UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 20212023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)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)

Registrant’s telephone number, including area code: (305) 577-0031

(305) 577-0031

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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 and post 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 definitionthe definitions of “large accelerated filer,” “accelerated filer, “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

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

The registrant’s shares were not listed on any exchange and had no value as of the last business day of the second fiscal quarter of 2021. The registrant’s units begin trading on the Nasdaq Capital Market on July 20, 2021, and the registrant’s shares of Class A common stock and rights began trading on the Nasdaq Capital Market September 9, 2021. The aggregate market value of the outstanding shares of the registrant’s shares of Class A common stock outstanding, including the shares included in the units,Common Stock, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the unitsClass A Common Stock on December 31, 2021,June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, as reported on the Nasdaq CapitalStock Market LLC was $140,592,027.24.$17,037,435.

As of April 1, 2022March 21, 2024, there were 14,645,1355,320,507 shares of Class A common stock,Common Stock, par value $0.0001 per share, and 3,457,807 shares1 share of the Company’s Class B common stock,Common Stock, par value $0.0001 per share of the registrant issued and outstanding.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report (as defined below), including, without limitation, statements under the heading “Management’s“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933(as defined below) and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act.(as defined below). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combinationBusiness Combination (as defined below) and any other statements that are not statements of current or historical facts. These statements are based on management’sManagement’s (as defined below) current expectations, but actual results may differ materially due to various factors, including, but not limited to:

Additionally, on January 24, 2024, the SEC (as defined below) adopted the 2024 SPAC Rules (as defined below), which will become effective on July 1, 2024, that will affect SPAC (as defined below) Business Combination transactions. 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 (as defined below), 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.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Unless otherwise stated in this Report, or the context otherwise requires, references to:

PART I

Item 1. Business.

GeneralOverview

We are a blank check company incorporated as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combinationan initial Business Combination with one or more businesses, which we referbusinesses.

The 2024 SPAC Rules may materially affect our ability to throughout this report asnegotiate and complete our initial business combination.Business Combination and may increase the costs and time related thereto.

Initial Public Offering

On July 22, 2021, we consummated our initial public offeringInitial Public Offering of 13,831,230 units.Units. Each unitUnit consists of one share of Class A common stock,Public Share and one rightPublic Right to receive one-eighth (1/8) of a share of Class A common stockCommon Stock upon the consummation of an initial business combination,Business Combination, with every eight (8) rightsPublic Rights entitling the holder thereof to receive one share of Class A common stockCommon Stock at the closing of the business combination.Business Combination. The unitsUnits were sold at a price of $10.00 per unit,Unit, generating gross proceeds to theour Company of $138,312,300.

Simultaneously with the closing of the initial public offering,Initial Public Offering, we completed the private sale of an aggregate of 675,593 units to our sponsorSponsor and the representativeRepresentative in the Private Placement at a purchase price of $10.00 per private placement unit,Private Placement Unit, generating gross proceeds of $6,755,930.

Upon the consummation of our Initial Public Offering, we also issued an additional 138,312 shares of Class A Common Stock, valued at $10.00 per share, to the Representative and/or its designees as Representative Shares.

A total of $140,386,985, comprised of $138,312,300 of the proceeds from the initial public offeringInitial Public Offering and $2,074,685 of the proceeds of the sale of the private placement unitsPrivate Placement Units, was placed in the trust accountTrust Account maintained by Continental, Stock, acting as trustee.

It is the job of our sponsorSponsor and management teamManagement Team to complete our initial business combination.Business Combination. Our management teamManagement Team is led by Felipe MacLean, our President and CEO, and Chris Rebentisch, our COO.CEO. We must complete our initial business combinationBusiness Combination by July 22, 2022, 12 months from the closing of our initial public offering (unless we extend the deadline for our initial business combination, for up to three extensions of three months each, but in no case later than April 22, 2023).2024. If our initial business combinationBusiness Combination is not consummated by July 22, 2022 (or such extended date),2024, then, unless our Board of Directors shall otherwise determine, our existence will terminate, and we will distribute all amounts in the trust account.Trust Account.

BUSINESSExtensions of our Combination Period

We areoriginally had up to 12 months from the closing of our Initial Public Offering, or until July 22, 2022, to consummate an early stage blank check company recently incorporatedinitial 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 connection with the July 2022 Extension, our Sponsor caused to be deposited into the Trust Account an aggregate of $1,383,123 (representing $0.10 per Public Share). The July 2022 Extension was the first of three three-month extensions permitted under our Amended and Restated Charter.

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 connection with the October 2022 Extension, Public Stockholders redeemed an aggregate 12,204,072 Public Shares, and our Sponsor loaned to the Company $1,383,123 ($0.85 per Public Share), which was deposited into the Trust Account.

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. In connection with the 2023 Extension, our Sponsor caused to be deposited into the Trust Account up to $360,000 (representing $0.048 per Public Share), which was deposited into the Trust Account.

At the 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. In connection with the 2024 Extension, we issued to our Sponsor the 2024 Extension Note, pursuant to which the Sponsor may cause to be deposited into the Trust Account up to $360,000. As of March 5, 2024, $120,000 of the principal on the 2024 Extension Note has been deposited into the Trust Account.

As a Delaware corporationresult of the July 2022 Extension, October 2022 Extension, 2023 Extension, and formed for2024 Extension, we must complete our initial Business Combination by July 22, 2024.

We may seek to further extend the purpose of effecting a merger,Combination Period consistent with applicable laws, regulations and stock exchange asset acquisition, stock purchase, reorganization amalgamation, recapitalization, reorganizationrules. Such an extension would require the approval of our Public Stockholders, who will be provided the opportunity to redeem all or similar business combination with onea portion of their Public Shares. Such redemptions will likely have a material adverse effect on the amount held in our Trust Account, our capitalization, principal stockholders and other impacts on our Company or more businesses or entities, which we refer to throughout this ReportManagement Team, such as our initial business combination. We have not selected any specific business combination target and have not, nor has anyoneability to maintain our listing on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us.Nasdaq.

While we may pursue a business combination target in any business, industry or geographic region, we have focused our search for cannabis industry businesses that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate and, in particular, we will not invest in, or consummate a business combination with, a target business that we determine has been operating, or whose business plan is to operate, in violation of U.S. federal laws, including the U.S. Controlled Substances Act (“CSA”).

Under the current legal landscape, examples of the business combination targets that we may pursue in the United State include providers of ancillary services that support the functioning of cannabis activity, but which are not themselves directly plant touching businesses. Such businesses have emerged, driven by the growth of the cannabis industry in sales and footprint, and include the following:

Another areaKustom Entertainment Business Combination

The below subsection describes the material provisions of focusthe Kustom Entertainment Merger Agreement, but does not purport to describe all the terms thereof. This summary of the Kustom Entertainment Merger Agreement is qualified in its entirety by reference to the complete text of the Kustom Entertainment Merger Agreement, a copy of which is filed hereto as Exhibit 2.1 and incorporated by reference herein. Unless otherwise defined herein, the capitalized terms used below have the same meanings given to them in the Kustom Entertainment Merger Agreement. Unless otherwise indicated, this Report does not assume the closing of the Kustom Entertainment Business Combination.

General Terms and Effects

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.”

Merger Consideration

The Merger Consideration will be an amount equal to (i) $125 million, minus (ii) the estimated consolidated indebtedness of Kustom Entertainment as of the date and time at which the Closing is actually held (the “Closing Indebtedness”). The Merger Consideration to be paid to the Kustom Entertainment Stockholder will be paid solely by the delivery of new shares of our 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.

Representations and Warranties

The Kustom Entertainment Merger Agreement contains a potentialnumber of representations and warranties by each of our Company, Merger Sub, Kustom Entertainment and the Kustom Entertainment Stockholder as of the date of the Kustom Entertainment Merger Agreement and as of the date of the Closing. Many of the representations and warranties are qualified by materiality or Material Adverse Effect. “Material Adverse Effect” as used in the Kustom Entertainment Merger Agreement means with respect to any specified person or entity, any fact, event, occurrence, change or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, combination targetassets, liabilities, results of operations, prospects or condition (financial or otherwise) of such person or entity and its subsidiaries, taken as a whole, or the ability of such person or entity or any of its subsidiaries on a timely basis to consummate the transactions contemplated by the Kustom Entertainment Merger Agreement or the ancillary documents to which it is Specialty Finance. We believe there isa party or bound or to perform its obligations thereunder, in each case subject to certain customary exceptions. Certain of the representations are subject to specified exceptions and qualifications contained in the Kustom Entertainment Merger Agreement or in information provided pursuant to certain disclosure schedules to the Kustom Entertainment Merger Agreement. The representations and warranties made by us, Merger Sub, Kustom Entertainment and the Kustom Entertainment Stockholder are customary for transactions similar to the Kustom Entertainment Business Combination.

