UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)

	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40625

CLOVER LEAF CAPITAL CORP.

(Exact name of registrant as specified in its charter)

Delaware		86-2303279
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

c/o Yntegra Capital Investments, LLC

1450 Brickell Avenue, Suite 2520

Miami, FL

33131

(Address of principal executive offices)

(Zip Code)

(305) 577-0031

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A Common Stock, $0.0001 par value and one right to receive one-eighth (1/8) of one share of Class A Common Stock upon the consummation of an initial business combination	CLOEU	The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share	CLOE	The Nasdaq Stock Market LLC
Rights, every eight (8) rights entitles the holder to receive one share of Class A Common Stock upon the consummation of an initial business combination	CLOER	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐

As of August 15, 2024, there were 4,964,642 shares of Class A common stock, par value $0.0001 per share and 1 share of Class B common stock, par value $0.0001 per share of the registrant issued and outstanding.

CLOVER LEAF CAPITAL CORP.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

TABLE OF CONTENTS

		Page
PART I –	FINANCIAL INFORMATION

Item 1.	Financial Statements.	1

	Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023 (Audited)	1

	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	2

	Unaudited Condensed Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended June 30, 2024 and 2023	3

	Unaudited Condensed Statements of Cash Flows for The Six Months ended June 30, 2024 and 2023	4

	Notes to Unaudited Condensed Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	29

Item 4.	Control and Procedures.	29

PART II –	OTHER INFORMATION

Item 1.	Legal Proceedings.	30

Item 1A.	Risk Factors.	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	33

Item 3.	Defaults Upon Senior Securities.	33

Item 4.	Mine Safety Disclosures.	33

Item 5.	Other Information.	33

Item 6.	Exhibits.	34

SIGNATURES		35

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CLOVER LEAF CAPITAL CORP.

CONDENSED BALANCE SHEETS

	June 30, 2024			December 31, 2023
	(unaudited)
Assets:
Current assets:
Cash	$	51,117		$	162,933
Prepaid expenses		68,178			122,364
Total current assets		119,295			285,297
Investments and cash held in Trust Account		12,900,905			14,648,926
Total Assets	$	13,020,200		$	14,934,223

Liabilities, Redeemable Common Stock and Stockholders’ Deficit
Accrued costs and expenses	$	1,073,630		$	809,542
Income taxes payable		188,080			134,428
Excise Tax Payable		65,841			42,099
Promissory note to Related Party		4,657,765			3,842,015
Due to related party		30,000			10,000
Total current liabilities		6,015,316			4,838,084

Deferred underwriting commissions		4,840,931			4,840,931
Total Liabilities		10,856,247			9,679,015

Commitments and Contingencies (see Note 6)

Redeemable Common Stock:
Class A common stock subject to possible redemption, 1,048,796 and 1,251,156 Class A common stock shares at redemption value of $12.37 and $11.85 per share at June 30, 2024 and December 31, 2023, respectively		12,976,334			14,830,241

Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 4,271,711 and 4,271,711 shares issued and outstanding (excluding 1,048,796 and 1,251,156 shares subject to possible redemption) at June 30, 2024 and December 31, 2023, respectively		427			427
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 1 and 1 shares issued and outstanding June 30, 2024 and December 31, 2023, respectively		—			—
Accumulated deficit		(10,812,808	)		(9,575,460	)
Total Stockholders’ Deficit		(10,812,381	)		(9,575,033	)
Total Liabilities, Redeemable Common Stock and Stockholders’ Deficit	$	13,020,200		$	14,934,223

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

CLOVER LEAF CAPITAL CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Formation and operating costs	$	446,437		$	709,836		$	897,030		$	900,007
Loss from operations		(446,437	)		(709,836	)		(897,030	)		(900,007	)

Other income:
Interest and penalties		(8,814	)		—			(8,814	)		—
Interest and dividends earned on investments and cash held in Trust Account		131,730			222,121			266,128			421,354
Interest earned on cash held in bank		1			21			3			74
Total other income, net		122,917			222,142			257,317			421,428

Loss before provision for income taxes		(323,520	)		(487,694	)		(639,713	)		(478,579	)
Provision for income taxes		(26,710	)		(47,220	)		(53,652	)		(88,799	)
Net loss	$	(350,230	)	$	(534,914	)	$	(693,365	)	$	(567,378	)

Basic and diluted weighted average of Class A common stock outstanding		1,048,796			2,441,063			1,073,257			2,441,063
Basic and diluted net loss per share, Class A common stock	$	(0.07	)	$	(0.08	)	$	(0.13	)	$	(0.10	)

Basic and diluted weighted average Class B common stock outstanding		4,271,712			3,457,807			4,271,712			3,457,807
Basic and diluted net loss per share, Class B common stock	$	(0.07	)	$	(0.08	)	$	(0.13	)	$	(0.10	)

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

CLOVER LEAF CAPITAL CORP.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

	Class A				Class B				Additional					Total
	Common Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance as of January 1, 2024		4,271,711	$	427		1	$	—	$	—	$	(9,575,460	)	$	(9,575,033	)
Accretion of Class A common stock to redemption amount		—		—		—		—		—		(260,857	)		(260,857	)
Excise tax liability on share redemptions		—		—		—		—		—		(23,741	)		(23,741	)
Net loss		—		—		—		—		—		(343,135	)		(343,135	)
Balance as of March 31, 2024		4,271,711	$	427		1	$	—	$	—	$	(10,203,193	)	$	(10,202,766	)
Accretion of Class A common stock to redemption amount		—		—		—		—		—		(259,385	)		(259,385	)
Net loss		—		—		—		—		—		(350,230	)		(350,230	)
Balance as of June 30, 2024		4,271,711	$	427		1	$	—	$	—	$	(10,812,808	)	$	(10,812,381	)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

	Class A				Class B				Additional					Total
	Common Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance as of January 1, 2023		813,905	$	81		3,457,807	$	346	$	—	$	(7,730,617	)	$	(7,730,190	)
Accretion of Class A common stock to redemption amount		—		—		—		—		—		(120,011	)		(120,011	)
Net loss		—		—		—		—		—		(32,464	)		(32,464	)
Balance as of March 31, 2023		813,905	$	81		3,457,807	$	346	$	—	$	(7,883,092	)	$	(7,882,665	)
Accretion of Class A common stock to redemption amount		—		—		—		—		—		(179,029	)		(179,029	)
Net loss		—		—		—		—		—		(534,914	)		(534,914	)
Balance as of June 30, 2023		813,905	$	81		3,457,807	$	346	$	—	$	(8,597,035	)	$	(8,596,608	)

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

CLOVER LEAF CAPITAL CORP.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

	For the Six Months Ended June 30,
	2024			2023

Cash flows from operating activities:
Net loss	$	(693,365	)	$	(567,378	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest and dividends earned on investments and cash held in Trust Account		(266,131	)		(421,354	)
Amortization of prepaid expenses		—			55,162
Changes in operating assets and liabilities:
Accrued costs and expenses		264,091			324,549
Prepaid expenses		54,187			—
Due to related party		20,000			—
Income taxes payable		53,652			88,799
Net cash used in operating activities		(567,566	)		(520,222	)

Cash Flows from Investing Activities:
Investment of cash in Trust Account		(360,000	)		—
Trust Account withdrawal for redeeming shareholder payments		2,374,149			—
Net cash provided by Investing Activities		2,014,149			—

Cash Flows from Financing Activities:
Payments to redeeming shareholders		(2,374,149	)		—
Proceeds from issuance of promissory note to related party		815,750			300,000
Net cash (used in) provided by financing activities		(1,558,399	)		300,000

Net change in cash		(111,816	)		(220,222	)
Cash, beginning of the period		162,933			303,449
Cash, end of the period	$	51,117		$	83,227

Supplemental disclosure of cash flow information:
Recognition of liability for excise tax on redemptions		23,741			—
Accretion of Class A redeemable shares to possible redemption value	$	520,242		$	299,040

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

CLOVER LEAF CAPITAL CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 — Organization, Business Operation and Going Concern

Clover Leaf Capital Corp. (the “Company,” “our,” “we,” or “us”) a blank check company incorporated in the State of Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). The Company may pursue the initial Business Combination target in any industry or geographic location. The Company originally intended to focus its search for a target business engaged in the cannabis industry.

As of June 30, 2024, the Company had not commenced any operations. All activity for the period from February 25, 2021 (inception) through June 30, 2024 relates to the Company’s formation, the initial public offering that the Company consummated on July 22, 2021 (the “Initial Public Offering” or “IPO”) and the Company’s efforts to pursue an initial Business Combination described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.

The Company’s sponsor is Yntegra Capital Investments, LLC, a Delaware limited liability company (the “Sponsor”).

The Registration Statement on Form S-1 initially filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 4, 2021, as amended for the Company’s IPO (the “IPO Registration Statement”) was declared effective on July 19, 2021. On July 22, 2021, the Company consummated its IPO of 13,831,230 units (the “Units” and, with respect to the Company’s Class A common stock, par value $0.0001 (“Class A Common Stock”) included in the Units being offered, the “Public Shares”) at $10.00 per Unit, which is discussed in Note 3 (“The Initial Public Offering”), and the sale of 675,593 Units which is discussed in Note 4 (“The Private Placement”), at a price of $10.00 per private placement unit (“Private Placement Units”), in a private placement (the “Private Placement”) to the Sponsor and Maxim Group LLC, the representative of the underwriters (the “Representative”), that closed simultaneously with the IPO. On July 22, 2021, the underwriters partially exercised their over-allotment option and purchased 1,331,230 of their full 1,875,000 Units available and subsequently forfeited the remainder of their option as of July 28, 2021. The Company’s executive officers and directors (“Management” or “Management Team”) has broad discretion with respect to the specific application of the net proceeds of the IPO and sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating an initial Business Combination.

Transaction costs amounted to $9,562,126 consisting of $2,766,246 of underwriting commissions, $4,840,931 of deferred underwriting commissions, $1,383,123 of the fair value of the 138,312 Class A Common Stock issued to the Representative and/or its designees upon the consummation of the IPO (“Representative Shares”), and $571,826 of other cash offering costs.

The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net balance in the Trust Account (as defined below) (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) at the time of the signing an agreement to enter into an initial Business Combination. However, the Company will only complete an initial Business Combination if the post-initial Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect an initial Business Combination.

Following the closing of the IPO on July 22, 2021, $140,386,985 ($10.15 per Unit) from the net proceeds sold in the IPO, including the proceeds of the sale of the Private Placement Units, will be held in a U.S.-based trust account (“Trust Account”), with Continental Stock Transfer & Trust Company (“Continental”) acting as trustee, and until July 6, 2023 were invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. Department of the Treasury (“Treasury”) obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to pay the Company’s franchise and income taxes, if any, the funds held in the Trust Account will not be released from the Trust Account until the earliest to occur of: (1) the completion of an initial Business Combination; (2) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation, as amended and currently in effect (the “Amended and Restated Charter”) (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete an initial Business Combination within the applicable period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity; and (3) the redemption of the Public Shares if the Company has not completed an initial Business Combination within the applicable period, subject to applicable law.

