bears interest at 15% per annum and matures upon closing of the Company’s initial Business Combination. In the event that the Company does not consummate an initial Business Combination, the Fourth Promissory Note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven. The Fourth Promissory Note may be further drawn down from time to time prior to the Maturity Date upon request by the Company subject to the Sponsor’s approval. The Fourth Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Fourth Promissory Note and all other sums payable with regard to the Fourth Promissory Note becoming immediately due and payable. As of December 31, 2023, the Company had a $1,200,000 principal outstanding under this Fourth Promissory Note. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024.

Notwithstanding the original terms of the Promissory Notes, the Company and iLearningEngines have agreed, pursuant to the Merger Agreement, that if the Closing occurs, the Sponsor will have the option for the principal and interest outstanding under the Promissory Notes to be repaid in cash or convert into common stock of the Surviving Corporation at a price per share equal to $10.00 per share at the Closing; provided, however, that to the extent the Acquiror Transaction Expenses (as defined in the Merger Agreement) exceed $30,000,000 then the Promissory Notes will be settled by the conversion of an amount equal to the lesser of (i) the principal and interest outstanding under the Promissory Notes and (ii) the Excess Transaction Expenses (as defined in the Merger Agreement) into common stock of the Surviving Corporation at a price per share equal to $10.00 per share.

As of December 31, 2023, the Company had $145,669 of cash held outside its Trust Account for use as working capital, $46,744,889 in cash held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $12,612,180. As of December 31, 2023, $686,759 of the deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations. As of December 31, 2023, the Company withdrew an aggregate amount of $1,826,650 to pay income and franchise taxes and $247,259,068 in connection with redemption. In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company working capital loans, as defined below.

F-38

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Management expects to incur significant costs in pursuit of its acquisition plans. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination, it would repay such loaned amounts. The Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs, obtain approval for an extension of the deadline or complete a Business Combination by the Extension Date, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Extension Date. The Company intends to complete a Business Combination before the mandatory liquidation date or obtain approval for an extension.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Emerging Growth Company

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 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 consolidated 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.

F-39

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

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 consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these consolidated financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

Cash and Investments Held in Trust Account

Prior to the Special Meeting, the Company’s portfolio of cash and investments held in Trust Account was comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account were classified as trading securities. Trading securities are presented on the consolidated balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these investments are included in interest earned on cash and investments held in Trust Account in the accompanying consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. In connection with the Special Meeting, the Company liquidated its portfolio of investments held in the Trust Account and converted it into cash held in the Trust Account.

Offering Costs

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the consolidated balance sheet date that are directly related to the Initial Public Offering. Offering costs associated with warrant liabilities were expensed as incurred in the consolidated statements of operations. Offering costs associated with the Class A common stock issued were initially charged to temporary equity and then accreted to Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. Offering costs amounted to $16,392,714, of which $760,022 was allocated to the warrant liabilities and charged to the consolidated statements of operations.

F-40

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Class A Common Stock Subject to Possible Redemption

At December 31, 2023 and 2022, the Class A common stock subject to possible redemption reflected in the consolidated balance sheets is reconciled in the following table:

Gross proceeds	$	287,500,000
Less:
Proceeds allocated to Public Warrants		(13,081,250	)
Class A common stock issuance costs		(15,632,692	)
Plus:
Remeasurement of carrying value to redemption value		31,531,449
Class A common stock subject to possible redemption at December 31, 2022		290,317,507
Less:
Redemption		(247,259,068	)
Plus:
Remeasurement of carrying value to redemption value		3,686,450
Class A common stock subject to possible redemption at December 31, 2023	$	46,744,889

Warrant Liabilities

F-41

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriter of their over-allotment option in the amount of 3,750,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). The Public Warrants for periods where no observable traded price was available were valued using a Monte Carlo simulation. The Private Placement Warrants are valued using a modified Black-Scholes Option Pricing Model. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Public Warrants as of each relevant date (see Note 10).

Income Taxes

The Company accounts for income taxes under ASC 740, “Income Taxes.” ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the consolidated financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. ASC 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. As of December 31, 2023 and 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it.

ASC 740-270-25-2 requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods under ASC 740-270-30-5. The Company’s effective tax rate was (10.67)% and (5.20)% for the years ended December 31, 2023 and 2022, respectively. The effective tax rate differs from the statutory tax rate of 21% for the years ended December 31, 2023 and 2022, due to changes in fair value in forward purchase agreement, and warrant liability, and the valuation allowance on the deferred tax assets.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company has identified the United States as its only “major” tax jurisdiction. The Company has been subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Net (Loss) Income per Common Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Net (loss) income per common stock is computed by dividing net (loss) income by the weighted average number of common stock outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from (loss) income per common share as the redemption value approximates fair value.

The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 22,625,000 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. As of December 31, 2023 and 2022, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net (loss) income per common share is the same as basic net (loss) income per common share for the periods presented.

F-42

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

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

	Year Ended December 31, 2023						Year Ended December 31, 2022
	Class A			Class B			Class A		Class B
Basic and diluted net (loss) income per common stock
Numerator:
Allocation of net (loss) income, as adjusted	$	(3,181,592	)	$	(2,667,036	)	$	10,817,039	$	2,704,260
Denominator:
Basic and diluted weighted average shares outstanding		8,574,195			7,187,500			28,750,000		7,187,500

Basic and diluted net (loss) income per common share	$	(0.37	)	$	(0.37	)	$	0.38	$	0.38

Concentration of Credit Risk

Fair Value of Financial Instruments

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 accompanying consolidated balance sheets, primarily due to their short-term nature, other than the warrant liabilities (see Note 10).

Recent Accounting Standards

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 8,250,000 Private Placement Warrants, at a price of $1.00 per warrant, or $8,250,000 in the aggregate. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment (see Note 8). A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.

F-43

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

Administrative Support Agreement

The Company entered into an agreement, commencing on March 4, 2021, through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $20,000 per month for office space, secretarial, and administrative support services. For the years ended December 31, 2023 and 2022, the Company incurred and paid $240,000 and $240,000 in fees for these services, respectively. There were no amounts outstanding in fees for these services at December 31, 2023 and 2022.

Promissory Notes — Related Parties

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

F-44

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

On February 23, 2023, the Company issued an unsecured promissory note in the principal amount of $500,000 in favor of the Sponsor (the “Second Promissory Note”), which was funded in full by the Sponsor upon execution of the Second Promissory Note. The Second Promissory Note is not convertible into Working Capital Warrants or any other security pursuant to its terms. As of December 31, 2023 and 2022, the Company had $500,000 and $0 outstanding balance under this Second Promissory Note, respectively.

In connection with the approval by the Company’s stockholders of the Extension Date at the Special Meeting, the Sponsor issued to the Company an unsecured promissory note that matures upon the Company closing its initial Business Combination (the “Third Promissory Note”). Following the Extension Proposal being approved, the Sponsor funded $640,000 of the Third Promissory Note. Pursuant to the terms of the Third Promissory Note, on each Additional Charter Extension Date, the Sponsor must fund the lesser of (a) $160,000 or (b) $0.04 for each public share that is not redeemed in connection with the Special Meeting for an aggregate deposit of up to the lesser of (x) $1,120,000 or (y) $0.28 for each public share that is not redeemed in connection with the Special Meeting (if all seven additional monthly extensions are exercised). As of December 31, 2023, the Company had a $1,600,000 outstanding balance under this Third Promissory Note. Additionally, on January 5, 2024, the Company drew down an additional $160,000 pursuant to the Third Promissory Note If the Company completes an initial Business Combination, the Company will, at the option of the Sponsor, repay the amounts loaned under the Third Promissory Note or convert a portion or all of the amounts loaned under such promissory note into warrants, which warrants will be identical to the private placement warrants issued in connection with the Company’s initial public offering. If the Company does not complete an initial Business Combination by the Subsequent Charter Extension Date, such promissory note will be repaid only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.

On June 13, 2023, the Company issued an unsecured promissory note in the principal amount of $2,000,000 in favor of the Sponsor (the “Fourth Promissory Note” and together with the First Promissory Note, the Second Promissory Note and the Third Promissory Note, the “Promissory Notes”), of which $700,000 was funded by the Sponsor upon execution of the Note. On September 27, 2023, the Company drew down an additional amount of $500,000 pursuant to the terms of the Fourth Promissory Note, after which $1,200,000 was outstanding under the Note. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024. There remains $750,000 available under the Note for future drawdowns. The Fourth Promissory Note bears interest at 15% per annum and matures upon closing of the Company’s initial business combination or the date that the winding up of the Company is effective (such date, the “Maturity Date”). The Fourth Promissory Note is not convertible into Working Capital Warrants or any other security. In the event that the Company does not consummate an initial business combination, the Fourth Promissory Note will be repaid only from funds held outside of the Trust Account established in connection with the Company’s initial public offering or will be forfeited, eliminated or otherwise forgiven. The Fourth Promissory Note may be further drawn down from time to time prior to the Maturity Date upon request by the Company subject to the Sponsor’s approval. The Fourth Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Fourth Promissory Note and all other sums payable with regard to the Fourth Promissory Note becoming immediately due and payable. As of December 31, 2023, the Company had a $1,200,000 outstanding balance under this Fourth Promissory Note. As of December 31, 2023, the Company incurred $89,408 of interest expense, which is included in Accrued Expenses on the balance sheet. An additional $50,000 was drawn on the Fourth Promissory Note on March 11, 2024.

F-45

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Notwithstanding the original terms the Promissory Notes, the Company and iLearningEngines have agreed, pursuant to the Merger Agreement, that if the Closing occurs, the Sponsor will have the option for the principal and interest outstanding under the Promissory Notes to be repaid in cash or convert into common stock of the Surviving Corporation at a price per share equal to $10.00 per share at the Closing; provided, however, that to the extent the Acquiror Transaction Expenses (as defined in the Merger Agreement) exceed $30,000,000, then the Promissory Notes will be settled by the conversion of an amount equal to the lesser of (i) the principal and interest outstanding under the Promissory Notes and (ii) the Excess Transaction Expenses (as defined in the Merger Agreement) into common stock of the Surviving Corporation at a price per share equal to $10.00 per share.

F-46

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The Third Promissory Note does not bear interest and matures upon closing of the Company’s initial business combination. In the event that the Company does not consummate an initial business combination, the Third Promissory Note will be repaid only from funds remaining outside of the Company’s Trust Account, if any, or will be forfeited, eliminated, or otherwise forgiven. Up to $1,760,000 of the total principal amount of the Third Promissory Note may be converted, in whole or in part, at the option of the Lender into warrants of the Company at a price of $1.00 per warrant, which warrants will be identical to the private placement warrants issued to the Lender at the time of the initial public offering of the Company.

In the event that the Company does not consummate an initial business combination, the Note will be repaid only from funds remaining outside of the Company’s Trust Account, if any, or will be forfeited, eliminated, or otherwise forgiven. Up to $1,760,000 of the total principal amount of the Note may be converted, in whole or in part, at the option of the Lender into warrants of the Company at a price of $1.00 per warrant, which warrants will be identical to the private placement warrants issued to the Lender at the time of the initial public offering of the Company.

Forward Purchase Agreement

F-47

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 6. COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these consolidated financial statements. Although a number of vaccines for COVID-19 have been developed and are in the process of being deployed in certain countries, including the United States, the timing for widespread vaccination is uncertain, and these vaccines may be less effective against new mutated strains of the virus. The impact of this coronavirus continues to evolve and is affecting the economies of many nations, individual companies and markets in general and may continue to last for an extended period of time. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is not determinable as of the date of these consolidated financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these consolidated financial statements.

Registration Rights

Underwriting Agreement

F-48

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

Merger Agreement

As described in greater detail in Note 1, on April 27, 2023, the Company entered into the Merger Agreement.

The Merger

(i)

at the Closing, in accordance with the DGCL, Merger Sub will merge with and into iLearningEngines, the separate corporate existence of Merger Sub will cease and iLearningEngines will be the surviving corporation and a wholly owned subsidiary of the Company; and

(ii)

as a result of the Merger, among other things, the outstanding shares of common stock of iLearningEngines (other than shares subject to iLearningEngines equity awards, treasury shares and dissenting shares) will be cancelled in exchange for the right to receive a number of shares of common stock of the Surviving Corporation equal to (x) the sum of (i) the Base Purchase Price (as defined below), minus (ii) the dollar value of the Company Incentive Amount (as defined below), plus (iii) the aggregate exercise price of the Company Warrants (as defined in the Merger Agreement) that are issued and outstanding immediately prior to the Effective Time, minus (iv) the aggregate amount of Note Balance (as defined in the Company Convertible Notes (as defined in the Merger Agreement)) divided by (y) $10.00. The “Base Purchase Price” means an amount equal to $1,285,000,000. The “Company Incentive Amount” means (x) the number of shares of the Company Class A Common Stock issuable to iLearningEngines securityholders (excluding, for the avoidance of doubt, the holders of Company Convertible Notes) at the Closing which iLearningEngines and the Company agree, at least two (2) business days prior to the Closing, to issue to certain private placement investors and non-redeeming stockholders (which amount will equal 82.03125% of all such shares issued to such investors and non-redeeming stockholders, with the remainder being contributed by the Sponsor), multiplied by (y) $10.00.

Sponsor Support Agreement

On April 27, 2023, concurrently with the execution of the Merger Agreement, the Company and iLearningEngines entered into an agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, in connection with the Closing, the Sponsor agreed to (i) vote all its shares of the Company common stock in favor of the Business Combination, (ii) discharge any Excess Transaction Expenses (as defined in the Merger Agreement) by payment in cash or elect, at the option of Sponsor, to have the Company discharge any Excess Transaction Expenses by payment in cash against a corresponding cancellation of shares of the Company common stock held by Sponsor (or any combination thereof), (iii) loan all amounts contemplated by the proxy statement filed by the Company on or about February 13, 2023, pursuant to which the Company stockholders approved the extension of the deadline by which the Company must complete its Business Combination to July 6, 2023, including any amounts required in connection with any additional extension of such deadline, (iv) contribute the Sponsor Incentive Shares (as defined in the Merger Agreement), (v) waive any adjustment to the conversion ratio set forth in the governing documents of the Company or any other anti-dilution or similar protection with respect to the Class B common stock of the Company, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement, and (vi) agree to be bound by any restrictions on transfer set forth in the Company’s bylaws, in each case, on the terms and subject to the conditions set forth therein.

F-49

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

As of December 31, 2023, the value of the Forward Purchase Agreement was $1,500,000.

BTIG Fee Agreement

NOTE 7. STOCKHOLDERS’ DEFICIT

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of December 31, 2023 and 2022, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At December 31, 2023 and 2022, there were 4,445,813 and 28,750,000 shares of Class A common stock issued and outstanding, respectively, which are subject to possible redemption and presented as temporary equity.

Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of December 31, 2023 and 2022, there were 7,187,500 shares of common stock issued and outstanding.

NOTE 8. WARRANT LIABILITIES

As of December 31, 2023 and 2022, there were 14,375,000 Public Warrants outstanding. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The Public Warrants will become exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the initial public offering and will expire five years after the completion of the initial Business Combination or earlier upon redemption or the Company’s liquidation.

F-50

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

Once the warrants become exercisable, the Company may call the warrants for redemption for cash:

	●	in whole and not in part;

	●	at a price of $0.01 per warrant;

	●	upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

	●	if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending three business days before the Company sends to the notice of redemption to the warrant holders.

F-51

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

As of December 31, 2023 and 2022, there were 8,250,000 Private Placement Warrants outstanding. Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTE 9. INCOME TAXES

The Company did not have any significant deferred tax assets or liabilities as of December 31, 2023 and 2022.

The Company’s net deferred tax assets are as follows:

	December 31, 2023			December 31, 2022
Deferred tax assets
Net operating loss carryforward	$	—		$	—
Start-up/organization expenses		1,891,958			890,822
Total deferred tax assets		1,891,958			890,822
Valuation allowance		(1,891,958	)		(890,822	)
Deferred tax assets, net of allowance	$	—		$	—

F-52

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The income tax provision consists of the following:

	Year Ended December 31, 2023			Year Ended December 31, 2022
Federal
Current	$	564,005		$	750,410
Deferred		(1,001,136	)		(244,686	)

State
Current		—			—
Deferred		—			—

Change in valuation allowance		1,001,136			244,686
Income tax provision	$	564,005		$	750,410

As of December 31, 2023 and 2022, the Company has $0 and $177,640 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the years ended December 31, 2023 and 2022, the change in the valuation allowance was $1,001,136 and $244,686, respectively.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2023 and 2022 is as follows:

	December 31, 2023			December 31, 2022

Statutory federal income tax rate		21.00	%		21.00	%
State taxes, net of federal tax benefit		0.00	%		0.00	%
Change in fair value of warrant liabilities		(6.76	)%		(17.50	)%
Change in fair value of forward purchase agreement		(5.96	)%		0.00	%
Transaction costs allocable to warrant liabilities		0.00	%		0.00	%
Franchise tax – fines and penalties		(0.01	)%		0.00	%
Change in valuation allowance		(18.94	)%		1.70	%
Income tax provision		(10.67	)%		5.20	%

The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities.

F-53

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 10. FAIR VALUE MEASUREMENTS

Level 1:

Level 2:

Level 3:

Unobservable inputs based on assessment of the assumptions that market participants would use in pricing the asset or liability.

At December 31, 2023, assets held in the Trust Account were comprised of $46,744,889 in cash. At December 31, 2022, assets held in the Trust Account were comprised of $279,107,161 in U.S. Treasury Bills and U.S. Treasury Notes and $11,338,046 in money market funds which are invested primarily in U.S. Treasury Securities and $292,710 in cash. During the year ended December 31, 2023, the Company withdrew an amount of $1,826,650 in interest income from the Trust Account to pay franchise and income taxes and $247,259,068 in connection with redemptions.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description	Level	December 31, 2023		December 31, 2022
Assets:
Investments held in Trust Account	1	$	—	$	290,737,917

Liabilities:
Warrant Liabilities – Public Warrants	1	$	1,150,000	$	70,000
Warrant Liabilities – Private Placement Warrants	3	$	660,000	$	40,000
Forward Purchase Agreement	3	$	1,500,000	$	—

The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statements of operations.

F-54

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

The key inputs into the modified Black Scholes model for the Level 3 Warrants were as follows:

Input	December 31, 2023			December 31, 2022
Market price of public shares	$	10.47		$	10.04
Risk-free rate		3.81	%		3.94	%
Dividend yield		0.00	%		0.00	%
Exercise price	$	11.50		$	11.50
Volatility		0.0	%		0.0	%
Term to expiration (years)		0.25			0.42

The following tables present the changes in the fair value of Level 3 warrant liabilities:

	Private Placement
Fair value as of January 1, 2023	$	40,000
Change in fair value		620,000
Fair value as of December 31, 2023	$	660,000

	Private Placement
Fair value as of January 1, 2022	$	4,372,500
Change in fair value		(4,332,500	)
Fair value as of December 31, 2022	$	40,000

There was no change in the fair value of the Forward Purchase Agreement as of December 31, 2023.