Covenants of the Parties

Each party agreed in the Kustom Entertainment Merger Agreement to use its commercially reasonable efforts to effect the Closing. The Kustom Entertainment Merger Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Kustom Entertainment Merger Agreement and the earlier of the Closing or the termination of the Kustom Entertainment Merger Agreement in accordance with its terms (the “Interim Period”), including (1) the provision of access to their properties, books and personnel; (2) the operation of their respective businesses in the ordinary course of business; (3) provision of audited financial statements by Kustom Entertainment; (4) our public filings; (5) no insider trading; (6) notifications of certain breaches, consent requirements or other matters; (7) efforts to consummate the Closing and obtain third-party and regulatory approvals; (8) tax matters and transfer taxes; (9) further assurances; (10) public announcements and (11) confidentiality. Each party also agreed during the Interim Period not to solicit or enter into any inquiry, proposal or offer, or any indication of interest in making an attractive investmentoffer or proposal for an alternative competing transactions, to notify the others as promptly as practicable in writing of the receipt of any inquiries, proposals or offers, requests for information or requests relating to an alternative competing transaction or any requests for non-public information relating to such transaction, and to keep the others informed of the status of any such inquiries, proposals, offers or requests for information. If Kustom Entertainment’s board of directors determines, after consultation with its financial advisors and outside legal counsel, that an unsolicited Acquisition Proposal constitutes a Company Superior Proposal it may, subject to giving Kustom Entertainment an opportunity to focus on those that provide asset-based loans, mainly with real estate. The opportunity ispropose revisions to provide financing and/or sale-leasebackthe Kustom Entertainment Merger Agreement which would cause such Company Superior Proposal to no longer constitute a Company Superior Proposal, cause Kustom Entertainment to terminate the Kustom Entertainment Merger Agreement in order to enter into a definitive agreement relating to such Company Superior Proposal and to pay us the Termination Fee (as defined below). There are also certain customary post-Closing covenants regarding (1) maintenance of specialized industrial real estate assetsbooks and records; (2) indemnification of directors and officers; and (3) use of Trust Account proceeds. We also agreed to seek and use our reasonable best efforts to obtain an extension of our deadline to consummate our initial Business Combination for the regulated cannabis industry. Offering real estate solutions is an attractive alternative to state-licensed operators that have limited access to efficient traditional financing solutions. We believe that the existence of established, creditworthy cannabis companies without access to conventional sources of capital is a compelling business opportunity for the creation of a leading specialty finance company in the cannabis industry.additional six months.

In addition to the above, we may consider pursuing a non-plant touching target business with a focus on e-commerce. The e-commerce revolution has significantly impacted the cannabis industry. The overall growth in the cannabis industry over the past couple of years has increased direct-to-consumer sales platforms and online ordering in those states where legally available. Technologies include existing and developing online platforms and transportation/delivery services that have started to change the industry.

If we target a business with a focus on e-commerce, we would only target a business that limits its activities to those states where such activities are legal. To the extent the target business involves a product that is excluded from Schedule 1 of the U.S. Controlled Substances Act, such as hemp or hemp-derived products, such target company may engage in interstate commerce. E-commerce in the cannabis industry can be distinguished in the following ways:

We may also consider entering into a business combination to market or develop products regulated by the FDA, including pharmaceutical applications and treatments that entail compounds found in cannabis. It is unclear how the FDA will respond to the approach taken by a target business we acquire, or whether the FDA will propose or implement new or additional regulations. In addition, such products may be subject to regulation at the state or local levels. Unforeseen regulatory obstacles may hinder our ability to find a target business that can successfully compete in the market for such products. However, recent regulatory movements such as the proposed amendment to the Food Drug & Cosmetic Act may provide the FDA with the flexibility to regulate hemp-based CBD as a dietary supplement and a potential pathway forward for hemp-derived health and wellness products.

The Cannabis Industry

The current trend to legalize different uses and applications of cannabinoid products in the United States, has begun to normalize a situation that had been known to science for many years: that there are numerous benefits from the use of the derived substances of the Cannabis plant. While cannabis is currently illegal under U.S. federal law since it is classified as a Schedule I drug under the CSA, which imposes various criminal penalties, the laws and regulations governing cannabis are still developing including in ways that we may not foresee. For example, the 2018 Farm Bill has taken hemp and hemp-derived cannabinoids out of the most restrictive class of controlled substances under U.S. federal law. Furthermore, numerous U.S. states have legalized the adult use of marijuana, even though its use remains a violation of U.S. federal law.

The evolving regulatory landscapeKustom Entertainment Merger Agreement and the Closing thereby require the approval of cannabis is creatingboth our stockholders and the possibilityKustom Entertainment Stockholder. The Kustom Entertainment Stockholder has approved the Kustom Entertainment Business Combination. We agreed, as promptly as practicable after the date of the Kustom Entertainment Merger Agreement, to prepare, with reasonable assistance from the Company, and file with the SEC the Kustom Entertainment Registration Statement in connection with the registration under the Securities Act of the Merger Consideration shares and containing a new legalized industry,proxy statement for both the medicalpurpose of soliciting proxies from our stockholders to approve the Kustom Entertainment Merger Agreement, the Kustom Entertainment Business Combination and adult userelated matters (the “Clover Leaf Stockholder Approval”) at a special meeting of cannabinoid products, understanding that cannabis continuesour stockholders (the “Clover Leaf Stockholder Meeting”) and providing such stockholders an opportunity to, in accordance with the our organizational documents and the IPO Registration Statement, have their Public Shares redeemed (the “Kustom Entertainment Redemption”) and, if necessary, for the issuance of the Merger Consideration to be illegal under U.S. federal law. issued to the Kustom Entertainment Stockholder.

The public perceptionparties also agreed to take all necessary action, so that effective at the Closing, the entire board of this old prohibition, alongsidedirectors of our Company (the “Post-Closing Board”) will consist of five individuals, a majority of whom shall be independent directors in accordance with Nasdaq requirements. Four of the members of the Post-Closing Board (at least one of whom shall be independent directors) will be designated by Kustom Entertainment prior to the Closing and one will be mutually agreed upon by Kustom Entertainment and us and will be independent. At or prior to the Closing, we will provide each of the director designees to the Post-Closing Board with a customary director indemnification agreement, in form and substance reasonably acceptable to such director. The parties also agreed to take all action necessary, so that the individuals serving as chief executive officer and chief financial officer, respectively, of our Company immediately after Closing will be the same individuals as that of Kustom Entertainment immediately prior to the Closing.

During the Interim Period, we may elect to seek subscription agreements with investors relating to a private equity investment in connection with the social supportKustom Entertainment Business Combination (including backstop arrangements) (a “PIPE Investment”) on terms agreeable to us and better government understandingKustom Entertainment, acting reasonably. Kustom Entertainment agreed to cooperate in connection with such PIPE Investment and use its commercially reasonable efforts to cause such PIPE Investment to occur, including having Kustom Entertainment’s senior management participate in any investor meetings and roadshows as reasonably requested by us. We will use commercially reasonable efforts to seek equity financing, whether through a private placement, forward purchase agreement, backstop arrangement or otherwise, that will provide PIPE Investments for a total of this issue, has paved the way for oneat least $10,000,000.

Survival

The representations and warranties of the fastest growing industries in today’s market. This presents a unique opportunityparties terminate as of and do not survive the Closing, and there are no indemnification rights for companies withanother party’s breach. The covenants and agreements of the capital, knowledgeparties shall not survive the Closing, except those covenants and experienceagreements to benefit from this seismic change.be performed after the Closing which covenants and agreements shall survive until fully performed.

This new potential is increased with continual scientific developments that have been unlocking the different propertiesClosing Conditions

The obligations of the cannabis plant, especially for its two main cannabinoids: Cannabinol or “CBD” and Tetrahydrocannabinol or “THC”. The Cannabis Industry today has been growing at a rapid pace, when more and moreparties to complete the Closing are subject to various conditions, including the following mutual conditions of the health and wellness benefits of the use of these cannabinoids gets unlocked by human discovery.parties unless waived:

But this novel industry is still in its infancy, as regulatory changes have been gradually changing the state legalized use of cannabis products, both for its medical use, that mainly use non-psychoactive CBD components, and the social or adult use that have controlled psychoactive THC components.

The cannabis industry can be segmented into the following four main categories:

In 2018, the U.S. Congress passed the Agriculture Improvement Act of 2018 (also known as the “2018 Farm Bill”), which legalized a significant portion of the hemp industry. With the passage of the 2018 Farm Bill, there has been a significant increase in the availability of hemp-derived products, including products containing CBD. Hemp-derived CBD products are now legally available through mainstream distribution channels and retailers. A wide range of CBD-infused products, including lotions, serums, balms, tinctures, shampoos, soaps and pet treats, can now be found online and at a variety of retailers, such as supermarkets, cosmetic stores, beauty salons and pet supply stores. Consumers are beginning to use hemp-based products to treat a variety of medical conditions, including anxiety, insomnia, pain and inflammation. In aggregate, across all state medical hemp laws in the United States, hemp is legally recognized as a form of therapy or medicine for more than 50 medical conditions. However, even the hemp sector continues to have certain market uncertainty, particularly related to the CBD-infused food and beverage market, as the FDA has asserted that the sale of such products violates the FFDCA.

Currently, state legalized sales are only a fraction of the overall market for cannabis products. This legalized portion has been growing rapidly, and in the United States, more and more states have legalized and regulated the permitted uses of cannabis products. This has also created a new consumer base, on two fronts, both for consumers who now find alternative products for health and wellness reasons, and for those consumers, who have embraced adult use in those states where it is legal.

Due to the current illegality of cannabis at the U.S. federal level and potential for criminal penalties for violations of the CSA, many U.S. private companies in this sector have been dependent on private money or smaller funds, many institutional investors have shied away from deploying capital on them, and, in addition, access to regular banking finance solutions is almost non-existent. In addition to capital and improved management practices, we believe that achieving a successful business combination will also allow us to unlock this value for both the business combination target and our shareholders.