The Company will provide its holders of Public Shares, including its Sponsor and any other holders of Founder Shares (as defined below) (see Note 5) (or their permitted transferees prior to our IPO (the “Initial Stockholders”) and Management Team to the extent our Initial Stockholders and/or the members of our Management Team purchase Public Shares (the “Public Stockholders”), with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either (1) in connection with a stockholder meeting called to approve the initial Business Combination or (2) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require it to seek stockholder approval under applicable law or stock exchange listing requirement. The Company will provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes, divided by the number of then issued and outstanding Public Shares, subject to the limitations described herein.

The shares of Class A Common Stock and Class B common stock, par value $0.0001 per share (the “Class B Common Stock,” and together with the Class A Common Stock, the “Common Stock”) subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with an initial Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of an initial Business Combination and, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the initial Business Combination.

The Company will have only until October 22, 2024 to complete the initial Business Combination (the “Combination Period”). Pursuant to the terms of the Company’s Amended and Restated Charter and the Investment Management Trust Agreement, dated July 19, 2021 entered into between the Company and Continental, as trustee of the Trust Account (the “Trust Agreement”), in order to extend the time available for the Company to consummate its initial Business Combination, the Sponsor or its affiliates or designees, upon five days’ advance notice prior to the applicable deadline, must have deposited into the Trust Account $1,383,123 ($0.10 per share on or prior to the date of the applicable deadline) for each additional three-month period. Any such payments would be made in the form of a loan. Any such loans will be non-interest bearing and payable upon the consummation of an initial Business Combination. If the Company completes an initial Business Combination, it will, at the option of the Sponsor, repay such loaned amounts out of the proceeds of the Trust Account released to the Company or convert a portion or all of the total loan amount into Units at a price of $10.00 per Unit.

Extensions of the Combination Period

The Company originally had up to 12 months from the closing of its Initial Public Offering, or until July 22, 2022, to consummate an initial Business Combination. However, as requested by the Sponsor and as permitted under the Company’s Amended and Restated Charter, on July 19, 2022, the Company extended the Combination Period from July 22, 2022 to October 22, 2022 (the “July 2022 Extension”). On July 18, 2022, the Company issued a promissory note (the “July 2022 Extension Note”) in the principal amount of $1,383,123 to the Sponsor in connection with the July 2022 Extension. The July 2022 Extension was the first of three three-month extensions permitted under the Company’s Amended and Restated Charter.

On October 19, 2022, the Company held a special meeting of stockholders (the “2022 Special Meeting”). At the 2022 Special Meeting, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Charter to extend the date by which the Company must consummate its initial Business Combination from October 22, 2022 to July 22, 2023, or such earlier date as determined by the Company’s board of directors (the “Board”) (the “October 2022 Extension”). In connection with the 2022 Special Meeting, stockholders holding 12,204,072 shares of the Company’s Class A Common Stock issued in the Company’s IPO exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, approximately $125,587,180.34 (approximately $10.29 per share) was removed from the Company’s Trust Account to pay such holders. On October 19, 2022, the Company issued a promissory note (the “October 2022 Extension Note”) in the principal amount of $1,383,123 to the Sponsor in connection with the October 2022 Extension.

On July 19, 2023, the Company held a special meeting of stockholders (the “2023 Special Meeting”). At the 2023 Special Meeting, the Company’s stockholders approved an amendment (the “2023 Extension Amendment”) to the Company’s Amended and Restated Charter to extend the date by which the Company must consummate its initial Business Combination from July 22, 2023 to January 22, 2024, or such earlier date as determined by the Company’s Board (the “2023 Extension”). On July 20, 2023, the Company filed the 2023 Extension Amendment with the Secretary of State of the State of Delaware.

In connection with the 2023 Special Meeting, stockholders holding 376,002 shares of the Company’s Class A Common Stock issued in the Company’s IPO exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, approximately $4,209,931.03 (approximately $11.20 per share after removal of interest to pay taxes) was removed from the Company’s Trust Account to pay such holders, resulting in approximately $14,008,650.13 remaining in the Trust Account. On July 22, 2023, the Company issued a promissory note (the “2023 Extension Note”) in the principal amount of $360,000 to the Sponsor in connection with the 2023 Extension.

In connection with the 2023 Extension, the Company caused up to $360,000 to be deposited into the Trust Account in installments of $60,000 per month, which equates to approximately $0.048 per remaining Public Share, for each calendar month or portion thereof (commencing on July 22, 2024 and on the 22nd of each subsequent month until January 22, 2024), that the Company needs to complete an initial Business Combination, and such amount was distributed either to: (i) all of the holders of Public Shares upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. As of June 30, 2024, an aggregate of $360,000 had been deposited into the Trust Account.

On January 17, 2024, the Company held a special meeting of stockholders (the “January 2024 Special Meeting”). At the January 2024 Special Meeting, the Company’s stockholders approved an amendment (the “January 2024 Extension Amendment”) to the Amended and Restated Charter to extend the date by which the Company must consummate its initial Business Combination from January 22, 2024 to July 22, 2024, or such earlier date as determined by the Company’s Board (the “2024 Extension”).

In connection with the January 2024 Special Meeting, Public Stockholders holding 202,360 Public Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, $2,374,149 (approximately $11.73 per share) was removed from the Trust Account to pay such holders.

Following the approval and implementation of the January 2024 Extension Amendment, on January 22, 2024, the Company issued a promissory note (the “January 2024 Extension Note”) in the aggregate principal amount of up to $360,000 the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $360,000 to deposit into the Company’s Trust Account for each Public Share that was not redeemed in connection with the January 2024 Extension Amendment. The January 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial Business Combination, or (b) the date of the liquidation of the Company. The Company has drawn $360,000 under the January 2024 Extension Note, which was outstanding as of June 30, 2024.

On January 22, 2024, the Company deposited $60,000 into the Trust Account, and the Company will continue to deposit $60,000 into the Trust Account for each additional calendar month (promptly following the 22nd of each calendar month), or portion thereof, that is needed by the Company to complete an initial Business Combination until July 22, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. As of June 30, 2024, $360,000 of the principal on the January 2024 Extension Note has been deposited into the Trust Account.

On July 18, 2024, the Company held a special meeting of stockholders (the “July 2024 Special Meeting”). At the July 2024 Special Meeting, the Company’s stockholders approved an amendment (the “July 2024 Extension Amendment”) to the Amended and Restated Charter to extend the date by which the Company must consummate its initial Business Combination from July 22, 2024 to October 22, 2024, or such earlier date as determined by the Company’s Board (the “July 2024 Extension”).

In connection with the July 2024 Special Meeting, Public Stockholders holding 355,865 Public Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account (together with the redemptions related to the 2022 Special Meeting, the 2023 Special Meeting, and the January 2024 Special Meeting and any future redemptions related to extension meetings, the “Redemptions”). As a result, $4,386,351 (approximately $12.33 per share) was removed from the Trust Account to pay such holders.

Following the approval and implementation of the July 2024 Extension Amendment, on July 22, 2024, the Company issued a promissory note (the “July 2024 Extension Note”) in the aggregate principal amount of up to $124,728 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $124,728 to deposit into the Company’s Trust Account for each Public Share that was not redeemed in connection with the July 2024 Extension Amendment. The July 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial Business Combination, or (b) the date of the liquidation of the Company.

On July 19, 2024, the Company deposited $41,576 into the Trust Account, and the Company will continue to deposit $41,576 into the Trust Account for each additional calendar month (promptly following the 22nd of each calendar month), or portion thereof, that is needed by the Company to complete an initial Business Combination until October 22, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. As of August 13, 2024, $41,576 of the principal on the July 2024 Extension Note has been deposited into the Trust Account.

Nasdaq Compliance—Minimum Public Holders and Annual Meeting Requirements

On March 7, 2024, the Company received a determination from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) on August 31, 2023, indicating that the Company did not comply with the requirement to maintain a minimum 300 public holders as required by Nasdaq Listing Rule 5550(a)(3) (the “Minimum Public Holders Requirement”). On January 23, 2024, the Company received an additional deficiency notice from the Staff that the Company did not comply with Nasdaq Listing Rule 5620(a), which requires that Nasdaq-listed companies hold an annual meeting of stockholders within twelve months of their fiscal year end (the “Annual Meeting Requirement”) because the Company did not hold an annual meeting of stockholders within twelve months of its fiscal year ended December 31, 2022. On March 1, 2024, the Company received a delisting determination from the Staff with respect to the Minimum Public Holders Requirement and the Annual Meeting Requirement. On March 8, 2024, the Company requested a hearing to appeal the determination, and the hearing was held on May 7, 2024. On June 5, 2024, the Nasdaq Hearings Panel (the “Panel”) granted the Company’s request for continued listing, subject to the obligation that, on or before August 28, 2024, the Company will complete a business combination with Kustom Entertainment (as defined below) and demonstrate compliance with all initial listing criteria. As a result of the Panel’s decision, the Company expects that its securities will continue to trade on The Nasdaq Capital Market so long as the Kustom Entertainment Business Combination (as defined below) is consummated on or prior to August 28, 2024.

Indemnification Agreement with Kustom Entertainment and Digital Ally

On February 1, 2024, the Company entered into indemnification agreement (the “Indemnification Agreement”) with Kustom Entertainment, Inc., a Nevada corporation (“Kustom Entertainment”) and Digital Ally, Inc., a Nevada corporation and the sole stockholder of Kustom Entertainment, pursuant to which, Kustom Entertainment and Digital Ally, Inc., a Nevada corporation (the “Kustom Entertainment Stockholder”) agreed to indemnify the Company and its officers and directors for liabilities incurred in connection with the Kustom Entertainment Stockholder disclosure incorporated by reference into the Registration Statement on Form S-4 the Company initially filed with the SEC on October 4, 2023, as amended (File No. 333-274851) (the “Kustom Entertainment Registration Statement”).

Under the terms of the Indemnification Agreement, if the Company had not completed the initial Business Combination within the Combination Period, the Company would: (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 the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and 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 Board, liquidate and dissolve, 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.

The Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to waive: (i) their redemption rights with respect to any Founder Shares (as defined below) (see Note 5), the shares of the Company’s Class A Common Stock included within the Private Placement Units purchased by our Sponsor, Initial Stockholders, and the underwriters of the Initial Public Offering in the Private Placement (“Private Placement Shares”), and Public Shares held by them, as applicable, in connection with the completion of the initial Business Combination; (ii) their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with a stockholder vote to amend the Company’s Amended and Restated Charter (a) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete the initial Business Combination within the Combination Period or (b) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity; and (iii) their rights to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the prescribed time).

The Sponsor had agreed that it would be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) 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 (i) $10.15 per Public Share or (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 $10.15 per 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 the monies held in the Trust Account (whether or not such waiver is enforceable), nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company had not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company and, therefore, the Sponsor may not be have been able to satisfy those obligations. The Company had not asked the Sponsor to reserve for such obligations.