NOTE 11. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events, other than below, that would have required adjustment or disclosure in the consolidated financial statements.

The Company approved an additional draw of an aggregate of $160,000 pursuant to the Third Promissory Note, which Extension Funds were deposited into the Company’s Trust Account for its public stockholders on January 5, 2024. This deposit enables the Company to extend the date by which it must complete its initial business combination from January 6, 2024 to February 6, 2024 (the “Seventh Extension”). The Seventh Extension is the final of seven one-month extensions permitted under the Company’s Certificate of Incorporation and provides the Company with additional time to complete its initial business combination.

On January 8, 2024, the Company received a notice (the “Annual Meeting Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company failed to hold an annual meeting of stockholders within 12 months after its fiscal year ended December 31, 2022, as required by Nasdaq Listing Rule 5620(a). In accordance with Nasdaq Listing Rule 5810(c)(2)(G), the Company had 45 calendar days (or until February 22, 2024) to submit a plan to regain compliance and, if Nasdaq accepts the plan, Nasdaq may grant the Company up to 180 calendar days from its fiscal year end, or until June 28, 2024, to regain compliance. The Company submitted a plan to regain compliance on February 22, 2024. While the compliance plan is pending, the Company’s securities will continue to trade on Nasdaq.

On February 2, 2024, the Company held a special meeting of stockholders (the “Extension Special Meeting”) to approve an amendment to Arrowroot’s amended and restated certificate of incorporation, as amended (the “Charter Amendment”), to extend the Termination Date from February 4, 2024 to March 6, 2024 (the “Initial Subsequent Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate an initial business combination on a monthly basis up to five times by an additional one month each time after the Initial Subsequent Charter Extension Date (the Initial Subsequent Charter Extension Date, as further extended by the Company, the “Subsequent Extension Date”), by resolution of the Company’s board of directors, if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until August 6, 2024, unless the closing of an initial business combination shall have occurred prior thereto (the “Subsequent Extension Proposal”).

F-55

ARROWROOT ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

On February 2, 2024, the Company entered into a Non-Redemption Agreement (the “Non-Redemption Agreement”) with a certain public stockholder of Arrowroot (the “Public Stockholder”) eligible to redeem its shares of the Company’s Class A common stock (the “Class A Common Stock”) at the special meeting of stockholders held on February 2, 2024 (the “Extension Special Meeting”). Pursuant to the Non-Redemption Agreement, the Public Stockholder agreed not to request redemption of 410,456 shares of Class A Common Stock (the “Non-Redeemed Shares”) in connection with the Extension Special Meeting. In consideration of the Public Stockholder entering into the Non-Redemption Agreement, immediately following the closing of the Company’s initial business combination, Arrowroot Acquisition LLC, a Delaware limited liability company (the “Sponsor”) agreed to forfeit 82,091 shares of Class B common stock (the “Class B Common Stock”), or 41,046 shares of Class B Common Stock in the event the initial business combination is consummated in February 2024 (“Forfeited Shares”). Pursuant to the terms of the Non-Redemption Agreement, the Company agreed to issue to the Public Stockholder and the Public Stockholder agreed to acquire from the Company, a number of newly issued shares of common stock promptly following the consummation of the Company’s initial business combination.

On March 5, 2024, the Company received a notice (the “Deadline Notice”) from the staff of the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”) by March 12, 2024, trading of the Company’s securities on The Nasdaq Capital Market would be suspended at the opening of business on March 14, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. The Company timely requested a hearing before the Panel to request sufficient time to complete the Company’s previously disclosed proposed business combination (the “Business Combination”) with iLearningEngines, Inc., a Delaware corporation (“iLearningEngines”). In addition, the Deadline Notice indicated that the Company should be prepared to address the concerns raised in the Annual Meeting Notice in its hearing before the Panel related to the Deadline Notice.

On March 11, 2024, the Company drew down an additional amount of $50,000 pursuant to the Fourth Promissory Note, after which $1,250,000 was outstanding under the Fourth Promissory Note. There remains $750,000 available under the Fourth Promissory Note for future drawdowns.

On March 12, 2024, the Company received notice from Nasdaq that the hearing will be held on May 7, 2024. The hearing request will result in a stay of any suspension or delisting action pending the outcome of the hearing. There can be no assurance that the Company will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with Nasdaq IM-5101-2 or Nasdaq Listing Rule 5620(a), and maintain compliance with other Nasdaq listing requirements.

In connection with the Business Combination, the Sponsor has agreed to forfeit 400,000 Founder Shares upon the Closing. In addition, on March 27, 2024, pursuant to the terms of the Merger Agreement, the Company elected to convert approximately $5 million of Acquiror Transaction Expenses (as defined in the Merger Agreement) into shares of common stock of the Surviving Corporation (as defined in the Merger Agreement).

On March 27, 2024, the Company and Cantor Fitzgerald & Co. (“Cantor”) entered into the Fee Reduction Agreement, pursuant to which Cantor agreed to forfeit $4,062,500 of deferred underwriting fees payable in connection with the IPO, resulting in a remainder of $6,000,000 of deferred underwriting fees payable by the Company to Cantor subject to the closing of the Business Combination (the “Reduced Deferred Fee”). The Reduced Deferred Fee shall be payable to Cantor in the form of shares of New iLearningEngines Common Stock issuable upon the filing with the SEC of a resale registration statement. The number of shares of New iLearningEngines Common Stock issuable to Cantor in satisfaction of the Reduced Deferred Fee will be equal to the greater of (i) the Reduced Fee divided by $10.00 and (ii) the Reduced Fee divided by the VWAP (as defined in the Fee Reduction Agreement) over the seven (7) trading days preceding the date of filing of such resale registration statement. Under the Fee Reduction Agreement, the combined company will be subject to, among others, certain obligations with respect to the filing of the resale registration statement and maintaining the continued effectiveness of the resale registration statement, and a failure of the combined company to discharge such obligations may result in the ability of Cantor to require the combined company to pay the Reduced Deferred Fee in cash.

On March 27, 2024, BTIG and the Company amended the BTIG Engagement Letter (the “BTIG Amendment”) to provide that, in lieu of payment in cash of the full amount of any advisory fees or other fees and expenses owed under the BTIG Engagement Letter, the Company will pay to BTIG $3,000,000 in advisory fees (the “BTIG Advisory Fee”) and $400,000 in expenses (the “BTIG Expenses”). The BTIG Expenses will be paid in cash upon the consummation of the Business Combination. The BTIG Advisory Fee will be payable to BTIG in the form of shares of New iLearningEngines Common Stock in an amount of shares equal to the greater of (i) $3,000,000, divided by $10.00 and (ii) the quotient obtained by dividing (x) $3,000,000 by (y) the VWAP (as defined in the BTIG Amendment) of New iLearningEngines Common Stock over the seven (7) trading days immediately prior to the initial filing of the Resale Registration Statement (as defined in the BTIG Amendment). Under the BTIG Amendment, the combined company will be subject to, among others, certain obligations with respect to the filing of the resale registration statement and maintaining the continued effectiveness of the resale registration statement, and a failure of the combined company to discharge such obligations may result in the ability of BTIG to require the combined company to pay the BTIG Advisory Fee in cash.

F-56

ILEARNINGENGINES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	As of
	March 31, 2024 (Unaudited)			December 31, 2023
Assets
Current assets:
Cash	$	815		$	4,763
Restricted cash		-			2,000
Accounts receivable, net of provision for credit loss of $510 and $336, respectively		82,904			73,498
Contract asset		297			509
Prepaid expenses		93			62
Total current assets		84,109			80,832
Receivable from Technology Partner		14,880			13,602
Receivable from related party		-			465
Other assets		672			729
Deferred tax assets, net		5,248			5,703
Deferred transaction costs		6,882			3,990
Total assets	$	111,791		$	105,321
Liabilities and shareholders’ deficit
Current liabilities:
Trade accounts payable	$	7,044		$	3,753
Accrued expenses		3,850			2,982
Current portion of long-term debt, net		26,026			10,517
Contract liability		1,447			2,765
Payroll taxes payable		3,037			3,037
Loan restructuring share liability		2,813			-
Other current liabilities		139			116
Total current liabilities		44,356			23,170
Convertible notes		37,712			31,547
Warrant liability		26,988			11,870
Long-term debt, net		-			10,679
Subordinated payable to Technology Partner		49,789			49,163
Other non-current liabilities		63			74
Total liabilities		158,908			126,503

Shareholders’ deficit:
Common Shares $0.0001 par value: 200,000,000 shares authorized: 95,782,605 shares issued and outstanding at March 31, 2024 and December 31, 2023		10			10
Additional paid-in capital		36,384			36,384
Accumulated deficit		(83,511	)		(57,576	)
Total shareholders’ deficit		(47,117	)		(21,182	)
Total liabilities and shareholders’ deficit	$	111,791		$	105,321

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

F-57

ILEARNINGENGINES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share amounts)

	Three Months Ended March 31,
	2024			2023

Revenue	$	124,935		$	93,980
Cost of revenue		38,714			31,551
Gross profit		86,221			62,429
Operating expenses:
Selling, general, and administrative expenses		41,223			31,612
Research and development expenses		37,099			28,582
Total operating expenses		78,322			60,194
Operating income		7,899			2,235
Other expense:
Interest expense		(1,986	)		(1,588	)
Change in fair value of warrant liability		(15,118	)		(280	)
Change in fair value of convertible notes		(5,465	)		-
Loss on debt extinguishment		(10,041	)		-
Other expense		-			(60	)
Foreign exchange loss		(2	)		(8	)
Total other expense		(32,612	)		(1,936	)
Net (loss) income before income taxes		(24,713	)		299
Income tax (expense) benefit		(1,222	)		152
Net (loss) income	$	(25,935	)	$	451

Net (loss) income per share – basic and diluted	$	(0.27	)	$	0.00
Weighted average common shares outstanding – basic		95,782,605			95,782,605
Weighted average common shares outstanding – diluted		95,782,605			95,782,605

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

F-58

ILEARNINGENGINES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (UNAUDITED)
(In thousands, except share amounts)

					Additional					Total
	Common Stock				Paid-In		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2023		95,782,605	$	10	$	36,384	$	(57,576	)	$	(21,182	)
Net loss		—		—		—		(25,935	)		(25,935	)
Balances at March 31, 2024		95,782,605	$	10	$	36,384	$	(83,511	)	$	(47,117	)

					Additional					Total
	Common Stock				Paid-In		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2022		95,782,605	$	10	$	36,384	$	(53,169	)	$	(16,775	)
Net income		—		—		—		451			451
Balances at March 31, 2023		95,782,605	$	10	$	36,384	$	(52,718	)	$	(16,324	)

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

F-59

ILEARNINGENGINES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Three Months Ended March 31,
	2024			2023
Cash flows used in operating activities:
Net (loss) income	$	(25,935	)	$	451
Adjustments to reconcile net (loss) income to net cash flows used in operating activities:
Depreciation and amortization		54			26
Amortization of debt issuance costs		631			531
Change in deferred taxes		455			324
Accretion of interest on subordinated payable to Technology Partner		626			417
Change in fair value of warrant liability		15,118			280
Change in fair value of convertible notes		5,465			-
Loss on debt extinguishment		10,041			-
Provision for current expected credit losses		174			-
Changes in operating assets and liabilities:
Accounts receivable		(9,580	)		(8,104	)
Receivable from related party		465			130
Contract asset		212			5,880
Prepaid expenses and other current assets		(31	)		6
Receivable from Technology Partner		(1,278	)		(2,405	)
Trade accounts payable		958			(19	)
Accrued expenses and other liabilities		429			(574	)
Contract liability		(1,318	)		552
Payroll taxes payable		-			305
Deferred transaction costs		(96	)		-
Net cash flows used in operating activities		(3,610	)		(2,200	)
Cash flows from investing activities:
Purchases of property and equipment		(9	)		-
Net cash flow used in investing activities		(9	)		-
Cash flows from financing activities:
Proceeds from term loans		-			5,000
Repayments of term loans		(3,029	)		(2,063	)
Proceeds from convertible note		700			-
Net cash flows (used in) provided by financing activities		(2,329	)		2,937
Net change in cash		(5,948	)		737
Cash, beginning of year		6,763			856
Cash, end of period	$	815		$	1,593
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	702		$	670
Supplemental disclosure of non-cash investing and financing activities:
Issuance of warrant to purchase common shares	$	-		$	514
Transaction costs capitalized which are included in trade accounts payable and accrued expenses	$	3,286		$	-

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

F-60

ILEARNINGENGINES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Nature of the Business and Basis of Presentation

iLearningEngines, Inc. (together with its subsidiaries, the “Company,” or “ILE”), a company headquartered in Maryland, United States of America, was incorporated in Delaware on November 17, 2010. The Company offers an Artificial Intelligence (“AI”) platform focused on automation of learning and enabling organizations to drive mission critical outcomes at scale. The AI Learning and Engagement platform has cloud-based, mobile, offline and multimedia capabilities that can be used to deliver highly personalized learning and engagement modules. The Company has developed an in-process learning platform that enables organizations to deliver learning in the flow of day-to-day activities.

Basis of Presentation

The accompanying 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”). The condensed consolidated financial statements include the accounts of iLearningEngines, Inc. and its wholly-owned subsidiaries.

A description of the Company’s significant accounting policies is included in the audited consolidated financial statements for the year ended December 31, 2023. No changes to significant accounting policies have occurred since December 31, 2023, other than new policy elections related to a debt amendment discussed in Note 5. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto, included in the Company’s consolidated financial statements for the year ended December 31, 2023.

Business Combination

On April 27, 2023, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Arrowroot Acquisition Corp. (NASDAQ: ARRW) (“Arrowroot”), a special-purpose acquisition company (“SPAC”), and ARAC Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Arrowroot (“Merger Sub”). Upon closing of the Merger Agreement and upon approval by the shareholders of Arrowroot, the combined company will be renamed to “iLearningEngines, Inc.” and will be listed on the NASDAQ under the new ticker symbol “AILE.” Arrowroot has agreed to acquire all of the outstanding equity interests of the Company. Completion of the “SPAC Transaction” described herein, is subject to certain customary regulatory consents and approval by stockholders of Arrowroot and the Company.

The merger with Arrowroot closed on April 16, 2024. Refer to Note 14 for additional discussion.

2. Summary of Significant Accounting Policies

Concentration of Credit Risk and Major Sales Channels

Financial investments that potentially subject the Company to credit risk consist of cash. The Company places its cash with certain U.S. financial institutions. At various times, the Company’s cash deposits with any one financial institution may exceed the amount insured by the Federal Deposit Insurance Corporation (the “FDIC”). The Company has not experienced any losses of such amounts and management believes it is not exposed to any significant credit risk on its cash.

During the three months ended March 31, 2024, there were four customers, representing 16.7%, 13.5%, 11.3%, and 10.3%, respectively, who individually accounted for 10% or more of the Company’s revenue. During the three months ended March 31, 2023, there were four customers, representing 21.5%, 17.7%, 13.0% and 11.8%, respectively, who individually accounted for 10% or more of the Company’s revenue.

Fair Value Option (“FVO”) Election

The Company has convertible notes (refer to Note 6) and debt (refer to Note 5) which are accounted under the “fair value option election” discussed below.

Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivative and Hedging, (“ASC 815”), a financial instrument containing embedded features and /or options may be required to be bifurcated from the financial instrument host and recognized as separate derivative asset or liability, with the bifurcated derivative asset or liability initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date.

F-61

The estimated fair value adjustment of convertible notes, including the component related to interest expense, is presented in a single line item, “Change in fair value of convertible notes”, within the condensed consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). As further discussed in Note 5, there was no change in the fair value of the Amended Term Loans between the date of the amendment on March 27, 2024 and March 31, 2024.

Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”), however there have been no such adjustments with respect to the convertible notes or debt which are accounted for under the fair value option.

Deferred Transaction Costs

The Company has incurred direct and incremental transaction costs related to the merger with Arrowroot. Transaction costs of $6.9 million and $4.0 million were deferred and capitalized to the “Deferred transaction costs” line item within the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.

After consummation of the merger, these costs will be recorded to shareholders’ deficit as a reduction of additional paid-in capital generated as a result of the merger. As of March 31, 2024, and December 31, 2023, $2.8 million and $1.1 million of unpaid transaction costs are included within the “Trade accounts payable” line item, and $0.5 million and $1.6 million are included within the “Accrued expenses” line item, within the condensed consolidated balance sheets, respectively.

Accounts Receivable and Provision for Credit Losses

Accounts receivable are uncollateralized, noninterest bearing customer obligations due under normal trade terms and generally requiring payment within 30 to 90 days of the invoice date. Accounts receivable are stated at the amount billed to the customer, net of provision for credit losses in accordance with ASC 326, Financial Instruments-Credit Losses. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice, or, if unspecified, are applied to the earliest unpaid invoice.

The estimation of the provision for credit loss is based on an analysis of historical loss experience, current receivables aging, any known or expected changes to the customers’ ability to fulfill their payment obligations, and management’s assessment of current conditions and estimated future conditions. The general CECL reserve is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments. The Company notes its account receivables do not similar risks, and the Company measures the CECL reserve on an individual customer account basis.

At the end of each reporting period, the provision for credit losses is reviewed relative to management’s expected credit loss model and is adjusted as necessary. The expense associated with the provision for expected credit losses is recognized in selling, general, and administrative expenses in the consolidated statements of operations. Accounts receivable write-offs are recorded when management believes it is probable a receivable will not be recovered. The provision for credit losses as of March 31, 2024 and December 31, 2023 were $0.5 million and $0.3 million, respectively.

The following table shows the change in the Company’s provision for credit losses recognized for receivables between December 31, 2023 and March 31, 2024 (in thousands):

	Balance
Provision for credit losses as of December 31, 2023	$	336
Change in provision for credit losses during the three months ended March 31, 2024		174
Provision for credit losses as of March 31, 2024	$	510

F-62

Revenue Recognition

Disaggregation of Revenue

The Company disaggregates revenue into categories that depict the nature, amount, and timing of revenue and cash flows based on differing economic risk profiles for each category. In concluding such disaggregation, the Company evaluated the nature of the products and services, consumer markets, sales terms, and sales channels which have similar characteristics such that the level of disaggregation provides an understanding of the Company’s business activities and historical performance. The level of disaggregation is evaluated annually and as appropriate for changes to the Company or its business, either from internal growth, acquisitions, divestitures, or otherwise. Revenue from implementation services and combined software license and maintenance is recognized over the respective performance obligation period. As such, there is no disaggregation of revenue by point in time as all of the Company’s revenue is recognized over time.