As more states legalize cannabis in the United States and the industry continues to adjust to an evolving regulatory landscape, additional opportunities in ancillary services for the cannabis industry are being created. Examples of such are business to consumer platforms, specialized marketplaces, research and development (both for new technologies and for product development), among others. Our management believes that by selecting the proper target business, we have the opportunity to create one of the leading cannabis companies, by combining institutional quality practices, proper capital allocation and potentially disruptive products and services to this new and evolving industry.

Regulatory Framework in the United States

We seek a target business in the United States that operates in the cannabis industry that is in compliance with all applicable U.S. federal and state laws and regulations. Below is a summary of the regulatory landscape in the United States.

Legal statusUnless waived by us, the obligations of cannabis,our Company and Merger Sub to consummate the Merger are subject to the satisfaction of the following additional conditions, in addition to customary certificates and other than hempclosing deliverables:

All but four U.S. statesUnless waived by Kustom Entertainment, the obligations of Kustom Entertainment to consummate the Merger are subject to the satisfaction of the following additional conditions:

Termination

The Kustom Entertainment Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including:

If the Kustom Entertainment Merger Agreement is terminated, all further obligations of the parties under the Kustom Entertainment Merger Agreement will terminate and will be of no further force and effect (except that certain obligations related to public announcements, confidentiality, fees and expenses, termination, waiver of claims against the trust, and certain general provisions will continue in effect), and no party will have legalized,any further liability to some extent, cannabisany other party thereto except for medical purposes. Thirty-six states,(i) liability for any willful breach of the District of Columbia, Puerto RicoKustom Entertainment Merger Agreement prior to such termination and Guam have legalized some form of whole-plant cannabis cultivation, sales and use for certain medical purposes (medical states)(ii) in the event that Kustom Entertainment terminates the Kustom Entertainment Merger Agreement pursuant to the Kustom Entertainment Stockholder rescinding its written consent approving the Kustom Entertainment Business Combination, Kustom Entertainment shall pay to the Company an amount equal to $1,750,000 plus all expenses incurred by the Company in connection with the Kustom Entertainment Merger Agreement (the “Termination Fee”). Seventeen of those states

Trust Account Waiver

Kustom Entertainment and the DistrictKustom Entertainment Stockholder agreed that they and their affiliates will not have any right, title, interest or claim of Columbiaany kind in or to any monies in our Trust Account held for our Public Stockholders, and Northern Mariana have also legalized cannabis for adults for non-medical purposes (sometimes referredagreed not to, as adult use)and waived any right to, make any claim against the Trust Account (including any distributions therefrom). Twelve additional states have legalized low-THC/high-CBD extracts for select medical conditions (CBD states).

Under U.S. federal law, however, those activities are illegal. Purchaser Representative

The CSA continues to list cannabis (marijuana, but not including hemp)Sponsor is serving as a Schedule I controlled substance (i.e., deemed to have no medical value), and accordingly, the manufacture (growth), sale or possession of cannabis is federally illegal, even for personal medical purposes. It also remains federally illegal to advertise the sale of cannabis or to sell or advertise the sale of paraphernalia designed or intended primarily for use with cannabis, unless the paraphernalia is traditionally used with tobacco or authorized by federal, state or local law. Entities or persons who knowingly lease or rent a property for the purposes of manufacturing, distributing or using any controlled substances, or merely knows that any of those activities are occurring on land that they control, can also be found liablepurchaser representative under the CSA. Additionally, violatingKustom Entertainment Merger Agreement, and in such capacity will represent the CSA is a predicate crimeinterests of our stockholders after the Closing (other than the Kustom Entertainment Stockholder) with respect to certain post-Closing matters under U.S. anti-money laundering laws.the Kustom Entertainment Merger Agreement and ancillary documents.

Violation of any U.S. federal laws and regulations can result in arrest, criminal charges, forfeiture of property, significant fines and penalties, disgorgement of profits, administrative sanctions, criminal conviction and cessation of business activities, as well as civil liabilities arising from proceedings initiated by either the U.S. government or private citizens. The U.S. government could enforce the federal cannabis prohibition laws even against companies complying with state law. Enforcement in the United States could slow the progress of global legalization, which could negatively impact even cannabis businesses not operating in the U.S. or subject to any U.S. enforcement action.

Legal status of hemp and hemp derivatives

Until recently, hemp (defined by the U.S. government as Cannabis sativa L. with a THC concentration of not more than 0.3% on a dry weight basis) and hemp’s extracts (except mature stalks, fiber produced from the stalks, oil or cake made from the seeds and any other compound, manufacture, salt derivative, mixture or preparation of such parts) were illegal Schedule I controlled substances under the CSA. The 2014 Farm Bill authorized states to establish industrial hemp research programs. The majority of states established programs purportedly in compliance with the 2014 Farm Bill. Many industry participants and even states interpreted the law to include “research” into the commercialization of, and commercial markets for, CBD from hemp, including products containing CBD.

In December 2018, the U.S. government changed hemp’s legal status. The 2018 Farm Bill, removed hemp and extracts of hemp, including CBD, from the CSA schedules. Accordingly, the production, sale and possession of hemp or extracts of hemp, including CBD, no longer violate the CSA. The 2018 Farm Bill did not create a system in which individuals or businesses can grow hemp whenever and wherever they want. There are numerous restrictions. The 2018 Farm Bill allows hemp cultivation under state plans approved by the U.S. Department of Agriculture (“USDA”) or under USDA regulations in states that have legalized hemp but not implemented their own regulations. It also allows the transfer of hemp and hemp-derived products across state lines for commercial or other purposes, even through states that have not legalized hemp or hemp-derived products. Nonetheless, states can still prohibit hemp or limit hemp more stringently than the federal law.

Despite the passage of the 2018 Farm Bill, hemp products’ legal status is complicated further by state and other federal law. The states have a patchwork of different laws on hemp and its extracts, including CBD. Additionally, the FDA claims that the FFDCA significantly limits the legality of hemp-derived CBD products.

It is important to note that the 2018 Farm Bill preserves the authority and jurisdiction of the FDA (pursuant to the FFDCA) to regulate the manufacture, marketing, and sale of food, drugs, dietary supplements, and cosmetics, including products that contain CBD and other cannabinoids. We are focusing our search on businesses in the CBD industry that are compliant with the FFDCA, including the regulations applicable to manufacturing and marketing of certain products, including food, dietary supplements, and cosmetics.

The Dietary Supplement Health and Education Act (the “DSHEA”) amended the FFDCA and established a framework governing the composition, safety, labeling, manufacturing and marketing of dietary supplements in the United States. Generally, under DSHEA, dietary ingredients marketed in the United States prior to October 15, 1994 may be used in dietary supplements without notifying the FDA. By contrast, “new” dietary ingredients (i.e., dietary ingredients not marketed in the United States before October 15, 1994) must be the subject of a new dietary ingredient notification submitted to the FDA, unless the ingredient has been “present in the food supply as an article used for food” and is not “chemically altered.” Any new dietary ingredient notification must provide the FDA with evidence of a “history of use or other evidence of safety” establishing that the use “will reasonably be expected to be safe.” Per the FFDCA, any substance added to a food is subject to premarket review and approval by the FDA, unless the substance is generally recognized, among qualified experts, as safe under the conditions of the substance’s intended use (otherwise known as “GRAS”).

WhileRelated Agreements

Lock-Up Agreement

Simultaneously with the 2018 Farm Bill legalized hemp (including its derivatives, extracts,execution and isomers),delivery of the FDA has yet to issue regulations governing hemp products. NotwithstandingKustom Entertainment Merger Agreement, we entered into the lacklock-up agreement, dated as of regulation of hemp products byJune 1, 2023, with the FDA, the FDA has taken the position that neither CBD nor THC can be added to food or marketed as a dietary supplement because CBD (and THC) are active ingredients in FDA-approved drugs (EpidiolexKustom Entertainment Stockholder and Marinol, respectively) and have been the subject of “substantial clinical investigations” before CBD (or THC) were marketed as a food or dietary supplementour Sponsor (the “Drug Exclusion Rule”“Lock-Up Agreement”). The Drug Exclusion Rule, codifiedPursuant to the Lock-Up Agreement, the Kustom Entertainment Stockholder agreed not to, during the period commencing from the Closing and ending on the six (6) month anniversary of the Closing (subject to early release if the closing price of the Common Stock equals or exceeds $12.00 per share for any 20 out of 30 trading days commencing after the Closing and also subject to early release if we consummate a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in 21 U.S.C. § 321(ff) and 21 U.S.C. § 331(ll)all of our stockholders having the right to exchange their equity holdings in the Company for cash, securities or other property): (x) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any restricted securities, (y) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the restricted securities, or (z) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (x), provides that an article that(y) or (z) above is an active ingredientto be settled by delivery of restricted securities or other securities, in an FDA-approved drug,cash or has beenotherwise (in each case, subject to certain limited permitted transfers where the subject of substantial clinical investigations that have been instituted and made public, cannot be added to a food or marketed as a dietary supplement. Despiterecipient takes the position taken by the FDA, industry stakeholders assert there are significant arguments against this position, including (i) that CBD and THC in their naturally occurring form are notshares subject to the Drug Exclusion Rule and (ii) CBD was presentrestrictions in the food supplyLock-Up Agreement). Eighty-five percent (85%) of the shares of Class A Common Stock to be received by the Kustom Entertainment Stockholder as Merger Consideration will be subject to the terms of the Lock-Up Agreement.