On May 9, 2024, the Company, Kustom Entertainment, and the Kustom Entertainment Stockholder entered into a termination agreement (the “Termination Agreement”), pursuant to which the parties terminated the Indemnification Agreement.

Franchise and Income Tax Withdrawals from Trust Account

Since completion of its IPO on July 19, 2021, and through June 30, 2024, the Company withdrew $1,017,913 from the Trust Account to pay its liabilities related to federal, Florida state and Delaware franchise taxes. Through June 30, 2024, the Company remitted $777,312 to the respective tax authorities. Additionally, as of June 30, 2024, the Company had accrued but unpaid income tax liability of $188,080 and was in a credit position of $20,743 for Delaware franchise tax, which resulted in remaining excess of funds withdrawn from the Trust Account, but not remitted to the government authorities of $240,601. As of June 30, 2024, the Company had $51,117 in its operating account and inadvertently used $240,601 of the funds withdrawn from the Trust Account for payment of taxes for payment of other operating expenses not related to taxes. The Company continues to incur further tax liabilities and intends to cover such liabilities from the funds in its operating account and, if necessary, from the proceeds from the promissory note to Sponsor, without recurring to additional withdrawals from the Trust Account, until the excess of the funds withdrawn from the Trust Account over the amounts remitted to the government authorities is cured.

Going Concern

As of June 30, 2024 and December 31, 2023, the Company had $51,117 and $162,933 in cash, respectively, and working capital deficit of $5,728,684 and $4,493,502 (net of Delaware franchise and income taxes), respectively.

Prior to the completion of the IPO, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 5) for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $300,000 (see Note 5).

On July 21, 2023, the Company issued a promissory note (the “2023 Working Capital Note”) in the principal amount of up to $300,000 to the Sponsor. The 2023 Working Capital Note was issued in connection with advances the Sponsor may make in the future to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date the winding up of the Company is effective.

At various dates in the fourth quarter of 2023, the Sponsor advanced to the Company $415,000 for the Company’s working capital needs. On January 22, 2024, the Company issued the January 2024 Working Capital Note in the principal amount of up to $1,000,000 to the Sponsor. The January 2024 Working Capital Note was issued in connection with advances the Sponsor may make in the future to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date the winding up of the Company is effective. The funds advanced in the fourth quarter of 2023 were considered advanced under terms of this January 2024 Working Capital Note and were outstanding as of June 30, 2024.

In addition, in order to finance transaction costs in connection with an Initial Business Combination, the Company’s 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 (see Note 5). $1,170,750 and $715,000 were outstanding under Working Capital Loans as of June 30, 2024, and December 31, 2023, respectively.

Until the consummation of an initial Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating, and consummating the initial Business Combination. The Company will need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s Sponsor, officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.

The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The Company has until October 22, 2024 to consummate an initial Business Combination, unless otherwise extended. It is uncertain that the Company will be able to consummate an initial Business Combination by this time. If an initial Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary, should the Company be unable to continue as a going concern, and also do not include any adjustments that might result should an initial Business Combination not occur.

Merger Agreement

On June 1, 2023, the Company entered into an Agreement and Plan of Merger (the “Kustom Entertainment Merger Agreement”) with CL Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), the Sponsor, in the capacity as the representative from and after the Effective Time (as defined in the Kustom Entertainment Merger Agreement) for the stockholders of the Company (other than the Kustom Entertainment Stockholder as of immediately prior to the Effective Time and its successors and assignees) in accordance with the terms and conditions of the Kustom Entertainment Merger Agreement, Kustom Entertainment, which has a focus and mission to own and produce events, festivals, and entertainment alongside its evolving primary and secondary ticketing technologies, and the Kustom Entertainment Stockholder.

Pursuant to the Kustom Entertainment Merger Agreement, subject to the terms and conditions set forth therein upon the consummation of the transactions contemplated by the Kustom Entertainment Merger Agreement (the “Closing”), Merger Sub will merge with and into Kustom Entertainment (the “Merger,” and together with the other transactions and agreements contemplated by the Kustom Entertainment Merger Agreement, the “Kustom Entertainment Business Combination”), with Kustom Entertainment continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of the Company. In the Merger, all of the issued and outstanding capital stock of Kustom Entertainment immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right for the Kustom Entertainment Stockholder to receive the Merger Consideration (as defined below). Upon consummation of the Kustom Entertainment Business Combination, the Company will change its name to “Kustom Entertainment, Inc.”

The aggregate merger consideration to be paid pursuant to the Kustom Entertainment Merger Agreement to the Kustom Entertainment Stockholder as of immediately prior to the Effective Time will be an amount equal to (the “Merger Consideration”) (i) $125 million, minus (ii) the estimated consolidated indebtedness of Kustom Entertainment as of the Closing (“Closing Indebtedness”). The Merger Consideration to be paid to the Kustom Entertainment Stockholder will be paid solely by the delivery of new shares of the Company’s Class A Common Stock, each valued at $11.14 per share. The Closing Indebtedness (and the resulting Merger Consideration) is based solely on estimates determined shortly prior to the Closing and is not subject to any post-Closing true-up or adjustment.

On June 24, 2024, the parties to the Kustom Entertainment Merger Agreement entered into the First Amendment to Merger Agreement (the “First Amendment”), pursuant to which the Outside Date (as defined in the Merger Agreement) was extended from July 22, 2024 to August 30, 2024.

Second Amendment to Lock-Up Agreement

Simultaneously with the execution and delivery of the Kustom Entertainment Merger Agreement, the Company, the Kustom Entertainment Stockholder, and the Sponsor entered into a Lock-Up Agreement (the “Lock-Up Agreement”), pursuant to which the Kustom Entertainment Stockholder agreed to certain transfer restrictions, with such restrictions applying to eighty-five percent (85%) of the shares of Class A Common Stock to be received by the Kustom Entertainment Stockholder as merger consideration in connection with the Business Combination (“Merger Consideration”). On June 24, 2024, the parties to the Lock-Up Agreement entered into the Second Amendment to Lock-Up Agreement (the “Second Lock-Up Amendment”), pursuant to which the amount of securities subject to the Lock-Up Agreement was reduced from eighty-five percent (85%) to between seventy percent (70%) and eighty percent (80%) of Class A Common Stock received by the Kustom Entertainment Stockholder as Merger Consideration, with the specific amount of securities subject to the Lock-Up Agreement set at the maximum amount in the range that ensures the satisfaction of the relevant closing condition in the Kustom Entertainment Merger Agreement, as determined by the Kustom Entertainment Stockholder in its reasonable discretion, subject to the approval of the Company.

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 financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Inflation Reduction Act of 2022

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 (the “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 Treasury has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the Excise Tax. In April 2024, the Treasury issued proposed regulations providing guidance with respect to the Excise Tax. Taxpayers may rely on these proposed regulations until final regulations are issued. Under the proposed regulations, liquidating distributions made by publicly traded domestic corporations are exempt from the Excise Tax. In addition, any redemptions that occur in the same taxable year as a liquidation is completed will also be exempt from such tax.

Any redemption or other repurchase that occurs after December 31, 2022, in connection with an initial Business Combination, a vote by the stockholders of the Company to extend the period of time to complete the initial 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 an initial 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 initial Business Combination, extension or otherwise, (ii) the structure of an initial Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with an initial Business Combination (or otherwise issued not in connection with an initial Business Combination but issued within the same taxable year of an initial 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 an initial Business Combination and in the Company’s ability to complete an initial Business Combination.

As discussed above, on July 19, 2023, holders of 376,002 shares of Common Stock elected to redeem their shares in connection with the 2023 Extension Amendment. As a result, $4,209,931 was removed from the Company’s Trust Account to pay such holders. On January 22, 2024, holders of 202,360 shares of Common Stock elected to redeem their shares in connection with the January 2024 Extension Amendment. As a result, $2,374,149 was removed from the Company’s Trust Account to pay such holders.

Management has evaluated the requirements of the IR Act and the Company’s operations and has determined that $65,841 is required to be recorded as a liability, which remained outstanding on the Company’s balance sheet as of June 30, 2024.

During the second quarter, the Internal Revenue Service issued final regulations with respect to the timing and payment of the Excise Tax. Pursuant to those regulations, the Company would need to file a return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024.

The Company is currently evaluating its options with respect to payment of this obligation. If the Company is unable to pay its obligation in full, it will be subject to additional interest and penalties which are currently estimated at 10% interest per annum and a 5% underpayment penalty per month or portion of a month up to 25% of the total liability for any amount that is unpaid from November 1, 2024 until paid in full.

New SPAC Rules

On January 24, 2024, the SEC adopted new rules and regulations for special purpose acquisition companies (“SPACs”), which will become effective on July 1, 2024 (the “2024 SPAC Rules”). The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC Business Combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and Business Combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect the Company’s ability to negotiate and complete its initial Business Combination and may increase the costs and time related thereto.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed 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 unaudited condensed 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 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 financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K (the “2023 Annual Report”) for the year ended December 31, 2023, as filed with the SEC on March 22, 2024. The accompanying condensed balance sheet as of December 31, 2023 has been derived from the Company’s audited financial statements included in the 2023 Annual Report. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future periods.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies 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 of 2002, 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 Securities Exchange Act of 1934, as amended (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 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.

Use of Estimates

The preparation of these unaudited condensed financial statements in conformity with GAAP requires 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ 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. As of June 30, 2024 and December 31, 2023, the Company had $51,117 and $162,933 in cash, respectively, and no cash equivalents.

Investments Held in Trust Account

As of June 30, 2024 and December 31, 2023, the Company had $12,900,905 and $14,648,926 in investments held in the Trust Account, respectively.

As of June 30, 2024, and December 31, 2023, the Company’s investments were held in the Trust Account are held in an interest-bearing demand deposit account and are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.

The carrying value, excluding gross unrealized holding loss and fair value of held-to-maturity securities on June 30, 2024 and December 31, 2023 are as follows:

	Carrying Value as of June 30, 2024		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value as of June 30, 2024
Demand Deposit Account		12,900,905		—		—		12,900,905
	$	12,900,905	$	—	$	—	$	12,900,905

	Carrying Value as of December 31, 2023		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value as of December 31, 2023
Demand Deposit Account		14,648,926		—		—		14,648,926
	$	14,648,926	$	—	$	—	$	14,648,926

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts, and Management believes the Company is not exposed to significant risks on such accounts.

Offering Costs Associated with Initial Public Offering

The Company complies with the requirements of the FASB ASC Topic 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A—“Expenses of Offering”. Offering costs consist of legal, accounting, underwriting and other costs incurred through the consummation of the IPO. Offering costs amounted to $9,562,126 and were charged to permanent and temporary equity, ratably with the redeemable and non-redeemable shares they are allocated to, upon the completion of the IPO.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

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 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

●

Level 2 – Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.