With respect to the Company’s disaggregation of revenue by customer geography, geography is primarily determined based on the location of the customer identified in the contract. Under certain arrangements, the Company enters contracts with the Technology Partner (refer to Note 4 for additional information about the Company’s contractual arrangements with the Technology Partner) though which the Technology Partner purchases and integrates the ILE platform into the Technology Partner’s own software solution provided to one of the Technology Partner’s customers. In this type of contractual arrangement, the Company identifies the Technology Partner as its customer. In contractual arrangements in which the Technology Partner is identified as the customer, the Technology Partner’s end customer may or may not be known by the Company In cases in which the Technology Partner’s customer is known to the Company, the geography is determined based on the location of the Technology Partner’s customer and conversely, in cases in which the Technology Partner’s customer is not known, the customer geography is determined based on the geography of the Technology Partner. The following table presents this disaggregation of revenue by customer geography:

	Three Months Ended March 31,
	2024		2023
	(In thousands)
North America	$	54,317	$	45,011
India		51,873		34,795
Other⁽¹⁾		18,745		14,174
Total Revenues	$	124,935	$	93,980

(1)	Other includes customers in Middle East and Europe.

The following table presents to disaggregation of revenue by type of revenue:

	Three Months Ended March 31,
	2024		2023
	(In thousands)
Revenue related to implementation services	$	5,200	$	4,660
Combined software license and maintenance revenues		119,735		89,320
Total Revenues	$	124,935	$	93,980

Contract asset

Contract asset balances represent amounts for which the Company has recognized revenue, pursuant to its revenue recognition policy, for software licenses already delivered, implementation services, and maintenance services already performed but invoiced in arrears. As of March 31, 2024 and December 31, 2023 contract assets were $0.3 million and $0.5 million, respectively.

Contract liability

Contract liability represents either customer advance payments or billings for which the revenue recognition criteria has not yet been met. Contract liability is primarily unearned revenue related to combined software and maintenance services. As of March 31, 2024 and December 31, 2023, the contract liability balance was $1.4 million and $2.8 million.

F-63

Remaining performance obligations

As of March 31, 2024, the total remaining performance obligations under the Company’s contracts with customers was $447.0 million, and the Company expects to recognize approximately 86% of the remaining performance obligations as revenue within the next twelve months. As of December 31, 2023, the total remaining performance obligations under the Company’s contracts with customers was $409.6 million, and the Company recognized revenues on approximately 90% of these remaining performance obligations over the year ended December 31, 2023.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is still evaluating the impact of this standard on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is still evaluating the impact of this standard on its condensed consolidated financial statements.

3. Accrued Expenses

The following table presents the components of accrued expenses as of March 31, 2024 and December 31, 2023:

	As of
	March 31, 2024		December 31, 2023
	(In thousands)
Accrued income taxes	$	2,495	$	1,742
Other accrued expenses⁽¹⁾		1,355		1,240
Total	$	3,850	$	2,982

(1)	Other Accrued Expense includes accrued professional service fees, accrued interest, accrued compensation and benefits, and other current liabilities.

4. Technology Partner

In 2019, the Company entered a Master Agreement (“MA”) with the Technology Partner, which allows for quarterly netting of amounts collected by the Technology Partner from end-users, against the cost of the Technology Partner’s services rendered and billable to the Company. The MA has an initial term of five years with an automatic renewal for five additional years.

On January 1, 2021, the Company amended the interest rate with the Technology Partner which changed from a 12-month LIBOR rate plus 2.0% to a fixed rate of 3.99% through December 31, 2023. On January 5, 2024, the Company amended the interest rate with the Technology Partner to a fixed rate of 5.99% through December 31, 2024. The Company is not required to repay any outstanding balance or accrued interest until the tenth anniversary of the effective date of termination of the MA. As of the date of these condensed consolidated financial statements, the MA has not been terminated.

F-64

The following table summarizes the expenses charged to Company by the Technology Partner that are presented within “Cost of revenue”, “Selling, general and administrative expenses”, and “Research and development expenses” on the condensed consolidated statements of operations for the three months ended March, 31 2024 and 2023:

	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cost of revenue	$	38,673	$	31,541
Selling, general and administrative expense		37,063		29,533
Research and development expense		37,048		28,581
	$	112,784	$	89,655

Subordinated Payable to the Technology Partner

On December 30, 2020, the Company and the Technology Partner entered into a subordination agreement whereby the payable to the Technology Partner became subordinated to the 2020 and 2021 Term Loans (refer to Note 5).

The following table presents a reconciliation of the change in subordinated payable to the Technology Partner between December 31, 2023 and March 31, 2024 (in thousands):

	Subordinated payable to Technology Partner

Balance as of December 31, 2023	$	49,163
Accrued interest		626
Balance as of March 31, 2024	$	49,789

Interest expense related to the subordinated payable to the Technology Partner was $0.6 million for the three months ended March 31, 2024.

Net Receivable from Technology Partner

Subsequent to the execution of the subordination agreement, the Company and the Technology Partner resumed quarterly netting of collections and the cost of services provided with the same interest rate terms defined above.

The following table presents a reconciliation of the changes in the net receivable from Technology Partner between December 31, 2023 and March 31, 2024 (in thousands):

	Net Receivable from Technology Partner

Balance of receivable from Technology Partner as of December 31, 2023	$	13,602
Collections by Technology Partner		113,732
Cost of services provided by Technology Partner		(112,784	)
Net cash transfers between Company and Technology Partner		330
Balance of receivable from Technology Partner as of March 31, 2024	$	14,880

F-65

5. Debt

The following table presents the components of the Company’s debt as of March 31, 2024 and December 31, 2023:

	March 31, 2024		December 31, 2023
	(In thousands)
2020 Term Loans	$	-	$	2,697
2021 Term Loans		-		12,299
2023 Term Loans		-		10,000
Amended Term Loans		26,026		-
		26,026		24,996
Less: Discount on debt		-		3,800
		26,026		21,196
Less: Current portion		26,026		10,517
Long-term portion of debt	$	-	$	10,679

Contractual interest expense related to the 2020 Term Loan, 2021 Term Loan, and 2023 Term Loan (collectively, the “Term Loans”), was $0.7 million and $0.7 million for the three months ended March 31, 2024 and March 31, 2023 and the amortization of debt issuance costs was $0.7 million and $0.5 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Amendment to 2020, 2021 and 2023 Term Loans

On March 27, 2024, ILE entered into an agreement to amend the 2020, 2021 and 2023 Term Loans (the “Amendment”). The amended terms consisted of:

(i)

revision to the amortization schedule for the Term Loans in exchange for 1,019,999 shares of “NewCo” (defined in Note 14 - Subsequent Events) common stock to be issued upon completion of the SPAC Transaction (the “Loan Restructuring Shares”)

(ii)

agreement to terminate the outstanding warrants issued in connection with the Term Loans and the respective put rights associated with each, in exchange for the Company’s agreement to provide the respective lenders with an aggregate amount of 3,399,999 shares of NewCo common stock to be issued upon completion of the SPAC Transaction.

Pursuant to the Amendment, if the Company repays the “Amended Term Loans” in full, on or before (i) April 15, 2024, then 90% of the Loan Restructuring Shares will be canceled, (ii) May 1, 2024, then 80% of the Loan Restructuring Shares will be canceled, and (iii) July 1, 2024, then 50% of the Loan Restructuring Shares will be canceled.

In addition, the Amendment provides that, if the Company prepays the Amended Term Loans, then at the Company’s option, the Company may prepay 50% of the amount of scheduled but unpaid payments of interest that would have accrued after the prepayment date by issuing a number of shares of NewCo common stock obtained by dividing (A) the product of (x) the unpaid scheduled interest payments and (y) 2.75, by (B) the volume-weighted average price of NewCo common stock over the seven (7) trading days immediately preceding the date of issuance.

The Loan Restructuring Shares were determined to be classified as a liability initially measured at fair value with subsequent changes in fair value recorded in earnings. The initial fair value of the Loan Restructuring Shares was determined to be $2.8 million. The Loan Restructuring Shares are presented within “Loan restructuring share liability” in the accompanying consolidated balance sheet. There was no change in fair value between the date of the initial fair value determined on March 27, 2024 and March 31, 2024.

The Amendment was accounted for as a debt extinguishment under US GAAP, through which the Company recorded a $10.0 million loss on debt extinguishment within the accompanying condensed consolidated statement of operations.

F-66

The Company elected to account for the Amended Term Loans under the fair value option. Under the fair value option, the balance is subsequently measured at fair value for each reporting period with changes in fair value, including changes due to instrument specific credit risk, recorded in earnings. The initial fair value of the Amended Term Loans was determined to be $26.0 million and there were no changes in fair value between the date of the Amendment on March 27, 2024 and March 31, 2024:

	Amended Term Loans
	(In thousands)
Fair value on March 27, 2024	$	26,026
Change in fair value of term loan due to instrument-specific credit risk		-
Remaining changes in fair value		-
Fair value as of March 31, 2024	$	26,026

On April 18, 2024, the Company prepaid the full amount of the Amended Term Loans using a combination of cash and 159,379 shares of NewCo common stock. Based on the timing of the prepayment, 815,999 Loan Restructuring Shares were canceled.

Debt Covenant Compliance

The Company’s 2020, 2021, and 2023 Term Loans were subject to covenant clauses. Covenant breaches related to timely filing of payroll tax returns and failure to maintain $2.0 million of restricted cash were waived by the respective lenders as part of the Amendment. Due to the waivers obtained, as of March 31, 2024, the Company is in compliance with all debt covenants.

Warrants

The following is a schedule of changes in warrants issued and outstanding from December 31, 2023 to March 31, 2024:

	Units
Outstanding as of December 31, 2023		1,094,299
Warrants issued		-
Outstanding as of March 31, 2024		1,094,299

The fair value of the warrant liability was determined using an option pricing model, see Note 11, Fair Value Measurements, for disclosure in assumption of the warrant liability.

6. Convertible Notes

The following is a schedule of the Company’s convertible notes at fair value as of March 31, 2024, and December 31, 2023:

	March 31, 2024		December 31, 2023
	(In thousands)
2023 Convertible Notes	$	35,936	$	31,547
2024 Convertible Notes		1,776		-
Total	$	37,712	$	31,547

On April 27, 2023, the Company entered into the 2023 convertible note purchase agreement (the “2023 Convertible Note Purchase Agreement”) pursuant to which the Company issued and sold 2023 Convertible Notes with an aggregate principal amount of $17.4 million. The 2023 Convertible Notes mature on October 27, 2025, unless converted earlier, redeemed, or repurchased prior to the maturity date.

On March 21, 2024 (“Issuance Date”), the Company entered into the 2024 convertible note purchase agreement (the “2024 Convertible Notes”) pursuant to which the Company issued and sold 2024 Convertible Notes with an aggregate principal amount of $0.7 million. The 2024 Convertible Notes mature 30 months after the Issuance Date.

The 2024 Convertible Notes contain a make whole provision, such that for each share of each common stock converted under the 2024 Convertible Notes, a number of additional incentive shares (rounded down to the nearest whole share) equal to (i) $10.00 (the “Conversion Price”), divided by the greater of (i) the volume-weighted average price of the NewCo common shares over the ten trading days immediately preceding November 30, 2024 (the “Reference Date”) and (ii) $1.00 (the “Reference Price”), minus (ii) one will be issued. The Conversion Price and Reference Price shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during the period beginning on the date the NewCo common shares are issued upon conversion of the 2024 Convertible Notes and ending on the Reference Date.

F-67

The 2023 and 2024 Convertible Notes bear simple interest, accrued on a daily basis in arrears, at a rate of 15.0% per annum until aggregate accrued interest is greater than 25.0% of the principal amount, and at a rate of 8.0% per annum thereafter.

The 2023 and 2024 Convertible Notes are convertible to shares including under the following circumstances:

●

upon the occurrence of an equity financing, the lender can elect to exchange the convertible notes into the number of shares of equity securities issued in such equity financing equal to the note balance divided by the equity price in such equity financing and

●

immediately prior to the consummation of a qualified de-SPAC transaction, the convertible notes shall automatically convert, in whole, into shares of common stock of the Company thereby entitling the lender to receive a number of shares equal to (i) 2.75, multiplied by the outstanding principal under each convertible note, plus all accrued and unpaid interest thereon, divided by (ii) $10.00.

Additionally, pursuant to the respective convertible note purchase agreements, the Company may prepay the 2023 and 2024 Convertible Notes in cash without the consent of the holders, at an amount equal to the balance of the note before maturity.

As of March 31, 2024, the fair value of the 2023 and 2024 Convertible Notes was $35.9 million and $1.8 million, respectively, and the corresponding change in fair value recorded within the accompanying condensed consolidated statements of operations for the three months ended March 31, 2024 was $5.5 million. The fair value of the 2023 Convertible Notes as of December 31, 2023 was $31.5 million.

7. Share-Based Compensation

On August 12, 2021, the Company adopted the 2020 Equity Incentive Plan (the “Plan”). The total restricted stock units (“RSUs”) granted under the Plan as of March 31, 2024 and December 31, 2023 was 8,338,438. The awards have a four year service requirement with a one-year cliff vesting starting on the employment date and are subject to the Liquidity Event provision defined below.

As of March 31, 2024 and December 31, 2023, the Company had 39,883,388 shares of restricted stock awards outstanding with the Company’s founders with a ten-year service requirements starting on the day of the Liquidity Event (defined below) (the “Founder Restricted Shares”) and 360,290 restricted shares outstanding with a former employee, in which the service requirement had been deemed met on the grant date (together with the Founder Restricted Shares, the “Restricted Shares”). The Company’s 40,243,678 outstanding Restricted Shares participate on par with common shares in all distributions from the Company, as the holders of these restricted shares are entitled to non-forfeitable dividend rights. Each of the RSUs and Restricted Shares is subject to a change of control provision; an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”); a direct listing on the Nasdaq Global Select Market or New York Stock Exchange; or the Company’s completion of a merger or consolidation with a SPAC whereby the surviving company’s common stock are publicly traded in a public offering pursuant to an effective registration statement under the Securities Act (collectively, the “Liquidity Events”).

The summary of nonvested RSUs and Restricted Shares whose vesting is subject to the achievement of a Liquidity Event for the period ended March 31, 2024 is disclosed below:

	Shares		Weighted Average Grant Date Fair Value
RSUs
Nonvested as of January 1, 2024		8,338,438	$	4.09
Granted		-		-
Nonvested as of March 31, 2024		8,338,438	$	4.09

	Shares		Weighted Average Grant Date Fair Value
Restricted Shares
Nonvested as of January 1, 2024		40,243,678	$	3.53
Granted		-		-
Nonvested as of March 31, 2024		40,243,678	$	3.53

F-68

The aggregate unrecognized compensation expense for these awards whose vesting is subject to the achievement of a Liquidity Event is $176.1 million as of March 31, 2024.

The vesting of these RSUs and Restricted Shares is contingent upon the Liquidity Events that are considered not probable of occurring until it actually occurs, therefore no share-based compensation expense will be recognized until any of the Liquidity Events are achieved.

8. Income Taxes

The Company’s income tax provision is computed based on the federal statutory rate and the average state statutory rates, net of the related federal benefit. For the three months ended March 31, 2024 and 2023, the Company recorded an income tax expense of $1.2 million and income tax benefit of $0.2 million, respectively.

The Company’s estimate of the realizability of the deferred tax asset is dependent on estimates of projected future levels of taxable income. In analyzing future taxable income levels, the Company considered all evidence currently available, both positive and negative. Accordingly, as of March 31, 2024 and December 31, 2023, the Company no longer maintains a valuation allowance outside of the Australia and India jurisdiction.

9. Net (Loss) Income Per Share

Basic net (loss) income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net (loss) income per share is computed using the weighted-average number of common shares and, if dilutive, common share equivalents outstanding during the period.

The computation of basic and diluted net (loss) income per share and weighted-average shares of the Company’s common stock outstanding during the periods presented is as follows:

	Three Months Ended March 31,
	2024			2023
	(In thousands, except share and per share amounts)
Basic net (loss) income per share:
Net (loss) income	$	(25,935	)	$	451
Income allocated to participating securities		-			(133	)
Net (loss) income attributable to common stockholders – basic	$	(25,935	)	$	318

Diluted net (loss) income per share:
Net (loss) income attributable to common stockholders – basic	$	(25,935	)	$	451
Interest expense on the 2019 Convertible Notes		-			(133	)
Net (loss) income attributable to common stockholders – diluted	$	(25,935	)	$	318

Shares used in computation:
Weighted-average common shares outstanding		95,782,605			95,782,605
Weighted-average effect of dilutive securities:
Diluted weighted-average common shares outstanding		95,782,605			95,782,605

Net (loss) income per share attributable to common stockholders:
Basic	$	(0.27	)	$	0.00
Diluted	$	(0.27	)	$	0.00

F-69

There were no dividends declared or accumulated on the common shares during the three months ended March 31, 2024 and 2023. The Company applies the two-class method to its Restricted Shares, which contains non-forfeitable dividend rights and thereby meets the definition of participating securities, which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. Net loss is not allocated to participating securities in accordance with the contractual terms. The Company’s weighted average restricted shares outstanding was 40,243,678 for the three months ended March 31, 2024 and 2023. The Company excluded the following securities, presented based on amounts outstanding at each period end, from the computation of diluted net (loss) income per share attributable to common stockholders for the periods indicated, as including them would have had an anti-dilutive effect:

	Three Months Ended March 31,
	2024		2023
Warrants to purchase common stock⁽¹⁾		1,094,299		873,618
RSUs⁽²⁾		8,338,438		7,138,438
Contingent consideration to In2vate⁽³⁾		34,030		34,030
Convertible Notes⁽⁴⁾		5,157,432		-
Restricted Shares⁽⁵⁾		40,243,678		40,243,678
Loan restructuring share liability⁽⁵⁾		1,019,999		-

(1)

Warrants of 220,681 are out-of-the-money during the three months ended March 31, 2024. The warrants of 873,618 are in-the-money during the three months ended March 31, 2024, however, are not considered exercised as the Company is in a net loss position.. The warrants of 873,618 are out-of-the money during the three-months ended March 31, 2023. Therefore, all warrants are excluded from the dilutive EPS calculation.

(2)

RSUs are subject to the vesting condition under the Liquidity Event, as discussed in Note 7 – Share Based Compensation. As these securities are considered as contingently issuable shares where the contingency has not been met at the end of the reporting period, they are excluded from the dilutive net income (loss) per share calculation for the periods presented.

