Company: FORL
Filing Date: 2025-04-30
Form Type: 10-K
Source: 0001213900-25-037576
Chunk: 1060

Company: Four Leaf Acquisition Corp
Filing Date: 2025-04-30
Form: 10-K
Item: Item 5
Chunk 1060
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 issuance dates, the valuation of the over-allotment option
provided to the underwriters and the excise tax liability in connection with redemption of Class A common stock. Actual results could
differ from those estimates

Derivative Financial Instruments 

The Company issued warrants to its investors,
and the over-allotment option to the underwriter. The Company accounts for financial instruments as either equity-classified or liability-classified
instruments based on an assessment of the specific terms of the instruments and applicable authoritative guidance in ASC 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment
considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant
to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to
the Company’s own stock and whether the holders of the instruments could potentially require “net cash settlement” in
a circumstance outside of the Company’s control, among other conditions for equity classification.

74

At the IPO date, the Public Warrants and Private
Placement Warrants were accounted for as equity instruments as they meet all of the requirements for equity classification under ASC 815
based on current expected terms, which are subject to change. The over-allotment option was accounted for as a liability under ASC 480,
as it is an option exercisable into redeemable shares.

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in ASC 480. Class A common stock subject to mandatory redemption (if any) are classified
as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s Class A common stock sold as part of the IPO, feature certain redemption rights that are considered to be
outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption are classified as temporary equity and are accreted from the initial carrying amount to the redemption value over
the period from the date of issuance to the earliest redemption