●

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statement of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Class A Common Stock Subject to Possible Redemption

All of the 13,831,230 Class A Common Stock sold as part of the Units in the IPO contain a redemption feature that allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the initial Business Combination and in connection with certain amendments to the Company’s Amended and Restated Charter. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in FASB ASC Topic 480-10-S99, redemption provisions not solely within the control of the Company require Common Stock subject to redemption to be classified outside of permanent equity. Given that the Class A Common Stock was issued with other freestanding instruments (i.e., equity rights), the initial carrying value of Class A Common Stock classified as temporary equity is the allocated proceeds based on the guidance in FASB ASC Topic 470-20, “Debt—Debt with Conversion and Other Options.”

If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately.

Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount, which approximates fair value. The change in the carrying value of Class A Common Stock subject to possible redemption resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit and Class A Common Stock.

As of June 30, 2024 and December 31, 2023, the Class A Common Stock reflected on the balance sheet is reconciled in the following table:

Gross Proceeds	$	138,312,300
Proceeds allocated to equity rights		(760,718	)
Less:
Issuance costs related to Class A common stock subject to possible redemption		(9,509,534	)
Plus:
Remeasurement of carrying value to redemption value		12,344,937
Contingently redeemable Class A common stock subject to possible redemption (December 31, 2021)		140,386,985
Less:
Redemptions of Class A common stock		(125,587,180	)
Plus:
Remeasurement of carrying value to redemption value		3,483,582
Contingently redeemable Class A common stock subject to possible redemption (December 31, 2022)		18,283,387
Plus:
Remeasurement of carrying value to redemption value		756,785
Less:
Redemptions of Class A common stock		(4,209,931	)
Contingently redeemable Class A common stock subject to possible redemption (December 31, 2023)		14,830,241
Plus:
Remeasurement of carrying value to redemption value		260,857
Less:
Redemptions of Class A common stock		(2,374,149	)
Contingently redeemable Class A common stock subject to possible redemption (March 31, 2024)	$	12,716,949
Plus:
Remeasurement of carrying value to redemption value		(259,385	)
Contingently redeemable Class A common stock subject to possible redemption (June 30, 2024)	$	12,976,334

Net Loss Per Common Stock

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. The Company has two classes of shares, redeemable Common Stock and non-redeemable Common Stock. The Company’s redeemable Common Stock is comprised of shares of Class A Common Stock sold in the IPO. The Company’s non-redeemable shares are comprised of shares of Class B Common Stock purchased by the Sponsor as well as shares of Class A Common Stock sold in the Private Placement and Representative Shares. Earnings and losses are shared pro rata between the two classes of shares. The Company’s statement of operations applies the two-class method in calculating net loss per share. Basic and diluted net loss per common share for redeemable Common Stock and non-redeemable Common Stock is calculated by dividing net loss, allocated proportionally to each class of Common Stock, attributable to the Company by the weighted average number of shares of redeemable and non-redeemable stock outstanding.

The calculation of diluted loss per share of Common Stock does not consider the effect of the rights, which entitle the holder to received one-eighth (1/8) of one share of Class A Common Stock upon the consummation of an initial Business Combination, and which rights include the rights sold as part of the Units in the Company’s Initial Public Offering (the “Public Rights”) and rights included within the Private Placement Units purchased by the Company’s Sponsor and the Representative in the Private Placement (the “Private Placement Rights,” and together with the Public Rights, the “Rights”) since exercise of the Rights is contingent upon the occurrence of future events and the inclusion of such Rights would be anti-dilutive. Accretion of the carrying value of Class A Common Stock to redemption value is excluded from net loss per redeemable share because the redemption value approximates fair value. As a result, diluted net loss per share is the same as basic net loss per share for the periods presented.

The basic and diluted loss per common stock is calculated as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Common stock subject to possible redemption
Numerator:
Net loss allocable to Class A common stock subject to possible redemption	$	(69,038	)	$	(221,357	)	$	(139,226	)	$	(234,792	)
Denominator:
Weighted Average Class A common stock, basic and diluted		1,048,796			2,441,063			1,073,257			2,441,063
Basic and Diluted net loss per share, Class A common stock	$	(0.07	)	$	(0.08	)	$	(0.13	)	$	(0.10	)

Non-redeemable common stock
Numerator:
Net loss allocable to Class B common stock	$	(281,192	)	$	(313,557	)	$	(554,139	)	$	(332,586	)
Denominator:
Weighted Average non-redeemable common stock, basic and diluted		4,271,712			3,457,807			4,271,712			3,457,807
Basic and diluted net loss per share, common stock	$	(0.07	)	$	(0.08	)	$	(0.13	)	$	(0.10	)

Income Taxes

The Company accounts for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the unaudited condensed financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s unaudited condensed financial statements and prescribes a recognition threshold and measurement process for unaudited condensed 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.

While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period if they are significant, unusual or infrequent. Computing the effective tax for the Company is complicated due to the potential impact of the timing of any Business Combination expenses and the actual interest income that will be recognized during the year. The Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “If an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (benefit) but is otherwise able to make a reasonable estimate, the tax (or benefit) applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effective tax rate. As such, the Company is computing its taxable income (loss) and associated income tax provision based on actual results through June 30, 2024.

The Company has identified the United States as its only “major” tax jurisdiction.

The Company’s effective tax rate was (8.26)% and (9.68%) for the three months ended June 30, 2024, and 2023, respectively, and (8.39)% and (18.55%) for the six months ended June 30, 2024, and 2023, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and six months ended June 30, 2024, and 2023, due to the valuation allowance on the deferred tax assets.

The Company is subject to income tax examinations 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 is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company’s Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU Topic 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is reviewing what impact, if any, adoption will have on the Company’s financial position, results of operations or cash flows.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s Management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures.

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

Note 3 — Initial Public Offering

On July 22, 2021, the Company consummated its IPO of 13,831,230 Units at a purchase price of $10.00 per Unit, generating gross proceeds of $138,312,300. This included 1,331,230 Units due to a partial over-allotment exercised by the underwriters. The underwriters forfeited their remaining over-allotment option on July 28, 2021. Each Unit consists of (i) one share of Class A Common Stock and (ii) one Right.

The Company paid an underwriting fee at the closing of the IPO of $2,766,246. An additional fee of $4,840,931 was deferred and will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.

Note 4 — Private Placement

Simultaneously with the closing of the IPO and the sale of the Units, the Sponsor purchased an aggregate of 571,859 Private Placement Units at a price of $10.00 per Private Placement Unit ($5,718,590 in the aggregate) and the Representative purchased an aggregate of 103,734 Private Placement Units at a price of $10.00 per Private Placement Unit ($1,037,340 in the aggregate) in a Private Placement. Each Private Placement Unit is identical to the Units offered in the IPO except as described below.

The Private Placement Units and their component securities will not be transferable, assignable or salable until after the completion of the initial Business Combination except to permitted transferees. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Founder Shares, Private Placement Shares or the Rights sold as part of the Units in the Company’s Initial Public Offering (whether they are purchased in the Company’s Initial Public Offering or thereafter in the open market), which will expire worthless if the Company does not consummate an initial Business Combination within the Combination Period.

Note 5 — Related Party Transactions

Founder Shares

In March 2021, the Sponsor paid $25,000 in consideration for 3,593,750 shares of Class B Common Stock (the “Founder Shares”). The number of Founder Shares issued was determined based on the expectation that the Founder Shares would represent 20% of the outstanding shares after the IPO (excluding shares included in the Private Placement Units or the shares of Class A Common Stock issuable to the Representative). Up to 468,750 of the Founder Shares were subject to forfeiture depending on the extent to which the underwriters’ over-allotment is exercised. On July 22, 2021, the underwriters partially exercised their over-allotment option and purchased an additional 1,331,230 of their full 1,875,000 option. The underwriters forfeited the remainder of their over-allotment option as of July 28, 2021, resulting in aggregate Founders Shares outstanding of 3,457,807.

On April 8, 2021, the Sponsor transferred a membership interest (the “Interest”) to three of the Company’s officers and the three independent directors of 75,000 Founder Shares. The Interest relates solely to the number of Founder Shares laid out in the Company’s officers’ and independent directors’ respective agreements. The transferred shares shall vest upon the Company consummating an initial Business Combination (the “Vesting Date”). If prior to the Vesting Date, any of the grantees ceases to remain in their role, either voluntarily or for a cause (a “Separation Event”), 100% of the shares granted will be automatically and immediately transferred back to the Sponsor upon such Separation Event. Since the stock grants to both directors and to the officers contain the performance condition of consummating an initial Business Combination, the Company has determined the appropriate accounting treatment is to defer recognition of the compensation costs until the consummation of an initial Business Combination in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation.”

The Company’s Initial Stockholders, including the Interests transferred to the Company’s officers and directors, have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) six months after the completion of the initial Business Combination; and (ii) subsequent to the initial Business Combination (a) if the closing price of the shares of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after the initial Business Combination or (b) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization 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 (except with respect to permitted transferees). Any permitted transferees would be subject to the same restrictions and other agreements of the Company’s Initial Stockholders with respect to any Founder Shares (the “Lock-Up”).

On July 20, 2023, the Company issued an aggregate of 3,457,806 shares of its Class A Common Stock to the Sponsor upon the conversion (the “Founder Share Conversion”) of an equal number of shares of Class B Common Stock of the Company held by the Sponsor. The 3,457,806 shares of Class A Common Stock issued in connection with the Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the Founder Share Conversion, including, among other things, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an Initial Business Combination as described in the prospectus for the Company’s IPO. Following the Founder Share Conversion, there were 5,522,867 shares of Class A Common Stock issued and outstanding and 1 share of Class B Common Stock issued and outstanding. As a result of the Founder Share Conversion, the Sponsor holds approximately 73.0% of the Company’s issued and outstanding Class A Common Stock.

Promissory Note — Related Party

On March 4, 2021, the Sponsor agreed to loan the Company up to $300,000 to be used for a portion of the expenses of the IPO, under a promissory note. These loans are non-interest bearing, unsecured and due at the earlier of September 30, 2021, or the closing of the IPO. These loans were repaid upon the closing of the IPO out of the offering proceeds that had been allocated to the payment of offering expenses. As of June 30, 2024 and December 31, 2023, there is no amount outstanding under the promissory note.

On July 18, 2022, the Company issued the July 2022 Extension Note in the principal amount of $1,383,123 to the Sponsor in connection with the July 2022 Extension. The July 2022 Extension Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial Business Combination is consummated and (ii) the liquidation of the Company on or before October 22, 2022 or such liquidation date as may be approved by the Company’s stockholders. At the election of the Sponsor, up to $1,383,123 of the unpaid principal amount of the July 2022 Extension Note may be converted into Units of the Company (the “Conversion Units”) with the total Conversion Units so issued shall be equal to: (i) the portion of the principal amount of the July 2022 Extension Note being converted divided by (ii) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Conversion Units. The conversion feature included in the July 2022 Extension Note is closely related to the debt instrument itself and is not bifurcated from the host instrument. As a result, all debt proceeds received have been allocated to debt liability. As of June 30, 2024, and December 31, 2023, there was $1,383,892 outstanding under the July 2022 Extension Note.