(3)	Contingencies underlying contingent consideration payable to In2vate was not met as of the end of the reporting period. Therefore, these shares have been excluded from the dilutive net (loss) income per share calculation for the periods presented.

(4)	If-converted method was applied to the Convertible Notes, in which the impact was anti-dilutive for the three months ended March 31, 2024. Therefore, they are excluded from the dilutive EPS calculation.

(5)	Restricted Shares and Loan Restructuring Shares were excluded from dilutive earnings per share calculation for the three months ended March 31, 2024 as the impact of including such shares would be anti-dilutive.

10. Payroll Taxes Payable

The Company has not paid or filed employment payroll tax returns for any period from inception through December 31, 2020. The federal and state withholding tax, employer payroll taxes, penalties, and interest liability from inception of the Company through December 31, 2023 and related penalties and interest were recorded within Payroll Taxes Payable on the condensed consolidated balance sheets. The total liability was $3.0 million each as of March 31, 2024 and December 31, 2023, respectively. The related charge for these accruals is recorded to “Selling, general, and administrative expenses” within the condensed consolidated statements of operations.

11. Fair Value Measurements

The Company’s financial instruments consist of warrant liability, 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, Amended Term Loans, 2023 and 2024 Convertible Notes, Loan Restructuring and Subordinated Payable to Technology Partner.

F-70

The carrying value and estimated fair value of the Company’s 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, Amended Term Loans, 2023 Convertible Notes, 2024 Convertible Notes, Loan Restructuring and Subordinated Payable to Technology Partner as of March 31, 2024 and December 31, 2023, were as follows:

	March, 31, 2024						December, 31, 2023
	Principal amount		Carrying amount		Fair value		Principal amount		Carrying amount		Fair value
	(In thousands)
2020 Term Loans	$	-	$	-	$	-	$	2,697	$	2,483	$	2,697
2021 Term Loans		-		-		-		12,299		11,498		12,299
2023 Term Loan		-		-		-		10,000		7,215		10,000
Amended Term Loans		21,967		26,026		26,026		-		-		-
2023 Convertible Notes		17,400		35,936		35,936		17,400		31,547		31,547
2024 Convertible Notes		700		1,776		1,776		-		-		-
Subordinated payable to Technology Partner		49,789		49,789		49,789		49,163		49,163		49,163
Loan restructuring share liability		-		2,813		2,813		-		-		-
	$	89,856	$	116,340	$	116,340	$	91,559	$	101,906	$	105,706

With respect to the 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, the Company concluded the fair values as of December 31, 2023 approximated the principal value. For Subordinated Payable to Technology Partner, the Company determined that the fair value approximated the principal value as of March 31, 2024 and December 31, 2023. The 2023 and 2024 Convertible Notes and the Loan restructuring share liability are presented are carried at fair value for each period presented.

The fair values of the 2023 and 2024 Convertible Notes, Loan restructuring share liability and Amended Term Loans are estimated using a scenario-based approach which considers the conversion feature and related payoffs within each scenario.

The level 3 inputs used in the valuation model for the Amended Term Loans as of March 31, 2024 included the following:

	March 31, 2024
Redemption Event	Prepay by April 15, 2024			Prepay by May 1, 2024			Prepay by July 1, 2024			Hold-to- Maturity			Private Sale
Discount spread		27.90	%		27.90	%		27.90	%		27.90	%		27.90	%
Probability		5	%		48	%		38	%		5	%		5	%
Term matched risk- free rate		5.49	%		5.49	%		5.46%-5.49	%		4.47%-5.49	%		4.47%-5.49	%

The level 3 inputs used in the valuation model for the 2024 Convertible Notes as of March 31, 2024 included the following:

	March 31, 2024
Redemption Event	De-SPAC Transaction			Hold-to- Maturity
Probability		95	%		5	%
Time to event date (years)		0.04			2.48
Discount spread		574.2	%		574.2	%
Risk-free rate		5.6	%		4.6	%
Discount yield		579.8	%		578.8	%

The level 3 inputs used in the valuation model for the 2023 Convertible Notes as of March 31, 2024 and December 31, 2023 included the following:

	March 31, 2024
Redemption Event	De-SPAC Transaction			Hold-to- Maturity
Probability		95	%		5	%
Time to event date (years)		0.04			1.58
Discount spread		574.2	%		574.2	%
Risk-free rate		5.6	%		4.8	%
Discount yield		579.8	%		579.0	%

F-71

	December 31, 2023
Redemption Event	Equity Financing			De-SPAC Transaction			Hold-to- Maturity
Probability		8.0	%		90.0	%		2.0	%
Time to event date (years)		0.13			0.13			1.82
Discount spread		574.2	%		574.2	%		574.2	%
Risk-free rate		5.6	%		5.6	%		4.4	%
Discount yield		579.8	%		579.8	%		578.6	%

The fair value of the warrant liability and Loan restructuring share liability was determined using an option pricing model which utilized the following level 3 inputs:

	March 31, 2024
	Private Sale Scenario (5% Probability)			SPAC Scenario (95% Probability)
Volatility		65.0	%		45.0	%
Risk-free interest rate		5.1	%		5.42	%
Dividend yield		0.0	%		0.0	%
Exercise price for $6.94 warrants	$	6.94		$	6.94
Exercise price for $10.14 warrants	$	10.14		$	10.14
Discount for Lack of Marketability		0.0	%		2.0	%
Term		0.75 Years			0.04 Years
Equity value⁽¹⁾	$	588,496,671		$	1,233,314,103

(1)	Equity value was derived from weighted average of discounted cash flow, guideline company method, and transaction methodologies.


	December 31, 2023
	Private Sale Scenario (10% Probability)			SPAC Scenario (90% Probability)
Volatility		60.0	%		50.0	%
Risk-free interest rate		4.7	%		5.5	%
Dividend yield		0.0	%		0.0	%
Exercise price for $6.94 warrants	$	6.94		$	6.94
Exercise price for $10.14 warrants	$	10.14		$	10.14
Term		1.0 Years			0.1 Years
Equity value⁽¹⁾	$	585,798,557		$	1,235,675,336

(1)	Equity value was derived from weighted average of discounted cash flow, guideline company method, and transaction methodologies.

The Company’s liabilities measured at fair value on a recurring basis were categorized as follows within the fair value hierarchy.

	March 31, 2024
	Level 1		Level 2		Level 3		Total
	(In thousands)
Liabilities
Warrant liabilities	$	-	$	-	$	26,988	$	26,988
Amended Term Loans		-		-		26,026		26,026
2023 Convertible Notes		-		-		35,936		35,936
2024 Convertible Notes		-		-		1,776		1,776
Loan restructuring share liability		-		-		2,813		2,813
Total liabilities	$	-	$	-	$	93,539	$	93,539

F-72

	December 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Liabilities
Warrant liability	$	-	$	-	$	11,870	$	11,870
2023 Convertible Notes		-		-		31,547		31,547
Total liabilities	$	-	$	-	$	43,417	$	43,417

The following table summarizes the activity for the Company’s Level 3 liabilities measured at fair value:

	Warrant Liability		Convertible Notes		Loan Restructuring		Amended Term Loans
	(In thousands)
Balance as of December 31, 2023	$	11,870	$	31,547	$	-	$	-
Issuance		-		700		2,813		26,026
Change in fair value		15,118		5,465		-		-
Balance as of March 31, 2024	$	26,988	$	37,712	$	2,813	$	26,026

During the three months ended March 31, 2024 and 2023, there were no transfers between Level 1 and Level 2, nor into and out of Level 3.

12. Commitments and Contingencies

Contingencies

The Company evaluates for any potential impact of loss contingencies that are probable and reasonably estimable. As of March 31, 2024, there were no loss contingencies recorded.

While the Company does not anticipate that the resolution of any ongoing matters will have a material impact on its results of operations, financial condition, or cash flows, it is important to note that the ultimate outcome of these matters remains uncertain. In the event of an unfavorable resolution of one or more of these contingencies, it could have a material effect on the Company’s financial condition, results of operations, or cash flows.

The Company will continue to monitor these matters and disclose any significant developments or changes in future financial statements as necessary.

Purchase Commitments

The Company entered into a long-term software licensing contract with a major customer that commenced in 2018 and is set to expire in June 2024, subject to an additional 5-year renewal. The contract has an annual value of $50.3 million. As part of the agreement, the Company installs its software licenses on the customer’s servers, and in exchange, the customer pays an annual fee for access to the software license and related maintenance services. Additionally, the Company has a separate contract with the customer for the purchase of the customer’s end-user data. This data is essential for the Company’s development and utilization of its next-generation artificial intelligence platform. The annual price for this data acquisition amounts to approximately $30.0 million.

The sale of the software license and the purchase of the customer’s end-user data are treated as distinct and independent transactions. Furthermore, the software licensing contract and the data acquisition contract can be canceled individually without affecting the other contract, with the data acquisition contract requiring twelve months notice for cancellation by either party. Due to the distinct nature of the data acquisition from the customer, which is obtained at fair value and used primarily for research and development purposes, the revenue generated from the software licensing contract is recognized on a gross basis. Conversely, the expenses associated with the data acquisition are also recognized on a gross basis and classified as research and development expenses.

F-73

Financial Advisor Agreement

The Company has a financial advisory agreement in place with a designated financial advisor to assist with any future equity fundraising activities. According to the terms of the agreement, the financial advisor will receive compensation based on the following structure:

For equity raises comprising less than a majority of the Company’s equity capitalization, the financial advisor will be entitled to a fee equal to 5.0% of the gross proceeds generated from the equity raise.

In the event of an equity raise comprising a majority of the Company’s equity capitalization, the financial advisor’s compensation will be calculated based on the greater of the following:

A flat fee of $3.5 million.

ii)

1.0% of the aggregate value of the equity raise up to $1.0 billion, plus an additional 1.5% of the portion of the aggregate value of the equity raise that exceeds $1.0 billion.

These compensation terms outline the financial advisor’s entitlement to fees based on the successful completion of equity fundraising activities. For non-equity transactions the specific fee is open to negotiation on a transaction-by-transaction basis to ensure that the financial advisor’s compensation aligns with the scale and significance of the equity raise, considering the Company’s equity capitalization and the total value of the funds raised.

On March 27, 2024, the Company and the financial advisor amended the financial advisory agreement to provide that, in lieu of payment in cash of the full amount of any advisory fees or other fees or expenses owed under the financial advisor agreement, the Company will pay the financial advisor $7,500,000 in cash or NewCo shares, at the sole discretion of the Company. As of March 31, 2024 and December 31, 2023, the financial advisor’s fees were not yet probable of being paid, nor was the amount of the payment determinable. As a result, no amount is accrued within the condensed consolidated balance sheets at either period, for the potential compensation outlined within the financial advisor agreement.

Litigation

The Company is involved in litigation arising in the normal course of business. Such litigation is not expected to have a material effect on the Company’s financial condition, results of operations, and cash flows.

13. Related-Party Transactions

Receivable from related party

The Company had outstanding receivables from Directors in the amount of $0.5 million as of December 31, 2023, related to expenses that the Company incurred on behalf of the Directors.

In February 2024, the Company collected the full amount of the related party receivable from each Director. There is no outstanding balance as of March 31, 2024.

14. Subsequent Events

The Company has evaluated all events subsequent to March 31, 2024 and through May 15, 2024, which represents the date these condensed consolidated financial statements were available to be issued. The Company is not aware of any subsequent event that would require recognition or disclosure in the condensed consolidated financial statements other than those described below.

Closing of the Merger and Related Transactions

On April 16, 2024, (the “Closing Date”), the Company consummated the previously announced merger contemplated by the Merger Agreement dated April 27, 2023 (the “SPAC Transaction”). Refer to Note 1 for additional detail.

The business combination is being accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, although Arrowroot issued shares for outstanding equity interests of iLearningEngines, Inc. in the business combination, Arrowroot is treated as the “acquired” company for financial reporting purposes. Accordingly, the business combination is treated as the equivalent of the Company issuing stock for the net assets of Arrowroot, accompanied by a recapitalization. The net assets of Arrowroot is stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the business combination will be those of the Company.

In connection with the closing of the business combination, Arrowroot Acquisition Corp. (NASDAQ: ARRW) changed its name to “iLearningEngines, Inc.” (“NewCo”) and is listed on the NASDAQ under the new ticker symbol “AILE”.

F-74

On the Closing Date, the following transactions occurred pursuant to the terms of the Merger Agreement:

(i)

Current ILE stockholders own 109,684,738 shares of NewCo common stock on the Closing Date in exchange for former ILE shares;

(ii)

Former Arrowroot public stockholders own 638,977 shares of NewCo common stock on the Closing Date in exchange for former Arrowroot public shares;

(iii)

Current and former affiliates of Arrowroot own 8,674,617 shares of NewCo common stock on the Closing Date in exchange for former Arrowroot convertible and promissory notes;

(iv)

Convertible note investors (not including affiliates of Arrowroot) own 11,551,784 shares of NewCo common stock on the Closing Date in exchange for former ILE convertible notes (see “Convertible Note Purchase Agreement” below for portion of convertible notes entered into on Closing Date);

(v)

The 2020 Lender, 2021 Lender and 2023 Lender own 4,419,998 shares of NewCo common stock on the Closing Date based on amendments to term loans (see “Amendments to 2020, 2021 and 2023 Term Loan” below for further details). Upon repayment of the term loans on April 18, 2024, 815,999 of the shares of NewCo common stock were cancelled.

Convertible Note Purchase Agreement

In connection with the SPAC Transaction, the Company issued and converted $29.4 million of 2024 Convertible Notes. The Company issued $0.7 million of convertible notes on March 21, 2024, and $28.7 million of convertible notes on the Closing Date (collectively, the “2024 Convertible Notes”). The 2024 Convertible Notes were converted to 8,089,532 common shares of NewCo on the Closing Date.

Negotiation of Payables to Third-Party Vendors

Proposed 2024 Equity Incentive Plan

The Company proposed a new equity incentive plan for 2024 and the plan was approved on April 1, 2024.

East West Bank Financing

The interest rate applicable to the Revolving Loans is Adjusted Term Secured Overnight Financing Rate (“SOFR”) (with an interest period of 1 or 3 months at the Borrower’s option) plus 3.50% per annum, subject to an Adjusted Term SOFR floor of 4.00%.

The maturity date of the Revolving Loans is April 17, 2027. The Revolving Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. Borrower is also required to comply with the following financial covenants, which are more fully set forth in the Revolving Loan Agreement (i) minimum liquidity, (ii) minimum revenue performance to plan, (iii) minimum fixed charge coverage ratio and (iv) maximum leverage ratio.

The Revolving Loan Agreement also includes customary events of default, including failure to pay principal, interest or certain other amounts when due, material inaccuracy of representations and warranties, violation of covenants, specified cross-default and cross-acceleration to other material indebtedness, certain bankruptcy and insolvency events, certain undischarged judgments, material invalidity of guarantees or grant of security interest, material adverse effect and change of control, in certain cases subject to certain thresholds and grace periods. If one or more events of default occurs and continues beyond any applicable cure period, the Agent may, with the consent of the Lenders holding a majority of the loans and commitments under the facility, or will, at the request of such Lenders, terminate the commitments of the Lenders to make further loans and declare all of the obligations of the Company under the Revolving Loan Agreement to be immediately due and payable.

F-75

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

iLearningEngines, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of iLearningEngines, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in shareholders’ deficit and cash flows for each of the three years ended December 31, 2023, 2022 and 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum llp

Marcum llp

We have served as the Company’s auditor since 2021.

Philadelphia, PA
April 22, 2024

F-76

ILEARNINGENGINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	As of December 31,
	2023			2022
Assets
Current assets:
Cash	$	4,763		$	856
Restricted cash		2,000			-
Accounts receivable, net of provision for credit loss of $336 and $0, respectively		73,498			34,698
Contract asset		509			9,408
Prepaid expenses		62			88
Total current assets		80,832			45,050
Receivable from Technology Partner		13,602			10,217
Receivable from related party		465			595
Other assets		729			885
Deferred tax assets, net		5,703			6,798
Deferred transaction costs		3,990			-
Total assets	$	105,321		$	63,545
Liabilities and shareholders’ deficit
Current liabilities:
Trade accounts payable	$	3,753		$	787
Accrued expenses		2,982			1,284
Current portion of long-term debt, net		10,517			8,138
Contract liability		2,765			2,106
Payroll taxes payable		3,037			2,789
Other current liabilities		116			237
Total current liabilities		23,170			15,341
Convertible notes		31,547			-
Warrant liability		11,870			7,645
Long-term debt, net		10,679			9,713
Subordinated payable to Technology Partner		49,163			47,495
Other non-current liabilities		74			126
Total liabilities		126,503			80,320

Shareholders’ deficit:
Common Shares $0.0001 par value: 200,000,000 shares authorized: 95,782,605 shares issued and outstanding at December 31, 2023 and December 31, 2022		10			10
Additional paid-in capital		36,384			36,384
Accumulated deficit		(57,576	)		(53,169	)
Total shareholders’ deficit		(21,182	)		(16,775	)
Total liabilities and shareholders’ deficit	$	105,321		$	63,545

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

F-77

ILEARNINGENGINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)

	Year Ended December 31,
	2023			2022			2021
Revenue	$	420,582		$	309,170		$	217,867
Cost of revenue		132,154			93,890			64,834
Gross profit		288,428			215,280			153,033
Operating expenses:
Selling, general, and administrative expenses		140,897			105,966			74,434
Research and development expenses		128,544			97,436			70,913
Total operating expenses		269,441			203,402			145,347
Operating income		18,987			11,878			7,686
Other (expense) income:
Interest expense		(6,274	)		(6,614	)		(5,047	)
Change in fair value of warrant liability		(771	)		248			(83	)
Change in fair value of convertible notes		(14,147	)		-			-
Other expense		(45	)		(21	)		(3	)
Total other expense, net		(21,237	)		(6,387	)		(5,133	)
Net (loss) income before income tax (expense) benefit		(2,250	)		5,491			2,553
Income tax (expense) benefit		(2,157	)		5,975			(32	)
Net (loss) income	$	(4,407	)	$	11,466		$	2,521
Net (loss) income per share – basic	$	(0.05	)	$	0.08		$	0.02
Net (loss) income per share – diluted	$	(0.05	)	$	0.08		$	0.02
Weighted average common shares outstanding – basic		95,782,605			95,728,760			94,697,428
Weighted average common shares outstanding – diluted		95,782,605			95,728,760			98,042,878

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

F-78

ILEARNINGENGINES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(In thousands, except share amounts)