Sponsor Forfeiture Letter

Simultaneously with the execution and solddelivery of the Kustom Entertainment Merger Agreement, we entered into a letter agreement, dated as of June 1, 2023, with the Sponsor and the Chief Executive Officer of Kustom Entertainment (the “Sponsor Forfeiture Letter”), pursuant to which the Sponsor agreed to forfeit up to 345,780 shares of Class A Common Stock and transfer to the Chief Executive Officer of Kustom Entertainment up to 518,672 shares of Class A Common Stock (the “Earnout Shares”) (such shares of Class A Common Stock having been converted from shares of Class B Common Stock) held by the Sponsor, subject to the earnout provisions contained therein pertaining to the revenue of Kustom Entertainment for the fiscal years of 2023 and 2024, contingent and effective upon the Closing. If the revenue of the business for either of the fiscal years 2023 and 2024 of Kustom Entertainment (the “Earn-Out Period”) achieves certain benchmarks in interstate commercethe applicable fiscal year, 172,890 of the Sponsor’s Earnout Shares shall no longer be subject to forfeiture and the Sponsor shall transfer to the Chief Executive Officer of Kustom Entertainment 259,336 Earnout Shares (the “Earn-Out Payment”); provided, however, that in the event the benchmark revenue is not achieved on or before the end of the applicable fiscal year, then the Earn-Out Payment for such fiscal year shall be zero, and the Sponsor shall, effective immediately, surrender for cancellation and retirement by the Company such amount of Earnout Shares. The Sponsor agreed to forfeit up to an additional 864,452 shares of Class B Common Stock (or shares of Class A Common Stock, if such shares of Class B Common Stock have been converted to shares of Class A Common Stock prior to October 15, 1994. Notably, the FDA does not imposeClosing) (the “Adjustment Shares”), with the same restrictions onpercentage of Adjustment Shares to be forfeited to be equal to the usepercentage of CBD ingredientsthe Common Stock redeemed by the Public in cosmetic products,connection with the Kustom Entertainment Redemption.

The foregoing descriptions of the Lock-Up Agreement and the Drug Exclusion Rule doesSponsor Forfeiture Letter do not applypurport to cosmetic products.be complete and are qualified in their entirety by reference to the complete text of the Lock-up Agreement and the Sponsor Forfeiture Letter, copies of which are filed hereto as Exhibits 10.12 and 10.13, respectively.

In addition, the FFDCA requires a facility that manufactures, packages, and/or labels food and dietary supplements must also establish and follow current Good Manufacturing Practices (“cGMPs”) in compliance with 21 CFR Part 111 (for dietary supplements) and Part 117 (for food). These cGMP requirements and other applicable FFDCA requirements include FDA facility registration, quality control, quality assurance, maintenance of records and documentation, serious adverse event recording and reporting, and compliant packaging and labeling, including absence of drug claims, among other items. The Company will only pursue a target that complies with the foregoing requirements.

To date the FDA has confined its enforcement efforts to issuing warning letters to companies marketing CBD products with disease claims. Any product marketed with claims suggesting that a product is intended to treat, cure, or prevent diseases and ailments will be considered a “drug,” requiring approval by the FDA for its intended use through one of the drug approval pathways. The definition of “drug” under the FFDCA includes, in relevant part, “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals” as well as “articles intended for use as a component of a drug as defined in the other sections of the definition.” In determining “intended use,” the FDA has traditionally looked beyond a product’s label, including statements made on websites, on social media, or orally by the company’s representatives. The Company will not pursue a target that markets any products with drug claims.

The FDA possesses significant post-market authority to monitor regulated products that have entered interstate commerce to ensure the product continues to adhere to the FFDCA. Enforcement for noncompliance under the FFDCA may be criminal or civil in nature and can include those who aid and abet a violation, or conspire to violate, the FFDCA. Civil remedies under the FFDCA include civil money penalties, injunctions, and seizures. The FDA also has a number of administrative remedies (e.g., warning letters, recalls, import alerts, and debarment). With respect to CBD products, as noted above, the FDA so far has limited its enforcement to sending cease-and- desist letters to companies selling CBD products and making “egregious, over-the-line” claims, such as “cures cancer,” “treats Alzheimer’s Disease” and “treats chronic pain.” The FDA’s additional guidance on CBD, titled, “Cannabidiol Enforcement Policy; Draft Guidance for Industry,” which the FDA has described as a “risk-based enforcement policy” to prioritize enforcement decisions, was submitted to the White House on July 22, 2020. FDA has since withdrawn its draft guidance. It has not yet indicated whether or when a new guidance document will be submitted.

Although criminal prosecutions of cannabis violations are rare under the FFDCA, the FFDCA also subjects individuals to criminal penalties, including fines and imprisonment, for violating certain provisions of the FFDCA. Criminal violations are generally treated as misdemeanors, meaning they are punishable by a fine or imprisonment of a year or less. FFDCA violations may constitute a felony if the violation is a second offense done with the “intent to defraud or mislead.” (21 U.S.C. § 333(a)(2).) For a defendant to act with an “intent to defraud or mislead,” the defendant must intend not only to mislead the product’s ultimate consumer but also the state and federal government regulatory enforcement agencies. The FFDCA provides for a $1,000 fine, imprisonment of up to one year, or both for simple violations and fines of up to $10,000, imprisonment for up to three years, or both, for subsequent convictions or convictions demonstrating intent to defraud or mislead. For misdemeanors not resulting in death, the current maximum fine for an individual is $100,000, while for misdemeanors resulting in death or for FFDCA felonies, the current maximum fine for an individual is $250,000. For organizations, the current maximum fine is $200,000, and for misdemeanors resulting in death or for FFDCA felonies, the current maximum fine is $500,000.

In additionFounder Share Conversion

On July 20, 2023, following the approval of the Conversion Amendment Proposal by our stockholders at the 2023 Special Meeting, we issued an aggregate of 3,457,806 shares of Class A Common Stock to the FFDCA,Sponsor upon the conversion of an equal number of shares of Class B Common Stock held by the Sponsor as Founder Shares. 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 the Sponsor’s agreement not to transfer, assign or sell any target’s advertisingof its Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) the date on which we complete a liquidation, merger, capital stock exchange or similar transaction that results in our stockholders having the right to exchange their shares of Common Stock for cash, securities or other property. Notwithstanding the foregoing, if the last reported sale price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be subject to regulation byreleased from the Federal Trade Commission (“FTC”) pursuant to the Federal Trade Commission Act. In recent years, the FTC has initiated numerous investigations of dietary and nutritional supplement makers (and their products) based on allegedly deceptive or misleading claims. On December 17, 2020, FTC announced enforcement proceedings against companies making deceptive claims related to CBD products. The six companies targeted by the FTC entered into settlement agreements, and fivelock-up. As a result of the companies paid a fine to FTC. More recently, on May 17, 2021,Founder Share Conversion, the FTC announced its latest law enforcement action against a CBD company that marketed their CBD products with false and/or unsubstantiated claims.2023 Redemptions and the 2024 Redemptions, the Sponsor holds approximately 75.7% of the issued and outstanding shares of Common Stock.

The Cannabis Industry OpportunityBusiness Strategy

Considering the current state of the cannabis industry, we believe that the opportunity is not only driven by a changing regulatory landscape and lack of traditional capital sources, but also by strong sector fundamentals that will allow us to achieve a business combination with accretive value for our shareholders.

Attractive Fundamentals:

The cannabis industry’s current size and growth is surprising considering the inefficiencies that have plagued this market. Potential future favorable changes in the regulatory environment (not limited to potential federal regulation), may accelerate this growth. The industry, in its current state, has achieved significant magnitude as shown by the following data (Source: BDS Analytics):

Fragmented market:

Capital provider’s market:

Business Strategy

Our business strategy is to identify and complete one or more business combinations with a target operating in the cannabis industryBusiness Combinations that is compliant with all applicable laws and regulations within the jurisdictions in which it is located or operates. We arehave been seeking companies that we believe can efficiently deploy new capital while benefiting from our industry know-how and management team. The goal of our business combination istoBusiness Combination is to achieve revenue growth and to increase profitability. These objectives can be achieved both through acquisitions and/or through organic growth. We expect to lookare looking for targets that can benefit from one or more of the following: investment in research &and development, new technologies and/or additional infrastructure, in order to achieve a dominant position in their market and/or entry in new ones.

While we may pursue a business combinationBusiness Combination target in any business, industry or geographical location (such as the Kustom Entertainment Business Combination), we are focusinghave finished our search for businesses in the cannabis industry that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate, and, in particular, we will not invest in, or consummate a business combination with, a target business that we determine has been operating, or whose business plan is to operate, in violation of U.S. federal laws, including the U.S. Controlled Substances Act.laws.

While evaluating any business combinationBusiness Combination, our team believes that the stage of the market should be considered, whether it’s a new, transitioning, or a mature market.

Business Combination Criteria

Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. Webusinesses, including Kustom Entertainment. While we have used and will continue to use these criteria and guidelines in evaluating acquisitioninitial Business Combination opportunities, butincluding the Kustom Entertainment Business Combination, we may decide to enter into our initial business combinationBusiness Combination with a target business that doesmeets some, but not meetall of these criteria and guidelines. While we utilize these criteria in evaluating business combination opportunities, we expect that no individual criterion will entirely determine a decision to pursue a particular opportunity.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our managementManagement may deem relevant.