On October 19, 2022, in connection with the October 2022 Extension, the Company issued the October 2022 Extension Note in the principal amount of $1,383,123 to the Sponsor pursuant to which the Sponsor loaned to the Company $1,383,123 to deposit into the Company’s Trust Account for each share of the Company’s Class A Common Stock that was not redeemed in connection with the October 2022 Extension. The October 2022 Extension Note bears no interest and is repayable in full upon the earlier of (i) the date of the consummation of the Company’s initial Business Combination, or (ii) the date of the liquidation of the Company. As of June 30, 2024, and December 31, 2023, there was $1,383,123 outstanding under the October 2022 Extension Note.

On July 21, 2023, the Company issued a promissory note (the “2023 Extension Note”) in the aggregate principal amount of up to $360,000 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $360,000 to deposit into Trust Account for the Company’s Class A Common Stock, held by the Company’s public stockholders that were not redeemed in connection with the 2023 Extension. On July 21, 2023, the Company deposited $60,000 into the Trust Account, with such amount being treated as the first draw under the 2023 Extension Note, and the Company continued to deposit $60,000 into the Trust Account for each additional calendar month (promptly following the 22^nd of each calendar month), or portion thereof, that is needed by the Company to complete an initial Business Combination until January 22, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. The 2023 Extension Note bears no interest and is repayable in full upon the earlier of (i) the date of the consummation of the Company’s initial Business Combination or (ii) the date of the liquidation of the Company. The Sponsor deposited $360,000 in the Trust Account under the 2023 Extension Note, which was outstanding as of June 30, 2024 and December 31, 2023.

On July 21, 2023, the Company issued the 2023 Working Capital Note in the principal amount of up to $300,000 to the Sponsor. The 2023 Working Capital Note was issued in connection with advances the Sponsor may make in the future to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date the winding up of the Company is effective. The Company drew $300,000 under the 2023 Working Capital Note which was outstanding as of June 30, 2024.

On January 22, 2024, the Company issued the January 2024 Extension Note in the aggregate principal amount of up to $360,000 the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $360,000 to deposit into the Company’s Trust Account for each Public Share that was not redeemed in connection with the January 2024 Extension Amendment. The January 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial Business Combination, or (b) the date of the liquidation of the Company. The Company has drawn $360,000 under the January 2024 Extension Note, which was outstanding as of June 30, 2024.

On January 22, 2024, the Company issued the January 2024 Working Capital Note in the principal amount of up to $1,000,000 to the Sponsor. The January 2024 Working Capital Note was issued in connection with advances the Sponsor may make in the future to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date the winding up of the Company is effective. The Company has drawn $870,750 and $415,000 under the January 2024 Working Capital Note as of June 30, 2024, and December 31, 2024, respectively.

Administrative Support Agreement

Commencing on the date of the IPO, the Company has agreed to pay an affiliate of the Sponsor for office space, secretarial, and administrative services provided to members of the Management Team, in the amount of $10,000 per month. The administrative support agreement began on the day the Company first listed on The Nasdaq Capital Market and continue monthly until the completion of the Company’s initial Business Combination or liquidation of the Company. For the three and six months ended June 30, 2024, the Company incurred $30,000 and $60,000, in administrative support fees, which is included in formation and operating costs in the accompanying statements of operations. For the three and six months ended June 30, 2023, the Company incurred $30,000 and $60,000, respectively, in administrative support fees which is included in formation and operating costs in the accompanying statements of operations. As of June 30, 2024 and December 31, 2023, there was $30,000 and $10,000, respectively, outstanding, which is included on the accompanying balance sheets as “due to related party.”

Note 6 — Commitments and Contingencies

Registration Rights

The holders of the Founder Shares, Private Placement Units and securities that may be issued upon conversion of Working Capital Loans and extension loans will have registration rights to require the Company to register a sale of any of its securities held by them pursuant to a Registration Rights Agreement, dated July 19, 2021, entered into by the Company, the Sponsor, Initial Stockholders and the holder parties thereto (the “Registration Rights Agreement”). These holders will be entitled to make up to three demands, excluding short-form registration demands, that the Company registers such securities for sale under the Securities Act. In addition, these holders will have “piggyback” registration rights to include their securities in other registration statements filed by the Company. Notwithstanding the foregoing, the underwriters may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the IPO Registration Statement forms a part and may not exercise their demand rights on more than one occasion.

Underwriting Agreement

The Company granted the underwriters a 30-day option to purchase up to 1,875,000 additional Units to cover any over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On July 22, 2021, the underwriters partially exercised their over-allotment option and purchased an additional 1,331,230 Units and forfeited the remainder of their over-allotment option as of July 28, 2021.

The Company agreed to pay or reimburse the underwriters for travel, lodging, and other “road show” expenses, expenses of the underwriters’ legal counsel, and certain diligence and other fees, including the preparation, binding and delivery of bound volumes in form and style reasonably satisfactory to the Representative, transaction Lucite cubes, or similar commemorative items in a style as reasonably requested by the Representative, and reimbursement for background checks on the Company’s directors and executive officers, which such fees and expenses are capped at an aggregate of $125,000 (less amounts previously paid).

The underwriters will be entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the IPO held in the Trust Account upon the completion of the Company’s initial Business Combination, subject to the terms of the underwriting agreement.

The Representative’s Common Stock

The Company agreed to issue to the Representative and/or its designees, 125,000 shares of Common Stock (or 143,750 shares if the underwriter’s over-allotment option is exercised in full) upon the consummation of the IPO. On July 22, 2021, the underwriters partially exercised their over-allotment option, resulting in an aggregate issuance of 138,312 Representative Shares. These shares were valued at a price of $10.00 which was the sale price of the Units sold in the IPO. The Representative has agreed not to transfer, assign, or sell any such shares until the completion of the Company’s initial Business Combination. In addition, the Representative has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of the Company’s initial Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete an initial Business Combination within the applicable period.

The shares have been deemed compensation by the Financial Industry Regulatory Authority (“FINRA”) and are therefore subject to a Lock-Up for a period of 180 days immediately following the date of the effectiveness of the IPO Registration Statement pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the IPO Registration Statement, nor may they be sold, transferred, assigned, pledged, or hypothecated for a period of 180 days immediately following the effective date of the IPO Registration Statement except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners.

Right of First Refusal

Subject to certain conditions, the Company will grant the Representative, for a period beginning on the closing of the IPO and ending 15 months after the date of the consummation of the initial Business Combination, a right of first refusal to act as lead left book-running managing underwriter with at least 75% of the economics; or, in the case of a three-handed deal, 50% of the economics, for any and all future public and private equity, convertible, and debt offerings for the Company or any of its successors or subsidiaries. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the IPO Registration Statement.

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. As of June 30, 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 100,000,000 shares of Class A Common Stock with a par value of $0.0001 per share. Holders of shares of Class A Common Stock are entitled to one vote for each share. As of June 30, 2024 and December 31, 2023 there were 4,271,711 and 4,271,711 shares of Class A Common Stock issued or outstanding, excluding 1,048,796 and 1,251,156 shares of Class A Common Stock subject to possible redemption, respectively.

Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B Common Stock with a par value of $0.0001 per share. As of June 30, 2024 and, December 31, 2023 there were 1 and 1 shares of Class B Common Stock issued and outstanding, respectively, so that the Founder Shares represent, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the IPO.

The Company’s Initial Stockholders have agreed not to transfer, assign, or sell any of their Founder Shares until the earlier to occur of: (i) six months after the date of the consummation of the initial Business Combination and (ii) subsequent to the initial Business Combination (a) if the closing price of the Company’s shares of Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within any 30-trading day period after the initial Business Combination or (b) the date on which the Company consummates a liquidation, merger, stock exchange, or other similar transaction that results in all of the public stockholders having the right to exchange their shares of Class A Common Stock for cash, securities, or other property (except as described herein). Any permitted transferees would be subject to the same restrictions and other agreements of the Company’s Initial Stockholders with respect to any Founder Shares.

Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of the Class A Common Stock and holders of the 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 required by law. The shares of Class B Common Stock will automatically convert into shares of Class A Common Stock at the time of the initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations, and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A Common Stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of the initial Business Combination, the ratio at which shares of Class B Common Stock shall convert into shares of Class A Common Stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B Common Stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A Common Stock issuable upon conversion of all shares of Class B Common Stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of Common Stock outstanding upon completion of the IPO (excluding shares included in the Private Placement Units or the shares of Class A Common Stock issuable to the Representative) plus all shares of Class A Common Stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination.

Rights

Each holder of a Right will receive one-eighth (1/8) of one Class A Common Stock upon consummation of the initial Business Combination. In the event the Company will not be the surviving entity upon completion of the initial Business Combination, each holder of a Right will be required to affirmatively convert its Rights in order to receive the 1/8 share of Class A Common Stock underlying each Right (without paying any additional consideration). If the Company is unable to complete an initial Business Combination within the required time period and the Company redeems the Public Shares of Class A Common Stock for the funds held in the Trust Account, holders of Rights will not receive any such funds in exchange for their Rights and the Rights will expire worthless. Every eight (8) Rights that a holder holds will entitle the holder to receive one share at the closing of the initial Business Combination. The Company will not issue fractional shares of Class A Common Stock upon exchange of the Rights. If, upon conversion of the Rights, a holder would be entitled to receive a fractional interest in a share, fractional shares will be rounded up to the nearest whole share.

If the Company is unable to complete an initial Business Combination within the required time period and it liquidates the funds held in the Trust Account, holders of Rights will not receive any such funds with respect to any of their Rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Rights, and all Rights will expire worthless.

Note 8 — Subsequent Events

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

July 2024 Extension and Promissory Notes

On July 18, 2024, the Company held the July 2024 Special Meeting. At the July 2024 Special Meeting, the Company’s stockholders approved the July 2024 Extension Amendment to the Amended and Restated Charter to extend the date by which the Company must consummate its initial Business Combination from July 22, 2024 to October 22, 2024, or such earlier date as determined by the Company’s Board.

Following the approval and implementation of the July 2024 Extension Amendment, on July 22, 2024, the Company issued the July 2024 Extension Note in the aggregate principal amount of up to $124,728 the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $124,728 to deposit into the Company’s Trust Account for each Public Share that was not redeemed in connection with the July 2024 Extension Amendment. The July 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial Business Combination, or (b) the date of the liquidation of the Company.

On July 22, 2024, the Company issued a promissory note (the “July 2024 Working Capital Note”) in the principal amount of up to $300,000 to the Sponsor. The July 2024 Working Capital Note was issued in connection with up to $300,000 of advances the Sponsor has made or may make in the future to the Company for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) the date of the consummation of the Company’s initial Business Combination or (ii) the date of the liquidation of the Company. As of August 13, 2024, no amounts had been drawn down on the July 2024 Working Capital Note.

Nasdaq Compliance—IM-5101-2 Requirement

On July 23, 2024, the Company received a delisting determination from the Staff of Nasdaq relating to the Company’s inability to complete a business combination within 36 months of the effectiveness of its IPO registration statement, which in the case of the Company, would be July 19, 2024 (the “Nasdaq Deadline”). The Company submitted its views to the Panel with respect to this deficiency on July 30, 2024. The Company’s securities will continue to trade on the Nasdaq Capital Market, pending the outcome of the Panel’s decision.