					Additional						Total
	Common Stock				Paid-In			Accumulated			Shareholders’
	Shares		Amount		Capital			Deficit			Deficit
Balances at January 1, 2021		94,483,835	$	9	$	34,928		$	(67,156	)	$	(32,219	)
Capital contribution from related party		—		—		574			—			574
Issuance of shares for cash		1,082,800		1		(1	)		—			—
Net income		—		—		—			2,521			2,521
Balances at December 31, 2021		95,566,635		10		35,501			(64,635	)		(29,124	)
Issuance of shares from acquisition		215,970		—		883			—			883
Net income		—		—		—			11,466			11,466
Balances at December 31, 2022		95,782,605		10		36,384			(53,169	)		(16,775	)
Net loss		—		—		—			(4,407	)		(4,407	)
Balances at December 31, 2023		95,782,605	$	10	$	36,384		$	(57,576	)	$	(21,182	)

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

F-79

ILEARNINGENGINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Years ended December 31,
	2023			2022			2021
Cash flows used in operating activities:
Net (loss) income	$	(4,407	)	$	11,466		$	2,521
Adjustments to reconcile net income to net cash flows used in operating activities:
Depreciation and amortization		128			77			—
Share based compensation expense		—			—			39
Amortization of debt discount and debt issuance costs		2,103			3,248			2,186
Provision for deferred taxes		1,095			(6,798	)		—
Accretion of interest on subordinated payable to Technology Partner		1,668			1,667			1,668
Change in fair value of warrant liability		771			(248	)		83
Change in fair value of convertible debts		14,147			—			—
Provision for credit losses		336			—			—
Changes in operating assets and liabilities:
Accounts receivable		(39,136	)		(18,740	)		(5,395	)
Receivable from related party		130			20			(350	)
Contract asset		8,899			7,645			2,115
Advance to customer		—			362			(362	)
Prepaid expenses and other current assets		26			(31	)		(56	)
Receivable from Technology Partner		(3,385	)		(9,490	)		(727	)
Trade accounts payable		1,906			163			536
Accrued expenses and other current liabilities		(47	)		702			(718	)
Contract liability		659			613			613
Subordinated payable to Technology Partner		—			—			(10,503	)
Payroll taxes payable		248			401			116
Deferred transaction costs		(1,307	)		—			—
Net cash flows used in operating activities		(16,166	)		(8,943	)		(8,234	)
Cash flows (used in) provided by investing activities:
Purchase of property and equipment		(24	)		—			(18	)
Cash acquired from business acquisition		—			161			—
Net cash flows (used in) provided by investing activities:		(24	)		161			(18	)
Cash flows provided by financing activities:
Proceeds from term loans		15,000			10,000			7,000
Repayment of term loans		(10,303	)		(4,766	)		(272	)
Proceeds from convertible notes		17,400			—			—
Other financing activities		—			(3	)		1
Net cash flows provided by financing activities:		22,097			5,231			6,729
Net change in cash		5,907			(3,551	)		(1,523	)
Cash and restricted cash, beginning of year		856			4,407			5,930
Cash and restricted cash, end of year	$	6,763		$	856		$	4,407

Supplemental disclosure of cash flows information:
Cash paid during the year for interest	$	2,510		$	3,557		$	922
Supplemental disclosure of non-cash investing and financing information:
Issuance of warrants to purchase common shares	$	3,455		$	1,027		$	3,193
Issuance of equity for acquisition of In2vate, LLC	$	—		$	883		$	—
Accrued transaction costs	$	2,683		$	—		$	—
Capital contribution from cancellation of convertible notes	$	—		$	—		$	574
Reconciliation of cash and restricted cash
Cash	$	4,763		$	856		$	4,407
Restricted cash	$	2,000		$	—		$	—
Total cash and restricted cash at end of year	$	6,763		$	856		$	4,407

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

F-80

ILEARNINGENGINES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

During the year ended December 31, 2021, the Company’s management incorporated iLearningEngines FZ-LLZ (“ILE Dubai”), a free zone company incorporated in the Dubai Development Authority Zone. The objective of this entity is to develop ILE’s customer based in the Middle East. ILE Dubai operates under the direction and supervision of ILE. The Company has determined that it has a variable interest in ILE Dubai and is the primary beneficiary, therefore the Company has consolidated ILE Dubai as a variable interest entity (“VIE”).

During the year ended December 31, 2021, the Company acquired a majority ownership in iLearningEngines India Private Limited, a private limited company formed under the laws of India (“ILE India”). The objective of this acquisition was for ILE India to develop employees and support operations in India, with hiring of talent and employees through ILE India for utilization within the Company. ILE India operates under the direction and supervision of ILE. The Company has determined that it has a variable interest in ILE India and is the primary beneficiary, therefore the Company has consolidated ILE India as a VIE.

During the year ended December 31, 2022, the Company registered iLearningEngines Australia as a wholly-owned subsidiary. The objective of this subsidiary is to develop new sales and channel partners in Australia, New Zealand, and Southeast Asia.

During the year ended December 31, 2022, the Company acquired all outstanding equity of In2vate, LLC (“In2vate”), a risk management and learning platform provider.

Proposed Business Combination

On April 27, 2023, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Arrowroot Acquisition Corp. (NASDAQ: ARRW) (“Arrowroot”), a special-purpose acquisition company (“SPAC”), and ARAC Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Arrowroot (“Merger Sub”). Upon closing of the Merger Agreement and upon approval by the shareholders of Arrowroot, the combined company will be renamed to “iLearningEngines, Inc.” and will be listed on the NASDAQ under the new ticker symbol “AILE.” Arrowroot has agreed to acquire all of the outstanding equity interests of the Company. Completion of the transaction is subject to certain customary regulatory consents and approval by stockholders of Arrowroot and the Company.

Basis of Presentation

The accompanying 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”). The consolidated financial statements include the accounts of iLearningEngines, Inc. and its subsidiaries.

Reclassifications

Certain reclassifications have been made to conform the prior period presentation.

Risks and Uncertainties

Impact of Conflicts in Ukraine and Middle East

Following Russia’s military invasion of Ukraine in February 2022, NATO deployed additional military forces to nearby countries in Eastern Europe, and the United States, European Union, and other nations announced various sanctions against Russia. The invasion of Ukraine and the retaliatory measures that have been taken, and could be taken in the future, by the United States, NATO, and other countries have created potential global security concerns and could have a lasting impact on regional and global economies, which could in turn adversely affect the Company.

In addition, although our business has experienced limited disruption as a result of the Russia-Ukraine conflict, continued escalation of this conflict as well as the Israeli-Hamas conflict and Houthi movement in the Red Sea may negatively impact the global economy and our future operating results and financial condition.

The conflicts in Ukraine and the Middle East have not presently resulted in a material impact on the Company’s financial position, operating results, or future forecasts. The Company continues to monitor these conflicts.

F-81

2. Summary of Significant Accounting Policies

Consolidation Policy

The accompanying consolidated financial statements include the accounts of the Company and all wholly-owned subsidiaries, ILE India and ILE Dubai. Consolidation of an entity is also assessed pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, which requires a variable interest holder to consolidate a VIE if that party will absorb a majority of the expected losses of the VIE, receive a majority of the residual returns of the VIE, or both, and assesses whether an enterprise is the primary beneficiary of a VIE. The Company has determined that it has a variable interest in ILE India and ILE Dubai, and is considered the primary beneficiary for each entity, therefore the Company has fully consolidated ILE India and ILE Dubai under ASC 810. All intercompany transactions and accounts have been eliminated.

Business Combinations

In accordance with ASC 805, Business Combinations, the Company assesses whether a business acquisition meets the definition of an asset acquisition or a business combination. Business combinations are accounted for using the acquisition method. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed, at their acquisition-date fair values. The Company utilizes valuation techniques appropriate for the assets and liabilities being measured in determining these fair values. The excess of the purchase price over the fair value of the net assets of the acquired business is goodwill.

Cash

Cash consists of funds held in checking accounts maintained at financial institutions. The Company classifies all highly liquid instruments with an original maturity of three months or less as cash equivalents. There are no cash equivalents as of December 31, 2023 and 2022.

Restricted Cash

Restricted cash consists of cash earmarked for a specific purpose and is not available for immediate and general use by the Company. The Company’s restricted cash reserve is prohibited from being spent in the ordinary course of business through a contractual arrangement with the Company’s lenders. As of December 31, 2023, the Company had $2.0 million in restricted cash.

Concentration of Credit Risk and Major Sales Channels

During the year ended December 31, 2023, there were four customers, representing 19.3%, 16.0%, 11.9%, and 11.7%, respectively, who individually accounted for 10% or more of the Company’s revenue. During the year ended December 31, 2022, there were five customers, representing 17.4%, 17.0%, 14.9%, 14.3% and 10.3%, respectively, who individually accounted for 10% or more of the Company’s revenue. During the year ended December 31, 2021, there were four customers, representing 22.8%, 20.2%, 13.1% and 11.0%, respectively, who individually accounted for 10% or more of the Company’s revenue.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome. Subjective and significant estimates include, but are not limited to, allowance for credit losses, and valuation of warrants. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the consolidated statements of operations in the period that they are determined.

Segment Information

The Company determined that it has a single operating segment after considering the Company’s organizational structure and the information regularly reviewed and evaluated by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has determined that its CODM is its Chief Executive Officer. The CODM reviews the Company’s financial information on a basis for purposes of evaluating financial performance and allocating resources. On the basis of these factors, the Company determined that it operates and manages its business as one operating segment, that develops, markets, and provides consumer learning automation solutions; and accordingly has one reportable segment for financial reporting purposes.

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Foreign Currency Translation and Transactions

The Company’s functional currency is the U.S. dollar. Assets and liabilities of foreign subsidiaries that operate primarily in a currency other than the U.S. dollar are remeasured and translated into U.S. dollars using the current exchange rate in effect at the balance sheet date, except for non-monetary assets and liabilities that are translated at historical exchange rates. Transactions denominated in currencies other than the Company’s functional currency are measured at the functional currency’s exchange rate in effect at the time of transaction. At the end of each reporting period, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income and are not adjusted for income taxes when they relate to permanent investments in foreign subsidiaries. Gains and losses from foreign currency transactions are included in other income in the consolidated statements of operations. Foreign currency translation adjustments were immaterial for the years ended December 31, 2023, 2022, and 2021.

Accounts Receivable and Provision for Credit Losses

Accounts receivable are uncollateralized, noninterest bearing customer obligations due under normal trade terms and generally requiring payment within 30 to 90 days of the invoice date. Accounts receivable are stated at the amount billed to the customer, net of provision for credit losses in accordance with ASC 326, Financial Instruments-Credit Losses. Payments of accounts receivable are allocated to the specific invoices identified on the customer’s remittance advice, or, if unspecified, are applied to the earliest unpaid invoice.

Costs to Obtain and Fulfill Contracts

Sales commissions tied to new customer contracts earned by the Company’s Technology Partner, discussed in Note 5, are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for renewal of a contract are considered commensurate with the commissions paid for the acquisition of the initial contract and are earned only as the revenue to which they relate is recognized. The Company has elected the practical expedient of expensing its costs to obtain contracts as incurred because the amortization period over which they would otherwise be amortized is one year or less.

The Company does not have any capitalizable costs to fulfill contracts. Internal and external labor costs related to providing implementation services are expensed as incurred.

Debt Issuance Costs and Deferred Financing Costs

The Company borrows from various lenders to finance its growth and operations. Costs incurred in connection with debt financings, such as origination fees, original issue discount, investment banking fees and legal fees, are classified as debt issuance costs and are presented as a deduction from the related borrowing. Debt issuance costs are amortized over the expected life of the related financing agreements as a component of interest expense under the effective interest method. Debt issuance costs are expensed immediately upon early extinguishment of the debt. In a debt modification, the initial issuance costs and any additional fees incurred as a result of the modification are amortized over the term of the modified agreement.

The Company accounts for certain debt issuance costs relating to the undrawn portion of term loan commitments as assets, which are included with deferred financing costs in the consolidated balance sheets and amortized into interest expense on a straight-line basis over the loan commitment period. Once the commitment is drawn, the pro-rata portion of the unamortized asset is reclassified as a deduction from the related borrowing.

Warrants Issued in Connection with Indebtedness

Warrants issued in connection with the issuance of indebtedness that are accounted for as liabilities are initially recorded at fair value. Proceeds are first allocated to the warrants in an amount equal to the fair value of the warrants. The residual proceeds remaining after allocation to the warrant are allocated to debt as a debt discount. The debt discount is accreted over the term of the indebtedness as interest expense, using the effective interest method. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of change in fair value of warrant liability in the consolidated statements of operations.

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Technology Partner

The Company has a long-term relationship with a Technology Partner. The Technology Partner provides research and development (“R&D”), sales and marketing, and implementation and support services to the Company. In addition, the Technology Partner also purchases, integrates and resells the Company’s platform to end customers.

When ILE contracts directly with the end customer, the Technology Partner provides front-end sales and marketing support to identify the end customer, but ILE contracts directly with the end customer to provide Implementation Services and the ILE platform. Separately, the Company contracts with the Technology Partner for the Technology Partner to provide implementation support services on behalf of the Company to the end customer. The Company is primarily responsible for fulfilling the promise to provide the specified goods and services over the contract term to the end customer and has discretion in establishing the price. Therefore, the Company determined the end customer is its customer, and the Technology Partner is acting as the Company’s agent.

When the Technology Partner purchases and integrates the ILE platform into the Technology Partner’s own software solution provided to the Technology Partner’s end customer, the Technology Partner identifies and contracts with the end customer to provide the integrated software solution, implementation services, and support services. In these arrangements, the Technology Partner controls the ILE platform, and the Company considers the Technology Partner to be its end customer for this contractual relationship.

Because the Technology Partner is a customer in some arrangements and a vendor in other arrangements, the Company evaluated the fees it pays the Technology Partner for the various services provided to the Company. The Company determined the services it received from the Technology Partner were distinct and the consideration paid to the Technology Partner was equivalent to an arms-length transaction. As a result, no costs incurred by the Company related to services provided by the Technology Partner have been netted against revenues earned from the Technology Partner.

The sales commissions paid to the Technology Partner are recognized in accordance with ASC 340-40. The implementation fees are presented within cost of revenue, while any fees paid for R&D services are presented in research and development expense and marketing fees are presented in selling, general and administrative expense on the consolidated statements of operations.

If at any time the services fees exceed collections resulting in a net payable to the Technology Partner, subsequent collections will first be applied to the net payable including any accrued interest on the balance. The details of the Master Arrangement are further described Note 5.

Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates goodwill and indefinite-lived intangible assets for impairment annually or more frequently when an event occurs, or circumstances change that indicate the carrying value may not be recoverable. The Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying value and if so, the Company performs a quantitative test. The Company compares the carrying value of each reporting unit and indefinite-lived intangible asset to its estimated fair value and if the fair value is determined to be less than the carrying value, the Company recognizes an impairment loss for the difference. Goodwill and indefinite-lived intangible assets are presented under Other Assets in the consolidated balance sheets.

Long-Lived Assets and Finite-Lived Intangible Assets

Long-lived assets and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might 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.

For long-lived assets used in operations, including lease assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the difference between the carrying amount and estimated fair value. Long-lived assets are considered held for sale when certain criteria are met, including when management has committed to a plan to sell the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year of the reporting date.

Finite-lived intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from five to twelve years. Long-lived assets and finite-lived intangible assets are presented under Other Asset in the consolidated balance sheets.

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Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company uses various valuation approaches. A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels, based on the inputs, as follows:

●

Level 1 — Valuations based on quoted prices for identical instruments in active markets. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.

●

Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant value drivers are observable or can be corroborated by observable market data.

●

Level 3 — Valuations based on inputs that are unobservable. These valuations require significant judgment.

The availability of valuation techniques and observable inputs can vary and is affected by a wide variety of factors, including the type of asset or liability, whether the asset or liability is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuations, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the assets or liabilities existed.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety.

Fair Value Option (“FVO”) Election

The Company entered into a Convertible Note Purchase Agreement on April 27, 2023, referred to herein as the “Convertible Notes”, which are accounted under the “fair value option election” as discussed below.

Alternatively, FASB ASC Topic 825, Financial Instruments, (“ASC 825”) provides for the “fair value option” (“FVO”) election. In this regard, ASC 825-10-15-4 provides for the FVO election (to the extent not otherwise prohibited by ASC 825-10-15-5) to be afforded to financial instruments, wherein the financial instrument is initially measured at estimated fair value as of the transaction issue date and then subsequently remeasured at estimated fair value as of each reporting period balance sheet date, with changes in the estimated fair value recognized as other income or expense in the statement of operations. The estimated fair value adjustment of the Convertible Notes is presented in a single line item within change in fair value of convertible notes in the accompanying consolidated statement of operations (as provided for by ASC 825-10-50-30(b)). Further, as required by ASC 825-10-45-5, to the extent a portion of the fair value adjustment is attributed to a change in the instrument-specific credit risk, such portion would be recognized as a component of other comprehensive income (“OCI”) (for which there have been no such adjustments with respect to the Convertible Notes.) Under the fair value option election described the Company presents the entire change in fair value of the Convertible Notes, including the component related to interest expense, within in a single line item on the consolidated statements of operations which is captioned “Change in fair value of convertible notes”.

The fair value of the Convertible Notes as of December 31, 2023 was $31.5 million and is presented within “Convertible notes” on the consolidated balance sheets. Refer to Note 7 for additional detail regarding the Convertible Notes.

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Deferred Transaction Costs

The Company incurred direct and incremental transaction costs for the year ended December 31, 2023 related to the contemplated merger with Arrowroot. Transaction costs of $4.0 million were deferred and capitalized to the deferred transaction costs line item on the consolidated balance sheet as of December 31, 2023.

After consummation of the merger, these costs will be recorded to shareholders’ deficit as a reduction of additional paid-in capital generated as a result of the merger. If the merger with Arrowroot is subsequently aborted, the Company will review the deferred transaction costs for impairment. As of December 31, 2023, $1.1 million and $1.6 million of unpaid transaction costs are included within the trade accounts payable and accrued expenses line items on the consolidated balance sheet, respectively.

Share-Based Compensation

The Company records compensation costs related to share-based awards in accordance with ASC Topic 718, Compensation — Stock Compensation (“ASC 718”), whereby the Company measures compensation cost at the grant date based on the estimated fair value of the award. Compensation cost is recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting period. Forfeitures are accounted for when they occur.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606.