In the event that we decide to enter into our initial business combinationBusiness Combination with a target business that doesmeets some, but not meetall of the above criteria and guidelines, we will disclose that the target business doesmeets some but not meetall of the above criteria in our stockholder communications related to our initial business combination,Business Combination, which would be in the form of proxy solicitation materials or tender offer documents that we would file with the SEC.SEC, such as the Kustom Entertainment Registration Statement.

Initial Business Combination

Nasdaq rules require that we must complete one or more business combinationsBusiness Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust accountTrust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account)Trust Account) at the time of our signing a definitive agreement in connection with our initial business combination.Business Combination. Our boardBoard of directorsDirectors will make the determination as to the fair market value of our initial business combination.Business Combination. If our boardBoard of directorsDirectors is not able to independently determine the fair market value of our initial business combination,Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criterion. While we consider it unlikely that our boardBoard of directorsDirectors will not be able to make an independent determination of the fair market value of our initial business combination,Business Combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combinationBusiness Combination must be approved by a majority of our independent directors. Based on the valuation analysis of our Management and Board of Directors, we have determined that the fair market value of Kustom Entertainment was substantially in excess of 80% of the funds in the Trust Account and that the 80% test was therefore satisfied.

We will have until July 22, 2022 (122024 (36 months from the closing of our initial public offering)Initial Public Offering) to consummate an initial business combination. However, if we anticipate that we may not be able to consummate our initial business combination within 12 months, we may extend the period of time to consummate a business combination by three additional three month periods (for a total of up to 21 months to complete a business combination) without submitting such proposed extensions to our stockholders for approval or offering our public stockholders redemption rights in connection therewith. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement dated July 19, 2021 between us and Continental Stock Transfer & Trust Company, in order to extend the time available for us to consummate our initial business combination, our sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account for each additional three month period, $1,383,123 for each additional three month period. In the event that we receive notice from our sponsor five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. 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 our initial business combination. If we complete our initial business combination, we will, at the option of our sponsor, repay such loaned amounts out of the proceeds of the trust account released to us or convert a portion or all of the total loan amount into units at a price of $10.00 per unit, which units will be identical to the private placement units. If we do not complete a business combination, we will repay such loans only from funds held outside of the trust account. Furthermore, the letter agreement with our initial stockholders contains a provision pursuant to which our sponsor has agreed to waive its right to be repaid for such loans out of the funds held in the trust account in the event that we do not complete a business combination. Our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination.

Business Combination. We anticipate structuring our initial business combinationBusiness Combination either (i) in such a way so that the post-transaction company in which our public stockholdersPublic Stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial business combinationBusiness Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the “Investment Company Act”.Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combinationBusiness Combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination.Business Combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target.

However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combinationBusiness Combination could own less than a majority of our outstanding shares subsequent to our initial business combination.Business Combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. If the initial business combinationBusiness Combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial business combinationBusiness Combination for purposes of a tender offer or for seeking stockholder approval, as applicable.

Our Business Combination Process

In evaluating prospective business combinations,Business Combinations, such as the Kustom Entertainment Business Combination, we expect to conduct a thorough due diligence review process that will encompass,encompasses, among other things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate.

We are not prohibited from pursuing an initial business combinationBusiness Combination with a company that is affiliated with our sponsorSponsor or our officers or directors. InWhile Kustom Entertainment is not affiliated with our Sponsor, executive officers or directors, in the event we do not consummate the Kustom Entertainment Business Combination and we seek to complete our initial business combinationBusiness Combination with a company that is affiliated with our sponsor,Sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm that our initial business combinationBusiness Combination is fair to our companyCompany from a financial point of view.

Our officers and directors indirectly own founder sharesFounder Shares and/or private placement units.Private Placement Units. Because of this ownership, our sponsorSponsor and our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.Business Combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combinationBusiness Combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition to any agreement with respect to our initial business combination.Business Combination.

Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combinationBusiness Combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combinationBusiness Combination opportunity whichthat is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she has honored and will continue to honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete our initial business combination.Business Combination. Our amendedAmended and restated certificate of incorporation willRestated Charter provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our companyCompany and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.

Our sponsor,Sponsor, officers and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination.Business Combination. As a result, our sponsor,Sponsor, officers or directors could have conflicts of interest in determining whether to present business combinationBusiness Combination opportunities to us or to any other blank check company with which they may become involved.

Our Management Team

Members of our management teamManagement Team are not obligated to devote any specific number of hours to our matters, but they devote as much of their time as they deem necessary to our affairs and intend to continue doing so until we have completed our initial business combination.Business Combination. The amount of time that any member of our management teamManagement Team devotes in any time period may vary based on whether a target business has been selected for our initial business combinationBusiness Combination and the current stage of the business combinationBusiness Combination process.

We believe our management team’sManagement Team’s operating and transaction experience and relationships with companies provide us with a substantial number of potential business combinationBusiness Combination targets. Over the course of their careers, the members of our management teamManagement Team have developed a broad network of contacts and corporate relationships in various industries. This network has grown through the activities of our management teamManagement Team sourcing, acquiring and financing businesses, our management team’sManagement Team’s relationships with sellers, financing sources and target management teams and the experience of our management teamManagement Team in executing transactions under varying economic and financial market conditions.

Status as a Public Company

We believe our structure makes us an attractive business combinationBusiness Combination partner to target businesses.businesses, such as Kustom Entertainment. As aan existing public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combinationBusiness Combination with us. Following an initial business combination,Business Combination, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combinationBusiness Combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A common stockCommon Stock (or shares of a new holding company) or for a combination of our shares of Class A common stockCommon Stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. See “Kustom Entertainment Business Combination” above for more information regarding such an exchange in the Kustom Entertainment Business Combination.

Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and cost effectivecost-effective method to becoming a public company than the typical initial public offering.Initial Public Offering. The typical initial public offeringInitial Public Offering process takes a significantly longer period of time than the typical business combinationBusiness Combination transaction process, and there are significant expenses in the initial public offeringInitial Public Offering process, including underwriting discounts and commissions, marketing and road show efforts that may not be present to the same extent in connection with an initial business combinationBusiness Combination with us.

Furthermore, once a proposed initial business combinationBusiness Combination such as the Kustom Entertainment Business Combination, is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination,Business Combination, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.

While we believe that our structure and our management team’sManagement Team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business combination,Business Combination, negatively.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.Financial Position

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following July 22, 2026, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30^th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30^th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30^th.

Financial Position

With funds available in the trust accountTrust Account for an initial business combinationBusiness Combination in the amount of $135,546,054 afterapproximately $14,648,926 as of December 31, 2023, before (i) payment of $4,840,931 of deferred underwriting fees, before fees and expenses associated with our initial business combination,Business Combination and (iii) taxes payable on the income earned on the Trust Account, we offer a target business, such as Kustom Entertainment, a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combinationBusiness Combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third partythird-party financing and there can be no assurance it will be available to us.

Effecting Our Initial Business Combination

We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business combinationBusiness Combination using cash from the proceeds of our initial public offeringInitial Public Offering and the private placement of the private placement units,Private Placement, the proceeds of the sale of our shares in connection with our initial business combinationInitial Business Combination (including pursuant to any forward purchase agreements or backstop agreements we may enter into or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combinationBusiness Combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.

If our initial business combinationInitial Business Combination is paid for using equity or debt securities, or not all of the funds released from the trust accountTrust Account are used for payment of the consideration in connection with our initial business combinationInitial Business Combination or used for redemptions of our Class A common stock,Common Stock, we may apply the balance of the cash released to us from the trust accountTrust Account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination,Initial Business Combination, to fund the purchase of other companies or for working capital.

We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination,Business Combination, and we may effectuate our initial business combinationBusiness Combination using the proceeds of such offering rather than using the amounts held in the trust account.Trust Account. In addition, we intend to targetare targeting businesses larger than we could acquire with the net proceeds of our initial public offeringInitial Public Offering and the sale of the private placement units,Private Placement and may as a result be required to seek additional financing to complete such proposed initial business combination.Business Combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination.Business Combination. In the case of an initial business combinationBusiness Combination funded with assets other than the trust accountTrust Account assets, our proxy materials or tender offer documents disclosing the initial business combinationBusiness Combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, or through loans in connection with our initial business combination.Business Combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.

Sources of Target Businesses

We anticipate thathave received and may continue to receive a number of proprietary transaction opportunities to originate as a result of the business relationships, direct outreach, and deal sourcing activities of our Management Team. In addition to the proprietary deal flow, target business candidates willhave been and may continue to be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. Our officers and directors, as well as our sponsorSponsor and their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect tomay receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and our sponsorSponsor and their affiliates. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We expect to engage a finder only to the extent our managementManagement determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our managementManagement determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account.Trust Account. In no event, however, will our sponsorSponsor or any of our existing officers or directors, or any entity with which our sponsorSponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered for any services they renderit renders in order to effectuate, the completion of our initial business combinationBusiness Combination (regardless of the type of transaction that it is). None of our sponsor,Sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combinationBusiness Combination target in connection with a contemplated initial business combination.Business Combination. We have agreed to pay an affiliate of our sponsorSponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support pursuant to the Administrative Support Agreement and to reimburse our sponsorSponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.Business Combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination.Business Combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combinationBusiness Combination candidate.