Filing of Definitive Proxy Statement and Prospectus

On July 30, 2024, the SEC declared the Kustom Entertainment Registration Statement effective, and on July 31, 2024, the Company filed a definitive proxy statement and prospectus, which are included in the Kustom Entertainment Registration Statement, with respect to the Kustom Entertainment Business Combination.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy, and the plans and objectives of Management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar expressions, as they relate to us or our Management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our Management, as well as assumptions made by, and information currently available to, our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under “Item 1. Financial Statements”.

Overview

We are a blank check company incorporated in the State of Delaware for the purpose of effecting an initial Business Combination. We may pursue the initial Business Combination target in any industry or geographic location, and we were focusing our search for a target business engaged in the cannabis industry.

The IPO Registration Statement was declared effective on July 19, 2021. On July 22, 2021, we consummated our Initial Public Offering of 13,831,230 Units at $10.00 per Unit, and the sale of 675,593 Units, at a price of $10.00 per Unit, in the Private Placement to our Sponsor and the Representative that closed simultaneously with the Initial Public Offering. On July 22, 2021, the underwriters of the Initial Public Offering partially exercised their over-allotment option and purchased 1,331,230 of their full 1,875,000 Units available and subsequently forfeited the remainder of their option as of July 28, 2021. Our Management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and sale of the Private Placement Units, although substantially all of the net proceeds are to be applied generally toward consummating an initial Business Combination.

Transaction costs amounted to $9,562,126, consisting of $2,766,246 of underwriting commissions, $4,840,931 of deferred underwriting commissions, $1,383,123 of fair value of the Representative Shares, and $571,826 of other cash offering costs.

On January 24, 2024, the SEC adopted the 2024 SPAC Rules, which became effective on July 1, 2024. The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC Business Combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and Business Combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial Business Combination and may increase the costs and time related thereto.

Extensions of Our Combination Period

We originally had up to 12 months from the closing of our Initial Public Offering, or until July 22, 2022, to consummate an initial Business Combination. However, as requested by our Sponsor and as permitted under our Amended and Restated Charter, on July 19, 2022, we extended the Combination Period by an additional three months from July 22, 2022 to October 22, 2022. In addition, at the 2022 Special Meeting held on October 19, 2022, our stockholders approved an amendment to our Amended and Restated Charter to extend the Combination Period from October 22, 2022 to July 22, 2023, or such earlier date as determined by our Board of Directors. In addition, at the 2023 Special Meeting held on July 19, 2023, our stockholders approved an amendment to our Amended and Restated Charter to extend the Combination Period from July 22, 2023 to January 22, 2024, or such earlier date as determined by our Board of Directors. Thereafter, at the January 2024 Special Meeting held on January 17, 2024, our stockholders approved an amendment to our Amended and Restated Charter to extend the Combination Period from January 22, 2024 to July 22, 2024, or such earlier date as determined by our Board of Directors. Also, at the July 2024 Special Meeting held on July 18, 2024, our stockholders approved an amendment to our Amended and Restated Charter to extend the Combination Period from July 22, 2024 to October 22, 2024, or such earlier date as determined by our Board of Directors.

Recent Developments

July 2024 Extension and Promissory Notes

On July 18, 2024, we held the July 2024 Special Meeting. At the July 2024 Special Meeting, our stockholders approved the July 2024 Extension Amendment to the Amended and Restated Charter to extend the date by which we must consummate our initial Business Combination from July 22, 2024 to October 22, 2024, or such earlier date as determined by the Company’s Board.

Following the approval and implementation of the July 2024 Extension Amendment, on July 22, 2024, we issued the July 2024 Extension Note in the aggregate principal amount of up to $124,728 the Sponsor, pursuant to which the Sponsor agreed to loan to us up to $124,728 to deposit into our Trust Account for each Public Share that was not redeemed in connection with the July 2024 Extension Amendment. The July 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, or (b) the date of the liquidation of our Company. We have drawn 41,576 under the July 2024 Extension Note as of August 13, 2024.

On July 19, 2024, we deposited $41,576 into the Trust Account, and we will continue to deposit $41,575.86 into the Trust Account for each additional calendar month (promptly following the 22nd of each calendar month), or portion thereof, that is needed by us to complete an initial Business Combination until October 22, 2024, and such amount will be distributed either to: (i) all of the holders of Public Shares upon our liquidation or (ii) holders of Public Shares who elect to have their shares redeemed in connection with the consummation of the initial Business Combination. As of August 13, 2024, $41,576 of the principal on the July 2024 Extension Note has been deposited into the Trust Account.

On July 22, 2024, we issued the July 2024 Working Capital Note in the principal amount of up to $300,000 to the Sponsor. The July 2024 Working Capital Note was issued in connection with up to $300,000 of advances the Sponsor has made or may make in the future to us for working capital expenses. The loan is non-interest bearing and payable upon the earlier of (i) the date of the consummation of our initial Business Combination or (ii) the date of the liquidation of our Company. As of August 13, 2024, no amounts had been drawn down on the July 2024 Working Capital Note.

Nasdaq Compliance—IM-5101-2 Requirement

On July 23, 2024, we received a delisting determination from the Staff of Nasdaq relating to our inability to complete a business combination before the Nasdaq Deadline. We submitted its views to the Panel with respect to this deficiency on July 30, 2024. Our securities will continue to trade on the Nasdaq Capital Market, pending the outcome of the Panel’s decision.

Filing of Definitive Proxy Statement and Prospectus

On July 30, 2024, the SEC declared the Kustom Entertainment Registration Statement effective, and on July 31, 2024, we filed a definitive proxy statement and prospectus, which are included in the Kustom Entertainment Registration Statement, with respect to the Kustom Entertainment Business Combination.

Founder Share Conversion

On July 20, 2023, upon the approval of the proposal to amend the Amended and Restated Charter to provide for the elective right of holders of shares of Class B Common Stock to convert such shares into shares of Class A Common Stock, on a one-for-one basis at any time prior to the closing of a Business Combination by our stockholders at the 2023 Special Meeting. we issued an aggregate of 3,457,806 shares of our Class A Common Stock to our Sponsor upon the Founder Share Conversion. The 3,457,806 shares of Class A Common Stock issued in connection with the Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the Founder Share Conversion, including, among other things, certain transfer restrictions, waiver of redemption rights, and the obligation to vote in favor of an initial Business Combination as described in the IPO Registration Statement. Following the Founder Share Conversion, there were 5,522,867 shares of Class A Common Stock issued and outstanding and 1 share of Class B Common Stock issued and outstanding. As a result of the Founder Share Conversion, our Sponsor held approximately 73.0% of our issued and outstanding Class A Common Stock.

Kustom Entertainment Business Combination

On June 1, 2023, we entered into the Kustom Entertainment Merger Agreement with Merger Sub, the Sponsor, Kustom Entertainment, and the Kustom Entertainment Stockholder.

Pursuant to the Kustom Entertainment Merger Agreement, subject to the terms and conditions set forth therein upon the Closing, Merger Sub will merge with and into Kustom Entertainment, with Kustom Entertainment continuing as the surviving corporation in the Merger and our wholly-owned subsidiary. In the Merger, all of the issued and outstanding capital stock of Kustom Entertainment immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right for the Kustom Entertainment Stockholder to receive the Merger Consideration. Upon consummation of the Kustom Entertainment Business Combination, we will change our name to “Kustom Entertainment, Inc.”

On October 4, 2023, we issued a press release announcing that we had submitted to EDGAR, the SEC’s online portal, the Kustom Entertainment Registration Statement, which includes a preliminary proxy statement/prospectus, with respect to the Kustom Entertainment Business Combination.

On June 24, 2024, the parties to the Kustom Entertainment Merger Agreement entered into the First Amendment, pursuant to which the Outside Date was extended from July 22, 2024 to August 30, 2024.

For a full description of the Kustom Entertainment Merger Agreement and the proposed Kustom Entertainment Business Combination, please see “Item 1. Business” of our 2023 Annual Report.

Indemnification Agreement

On February 1, 2024, the Company entered into the Indemnification Agreement with Kustom Entertainment and the Kustom Entertainment Stockholder, pursuant to which Kustom Entertainment and the Kustom Entertainment Stockholder agreed to indemnify the Company and its officers and directors for liabilities incurred in connection with the Kustom Entertainment Stockholder disclosure incorporated by reference into the Kustom Entertainment Registration Statement.

On May 9, 2024, the Company, Kustom Entertainment, and the Kustom Entertainment Stockholder entered into the Termination Agreement, pursuant to which the parties terminated the Indemnification Agreement.

Second Amendment to Lock-Up Agreement

On June 24, 2024, the parties to the Lock-Up Agreement entered into the Second Lock-Up Amendment, pursuant to which the amount of securities subject to the Lock-Up Agreement was reduced from eighty-five percent (85%) to between seventy percent (70%) and eighty percent (80%) of Class A Common Stock received by the Kustom Entertainment Stockholder as Merger Consideration, with the specific amount of securities subject to the Lock-Up Agreement set at the maximum amount in the range that ensures the satisfaction of the relevant closing condition in the Kustom Entertainment Merger Agreement, as determined by the Kustom Entertainment Stockholder in its reasonable discretion, subject to our approval.

Results of Operations

Our entire activity since inception up to June 30, 2024 relates to our formation, the Initial Public Offering, and, since the closing of the Initial Public Offering, a search for an initial Business Combination candidate. We will not be generating any operating revenues until the Closing and completion of our initial Business Combination, at the earliest.

For the three months ended June 30, 2024, we had a net loss of $350,230, which consisted of formation and operating costs of $446,437, provision for income taxes of $26,710, and interest and penalties of $8,814, offset by interest earned on investments held in Trust Account of $131,730 and interest earned on cash held in bank of $1.

For the six months ended June 30, 2024, we had a net loss of $693,365, which consisted of formation and operating costs of $897,030, provision for income taxes of $53,652, and interest and penalties of $8,814, offset by interest earned on investments held in Trust Account of $266,128 and interest earned on cash held in bank of $3.

For the three months ended June 30, 2023, we had a net loss of $534,914, which consisted of formation and operating costs of $709,836 and provision for income taxes of $47,220, offset by interest earned on investments held in Trust Account of $222,121 and interest earned on cash held in bank of $21

For the six months ended June 30, 2023, we had a net loss of $567,378, which consisted of formation and operating costs of $900,007 and provision for income taxes of $88,799, offset by interest earned on investments held in Trust Account of $421,354 and interest earned on cash held in bank of $74.

Factors That May Adversely Affect our Results of Operations

Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.

Liquidity, Capital Resources, and Going Concern

As of June 30, 2024 and December 31, 2023, we had cash of $51,117 and $162,933, respectively, and working capital deficit of $5,728,684 and working capital of $4,493,502, respectively. Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through a payment from our Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from our Sponsor of $300,000.