Revenues are recognized when control of services is transferred to the Company’s customers, in an amount that reflects the consideration ILE expects to be entitled to in exchange for those services over the term of the agreement, generally when made available to the customers. Revenues are recognized net of sales credits and allowances. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

Revenue is recognized based on the following five step model in accordance with ASC 606:

●

Identification of the contract with a customer;

●

Identification of the performance obligations in the contract;

●

Determination of the transaction price;

●

Allocation of the transaction price to the performance obligations in the contract; and

●

Recognition of revenue when, or as, the Company satisfies a performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company’s contracts with customers include two performance obligations, (i) implementation, and (ii) combined software license and maintenance. The Company records individual performance obligations separately by allocating the contract’s total transaction price to each performance obligation of each distinct good or service in the contract.

Implementation services

All customers require implementation services prior to being able to use the ILE platform. To date ILE has outsourced these services to its Technology Partner who has been trained to provide the implementation services. Refer to Note 5 for further discussion of the Technology Partner. Implementation services generally take 1 – 3 months and consist of the phases the Company follows as part of the customer onboarding process.

The Company is primarily responsible for fulfilling the promise to provide implementation services to a customer and also has discretion in establishing pricing for these services. Accordingly, the Company is identified as the principal in the arrangement.

The implementation services do not involve significant customization or creating new software functionality. Instead, the services mainly focus on configuration and mapping customer data with the required attributes within the software platform to ensure the platform’s built-in functionalities can be utilized by the customer. Revenues from implementations are recognized over time as such services are performed using an input method of efforts expended, compared to total estimated efforts to complete the project.

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Combined software license and maintenance

The combined software license and maintenance performance obligation relates to the license to the ILE AI platform and related maintenance services (including critical support functions and updates) provided over the license term. The software licenses to the AI platform is not considered distinct from the maintenance services, because the customer cannot derive the intended value from the software without ongoing critical support services and updates that are provided by the maintenance services. ILE recognizes revenue from the combined software license and maintenance performance obligation ratably over the contract term beginning on the date that the software license is delivered to the customer and related maintenance services are made available, as the customer simultaneously receives and consumes the benefits of the combined software license and maintenance performance obligation. Contracts with customers typically include a fixed amount of consideration and are generally cancelable with 90 days to 24 months’ notice. ILE typically invoices customers quarterly in advance for ILE’s software license and maintenance services upon execution of the initial contract or subsequent renewal.

A contract’s transaction price, which is generally a fixed fee in the Company’s arrangements, is allocated to each performance obligation and recognized as revenue as the respective performance obligation is satisfied. The Company’s process for determining SSP involves significant management judgment since the Company’s performance obligations are not sold separately. In determining the SSP of implementation services, the Company estimates the cost of providing the services and adds a reasonable margin. The determination of the added margin considers what a market participant would be willing to pay and is adjusted for differences in products, geographies, customers, and other factors. The Company’s cost estimates are primarily based on historical cost data for similar implementation projects. The SSP of the combined software license and maintenance performance obligation is based on the residual approach as the Company sells the ILE AI platform and related maintenance services to different customers at a highly variable range of amounts.

Disaggregation of Revenue

With respect to the Company’s disaggregation of revenue by customer geography, geography is primarily determined based on the location of the customer identified in the contract. As described in the Technology Partner policy note above, the Company enters contracts with the Technology Partner though which the Technology Partner purchases and integrates the ILE platform into the Technology Partner’s own software solution provided to one of the Technology Partner’s customers. In this type of contractual arrangement, the Company identifies the Technology Partner as its customer. In contractual arrangements in which the Technology Partner is identified as the customer, the Technology Partner’s end customer may or may not be known by the Company. In cases in which the Technology Partner’s customer is known to the Company, the geography is determined based on the location of the Technology Partner’s customer and conversely, in cases in which the Technology Partner’s customer is not known, the customer geography is determined based on the geography of the Technology Partner. The following table presents this disaggregation of revenue by customer geography:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
India	$	162,854	$	138,048	$	126,371
North America		194,886		116,112		47,953
Other⁽¹⁾		62,842		55,010		43,543
Total Revenues	$	420,582	$	309,170	$	217,867

(1)	Other includes customers in Middle East and Europe.

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The following table presents to disaggregation of revenue by type of revenue:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Revenue related to implementation services	$	16,491	$	15,872	$	5,495
Combined software license and maintenance revenues		404,091		293,298		212,372
Total Revenues	$	420,582	$	309,170	$	217,867

Contract asset

Contract asset balances represent amounts for which the Company has recognized revenue, pursuant to its revenue recognition policy, for software licenses already delivered, implementation services, and maintenance services already performed but invoiced in arrears. As of December 31, 2023 and 2022 contract assets were $0.5 million and $9.4 million, respectively.

Contract liability

Contract liability represents either customer advance payments or billings for which the revenue recognition criteria has not yet been met. Contract liability is primarily unearned revenue related to combined software and maintenance services. During the year ended December 31, 2023 and 2022, $2.8 million and $2.1 million of combined software and maintenance services revenue were recognized, respectively, that was included in the contract liability balances at the beginning of the period.

Remaining performance obligations

As of December 31, 2023, the total remaining performance obligations under the Company’s contracts with customers was $409.6 million, and the Company expects to recognize approximately 90% of the remaining performance obligations as revenue within the next twelve months. As of December 31, 2022, the total remaining performance obligations under the Company’s contracts with customers was $235.1 million, and the Company recognized revenues on approximately 70% of these remaining performance obligations over the year ended December 31, 2023.

Cost of Revenue

Cost of revenue is comprised of expenses related to customer support and fees paid to third parties.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statements of operations in the period of the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. During 2022, the Company achieved sufficient profits to release the entirety of its valuation allowance established in a prior period. Accordingly, as of December 31, 2023, the Company no longer maintains a valuation allowance outside of the Australia jurisdiction.

The Company records uncertain tax positions in accordance with ASC Topic 740, Income Taxes, (“ASC 740”) on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company will recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. As of December 31, 2023 and 2022, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets.

Research and Development Expenses

Software development costs are expensed as incurred until the point the Company establishes technological feasibility. Technological feasibility is established upon the completion of a working model. Costs incurred by the Company between establishment of technological feasibility and the point at which the product is ready for general release are capitalized, subject to their recoverability, and amortized over the economic life of the related products. Because the Company believes its current process for developing its software products essentially results in the completion of a working product concurrent with the establishment of technological feasibility, no software development costs have been capitalized to date. There were no software development costs required to be capitalized under ASC Topic 985-20, Costs of Software to be Sold, Leased or Marketed. The Company’s R&D costs are primarily incurred with the Company’s Technology Partner discussed in Note 5.

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Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU No. 2020-06”). ASU No. 2020-06 was issued to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, the FASB decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock. In addition to eliminating certain accounting models, the FASB also decided to enhance information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance. This update is effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal year. For all other entities, this update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 31, 2020.

On January 1, 2023, the Company adopted this standard and it did not have a material impact on the Company’s consolidated results of operations, financial position, cash flows, or related disclosures. On January 1, 2023, the Company adopted FASB ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU No. 2016-13”). ASU No. 2016-13 was issued to bring consistency in the accounting treatment of different types of financial instruments, require consideration of a broader range of variables when forming loss estimates, and require immediate recognition of management’s estimates of current expected credit losses (“CECL”). See “Accounts Receivable and Provision for Credit Losses” above for further information.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. We expect this ASU to only impact our disclosures with no impacts to our results of operations, financial position, or cash flows.

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3. Acquisitions

On April 4, 2022, the Company completed the acquisition of 100% interest of In2vate, LLC (“In2vate”). In2vate is a risk management and learning platform provider in Tulsa, Oklahoma. In2vate serves more than two million users delivering high impact risk management programs and services to enterprises, educational institutions, health systems and law enforcement organizations. Total consideration of $0.9 million was exchanged, consisting of 215,970 shares of the Company’s common stock and contingent consideration of 34,030 shares of the Company’s common stock, both at a price per share of $3.53, the contingent consideration will only vest upon the occurrence of any of the following events: an initial public offering of the Company’s common stock; a merger with a special purpose acquisition company; a merger or consolidation of the Company that is also a change of control; the sale, lease, transfer, exclusive license, or other disposition of substantially all of the assets of the Company; or the sale or disposition of one or more subsidiaries of the Company if substantially all of the assets of the Company are held by those subsidiaries. This contingent consideration meets the requirements for permanent equity classification and was recorded to Additional Paid-In Capital within the consolidated balance sheets. Transaction costs related to the acquisition totaling $0.05 million are included in selling, general and administrative expenses in the consolidated statements of operations and consist primarily of legal and other management due diligence fees, for the year ended December 31, 2022.

The following table summarizes the consideration transferred and the purchase price allocation of the fair values of the assets acquired and liabilities assumed at the acquisition date:

	Amount
	(in thousands)
Total consideration exchanged, less cash and cash equivalents of $161	$	722

Accounts receivables, net	$	60
Property and equipment, net		454
Goodwill and intangible assets		319
Other assets		1
Total assets acquired		834
Accounts payable		(84	)
Other current liabilities		(28	)
Total liabilities assumed		(112	)
Total net assets assumed	$	722

Goodwill represents the excess of the consideration paid over the fair values of the acquired net assets and is included in Other Assets in the consolidated balance sheets. The allocated value of goodwill primarily relates to the value of the existing workforce and anticipated synergies by combining existing Company functions. The results of operations of the acquired company are included in the Company’s consolidated statements of income from the date of acquisition. The goodwill is amortizable for tax purposes over 15 years.

4. Accrued Expenses

The following table presents the components of accrued expenses as of December 31, 2023, and 2022:

	As of
	December 31, 2023		December 31, 2022
	(In thousands)
Accrued income taxes	$	1,742	$	834
Other accrued expenses⁽¹⁾		1,240		450
Total	$	2,982	$	1,284

(1)	Other Accrued Expense includes accrued professional service fees, accrued interest, accrued compensation and benefits, and other current liabilities.

5. Technology Partner

On January 1, 2021, the Company amended the interest rate with the Technology Partner which changed from a 12-month LIBOR rate plus 2.0% to a fixed rate of 3.99% through December 31, 2023. Subsequent to December 31, 2023, the Company amended the interest rate with the Technology Partner to a fixed rate of 5.99% through December 31, 2024. The Company is not required to repay any outstanding balance or accrued interest until the tenth anniversary of the effective date of termination of the MA. As of the date of these consolidated financial statements, the MA has not been terminated.

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The following table summarizes the expenses charged to company by the Technology Partner that are presented within cost of revenue, selling, general and administrative expenses, and research and development expenses on the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021:

	December 31,
	2023		2022		2021
	(In thousands)
Cost of revenue	$	132,111	$	93,753	$	64,834
Selling, general and administrative expense		127,538		96,972		68,931
Research and development expense		128,539		97,396		70,836
	$	388,188	$	288,121	$	204,601

Subordinated Payable to the Technology Partner

On December 30, 2020, in conjunction with the 2020 Term Loans issuance described in Note 6 - Debt, the Company and the Technology Partner entered into a subordination agreement whereby the payable to the Technology Partner became subordinated to the 2020 and 2021 Term Loans.

	December 31,
	2023		2022
	(In thousands)
Beginning balance	$	47,495	$	45,828
Accrued interest		1,668		1,667
Subordinated payable to Technology Partner	$	49,163	$	47,495

Interest expense related to the subordinated payable to the Technology Partner was $1.7 million for each of the years ended December 31, 2023, 2022, and 2021.

Net Receivable from Technology Partner

	December 31,
	2023			2022
	(In thousands)
Opening balance of receivable from Technology Partner	$	10,217		$	727
Collections by Technology Partner		389,361			297,710
Cost of services provided by Technology Partner		(388,189	)		(288,121	)
Net cash transfers between Company and Technology Partner		2,213			(99	)
Closing balance of receivable from Technology Partner	$	13,602		$	10,217

6. Debt

The following table presents the components of the Company’s debt as of December 31, 2023 and 2022:

	December 31,
	2023		2022
	(In thousands)
2020 Term Loans	$	2,697	$	6,708
2021 Term Loans		12,299		13,377
2023 Term Loans		10,000		-
Other Loans		-		160
		24,996		20,245
Less: Discount on debt		3,800		2,394
		21,196		17,851
Less: Current portion		10,517		8,138
Long-term portion of debt	$	10,679	$	9,713

F-91

Contractual interest expense related to long-term debt was $2.5 million, $2.0 million, and $1.1million for the years ended December 31, 2023, 2022, and 2021, respectively. The amortization of debt issuance costs was $2.1 million, $3.2 million and $2.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Aggregate annual maturities of long-term debt obligations for each of the next five years are as follows for the years ending December 31:

Year ended December 31,	Long-Term Debt
	(In thousands)
2024	$	12,745
2025		8,356
2026		3,895
Total	$	24,996

Term Loans and Warrants Issued

On December 30, 2020, the Company entered into a Loan and Security Agreement (the “2020 Term Loan”) with Venture Lending & Leasing IX, Inc. (the “2020 Lender”), pursuant to which the 2020 Lender made available to the Company a term loan facility in an aggregate principal amount of $10.0 million.

In connection with the 2020 Term Loan, the Company issued to Venture Lending & Leasing IX, LLC, an affiliate of the 2020 Lender, warrants to purchase 433,597 shares of the Company (the “2020 Warrants”). The 2020 Warrants are classified as a liability and recorded at their fair value because there are certain put rights that may obligate the Company to repurchase the 2020 Warrants in the future, based on events that are outside of the control of the Company. The 2020 Warrants have an exercise price of $6.94 per share and are exercisable through July 31, 2036. In the event that the Company participates in a preferred stock financing round, the warrant will also become exercisable for shares of preferred stock at an exercise price equal to the lowest price per share of any preferred stock financing round. The 2020 Warrants are presented within the Warrant liability line item of the December 31, 2023 and December 31, 2022 consolidated balance sheets. As of December 31, 2023, the weighted average effective interest rate for 2020 Term Loan is 32.4%.

On October 21, 2021, the Company entered into a Loan and Security Agreement (the “2021 Term Loan”, together with the 2020 Term Loan Agreement, the “Term Loan Agreement”) with Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc. (collectively, the “2021 Lender”), pursuant to which the 2021 Lender made available to the Company a term loan facility in an aggregate principal amount of $20.0 million. The Company made its fourth draw on the 2021 Term Loan of $5.0 million on January 10, 2023. The 2021 Term Loan bears interest of 11.5% per annum. The Company incurred debt discounts on the 2021 Term Loan in connection with the fair value of the warrants referenced below. As of December 31, 2023, the weighted average effective interest rate for 2021 Term Loan is 19.1%.

In connection with the 2021 Term Loan, the Company issued to Venture Lending & Leasing IX, LLC and WTI Fund X, LLC, affiliates of the 2021 Lenders, warrants to purchase 440,021 common shares of the Company (the “2021 Warrants”), of which 55,005 were issued in 2023 in connection with the $5.0 million draw on the 2021 Term Loan on January 10, 2023. The 2021 Warrants are classified as a liability and recorded at their fair value because there are certain put rights that may obligate the Company to repurchase the 2021 Warrants in the future, based on events that are outside of the control of the Company. The 2021 Warrants have an exercise price of $6.94 per share and are exercisable through July 31, 2037. In the event that the Company participates in a preferred stock financing round, the warrant will also become exercisable for shares of preferred stock at an exercise price equal to the lowest price per share of any preferred stock financing round. The 2021 Warrants are presented within the Warrant liability line item of the December 31, 2023 and December 31, 2022 consolidated balance sheets.

On October 31, 2023, the Company entered a Loan and Security Agreement with WTI Fund X, Inc. (the “2023 Lender”), pursuant to which the 2023 Lender made available to the Company a term loan facility with an aggregate principal amount of $10.0 million (the “2023 Term Loan”). On October 31, 2023, the Company drew down the full principal amount of $10.0 million. In connection with the 2023 Term Loan, the Company issued to WTI Fund X, LLC, an affiliate of the 2023 Lender, warrants to purchase 220,681 common shares. The 2023 Warrants have an exercise price of $10.14 per share and are exercisable through October 31, 2038. As of December 31, 2023, the effective interest rate for 2023 Term Loan is 35.9%.

The Company’s 2020, 2021, and 2023 Term Loans are subject to covenant clauses, whereby the Company is required to pay and file all taxes in a timely manner as well as deliver audited consolidated financial statements within six months after the end of each financial reporting year. The Company did not pay or file employment payroll tax returns for any period from its inception through the year ended December 31, 2020. The Company also failed to deliver audited consolidated financial statements for the years ended December 31, 2022 and 2021 within the required time period. In addition, the Company failed to maintain $2.0 million as restricted cash in a separate bank account, as required under the terms of 2023 Term Loan, for the year ended December 31, 2023. Due to these breaches of covenant clauses, the 2020, 2021, and 2023 Lenders were contractually entitled to request immediate repayment of the outstanding 2020, 2021, and 2023 Term Loans, however agreed to waive the each of the various covenant breaches described. Accordingly, the current portion of long-term debt presented within the consolidated balance sheets represent only the principal payments contractually due within the twelve months of each balance sheet date.

F-92

The following is a schedule of changes in warrants issued and outstanding from January 1, 2022 to December 31, 2023:

	Units
Outstanding as of December 31, 2021		708,609
Warrants issued		110,004
Outstanding as of December 31, 2022		818,613
Warrants issued		275,686
Outstanding as of December 31, 2023		1,094,299

7. Convertible Notes

The Company entered into a Convertible Note Purchase Agreement on April 27, 2023 with Arrowroot Capital, to finance the proposed business combination discussed in Note 1 – Nature of the Business and Basis of Presentation. The Convertible Notes shall bear simple interest, accrued on a daily basis in arrears, at a rate of 15.0% per annum until aggregate accrued interest is greater than 25.0% of the principal amount, and at a rate of 8.0% per annum thereafter. An amount equal to the sum of the product of the outstanding principal balance times 2.75, or $47.9 million at December 31, 2023, and the unpaid accrued interest on the notes are due and payable upon the earlier of the maturity date and occurrence of any event of default, as defined in the agreement. The Convertible Notes are issuable with an aggregate principal amount up to $50.0 million payable in cash of which $17.4 million has been drawn upon as of December 31, 2023. The Convertible Notes mature on October 27, 2025, unless converted earlier, redeemed, or repurchased in accordance with their terms, prior to the maturity date.

Under the terms of the Convertible Note Purchase Agreement, the Convertible Notes will be convertible to shares including under the following circumstances after April 27, 2023:

●

upon the occurrence of an equity financing, the lender can elect to exchange the Convertible Notes into the number of shares of equity securities issued in such equity financing equal to the note balance divided by the equity price in such equity financing and

●

immediately prior to the consummation of a qualified de-SPAC transaction, the Convertible Notes shall automatically convert, in whole, into shares of common stock of the Company thereby entitling the lender to receive a number of shares equal to the note balance, divided by $10.00.