We are not prohibited from pursuing an initial business combination with an initiala business combination target that is affiliated with our sponsor,Sponsor, officers or directors or making the initial business combinationBusiness Combination through a joint venture or other form of shared ownership with our sponsor,Sponsor, officers or directors. InWhile Kustom Entertainment is not affiliated with our Sponsor, executive officers or directors, in the event we do not consummate the Kustom Entertainment Business Combination and we seek to complete our initial business combinationBusiness Combination with an initial business combinationBusiness Combination target that is affiliated with our sponsor,Sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.

If any of our officers or directors becomes aware of an initial business combinationBusiness Combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combinationBusiness Combination opportunity to such entity prior to presenting such business combinationBusiness Combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.

Selection of a Target Business and Structuring of our Initial Business Combination

Nasdaq rules require that we must complete one or more business combinationsBusiness Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust accountTrust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account)Trust Account) at the time of our signing a definitive agreement in connection with our initial business combination.Business Combination. The fair market value of our initial business combinationBusiness Combination will be determined by our boardBoard of directorsDirectors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&Amergers and acquisitions transactions of comparable businesses. If our boardBoard of directorsDirectors is not able to independently determine the fair market value of our initial business combination,Business Combination, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our boardBoard of directorsDirectors will not be able to make an independent determination of the fair market value of our initial business combination,Business Combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.Business Combination. Subject to this requirement, our managementManagement will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combinationBusiness Combination with another blank check company or a similar company with nominal operations.

In any case, we will only complete an initial business combinationBusiness Combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of Nasdaq’s 80% of net assets test.

To the extent we effect our initial business combinationBusiness Combination with a company or business that may be financially unstable or in its early stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our managementManagement will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

In evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass,encompasses, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that will beis made available to us.

The time required to select and evaluate a target business and to structure and complete our initial business combination,Business Combination, and the costs associated with this process, areis not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combinationBusiness Combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.Business Combination.

Lack of Business Diversification

For an indefinite period of time after the completion of our initial business combination,Business Combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinationsBusiness Combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. In addition, we are focusing our search for an initial business combinationBusiness Combination in a single industry. By completing our initial business combinationBusiness Combination with only a single entity, our lack of diversification may:

Limited Ability to Evaluate the Target’s Management Team

Although we intend to closely scrutinize the management of a prospective target business, including the management team of Kustom Entertainment, when evaluating the desirability of effecting our initial business combinationBusiness Combination with that business, and plan to continue to do so if the Kustom Entertainment Business Combination is not consummated and we seek other Business Combination opportunities, our assessment of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team,Management Team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our management teamManagement Team will remain with the combined company will be made at the time of our initial business combination.Business Combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination,Business Combination, including the Kustom Entertainment Business Combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.Business Combination.

We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.Business Combination.

Following an initial business combination,Business Combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Stockholders May Not Have the Ability to Approve Our Initial Business Combination

We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule (as is the case for Kustom Entertainment as currently contemplated), or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinationsBusiness Combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.

Under Nasdaq’s listing rules, stockholder approval would be required for our initial business combinationBusiness Combination if, for example:

The decision as to whether we will seek stockholder approval of a proposed Business Combination in those instances in which stockholder approval is not required by applicable law or stock exchange rules will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors,

including, but not limited to:

See “Kustom Entertainment Business Combination” above for more information regarding the requisite approvals needed in the Kustom Entertainment Business Combination.

Permitted Purchases of our Securities

If we seek stockholder approval of our initial business combinationBusiness Combination and we do not conduct redemptions in connection with our initial business combinationBusiness Combination pursuant to the tender offer rules, our sponsor, initial stockholders,Sponsor, Initial Stockholders, directors, officers, advisors or their affiliates may purchase sharesPublic Shares or public rightsPublic Rights in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination.Business Combination. There is no limit on the number of sharesPublic Shares our initial stockholders,Initial Stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust accountTrust Account will be used to purchase shares or public rightsPublic Rights in such transactions prior to completion of our initial business combination.Business Combination.

The purpose of any such purchases of sharesPublic Shares could be to vote such shares in favor of the initial business combinationBusiness Combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combinationBusiness Combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of rightsPublic Rights could be to reduce the number of rights, or underlying securities, outstanding. Any such purchases of our securities may result in the completion of our initial business combinationBusiness Combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stockCommon Stock or rights may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

Our sponsor,Sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholdersPublic Stockholders with whom our sponsor,Sponsor, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholdersPublic Stockholders contacting us directly or by our receipt of redemption requests submitted by stockholdersPublic Stockholders following our mailing of proxy materials in connection with our initial business combination.Business Combination. To the extent that our sponsor,Sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholdersPublic Stockholders who have expressed their election to redeem their sharesPublic Shares for a pro-rata share of the trust accountTrust Account or vote against our initial business combination,Business Combination, whether or not such stockholderPublic Stockholder has already submitted a proxy with respect to our initial business combination.Business Combination. Our sponsor,Sponsor, officers, directors, advisors or their affiliates will only purchase sharesPublic Shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.

Any purchases by our sponsor,Sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,Sponsor, officers, directors and/or their affiliates will not make purchases of common stockCommon Stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.

See “Kustom Entertainment Business Combination” above for more information regarding such purchases in connection with the Kustom Entertainment Business Combination.

Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination

We will provide our public stockholdersPublic Stockholders with the opportunity to redeem all or a portion of their shares of Class A common stockRedemption opportunities upon the completion of our initial business combinationBusiness Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust accountTrust Account as of two business days prior to the consummation of the initial business combinationBusiness Combination, such as the Kustom Entertainment Business Combination, including interest earned on the funds held in the trust accountTrust Account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares,Public Shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to beTrust Account as of December 31, 2023 was approximately $10.15$11.85 per public share.Public Share. The per-share amount we will distribute to investorsPublic Stockholders who properly redeem their sharesPublic Shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.underwriters of our Initial Public Offering. Our sponsor,Sponsor, officers and directors have entered into a letter agreementthe Letter Agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement sharesFounder Shares, Private Placement Shares and public sharesPublic Shares held by them in connection with the completion of our initial business combination.Business Combination.

Manner of Conducting Redemptions

We will provide our public stockholdersPublic Stockholders with the opportunity to redeem all or a portion of their shares of Class A common stockRedemption opportunities upon the completion of our initial business combinationBusiness Combination either (i) in connection with a stockholder meeting called to approve the initial business combinationBusiness Combination, such as the Kustom Entertainment Business Combination, or (ii) by means of a tender offer.offer if the Kustom Entertainment Business Combination is not consummated. The decision as to whether we will seek stockholder approval of a proposed initial business combinationBusiness Combination or conduct a tender offer will be made by us, solely in our 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 us to seek stockholder approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our companyCompany where we do not survive and any transactions where we issue more than 20% of our outstanding common stockCommon Stock or seek to amend our amendedAmended and restated certificate of incorporationRestated Charter would require stockholder approval. If we structure an initial business combinationBusiness Combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business combination.Business Combination. We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. To maintain thelistingthe listing for our securities on Nasdaq, we are be required to comply with such rules.

If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amendedAmended and restated certificate of incorporation:Restated Charter:

Upon the public announcement of our initial business combination,Business Combination, we or our sponsorSponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stockCommon Stock in the open market if we elect to redeem our public sharesPublic Shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.

In the event we conduct redemptionsRedemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combinationBusiness Combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholdersPublic Stockholders not tendering more than a specified number of public sharesPublic Shares which are not purchased by our sponsor,Sponsor, which number will be based on the requirement that we will only redeem our public sharesPublic Shares so long as (after such redemption)Redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combinationBusiness Combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.Business Combination. If public stockholdersPublic Stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.Business Combination.

If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will, pursuant to our amendedAmended and restated certificate of incorporation:Restated Charter:

In the event that we seek stockholder approval of our initial business combination,Business Combination, we will distribute proxy materials and, in connection therewith, provide our public stockholdersPublic Stockholders with the redemptionRedemption rights described above upon completion of the initial business combination.Business Combination.

If we seek stockholder approval, we will complete our initial business combinationBusiness Combination only if a majority of the outstanding shares of common stockCommon Stock voted are voted in favor of the initial business combination.Business Combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the companyCompany representing a majority of the voting power of all outstanding shares of capital stock of the companyCompany entitled to vote at such meeting. Our initial stockholdersInitial Stockholders will count toward this quorum and pursuant to the letter agreement,Letter Agreement, our sponsor, officersSponsor and directorsInitial Stockholders have agreed to vote their founder shares, private placement sharesFounder Shares, Private Placement Shares and public sharesPublic Shares purchased during or after our initial public offeringInitial Public Offering (including in open market and privately negotiated transactions) in favor of our initial business combination.Business Combination. For purposes of seeking approval of the majority of our outstanding shares of common stockCommon Stock voted, non-votes will have no effect on the approval of our initial business combinationBusiness Combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder sharesInitial Stockholders’ Founder Shares and the private placement shares,Private Placement Shares, unless otherwise required under applicable law we would not need only 4,848,916, or 35.1%, (assuming all issued and outstanding shares are voted), or 2,424,459, or 17.6%  (assuming only the minimum number of shares representing a quorum are voted),any of the 13,831,230 public sharesPublic Shares sold in our initial public offeringInitial Public Offering to be voted in favor of an initial business combinationBusiness Combination in order to have our initial business combination approved (assuming in each case that the over-allotment option is not exercised).Business Combination approved. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination.Business Combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders,Initial Stockholders, may make it more likely that we will consummate our initial business combination.Business Combination. Each public stockholderPublic Stockholder may elect to redeem its public sharesPublic Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.