In addition, on July 18, 2022, we issued the July 2022 Extension Note to our Sponsor in the principal amount of $1,383,123, pursuant to which our Sponsor loaned us $1,383,123 ($0.10 per Public Share after redemptions) to deposit into the Trust Account for each Public Share that was not redeemed in connection with the July 2022 Extension. At the election of our Sponsor, up to $1,383,123 of the unpaid principal amount of the July 2022 Extension Note may be converted into Conversion Units, of which the total Conversion Units so issued shall be equal to: (i) the portion of the principal amount of the July 2022 Extension Note being converted divided by (ii) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Units.

On October 19, 2022, we issued the October 2022 Extension Note to our Sponsor in the principal amount of $1,383,123, pursuant to which our Sponsor loaned us $1,383,123 to deposit into the Trust Account for each Public Share that was not redeemed in connection with the October 2022 Extension. The October 2022 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of an initial Business Combination, or (b) the date of our liquidation.

On July 21, 2023, the Company issued the 2023 Extension Note in the aggregate principal amount of up to $360,000 to the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $360,000 to deposit into the Trust Account for the Public Stockholders that did not redeem Public Shares in the connection with the 2023 Extension. The 2023 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of our initial Business Combination, or (b) the date of our liquidation. As of June 30, 2024, $360,000 was outstanding under the 2023 Extension Note.

On July 21, 2023, we issued the 2023 Working Capital Note in the principal amount of up to $300,000 to our Sponsor. The 2023 Working Capital Note was issued in connection with advances our Sponsor may make in the future to us as Working Capital Loans. The 2023 Working Capital Note is non-interest bearing and payable upon the earlier of (i) completion of our initial Business Combination or (ii) the date that our winding up is effective. We drew $300,000 under the 2023 Working Capital Note, which was outstanding as of June 30, 2024.

On January 22, 2024, we issued the January 2024 Extension Note in the aggregate principal amount of up to $360,000 the Sponsor, pursuant to which the Sponsor agreed to loan to the Company up to $360,000 to deposit into the Company’s Trust Account for each Public Share that was not redeemed in connection with the January 2024 Extension Amendment. The January 2024 Extension Note bears no interest and is repayable in full upon the earlier of (a) the date of the consummation of the Company’s initial Business Combination, or (b) the date of the liquidation of the Company. The Company has drawn $360,000 under the January 2024 Extension Note, which was outstanding as of June 30, 2024.

On January 22, 2024, we issued the January 2024 Working Capital Note in the principal amount of up to $1,000,000 to our Sponsor. The January 2024 Working Capital Note was issued in connection with advances our Sponsor may make in the future to us as Working Capital Loans. The January 2024 Working Capital Note is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date of our winding up is effective. We have drawn $870,750 and $415,000 under the January 2024 Working Capital Note as of June 30, 2024, and December 31, 2023, respectively.

In addition, in order to finance transaction costs in connection with an initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, provide us further Working Capital Loans. $870,750 and $715,000 were outstanding under Working Capital Loans as of June 30, 2024 and December 31, 2023, respectively.

Until the consummation of an initial Business Combination, we will continue to use the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating, and consummating the initial Business Combination. We will need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors, or third parties. Our Sponsor, officers, and directors may, but are not obligated to, loan us funds from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.

On June 26, 2023, we instructed Continental to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in an interest-bearing demand deposit account at Morgan Stanley with Continental continuing to act as trustee, until the earlier of the consummation of our initial Business Combination or our liquidation. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.

Going Concern

We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. In connection with our assessment of going concern considerations in accordance with FASB ASU Topic 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” We have until October 22, 2024 to consummate an initial Business Combination. It is uncertain that we will be able to consummate an initial Business Combination by this time. If an initial Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. These conditions raise substantial doubt about our ability to continue as a going concern. The unaudited condensed financial statements and notes thereto contained elsewhere in this Report do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern and also do not include any adjustment that might result from the outcome of this uncertainty should an initial Business Combination not occur.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2024 and December 31, 2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

Administrative Support Agreement

We do not have any long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities, other than an agreement to pay an affiliate of our Sponsor a monthly fee of $10,000 for office space, utilities and administrative support, pursuant to the Administrative Support Agreement. Upon completion of our initial Business Combination or our liquidation, we will cease paying these monthly fees.

Registration Rights

The holders of the Founder Shares, Private Placement Units, and securities that may be issued upon conversion of Working Capital Loans and extension loans will have registration rights to require us to register a sale of any of the securities held by them pursuant to the Registration Rights Agreement. These holders will be entitled to make up to three demands, excluding short-form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have “piggyback” registration rights to include their securities in other registration statements filed by us. Notwithstanding the foregoing, the underwriters of the Initial Public Offering may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the IPO Registration Statement and may not exercise their demand rights on more than one occasion.

Underwriting Agreement

The underwriters had a 30-day option to purchase up to 1,875,000 additional Units to cover any over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On July 22, 2021, the underwriters partially exercised their over-allotment option and purchased an additional 1,331,230 Units and forfeited the remainder of their over-allotment option as of July 28, 2021.

The underwriters are entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the Initial Public Offering held in the Trust Account upon the completion of the initial Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Estimates

The preparation of unaudited condensed financial statements in conformity with GAAP requires 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following as our critical accounting policies:

Class A Common Stock Subject to Possible Redemption

All of the 13,831,230 Class A Common Stock sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the Redemption of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with the initial Business Combination and in connection with certain amendments to our Amended and Restated Charter. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in FASB ASC Topic 480-10-S99. Redemption provisions not solely within our control require Common Stock subject to redemption to be classified outside of permanent equity.

If it is probable that the equity instrument will become redeemable, we have the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. We have elected to recognize the changes immediately.

Net Loss Per Common Share

We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. We have two classes of shares, redeemable Common Stock and non-redeemable Common Stock. Our redeemable Common Stock is comprised of shares of Class A Common Stock sold in the Initial Public Offering. Our non-redeemable shares are comprised of shares of Class B Common Stock purchased by our Sponsor as well as shares of Class A Common Stock sold as part of the Private Placement Units and the Representative Shares. Earnings and losses are shared pro rata between the two classes of shares. Our statements of operations ally the two-class method in calculating net loss per share. Basic and diluted net loss per common share for redeemable Common Stock and non-redeemable Common Stock is calculated by dividing net loss, allocated proportionally to each class of Common Stock, attributable to us by the weighted average number of shares of redeemable and non-redeemable stock outstanding.

The calculation of diluted loss per share of Common Stock does not consider the effect of the rights issued in connection with the Initial Public Offering since exercise of the rights is contingent upon the occurrence of future events and the inclusion of such rights would be anti-dilutive. Accretion of the carrying value of Class A Common Stock to redemption value is excluded from net loss per redeemable share because the redemption value approximates fair value. As a result, diluted loss per share is the same as basic loss per share for the periods presented.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU Topic 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. We are reviewing what impact, if any, adoption will have on our financial position, results of operations, or cash flows.

In December 2023, the FASB issued ASU Topic 2023-09, “Income Taxes” (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Our Management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures.

Our Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.

JOBS Act

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to Management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our Management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the quarterly period ended June 30, 2024, due to the following material weaknesses identified in the prior reporting periods:

(i)

accounting for complex financial instruments including those requiring us to apply complex accounting principles as a means of differentiating between liability, temporary equity, and permanent equity classification;

(ii)

controls needed to ensure the timeliness, completeness and accuracy of accruals;

(iii)

controls needed to ensure the accuracy of the provision for income tax and the Delaware franchise tax;

(iv)

controls over the financial reporting process which failed to identify a material out of period adjustment that resulted in the restatement of previously issued financial statements; and

(v)

controls over compliance with the provisions of the Trust Agreement related to the use of funds withdrawn from the Trust Account for payment of our tax liabilities.

In light of the material weaknesses described above, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements including making greater use of third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial instruments and internal controls related to timeliness, completeness, and accuracy of accruals, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarterly period ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

To the knowledge of our Management Team, there is no material litigation currently pending or contemplated against us, any of our subsidiaries, or any of our officers or directors in their capacity as such or against any of our property.

Item 1A. Risk Factors.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations, see the section titled “Risk Factors” contained in our (i) IPO Registration Statement, (ii) 2023 Annual Report, (iii) Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on April 14, 2023, (iv) Quarterly Reports on Form 10-Q for the quarters ended June 30, 2023, June 30, 2023 and September 30, 2023, as filed with the SEC on May 16, 2023, August 14, 2023 and November 14, 2023, respectively, and (v) Definitive Proxy Statements on Schedule 14A filed with the SEC on July 7, 2023 and January 3, 2024, and July 5, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

For risks related to Kustom Entertainment and the Kustom Entertainment Business Combination, please see the Kustom Entertainment Registration Statement.

We have amended our Amended and Restated Charter to extend the date by which we must complete a Business Combination from July 22, 2024 to October 22, 2024 or such earlier date as determined by the Board. The extension pursuant to the July 2024 Extension Amendment (the “Additional Extension”) goes beyond the Nasdaq Deadline, which could lead Nasdaq to suspend trading in our securities or lead us to be delisted from Nasdaq, which may have a material adverse effect on the trading of our securities and our ability to consummate an initial Business Combination.

Our IPO Registration Statement was declared effective by the SEC on July 19, 2021, and our securities are currently listed on the Nasdaq Capital Market. Pursuant to our Amended and Restated Charter, we have until October 22, 2024 (or such shorter period of time as determined by our Board) to consummate our initial Business Combination. Nasdaq’s rules and guidance currently provide that SPACs (such as us) must satisfy certain listing conditions, including that a SPAC must complete one or more Business Combinations meeting certain conditions within 36 months of the effectiveness of its initial public offering registration statement. If a SPAC does not meet the Nasdaq Deadline, it will receive a Staff Delisting Determination from Nasdaq which, among other things, informs the SPAC that (i) its securities will be suspended as of a date certain; (ii) it has a right to request review of the Staff Delisting Determination by the Panel; and (iii) a timely request for such review will stay the suspension and delisting action pending the issuance of a written decision of the Panel. The Hearings may, where it deems appropriate, grant an exception to the continued listing standards for a period not to exceed 180 days from the date of the Staff Delisting Determination. The basis for the Staff Delisting Determination may be cured if, for example, a SPAC completes an initial Business Combination during the period of the stay.

On July 8, 2024, Nasdaq filed with the SEC a proposal to change the rules applicable to the foregoing procedures (the “Proposed Nasdaq Rules”) that includes removing the stay referred to above so that a SPAC’s securities will be immediately suspended from trading on Nasdaq through the pendency of the Panel’s review. In addition, under the Proposed Nasdaq Rules, the scope of the Panel’s review would be limited, as the Panel may only reverse a Staff Delisting Determination where it determines that the Staff Delisting Determination was in error and that the SPAC never failed to satisfy the Nasdaq Deadline. In such cases, the Panel would not be able to consider facts indicating that the SPAC had regained compliance since the date of the Staff Delisting Determination, nor may the Panel grant an exception allowing the SPAC additional time to regain compliance. If a SPAC completes a Business Combination after receiving a Staff Delisting Determination and/or demonstrates compliance with all applicable initial listing requirements, the combined company could apply to list its securities on Nasdaq pursuant to the normal application review process. The Proposed Nasdaq Rules contained a list of deficiencies that would immediately result in a Staff Delisting Determination, which includes noncompliance with the Nasdaq Deadline.