Additionally, pursuant to the note purchase agreement, the Company may prepay the Convertible Notes in cash without the consent of the holders, at an amount equal to the balance of the note, at any time prior to October 27, 2025. As of December 31, 2023, the fair value of the Convertible Notes was $31.5 million, and the corresponding change in fair value of the Convertible Notes was an increase of $14.1 million for the year ended December 31, 2023.

8. Share-Based Compensation

On August 12, 2021, the Company adopted the 2020 Equity Incentive Plan (the “Plan”). The total restricted stock units (“RSUs”) granted under the Plan as of December 31, 2023 and December 31, 2022 was 8,338,438 and 7,138,438, respectively. The awards have a four year service requirement with a one-year cliff vesting starting on the employment date and are subject to the Liquidity Event provision defined below.

As of December 31, 2023 and December 31, 2022, the Company had 39,883,388 shares of restricted stock awards outstanding with the Company’s founders with a ten year service requirements starting on the day of the Liquidity Event (defined below) (the “Founder Restricted Shares”) and 360,290 restricted shares outstanding with a former employee, in which the service requirement had been deemed met on the grant date (together with the Founder Restricted Shares, the “Restricted Shares”). The Company’s 40,243,678 outstanding Restricted Shares participate on par with common shares in all distributions from the Company, as the holders of these restricted shares are entitled to non-forfeitable dividend rights. Each of the RSUs and Restricted Shares is subject to a change of control provision; an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”); a direct listing on the Nasdaq Global Select Market or New York Stock Exchange; or the Company’s completion of a merger or consolidation with a SPAC whereby the surviving company’s common stock are publicly traded in a public offering pursuant to an effective registration statement under the Securities Act (collectively, the “Liquidity Events”).

F-93

The summary of nonvested RSUs and Restricted Shares whose vesting is subject to the achievement of a Liquidity Event for the year ended December 31, 2023 is disclosed below:

	Shares		Weighted Average Grant Date Fair Value
RSUs
Nonvested as of January 1, 2022		7,138,438	$	3.53
Granted		-		-
Nonvested as of December 31, 2022		7,138,438	$	3.53
Granted		1,200,000	$	7.39
Nonvested as of December 31, 2023		8,338,438	$	4.09

	Shares		Weighted Average Grant Date Fair Value
Restricted Shares
Nonvested as of January 1, 2022		40,243,678	$	3.53
Granted		-		-
Nonvested as of December 31, 2022		40,243,678	$	3.53
Granted		-		-
Nonvested as of December 31, 2023		40,243,678	$	3.53

The aggregate unrecognized compensation expense for these awards whose vesting is subject to the achievement of a Liquidity Event is $176.1 million as of December 31, 2023.

9. Income Taxes

(Loss) income before income tax expense (benefit) consisted of the following (in thousands):

	Years Ended December 31,
	2023			2022		2021
Domestic	$	(2,230	)	$	5,441	$	2,524
Foreign		(20	)		50		29
Net (loss) income before income tax (benefit) expense	$	(2,250	)	$	5,491	$	2,553

The components of the provision (benefit) for income taxes are as follows (in thousands):

	Years Ended December 31,
	2023			2022			2021
Current expense:
Federal	$	637		$	483		$	—
State		406			319			32
Foreign		21			21			—
Total current expense:		1,064			823			32
Deferred expense (benefit):
Federal		1,325			(6,623	)		—
State		(229	)		(172	)		—
Foreign		(3	)		(3	)		—
Total deferred benefit:		1,093			(6,798	)		—
Total income tax expense (benefit):	$	2,157		$	(5,975	)	$	32

F-94

A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:

	Years Ended December 31,
	2023			2022			2021
Federal statutory rate		21.0	%		21.0	%		21.0	%
Effect of:
State taxes, net of federal tax benefit		(6.4	)%		1.6	%		2.4	%
Permanent differences		(0.3	)%		0.2	%		0.4	%
FDII provisions		28.5	%		(1.6	)%		0.0	%
Foreign rate differential		0.5	%		0.2	%		(0.2	)%
Change in fair value of securities		(139.2	)%		(0.9	)%		0.7	%
Change in state rates		2.4	%		11.0	%		71.2	%
Stock compensation		(0.9	)%		0.0	%		0.3	%
Change in valuation allowance		(1.4	)%		(140.3	)%		(94.6	)%
Effective tax rate		(95.8	)%		(108.8	)%		1.2	%

The net deferred income tax asset balance related to the following (in thousands):

	Years Ended December 31,
	2023			2022
Deferred tax assets:
Federal, state and local net operating loss carryforwards	$	3,101		$	5,579
Payroll taxes		743			643
163j disallowed interest		224			7
Capitalized R&D expenses		2,935			1,883
Accrued expenses		127			10
Total deferred tax assets before valuation allowance		7,130			8,122
Deferred tax liabilities:
Other		(80	)		(86	)
481(A) adjustment		(1,315	)		(1,238	)
Total deferred tax liabilities before valuation allowance		(1,395	)		(1,324	)
Valuation allowance		(32	)		—
Net deferred tax asset	$	5,703		$	6,798

As of December 31, 2023, 2022, and 2021, the Company had federal net operating loss carryforwards of $14.5 million, $26.3 million, and $37.8 million, respectively. As of December 31, 2023 and 2022, the Company has state net operating loss (“NOL”) carryforwards of $26.7 million and $37.4 million. The Federal net operating loss carryforwards may be carried forward indefinitely, subject to 80% of taxable income limitation. The state net operating loss carryforwards begin to expire in 2037. As of December 31, 2023, the Company had foreign NOL carryforwards of $0.1 million, primarily related to Australia. There were no foreign NOL carryforwards as of December 31, 2022.

As of December 31, 2023, the Company had interest expense carryforward for U.S. income tax purposes of $0.9 million. The entire $0.9 million has an indefinite carryforward period. These carryforwards are available, subject to certain limitations, to offset future taxable income.

Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2023 and 2022, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. With the exception of the Australia jurisdiction, the Company determined that future taxable income is probable and determined that it is more likely than not that all of the deferred tax assets will be realized. Accordingly, as of December 31, 2023, the Company no longer maintains a valuation allowance outside of the Australia jurisdiction.

F-95

The Tax Cuts and Jobs Act (“TCJA”) resulted in significant changes to the treatment of R&D expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&D expenditures that are paid or incurred in connection with their trade or business. Specifically, costs for U.S.-based R&D activities must be amortized over five years and costs for foreign R&D activities must be amortized over 15 years — both using a midyear convention. During the year ended December 31, 2023, the Company capitalized $4.5 million of foreign R&D expenses for income tax purposes.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company has not completed a study to assess whether an “ownership change” has occurred or whether there have been multiple ownership changes since ILE became a “loss corporation” as defined in Section 382. Future changes in the Company’s stock ownership, which may be outside of ILE’s control, may trigger an “ownership change.” In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership change” has occurred or does occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to the Company.

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which the Company operates or does business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjusts these liabilities when the Company’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2023 and 2022, the Company has not recorded any uncertain tax positions in the Company’s financial statements.

A reconciliation of the beginning and ending amounts of unrecognized tax provision is as follows:

	Year Ended December 31,
	2023		2022
	(In thousands)
Gross tax contingencies as of beginning of year	$	—	$	1,715
Decreases in gross tax contingencies		—		(1,715	)
Gross tax contingencies as of end of year	$	—	$	—

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations.

F-96

10. Net (Loss) Income Per Share

The computation of basic and diluted net (loss) income per share and weighted-average shares of the Company’s common stock outstanding during the periods presented is as follows:

	Year Ended December 31,
	2023			2022			2021
	(In thousands, except share and per share amounts)
Basic net (loss) income per share:
Net (loss) income	$	(4,407	)	$	11,466		$	2,521
Income allocated to participating securities		—			(3,393	)		(358	)
Net (loss) income attributable to common stockholders – basic	$	(4,407	)	$	8,073		$	2,163

Diluted net (loss) income per share:
Net (loss) income attributable to common stockholders – basic	$	(4,407	)	$	8,073		$	2,163
Interest expense on the 2019 Convertible Notes		—			—			39
Net (loss) income attributable to common stockholders – diluted	$	(4,407	)	$	8,073		$	2,202

Shares used in computation:
Weighted-average common shares outstanding		95,782,605			95,728,760			94,697,428
Weighted-average effect of dilutive securities:
Assumed conversion of the 2019 Convertible Notes		—			—			3,345,450
Diluted weighted-average common shares outstanding		95,782,605			95,728,760			98,042,878

Net (loss) income per share attributable to common stockholders:
Basic	$	(0.05	)	$	0.08		$	0.02
Diluted	$	(0.05	)	$	0.08		$	0.02

There were no dividends declared or accumulated on the common shares during the years ended December 31, 2023, 2022 and 2021.The Company applies the two-class method to its Restricted Shares, which contains non-forfeitable dividend rights and thereby meets the definition of participating securities, which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. Net loss is not allocated to participating securities in accordance with the contractual terms. The Company’s weighted average restricted shares outstanding for the years ended December 31, 2023, 2022 and 2021 are 40,243,678, 40,243,678 and 15,656,445, respectively. The Company excluded the following securities, presented based on amounts outstanding at each period end, from the computation of diluted net (loss) income per share attributable to common stockholders for the periods indicated, as including them would have had an anti-dilutive effect:

	Year Ended December 31,
	2023		2022		2021
Warrants to purchase common stock⁽¹⁾		1,094,299		818,613		708,609
RSUs⁽²⁾		8,338,438		7,138,438		6,988,938
Contingent consideration to In2vate⁽³⁾		34,030		34,030		—
Convertible Notes⁽⁴⁾		4,905,672		—		—
Restricted Shares⁽⁵⁾		40,243,678		—		—

(1)

The treasury stock method was applied to warrants, in which the impact was anti-dilutive for the year ended December 31, 2023 and 2022. Therefore, they are excluded from the dilutive EPS calculation.

(2)

RSUs are subject to the vesting condition under the Liquidity Event, as discussed in Note 8 – Share Based Compensation. As these securities are considered as contingently issuable shares where the contingency has not been met at the end of the reporting period, they are excluded from the dilutive net income (loss) per share calculation for the periods presented.

(3)

Contingencies underlying contingent consideration payable to In2vate was not met as of the end of the reporting period. Therefore, these shares have been excluded from the dilutive net (loss) income per share calculation for the periods presented.

(4)

If-converted method was applied to the Convertible Notes, in which the impact was anti-dilutive for the year ended December 31, 2023. Therefore, they are excluded from the dilutive EPS calculation.

(5)

Restricted Shares were excluded from dilutive earnings per share calculation for the year ended December 31, 2023 as the impact of including such shares would be anti-dilutive.

F-97

11. Payroll Taxes Payable

The Company has not paid or filed employment payroll tax returns for any period from inception through December 31, 2020. The federal and state withholding tax, employer payroll taxes, penalties, and interest liability from inception of the Company through December 31, 2023 and related penalties and interest were recorded within Payroll Taxes Payable on the consolidated balance sheets. The total liability was $3.0 million and $2.8 million as of December 31, 2023 and December 31, 2022, respectively. The related charge for these accruals is recorded to Selling, General, and Administrative Expenses within the consolidated statements of operations.

12. Fair Value Measurements

The Company’s financial instruments consist of its warrant liability, 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, Other Loans, Convertible Notes, and Subordinated Payable to Technology Partner.

The carrying value and estimated fair value of the Company’s 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, Other Loans, Convertible Notes, and Subordinated Payable to Technology Partner of December 31, 2023 and 2022, were as follows:

	December 31, 2023						December 31, 2022
	Principal Amount		Carrying Amount		Fair Value		Principal Amount		Carrying Amount		Fair Value
	(In thousands)
2020 Term Loans	$	2,697	$	2,483	$	2,697	$	6,708	$	5,615	$	6,708
2021 Term Loans		12,299		11,498		12,299		13,377		12,076		13,377
2023 Term Loans		10,000		7,215		10,000		—		—		—
Convertible Notes		17,400		31,547		31,547		—		—		—
Other Loans		—		—		—		160		160		160
Subordinated Payable to Technology Partner		49,163		49,163		49,163		47,495		47,495		47,495
	$	91,559	$	101,906	$	105,706	$	67,740	$	65,346	$	67,740

With respect to the 2020 Term Loans, 2021 Term Loans, 2023 Term Loans, Other Loans, and Subordinated Payable to Technology Partner, the Company concluded the fair value approximated the principal value as of December 31, 2023 and 2022.

The fair value of the Convertible Notes is estimated using a scenario-based approach which considers the conversion feature and related payoffs within each scenario. The level 3 inputs used in the valuation model for the Convertible Notes as of December 31, 2023, included the following:

	December 31, 2023
Redemption Event	Equity Financing			De-SPAC Transaction			Hold-to-Maturity
Probability		8.0	%		90.0	%		2.0	%
Time to Event Date (years)		0.13			0.13			1.82
Discount Spread		574.2	%		574.2	%		574.2	%
Risk free rate		5.6	%		5.6	%		4.4	%
Discount Yield		579.8	%		579.8	%		578.6	%

The fair value of the warrant liability was determined using an option pricing model which utilized the following level 3 inputs:

	December 31, 2023
	Private Sale Scenario (10% Probability )			SPAC Scenario (90% Probability)
Volatility		60	%		50	%
Risk-free interest rate		4.7	%		5.5	%
Dividend yield		0.0	%		0.0	%
Exercise price for $6.94 warrants	$	6.94		$	6.94
Exercise price for $10.14 warrants	$	10.14		$	10.14
Term		1.0 years			0.1 years
Equity value⁽¹⁾	$	585,798,557		$	1,235,675,336

(1)	Equity value was derived from weighted average of discounted cash flow, guideline company method, and transaction methodologies.

F-98

	December 31, 2022
Volatility		72.0	%
Risk-free interest rate		4.5	%
Dividend yield		0.0	%
Exercise price	$	6.94
Term		2.0 Years
Equity value⁽¹⁾	$	514,210,000

(1)	Equity value was derived from weighted average of discounted cash flow, guideline company method, and transaction methodologies.

The Company’s liabilities measured at fair value on a recurring basis were categorized as follows within the fair value hierarchy.

	December 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Liabilities
Warrant liability	$	-	$	-	$	11,870	$	11,870
Convertible Notes		-		-		31,547		31,547
Total liabilities	$	-	$	-	$	43,417	$	43,417

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Liabilities
Warrant liability	$	-	$	-	$	7,645	$	7,645
Total liabilities	$	-	$	-	$	7,645	$	7,645

The following table summarizes the activity for the Company’s Level 3 liabilities measured at fair value:

	Warrant Liability
	(In thousands)
Balance as of January 1, 2022	$	6,866
Issuance		1,027
Change in fair value		(248	)
Balance as of December 31, 2022	$	7,645
Issuance		3,454
Change in fair value		771
Balance as of December 31, 2023	$	11,870

	Convertible Notes
	(In thousands)
Balance as of December 31, 2022	$	-
Issuance		17,400
Change in fair value		14,147
Balance as of December 31, 2023	$	31,547

During the years ended December 31, 2023 and 2022, there were no transfers between Level 1 and Level 2, nor into and out of Level 3.

13. Commitments and Contingencies

Contingencies

The Company evaluates for any potential impact of loss contingencies that are probable and reasonably estimable. As of December 31, 2023 and 2022, there were no loss contingencies recorded.

The Company will continue to monitor these matters and disclose any significant developments or changes in future financial statements as necessary.

F-99

Purchase Commitments

The sale of the software license and the purchase of the customer’s end-user data are treated as distinct and independent transactions. Furthermore, the software licensing contract and the data acquisition contract can be canceled individually without affecting the other contract, with the data acquisition contract requiring twelve months’ notice for cancellation by either party. Due to the distinct nature of the data acquisition from the customer, which is obtained at fair value and used primarily for research and development purposes, the revenue generated from the software licensing contract is recognized on a gross basis. Conversely, the expenses associated with the data acquisition are also recognized on a gross basis and classified as research and development expenses.

This accounting treatment accurately reflects the separate nature of these transactions and ensures appropriate recognition of revenue and expenses related to the software licensing and data acquisition activities.

Financial Advisor Agreement

In the event of an equity raise comprising a majority of the Company’s equity capitalization, the financial advisor’s compensation will be calculated based on the greater of the following:

A flat fee of $3.5 million.

ii)

1.0% of the aggregate value of the equity raise up to $1.0 billion, plus an additional 1.5% of the portion of the aggregate value of the equity raise that exceeds $1.0 billion.

These compensation terms outline the financial advisor’s entitlement to fees based on the successful completion of equity fundraising activities. For non-equity transactions the specific fee is open to negotiation on a transaction by transaction basis to ensure that the financial advisor’s compensation aligns with the scale and significance of the equity raise, considering the Company’s equity capitalization and the total value of the funds raised.

Litigation

14. Related-Party Transactions

Receivable from related party

The Company had outstanding receivables from Directors in the amounts of $0.5 million and $0.6 million as of December 31, 2023 and December 31, 2022, respectively related to expenses that the Company incurred on behalf of the Directors.

In February 2024, the Company collected the full amount of the related party receivable from each Director. No balance is outstanding after the collection.

F-100

15. Subsequent Events

The Company has evaluated all events subsequent to December 31, 2023 and through April 22, 2024, which represents the date these consolidated financial statements were available to be issued.

Closing of the Merger and Related Transactions

On the Closing Date, the following transactions occurred pursuant to the terms of the Merger Agreement:

(i)

Current ILE stockholders own 109,684,738 shares of NewCo common stock on the Closing Date in exchange for former ILE shares;

(ii)

Former Arrowroot public stockholders own 638,977 shares of NewCo common stock on the Closing Date in exchange for former Arrowroot public shares;

(iii)

Current and former affiliates of Arrowroot own 8,674,617 shares of NewCo common stock on the Closing Date in exchange for former Arrowroot convertible and promissory notes;

(iv)

(v)

Convertible Note Purchase Agreement

In connection with the SPAC Transaction, the Company issued and converted $29.4 million of 2024 convertible notes. The Company issued $0.7 million of convertible notes on March 21, 2024, and $28.7 million of convertible notes on the Closing Date (collectively, the “2024 Convertible Notes”). The 2024 Convertible Notes were converted to 8,089,532 common shares of NewCo on the Closing Date.

Amendments to 2020, 2021 and 2023 Term Loan

On March 27, 2024, ILE entered into an agreement to amend the 2020, 2021 and 2023 Term Loans (“Term Loans”). Pursuant to the amendment, the Term Loans were amended to:

(i)

revise the amortization schedule for the Term Loans in exchange for 1,019,999 shares of NewCo common stock to be issued upon completion of the SPAC Transaction (the “Loan Restructuring Shares”)

(ii)

terminate the 2020 Warrants, 2021 Warrants and 2023 Warrants and the respective put rights associated with each in exchange for our agreement to provide the 2020 Lenders, 2021 Lenders and 2023 Lender with an aggregate amount of 3,399,999 shares of NewCo common stock to be issued upon completion of the SPAC Transaction.