Our amendedAmended and restated certificate of incorporationRestated Charter provides that we will only redeem our public sharesPublic Shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combinationBusiness Combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.Business Combination. For example, the proposed initial business combinationBusiness Combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination.Business Combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stockCommon Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combinationBusiness Combination exceed the aggregate amount of cash available to us, we will not complete the initial business combinationBusiness Combination or redeem any shares, and all shares of Class A common stockCommon Stock submitted for redemptionRedemption will be returned to the holders thereof.

Limitation on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval

Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 2,074,685, or 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates.

Ability to Extend Time to Complete Business Combination

We will have until July 22, 2022, 12 months from the closing of our initial public offering, to consummate an initial business combination. However, if we anticipate that we may not be able to consummate our initial business combination within 12 months, we may extend the period of time to consummate a business combination for three additional three month periods (for a total of up to 21 months to complete a business combination) without submitting such proposed extensions to our stockholders for approval or offering our public stockholders redemption rights in connection therewith. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement dated July 19, 2021 between us and Continental, in order to extend the time available for us to consummate our initial business combination, our sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account 1,383,123, or $0.10 per public offering share, on or prior to the date of the applicable deadline, for each such three month extension on or prior to the date of the applicable deadline. In the event that we receive notice from our sponsor five days prior to the applicable deadline of their intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. 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 our initial business combination. If we complete our initial business combination, we will, at the option of our sponsor, repay such loaned amounts out of the proceeds of the trust account released to us or convert a portion or all of the total loan amount into units at a price of $10.00 per unit, which units will be identical to the private placement units. If we do not complete a business combination, we will repay such loans only from funds held outside of the trust account. Furthermore, the letter agreement with our initial stockholders contains a provision pursuant to which our sponsor has agreed to waive its right to be repaid for such loans out of the funds held in the trust account in the event that we do not complete a business combination. Our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business combination.

Redemption of Public Shares and Liquidation if no Initial Business Combination

Our amendedAmended and restated certificate of incorporationRestated Charter provides that we will have until July 21, 2022 (or until April 21, 2023,if we extend the period of time to consummate a business combination)22, 2024 to complete our initialInitial business combination.Combination. If we are unable to completehave not completed our initial business combination withinBusiness Combination by July 21, 2022 (or up to April 21, 2023),the end of the Combination Period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust accountTrust Account including interest earned on the funds held in the trust accountTrust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,Public Shares, which redemptionRedemption will completely extinguish public stockholders’Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our boardBoard of directors,Directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our rights,Rights, which will expire worthless if we fail to complete our initial business combinationBusiness Combination by July 21, 2022 (or April 21, 2023, if extended).the end of the Combination Period.

Our sponsor,Sponsor, officers and directors have entered into a letter agreementthe Letter Agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust accountTrust Account with respect to any founder sharesFounder Shares and private placement sharesPrivate Placement Shares held by them if we fail to complete our initial business combinationBusiness Combination by July 22, 2021 (or by April 22, 2023, if we extend the periodend of time to consummate a business combinationthe Combination Period. However, if our sponsor,Sponsor, officers or directors acquire public shares,Public Shares, they will be entitled to liquidating distributions from the trust accountTrust Account with respect to such public sharesPublic Shares if we fail to complete our initial business combinationBusiness Combination by July 22, 2021 (or by April 21, 2023, if extended).the end of the Combination Period.

Our sponsor,Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amendedAmended and restated certificate of incorporationRestated Charter (i) to modify the substance or timing of our obligation to redeem 100% of our public sharesPublic Shares if we do not complete our initial business combination byBusiness Combination prior to the required timeend of the Combination Period or (ii) with respect to any other provision relating to stockholders’ rights or pre-initialbusiness combinationpre-initial Business Combination activity, unless we provide our public stockholdersPublic Stockholders with the opportunity to redeem their shares of Class A common stockCommon Stock upon approval of any such amendment at a per-shareprice,per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust accountTrust Account including interest earned on the funds held in the trust accountTrust Account and not previously released to us to pay our franchise and income taxes divided by the number of then outstanding public shares.Public Shares. However, we will only redeem our public sharesPublic Shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combinationBusiness Combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemptionRedemption right is exercised with respect to an excessive number of public sharesPublic Shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemptionRedemption of our public sharesPublic Shares at such time.

We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, willwould be funded from amounts remaining out of the approximately $1,350,000$162,933 of proceeds held outside the trust account,Trust Account as of December 31, 2023, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the trust accountTrust Account to pay any franchise and income tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust accountTrust Account not required to pay franchise and income taxes on interest income earned on the trust accountTrust Account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.

If we were to expend all of the net proceeds of our initial public offeringInitial Public Offering of unitsUnits and the salePrivate Placement of the private placement units,Private Placement Units, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,Trust Account, the per-share redemption amount received by stockholdersPublic Stockholders upon our dissolution would be approximately $10.15.$11.85 as of December 31, 2023 (before taking into account the withdrawal of interest to pay taxes, if any, and up to $100,000 in dissolution expenses). The proceeds deposited in the trust accountTrust Account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.Public Stockholders. We cannot assure you that the actual per-share redemptionRedemption amount received by stockholders will not be substantially less than $10.15.$11.85. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.

Although we will have sought and will continue to seek to have all vendors, service providers (other than our independent auditor), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust accountTrust Account for the benefit of our public stockholders,Public Stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust accountTrust Account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account.Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,Trust Account, our managementManagement will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if managementManagement believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third partythird-party consultant whose particular expertise or skills are believed by managementManagement to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where managementManagement is unable to find a service provider willing to execute a waiver. Marcum, LLP, our independent registered public accounting firm, and the underwriters of the offering,our Initial Public Offering will not execute agreements with us waiving such claims to the monies held in the trust account.Trust Account.

In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust accountTrust Account for any reason. Our sponsorSponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combinationBusiness Combination agreement, reduce the amount of funds in the trust accountTrust Account to below the lesser of (i) $10.15 per public sharePublic Share and (ii) the actual amount per public sharePublic Share held in the trust accountTrust Account as of the date of the liquidation of the trust account,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 accountTrust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offeringInitial Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsorSponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsorSponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’sSponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsorSponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

In the event that the proceeds in the trust accountTrust Account are reduced below (i) $10.15 per public sharePublic Share or (ii) such lesser amount per public sharePublic Share held in the trust accountTrust Account as of the date of the liquidation of the trust account,Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsorSponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsorSponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsorSponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsorSponsor to reserve for such indemnification obligations and we cannot assure you that our sponsorSponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemptionRedemption price will not be less than $10.15 per public share.Public Share.

We seek to reduce the possibility that our sponsorSponsor has to indemnify the trust accountTrust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent auditor), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.Trust Account. Our sponsorSponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial public offeringInitial Public Offering against certain liabilities, including liabilities under the Securities Act. WeAs of December 31, 2023 have access to up to approximately $1,350,000$262,933 from the proceedsfunds held outside of our initial public offeringthe Trust Account with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust accountTrust Account could be liable for claims made by creditors.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro-rata portion of our trust accountTrust Account distributed to our public stockholdersPublic Stockholders upon the redemption of our public sharesPublic Shares in the event we do not complete our initial business combinationBusiness Combination by July 22, 2021 (or by April 22, 2023, if we extend the periodend of time to consummate a business combination)the Combination Period may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro-rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

Furthermore, if the pro-rata portion of our trust accountTrust Account distributed to our public stockholdersPublic Stockholders upon the redemption of our public sharesPublic Shares in the event we do not complete our initial business combinationBusiness Combination within the specified time is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combinationBusiness Combination by July 22, 2021 (or by April 22, 2023 if we extend the period of time to consummate a business combination),2024, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust accountTrust Account including interest earned on the funds held in the trust accountTrust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,Public Shares, which redemptionRedemption will completely extinguish public stockholders’Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,Redemption, subject to the approval of our remaining stockholders and our boardBoard of directors,Directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public sharesPublic Shares as soon as reasonably possible following our July 22, 2021 (or April 22, 2023)the end of the Combination Period and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

Because we are not complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers and auditors) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we have sought and will continue to seek to have all vendors, service providers (other than our independent auditor), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.Trust Account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust accountTrust Account is remote. Further, our sponsorSponsor may be liable only to the extent necessary to ensure that the amounts in the trust accountTrust Account are not reduced below (i) $10.15 per public sharePublic Share or (ii) such lesser amount per public sharePublic Share held in the trust accountTrust Account as of the date of the liquidation of the trust account,Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of our initial public offeringInitial Public Offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsorSponsor will not be responsible to the extent of any liability for such third-party claims.

If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust accountTrust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account,Trust Account, we cannot assure you we will be able to return $10.15 per share to our public stockholders.Public Stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our boardBoard of directorsDirectors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our companyCompany to claims of punitive damages, by paying public stockholdersPublic Stockholders from the trust accountTrust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

Our public stockholdersPublic Stockholders will be entitled to receive funds from the trust accountTrust Account only upon the earlier to occur of: (i) the completion of our initial business combination,Business Combination, (ii) the redemption of any public sharesPublic Shares properly tendered in connection with a stockholder vote to amend any provisions of our amendedAmended and restated certificate of incorporationRestated Charter (A) to modify the substance or timing of our obligation to redeem 100% of our public sharesPublic Shares if we do not complete our initial business combination within 12 months fromBusiness Combination by the closingend of our initial public offering (or up to 21 months from the closing of our initial public offering if we extend the period of time to consummate a business combination)Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity,Business Combination Activity, and (iii) the redemptionRedemption of all of our public sharesPublic Shares if we are unable to complete our business combination by July 22, 2022 (or April 22, 2023, if we extend the periodend of time to consummate a business combination),the Combination Period, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.Trust Account. In the event we seek stockholder approval in connection with our initial business combination,Business Combination, a stockholder’s voting in connection with the initial business combinationBusiness Combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro-rata share of the trust account.Trust Account. Such stockholder must have also exercised its redemptionRedemption rights as described above. These provisions of our amendedAmended and restated certificate of incorporation,Restated Charter, like all provisions of our amendedAmended and restated certificate of incorporation,Restated Charter, may be amended with a stockholder vote.