On July 15, 2024, the SEC issued a release approving the immediate effectiveness of the Proposed Nasdaq Rules. The Proposed Nasdaq Rules will become operative on October 7, 2024.

The Additional Extension extends our termination date beyond the Nasdaq Deadline. As a result, the Additional Extension does not comply with Nasdaq rules, and consequently there is a risk that trading in our securities may be suspended and we may be subject to delisting by Nasdaq. On July 23, 2024, we received a delisting determination relating to our inability to complete a business combination by the Nasdaq Deadline. We submitted our views to the Panel with respect to this deficiency on July 30, 2024. Prior to such date, our securities will continue to trade on the Nasdaq Capital Market. We cannot assure that the Panel will render a favorable decision on this matter, or that our securities will not be suspended pending the Panel’s decision.

If Nasdaq delists any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, as discussed in “Risk Factors — We have received Nasdaq notices for failing to comply with listing requirements and there is no assurance we will maintain our Nasdaq listing. If we cannot maintain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected” below.

We have received Nasdaq notices for failing to comply with listing requirements and there is no assurance we will maintain our Nasdaq listing. If we cannot maintain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected.

On February 27, 2024, we were not able to demonstrate compliance with the Minimum Public Holders Requirement, and as such, on March 1, 2024, we received a notice from the Staff of Nasdaq informing us that our securities may be subject to suspension and delisting pending the outcome of a hearing before the Panel. Because the Staff of Nasdaq issued the notice us on March 1, 2024, we chose to forego submitting a plan of compliance to Nasdaq related to the Annual Meeting Requirement. We requested a hearing before the Panel on March 8, 2024, and the hearing was held on May 7, 2024.

On June 5, 2024, the Panel granted our request for continued listing, subject to the obligation that, on or before August 28, 2024, we will complete the Kustom Entertainment Business Combination and demonstrate compliance with all initial listing criteria. As a result of the Panel’s decision, we expect that our securities will continue to trade on Nasdaq so long as the Business Combination is consummated on or prior to August 28, 2024.

On July 23, 2024, we received a delisting determination relating to our inability to complete a business combination by the Nasdaq Deadline. We submitted our views to the Panel with respect to this deficiency on July 30, 2024. Prior to such date, our securities will continue to trade on the Nasdaq Capital Market. We cannot assure that the Panel will render a favorable decision on this matter, or that our securities will not be suspended pending the Panel’s decision.

As noted earlier, unless waived by Kustom Entertainment, the obligations of Kustom Entertainment to consummate the Business Combination are subject to the satisfaction of the condition that our Common Stock shall not have been suspended from trading as a result of a delisting from Nasdaq (the “Listing Condition”). If, notwithstanding the Panel’s decision, our common stock is suspended or delisted for any reason and Kustom Entertainment does not waive this closing condition, we will not be able to complete the Kustom Entertainment Business Combination.

If our common stock is suspended or delisted prior to the consummation of the Business Combination and Kustom Entertainment waives the Listing Condition and/or such event materially impacts our ability to list on a national securities exchange following the Kustom Entertainment Business Combination, we will promptly file a Current Report on Form 8-K to report such event, with sufficient advance notice prior to the consummation of the Kustom Entertainment Business Combination for stockholders to make an investment decision with respect to their shares.

If (i) Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, (ii) Kustom Entertainment waives the Listing Condition and (iii) the Kustom Entertainment Business Combination closes and stockholders receive unlisted shares, then we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

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a limited availability of market quotations for our securities;

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reduced liquidity for our securities;

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a determination that our Class A Common Stock is considered a “penny stock,” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

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a limited amount of news and analyst coverage; and

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a decreased ability to issue additional securities or obtain additional financing in the future.

In addition, if our securities are delisted from Nasdaq, offers and sales of our securities by us may be subject to regulation and we may be subject to additional compliance costs in each state in which we offer or sell our securities.

A 1% U.S. federal Excise Tax may be imposed on us in connection with our redemptions of shares in connection with a Business Combination or other stockholder vote pursuant to which stockholders would have a right to submit their shares for redemption (a “Redemption Event”).

Pursuant to the IR Act commencing in 2023, a 1% U.S. federal Excise Tax is imposed on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The Excise Tax is imposed on the repurchasing corporation and not on its stockholders. The amount of the Excise Tax is equal to 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. The Treasury has authority to promulgate regulations and provide other guidance regarding the Excise Tax. In April 2024, the Treasury issued proposed regulations providing guidance with respect to the Excise Tax. Taxpayers may rely on these proposed regulations until final regulations are issued. Under the proposed regulations, liquidating distributions made by publicly traded domestic corporations are exempt from the Excise Tax. In addition, any redemptions that occur in the same taxable year as a liquidation is completed will also be exempt from such tax. Accordingly, redemptions of our Public Shares in connection with an extension of the Combination Period may subject us to the Excise Tax, unless one of the two exceptions above apply. Such redemptions would only occur if an extension of the Combination Period is approved by our stockholders and such extension is implemented by the Board of Directors.

If the deadline for us to complete a Business Combination (currently October 22, 2024) is extended, our Public Stockholders will have the right to require us to redeem their Public Shares. Any redemption or other repurchase may be subject to the Excise Tax. The extent to which we would be subject to the Excise Tax in connection with a Redemption Event would depend on a number of factors, including: (i) the fair market value of the redemptions and repurchases in connection with the Redemption Event, (ii) the nature and amount of any “PIPE” or other equity issuances in connection with the Business Combination (or otherwise issued not in connection with the Redemption Event but issued within the same taxable year of the Business Combination), (iii) if we fail to timely consummate a Business Combination and liquidate in a taxable year subsequent to the year in which a Redemption Event occurs and (iv) the content of any proposed or final regulations and other guidance from the Treasury Department. In addition, because the Excise Tax would be payable by us and not by the redeeming holders, the mechanics of any required payment of the Excise Tax remain to be determined. Any Excise Tax payable by us in connection with a Redemption Event may cause a reduction in the cash available to us to complete a Business Combination and could affect our ability to complete a Business Combination.

Our Public Stockholders’ exercise of redemption rights with respect to a large number of Public Shares in the Redemptions may affect our ability to complete an initial Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all.

Over the past two years, the redemption rate of shares held by public stockholders of SPACs at the time of a stockholder meeting that approves an amendment to the charter of the SPAC or the initial Business Combination of the SPAC has been very high, thereby increasing the likelihood that we, too, may be subject to significant redemptions that may affect our ability to complete an initial Business Combination.

Most recently, in connection with the July 2024 Special Meeting, 355,865 Public Shares were redeemed at a price per Public Share of approximately $12.33, reducing the total amount held in the Trust Account by approximately $4,386,351. As a result of the Redemptions, the number of outstanding Public Shares has been reduced to 692,931 Public Shares.

Due to the high rates of redemptions of Public Shares in connection with stockholder votes on extensions or Business Combinations of SPACs, we may need to rely upon significant PIPE or other outside financing to provide cash to our post- Business Combination company. Obtaining financing in connection with initial Business Combinations of SPACs has in recent times been very difficult, with many financings available only on terms that are onerous to the surviving company of the Business Combination. The failure to secure additional financing on reasonable terms could have a material adverse effect on the continued development or growth of the target business. None of the Sponsor or our other stockholders is required to provide any financing to us in connection with or after our initial Business Combination. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels or on onerous terms. The above considerations may limit our ability to complete a Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all. If we are unable to complete an initial Business Combination, our Public Stockholders may only receive approximately $12.37 per Public Share on the liquidation of our Trust Account, as of June 30, 2024. In certain circumstances, our Public Stockholders may receive less than $12.37 per share on the redemption of their Public Shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Use of Proceeds

For a description of the use of proceeds generated in our Initial Public Offering and Private Placement, see Part II, Item 2 of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, as filed with the SEC on August 15, 2022. There has been no material change in the planned use of proceeds from our Initial Public Offering and Private Placement as described in the IPO Registration Statement. The specific investments in our Trust Account may change from time to time.

On June 26, 2023, we instructed Continental to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in an interest-bearing demand deposit account at Morgan Stanley, with Continental continuing to act as trustee, until the earlier of the consummation of our initial Business Combination or our liquidation. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On July 18, 2024, we held the July 2024 Special Meeting and our stockholders approved, among other things, the July 2024 Extension Amendment, which extended the date by which we must consummate a Business Combination from July 22, 2024 (which was 36 months from the closing of the Initial Public Offering) to October 22, 2024 (or such earlier date as determined by the Board). In connection with the vote to approve the July 2024 Extension Amendment, Public Stockholders holding 355,865 Public Shares properly exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. We paid cash in the aggregate amount of $4,386,351, or approximately $12.33 per share to such redeeming Public Stockholders in the Extension Redemptions.

There were no such repurchases of our equity securities by us or an affiliate during the quarterly period covered by the Report.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Trading Arrangements

During the quarterly period ended June 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Additional Information

None.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Report.

No.		Description of Exhibit
2.1		First Amendment to Agreement and Plan of Merger, dated as of June 24, 2024, by and among Clover Leaf Capital Corp., CL Merger Sub, Inc., Yntegra Capital Investments LLC in the capacity as Purchaser Representative, Kustom Entertainment, Inc. and Digital Ally, Inc. (2)
3.1		Fourth Amendment to Amended and Restated Certificate of Incorporation. (3)
10.1		Second Amendment to Lock-Up Agreement, dated June 24, 2024, by and among Clover Leaf Capital Corp., Yntegra Capital Investments LLC in the capacity as the Purchaser Representative and Digital Ally, Inc. (2)
10.1		Extension Note, dated July 22, 2024, issued to Yntegra Capital Investments, LLC. (3)
10.2		Working Capital Note, dated July 22, 2024, issued to Yntegra Capital Investments, LLC. (3)
10.4		Termination Agreement, dated May 9, 2024, by and among Clover Leaf Capital Corp., Kustom Entertainment, Inc. and Digital Ally, Inc. (1)
31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2		Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
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 (Embedded as Inline XBRL document and contained in Exhibit 101).*

*	Filed herewith.
**	Furnished herewith.
(1)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q, as filed with the SEC on May 15, 2024.
(2)	Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on June 28, 2024.
(3)	Incorporated by reference to the Company’s Current Report on Form 8-K, as filed with the SEC on July 22, 2024.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CLOVER LEAF CAPITAL CORP.

Date: August 15, 2024	By:	/s/ Felipe MacLean
	Name:	Felipe MacLean
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Date: August 15, 2024	By:	/s/ Luis A. Guerra
	Name:	Luis A. Guerra
	Title:	Chief Financial Officer
		(Principal Accounting and Financial Officer)

SEC Form 10-Q filed by Clover Leaf Capital Corp.