F-101

If the Company repays the Term Loans on or before (i) April 15, 2024, then 90% of the Loan Restructuring Shares will be cancelled, (ii) May 1, 2024, then 80% of the Loan Restructuring Shares will be cancelled, and (iii) July 1, 2024, then 50% of the Loan Restructuring Shares will be cancelled. The Company repaid the Term Loans on April 18, 2024, and 815,999 shares were cancelled.

In addition, the amendment provides that, if the Company prepays the Term Loans, then at the Company’s option, the Company may prepay 50% of the amount of scheduled but unpaid payments of interest that would have accrued after the prepayment date by issuing a number of shares of NewCo common stock obtained by dividing (A) the product of (x) the unpaid scheduled interest payments and (y) 2.75, by (B) the VWAP of NewCo common stock over the seven (7) trading days immediately preceding the date of issuance. The Company prepaid the full amount of the Term Loan on April 18, 2024 in a combination of cash and 159,379 shares of common stock.

Negotiation of Payables to Third-Party Vendors

On March 27, 2024, the Company and the financial advisor (refer to Note 13) amended the financial advisory agreement to provide that, in lieu of payment in cash of the full amount of any advisory fees or other fees or expenses owed under the financial advisory agreement, the Company will pay the financial advisor $7,500,000 in cash or NewCo shares, at the sole discretion of the Company.

The Company also negotiated concessions on accounts payable to other third-party vendors in several forms. The form of concessions include: (1) providing a discount to the total amount payable, (2) the option to settle certain payables in common stock, and (3) entering into a deferred payment agreement for certain payables. The concessions became effective on the Closing Date.

Proposed 2024 Equity Incentive Plan

The Company proposed a new equity incentive plan for 2024 and the plan was approved on April 1, 2024.

East West Bank Financing

F-102

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the securities being registered. All amounts shown are estimates except for the SEC registration fee.

	Amount
SEC registration fee	$	118,044.01
Accountants’ fees and expenses	$	75,950.00
Legal fees and expenses	$	200,000.00
Miscellaneous fees and expenses	$	40,000.00
Total expenses	$	433,994.01

Discounts, concessions, commissions and similar selling expenses attributable to the sale of shares of Common Stock covered by this prospectus will be borne by the selling securityholders. We will pay all expenses (other than discounts, concessions, commissions and similar selling expenses) relating to the registration of the shares with the SEC, as estimated in the table above.

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law, as amended (“DGCL”) provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the Registrant. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaws, agreement, vote of stockholders or disinterested directors or otherwise. The Registrant’s Certificate of Incorporation and Bylaws provide for indemnification by the Registrant of its directors and officers to the fullest extent permitted by the DGCL.

Section 102(b)(7) of the DGCL permits a corporation to provide in its Certificate of Incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for unlawful payments of dividends or unlawful stock repurchases redemptions or other distributions or (4) for any transaction from which the director derived an improper personal benefit. The Registrant’s Certificate of Incorporation provides for such limitation of liability to the fullest extent permitted by the DGCL.

The Registrant has entered into indemnification agreements with each of its directors and executive officers to provide contractual indemnification in addition to the indemnification provided in our Certificate of Incorporation. Each indemnification agreement provides for indemnification and advancements by the Registrant of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to the Registrant or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law. We believe that these provisions and agreements are necessary to attract qualified directors.

II-1

The Registrant also maintains standard policies of insurance under which coverage is provided (1) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act, while acting in their capacity as directors and officers of the Registrant and (2) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to any indemnification provision contained in the Registrant’s Certificate of Incorporation and Bylaws or otherwise as a matter of law.

Item 15. Recent Sales of Unregistered Securities.

The following list sets forth information regarding all unregistered securities sold by us since January 1, 2021:

(1) In November 2020, we issued an aggregate of 5,750,000 Arrowroot Class B Common Stock for a total subscription price of $30,000. On December 31, 2020, we effectuated a 5-for-4 stock split, resulting in 7,187,500 Arrowroot Class B Common Stock outstanding;

(2) In March 2021, we issued an aggregate of 8,250,000 private placement warrants to Sponsor at a price of $1.00 per private placement warrant, generating gross proceeds of $8,250,000;

(3) In April 2024, substantially concurrently with the Closing, we issued 8,089,532 shares of our Common Stock to holders of our 2024 Convertible Notes upon the conversion of the 2024 Convertible Notes originally issued in a private placement pursuant to the 2024 Convertible Note Purchase Agreement;

(4) In April 2024, substantially concurrently with the Closing, we issued 82,091 shares of Common Stock to certain investors pursuant to a non-redemption agreement with certain investors as consideration for the non-exercise of redemption rights by such investors;

(5) In April 2024, substantially concurrently with the Closing, we issued 460,384 shares of Common Stock to the Sponsor for the repayment in full of all outstanding obligations under unsecured promissory notes issued to ARRW;

(6) In April 2024, substantially concurrently with the Closing, we issued 4,419,998 shares of Common Stock to the Lenders pursuant to the Second Omnibus Amendment to Loan Documents with In2vate, L.L.C. and the Lenders as consideration for the revision of amortization schedules under the WTI Loan Agreements prior to the Business Combination. 815,999 shares of Common Stock were subsequently cancelled pursuant to the Second Omnibus Amendment to Loan Documents with In2vate, L.L.C;

(7) In April 2024, we issued 159,379 shares of Common Stock to the Lenders pursuant to the Second Omnibus Amendment to Loan Documents with In2vate, L.L.C. and the Lenders as consideration for the repayment in full of all outstanding obligations under the WTI Loan Agreements;

(8) In June 2024, we issued 511,073 shares of Common Stock to BTIG, LLC at a price of $5.87 per share pursuant to the BTIG Amendment in connection with the payment of certain Business Combination transaction expenses;

(9) In June 2024, we issued 1,022,146 shares of Common Stock to Cantor Fitzgerald & Co. in lieu of payment of deferred underwriting commissions in an aggregate amount of $6,000,000 at a price of $5.87 per share pursuant to the Fee Modification Agreement in connection with the Closing; and

(10) In June 2024, we issued 221,465 shares of Common Stock to Cooley LLP at a price of $5.87 per share pursuant to the Cooley Fee Agreement in connection with the payment of Business Combination transaction expenses.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. We believe each of these transactions was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.

II-2

Item 16. Exhibits and Financial Statement Schedules

		Incorporated by Reference
Exhibit Number	Description	Schedule/ Form	File No.	Exhibit	Filing Date
2.1	Merger Agreement, dated as of April 27, 2023, by and among Arrowroot Acquisition Corp., ARAC Merger Sub, Inc., and iLearningEngines, Inc.	8-K	001-40129	2.1	May 2, 2023

3.1	Second Amended and Restated Certificate of Incorporation of iLearningEngines, Inc.	8-K	001-40129	3.1	April 22, 2024

3.2	Amended and Restated Bylaws of iLearningEngines, Inc.	8-K	001-40129	3.2	April 22, 2024

4.1	Amended and Restated Registration Rights Agreement, dated April 16, 2024, by and among iLearningEngines, Inc., members of Arrowroot Acquisition LLC, and certain former stockholders of iLearningEngines, Inc.	8-K	001-40129	10.1	April 22, 2024

4.2	Specimen Common Stock Certificate.	8-K	001-40129	4.1	April 22, 2024

4.3	Specimen Warrant Certificate.	8-K	001-40129	4.2	April 22, 2024

4.4	Warrant Agreement, dated March 4, 2021, by and between Arrowroot Acquisition Corp., and Continental Stock Transfer & Trust Company, as warrant agent.	8-K	001-40129	4.1	March 5, 2021

4.5	Form of 2020 Warrant to Acquire Shares of Exercise Stock of iLearningEngines Inc.	S-4/A	333-274333	4.6	December 8, 2023

4.6	Form of 2021 Warrant to Acquire Shares of Exercise Stock of iLearningEngines Inc.	S-4/A	333-274333	4.7	December 8, 2023

4.7	Form of 2023 Warrant to Acquire Shares of Exercise Stock of iLearningEngines Inc.	S-4/A	333-274333	4.8	December 8, 2023

4.8	Form of Restricted Stock Agreement	8-K	001-40129	4.7	April 22, 2024

5.1	Opinion of Cooley LLP	S-1	333-279908	5.1	June 3, 2024

10.1	Form of Sponsor Support Agreement, by and among Arrowroot Acquisition Corp., iLearningEngines, Inc., Arrowroot Acquisition LLC. and certain stockholders of iLearningEngines, Inc.	S-4	333-274333	10.14	September 5, 2023

10.2	Form of Stockholder Support Agreement, by and among Arrowroot Acquisition Corp., iLearningEngines, Inc. and certain stockholders of iLearningEngines, Inc.	S-4	333-274333	2.2	September 5, 2023

10.3*+	Executive Employment Agreement, dated as of January 1, 2011, by and between iHealthEngines Inc. and Harish Chidambaran	S-4/A	333-274333	10.21	December 8, 2023

10.4*+	Executive Employment Agreement, dated as of February 20, 2019, by and between iLearningEngines Inc. and Sayyed Farhan Naqvi	S-4/A	333-274333	10.22	December 8, 2023

II-3

		Incorporated by Reference
Exhibit Number	Description	Schedule/ Form	File No.	Exhibit	Filing Date
10.5*+	Executive Employment Agreement, dated as of October 10, 2018, by and between iLearningEngines Inc. and Balakrishnan Arackal	S-4/A	333-274333	10.23	December 8, 2023

10.6*#	Employment Offer Letter, dated as of September 15, 2022, by and between iLearningEngines FZ-LLC and Ramakrishnan Parameswaran	S-4/A	333-274333	10.24	December 8, 2023

10.7*	Executive Employment Agreement, dated as of October 12, 2023, by and between iLearningEngines Inc. and David Samuels	S-4/A	333-274333	10.25	December 8, 2023

10.8*	iLearningEngines Inc. 2020 Equity Incentive Plan	S-4/A	333-274333	10.19	December 8, 2023

10.9*	Form of Restricted Stock Unit Agreement and Grant Notice under the iLearningEngines Inc. 2020 Equity Incentive Plan	S-4/A	333-274333	10.20	December 8, 2023

10.10*	iLearningEngines, Inc. 2024 Equity Incentive Plan.	8-K	001-40129	10.11	April 22, 2024

10.11*	Form of Stock Option Grant Notice and Form of Stock Option Agreement under 2024 Equity Incentive Plan.	8-K	001-40129	10.12	April 22, 2024

10.12*+	Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Agreement under 2024 Equity Incentive Plan.	8-K	001-40129	10.13	April 22, 2024

10.13*	iLearningEngines, Inc. 2024 Employee Stock Purchase Plan.	8-K	001-40129	10.14	April 22, 2024

10.14*	Form of Indemnification Agreement by and between the Company and its directors and executive officers.	8-K	001-40129	10.15	April 22, 2024

10.15+	Loan and Security Agreement, dated as of December 30, 2020, between iLearningEngines Inc. and Venture Lending & Leasing IX, Inc.	S-4/A	333-274333	10.26	December 8, 2023

10.16+#	Supplement to the Loan and Security Agreement, dated as of December 30, 2020, between iLearningEngines Inc. and Venture Lending & Leasing IX, Inc.	S-4/A	333-274333	10.27	December 8, 2023

10.17	Amendment No. 1 to the Loan and Security Agreement, dated as of October 21, 2021, between iLearningEngines Inc. and Venture Lending & Leasing IX, Inc.	S-4/A	333-274333	10.28	December 8, 2023

10.18+	Loan and Security Agreement, dated as of October 21, 2021, between iLearningEngines Inc., and Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc.	S-4/A	333-274333	10.29	December 8, 2023

10.19+#	Supplement to the Loan and Security Agreement, dated as of October 21, 2021, between iLearningEngines Inc., and Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc.	S-4/A	333-274333	10.30	December 8, 2023

10.20+	Loan and Security Agreement, dated as of October 31, 2023, between iLearningEngines Inc., and WTI Fund X, Inc.	S-4/A	333-274333	10.31	December 8, 2023

II-4

		Incorporated by Reference
Exhibit Number	Description	Schedule/ Form	File No.	Exhibit	Filing Date
10.21+#	Supplement to the Loan and Security Agreement, dated as of October 31, 2023, between iLearningEngines Inc., and WTI Fund X, Inc.	S-4/A	333-274333	10.32	December 8, 2023

10.22+#	Intellectual Property Security Agreement, dated as of December 30, 2020, between iLearningEngines Inc. and Venture Lending & Leasing IX, Inc.	S-4/A	333-274333	10.33	December 8, 2023

10.23+#	Intellectual Property Security Agreement, dated as of October 21, 2021, between iLearningEngines Inc., and Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc.	S-4/A	333-274333	10.34	December 8, 2023

10.24+#	Intellectual Property Security Agreement, dated as of October 31, 2023, between iLearningEngines Inc., and WTI Fund X, Inc.	S-4/A	333-274333	10.35	December 8, 2023

10.25	Form of 2023 Convertible Note Purchase Agreement.	S-4	333-274333	10.15	September 5, 2023

10.26	Form of 2023 Convertible Note.	S-4/A	333-274333	10.16	January 5, 2024

10.27	Form of 2024 Convertible Note Purchase Agreement.	8-K	001-40129	10.28	April 22, 2024

10.28+	Form of 2024 Convertible Note.	8-K	001-40129	10.29	April 22, 2024

10.29	Form of Subordination Agreement.	8-K	001-40129	10.30	April 22, 2024

10.30+#	Loan and Security Agreement, dated April 17, 2024, by and among iLearningEngines Holdings, Inc., as borrower, East West Bank, as agent, and the lenders.	8-K	001-40129	10.31	April 22, 2024

10.31+	Intellectual Property Security Agreement, dated April 17, 2024, by and among iLearningEngines Holdings, Inc. and In2vate, L.L.C, as grantors, for the benefit of East West Bank.	8-K	001-40129	10.32	April 22, 2024

10.32	Guaranty and Suretyship Agreement, dated April 17, 2024, by and among iLearningEngines Holdings, Inc. and In2vate, L.L.C, as debtors, and East West Bank as agent for the lenders.	8-K	001-40129	10.33	April 22, 2024

10.33	Subordination Agreement, dated April 17, 2024, by and among iLearningEngines Holdings, Inc, and Experion Technologies, FZ LLC.	8-K	001-40129	10.34	April 22, 2024

10.34+#	Second Omnibus Amendment to Loan Documents by and among iLearningEngines Holdings, Inc., as borrower, and In2vate, L.L.C, Venture Lending & Leasing IX, Inc., and WTI Fund X, Inc. as the lenders.	8-K	001-40129	10.35	April 22, 2024

10.35	Fee Reduction Agreement, dated March 27, 2024, by and among Cantor Fitzgerald & Co., Arrowroot Acquisition Corp. and iLearningEngines Inc.	8-K	001-40129	10.36	April 22, 2024

10.36	Amendment No. 1, dated March 27, 2024, to the Letter Agreement, dated June 5, 2020, by and among Mizuho Securities USA LLC, iLearningEngines Inc. and Arrowroot Acquisition Corp.	8-K	001-40129	10.37	April 22, 2024

II-5

		Incorporated by Reference
Exhibit Number	Description	Schedule/ Form	File No.	Exhibit	Filing Date
10.37	Amendment to the Letter Agreement, dated March 27, 2024, between BTIG, LLC and Arrowroot Acquisition Corp.	8-K	001-40129	10.38	April 22, 2024

10.38	Fee Equitization Agreement, dated March 27, 2024, by and among Cooley LLP, Arrowroot Acquisition Corp. and iLearningEngines Inc.	S-1	333-279908	10.38	June 3, 2024

10.39	Amendment No. 1 to Fee Equitization Agreement, dated May 31, 2024, by and among iLearningEngines, Inc. and Cooley LLP	S-1/A	333-279908	10.39	July 1, 2024

10.40	Forward Purchase Agreement, dated April 26, 2023	S-4/A	333-274333	10.16	November 6, 2023

10.41	Letter Agreement, dated April 9, 2024, by and among Polar Multi-Strategy Master Fund, Arrowroot Acquisition Corp. and iLearningEngines Inc.	S-1/A	333-279908	10.41	July 1, 2024

10.42	First Amendment to Loan and Security Agreement, among iLearningEngines Holdings, Inc., as borrower, East West Bank, as administrative agent, and the lenders party thereto	S-1/A	333-279908	10.42	July 1, 2024

16.1	Letter from WithumSmith+Brown, PC to the SEC.	8-K	001-40129	16.1	April 22, 2024

21.1	List of Subsidiaries of iLearningEngines, Inc.	8-K	001-40129	21.1	April 22, 2024

23.1^	Consent of Marcum LLP, independent registered public accounting firm

23.2^	Consent of WithumSmith+Brown, PC, independent registered public accounting firm

23.3	Consent of Cooley LLP (included in Exhibit 5.1).	S-1	333-279908	23.3	June 3, 2024

24.1	Power of Attorney (included on signature page)	S-1	333-279908	24.1	June 3, 2024

101.INS	Inline XBRL Instance Document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

107	Filing Fee Table	S-1	333-279908	107	June 3, 2024

^	Filed herewith.

+	The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

Certain portions of this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(10)(iv) because they are not material and are the type of information that the Registrant treats as private or confidential. The Registrant agrees to furnish supplementally an unredacted copy of the Exhibit, or any section thereof, to the SEC upon request

*	Indicates management contract or compensatory plan or arrangement.

II-6

Item 17. Undertakings

The undersigned Registrant hereby undertakes:

(a)

To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i)

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement.

(b)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(d)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(e)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications,

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Bethesda, Maryland, on July 22, 2024.

ILEARNINGENGINES, INC.

By:	/s/ Harish Chidambaran
	Name:	Harish Chidambaran
	Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Harish Chidambaran	Chief Executive Officer and Chairman of the Board	July 22, 2024
Harish Chidambaran	(Principal Executive Officer)

*	Chief Financial Officer	July 22, 2024
Farhan Naqvi	(Principal Financial and Accounting Officer)

*	Director	July 22, 2024
Balakrishnan Arackal

*	Director	July 22, 2024
Matthew Barger

*	Director	July 22, 2024
Ian Davis

*	Director	July 22, 2024
Bruce Mehlman

*	Director	July 22, 2024
Michael Moe

*	Director	July 22, 2024
Thomas Olivier

*By: /s/ Harish Chidambaran
Harish Chidambaran

Attorney-in-Fact

II-8