Competition

In identifying, evaluating and selecting a target business for our initial business combination,Business Combination, we have encountered and may continue to encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinationsBusiness Combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combinationBusiness Combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholdersPublic Stockholders who exercise their redemptionRedemption rights may reduce the resources available to us for our initial business combinationBusiness Combination and our outstanding rights,Rights, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.Business Combination.

Employees

We currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters, but they devote as much of their time as they deem necessary and intend to continue doing so to our affairs until we have completed our initial business combination.Business Combination. The amount of time they devote in any time period will varyvaries based on whether a target business has been selected for our initial business combination and the stage of the initial business combinationBusiness Combination process we are in. We do not intend to have any full timefull-time employees prior to the completion of our initial business combination.Business Combination.

Periodic Reporting and Financial Information

Our units,Units, Class A common stockCommon Stock and rightsRights are registered under the Exchange Act and, accordingly, we have reporting obligations, including the requirement that we file annual, quarterlyAnnual, Quarterly and current reportsCurrent Reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reportsAnnual Reports, including this Report, have contained and will contain financial statements audited and reported on by our independent registered public accountants.

We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business.business, such as the Kustom Entertainment Registration Statement. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct an initial business combinationBusiness Combination with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combinationBusiness Combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combinationBusiness Combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combinationBusiness Combination candidates, we do not believe that this limitation will be material.

We are required to evaluate our internal control procedures for the fiscal year ending December 31, 20222023 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following July 22, 2026, (b) in which we have total annual gross revenue of at least $1.07$1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stockCommon Stock that areis held by non-affiliates exceeds $700 million as of the prior June 30^th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30^th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30^th.

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. However, belowthe following is a partial list of material risks, uncertainties and other factors that could have a material effect on the Companyus and itsour operations:

We may seek to further extend the Combination Period, which could have a material adverse effect on the amount held in our Trust Account and other adverse effects on our Company.

We may seek to further extend the Combination Period. Such an extension would require the approval of our Public Stockholders, who will be provided the opportunity to redeem all or a portion their Public Shares. Such redemptions will likely have a material adverse effect on the amount held in our Trust Account, our capitalization, principal stockholders and other impacts on our Company or Management Team, such as our ability to maintain our listing on Nasdaq.

If we seek to further extend the Combination Period, such extension would not be in compliance with Nasdaq rules, and unless Nasdaq were to grant us an exemption, will likely lead Nasdaq to suspend trading in or delist our securities.

Our securities are listed on the Nasdaq Capital Market. Nasdaq IM-5101-2 requires that a SPAC complete one or more business combinations within 36 months of the effectiveness of its initial public offering registration statement, which, in our case, would be July 19, 2024 (the “Nasdaq Deadline”). If we were to seek to further extend the Combination Period beyond July 19, 2024, our Combination Period would extend beyond the Nasdaq Deadline. Consequently, further extension of our Combination Period does not comply with Nasdaq rules. There is a risk that, even if an extension were approved by our stockholders, trading in our securities may be suspended and we may be subject to delisting by Nasdaq. We cannot assure you that (i) Nasdaq will not delist our securities in the event such an extension were approved and we do not complete one or more Business Combinations by the Nasdaq Deadline, (ii) we will be able to obtain a hearing with the Panel to appeal the delisting determination, or (iii) our securities will not be suspended pending the Panel’s decision.

If Nasdaq delists any of our securities from trading and we are unable to list our securities on another national securities exchange, we expect our securities could potentially be quoted on an over-the-counter market. However, if this were to occur, we could face significant material adverse consequences. 

Cyber incidents or attacks directed at us or third parties could result in information theft, data corruption, operational disruption and/or financial loss.

We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with whom we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. Any of these occurrences, or a combination of them, could have material adverse consequences on our business and lead to financial loss.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements and numerous complex tax laws. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.

On January 24, 2024, the SEC adopted the 2024 SPAC Rules requiring, 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.

Compliance with the 2024 SPAC Rules and related guidance may (i) increase the costs of and the time needed to negotiate and complete an initial Business Combination and (ii) constrain the circumstances under which we could affect our ability to complete an initial Business Combination.

If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial Business Combination.

The SEC‘s adopting release with respect to the 2024 SPAC Rules provided guidance relating to the potential status of SPACs as investment companies subject to regulation under the Investment Company Act and the regulations thereunder. Whether a SPAC is an investment company is dependent on specific facts and circumstances and we can give no assurance that a claim will not be made that we have been operating as an unregistered investment company.

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including (i) restrictions on the nature of our investments; and (ii) restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial Business Combination.

In addition, we may have imposed upon us burdensome requirements, including: (i) registration as an investment company; (ii) adoption of a specific form of corporate structure; and (iii) reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We are mindful of the SEC’s investment company definition and guidance and intend to complete an initial Business Combination with an operating business, and not with an investment company, or to acquire minority interests in other businesses exceeding the permitted threshold.

We do not believe that our business activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account were initially invested only in U.S. government treasury obligations 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. government treasury obligations; the holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended Business Combination. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, on June 26, 2023, we instructed Continental, as trustee of the Trust Account, to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest bearing demand deposit account at a bank.

Pursuant to the Trust Agreement, Continental is not permitted to invest in securities or assets other than as described above. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intended to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our Initial Public Offering was not intended for persons who were seeking a return on investments in government securities or investment securities. The Trust Account is intended solely as a temporary depository for funds pending the earliest to occur of: (i) the completion of our initial Business Combination; (ii) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend our Amended and Restated Charter (x) in a manner that would affect the substance or timing of our obligation to provide for the redemption of the Public Shares in connection with an initial Business Combination or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within the Combination Period; or (y) with respect to any other provision relating to the rights of holders of shares of our Class A Common Stock or pre-initial Business Combination activity; or (iii) absent an initial Business Combination within the Combination Period, our return of the funds held in the Trust Account to our Public Stockholders as part of our redemption of the Public Shares.

We are aware of litigation claiming that certain SPACs should be considered investment companies. Although we believe that these claims are without merit, we cannot guarantee that we will not be deemed to be an investment company and thus subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial Business Combination or may result in our liquidation. If we are unable to complete our initial Business Combination, our Public Stockholders may receive only approximately $10.00 per Public Share upon the liquidation of our Trust Account and our Rights will expire worthless.

We have received the Delisting Notice indicating that we have failed to regain compliance with the Minimum Public Holders Requirement and the Annual Meeting Requirement and which informed us that our securities may be subject to suspension and delisting pending the outcome of a hearing before the Panel, which we requested on March 8, 2024. If we cannot regain compliance, our securities will be subject to delisting and the liquidity and the trading price of our securities could be adversely affected.

On August 31, 2023, we received a deficiency letter from the Staff of Nasdaq notifying us that we no longer meet the Minimum Public Holders Requirement. The notification received has no immediate effect on our Nasdaq listing. On October 16, 2023, we submitted to Nasdaq a plan to regain compliance with the Minimum Public Holders Requirement. On October 25, 2023, in response to such compliance plan, the Staff granted us an extension of time to regain compliance with the Minimum Public Holders Requirement. Pursuant to the extension, on or before February 27, 2024, we must have filed with Nasdaq documentation that demonstrated that our Common Stock has a minimum of 300 public holders.

On January 23, 2024, we received a deficiency notice from the Staff of Nasdaq notifying us that we are not in compliance with the Annual Meeting Requirement because we did not hold an annual meeting of stockholders within twelve months of our fiscal year ended December 31, 2022. The notification received had no immediate effect on our Nasdaq listing. In accordance with Nasdaq rules, we had 45 calendar days, or until March 8, 2024, to submit a plan to regain compliance with the Annual Meeting Requirement.

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 the Delisting 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 Delisting Notice to us on March 1, 2024, we chose to forego submitting a plan of compliance to Nasdaq related to the Annual Meeting Requirement. Because we were unable to demonstrate compliance with the Minimum Public Holders Requirement and did not submit to Nasdaq a plan of compliance related to the Annual Meeting Requirement, our securities may be subject to suspension and delisting pending the outcome of a hearing before the Panel, which we requested on March 8, 2024.

If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, 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:

For the complete list ofadditional risks relating to our operations, other than as set forth above, see the section titled “Risk Factors” contained in our (i) IPO Registration Statement, and the(ii) 2022 Annual Report, (iii) Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2021, March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, and September 30, 2023, as filed with the SEC on November 26, 2021. We may disclose changes to such factors or disclose additional factors from time to time in2021, May 17, 2022, August 15, 2022, November 14, 2022, May 16, 2023, and November 14, 2023, respectively, and (iii) our future filingsDefinitive Proxy Statements on Schedule 14A, as filed with the SEC.SEC on October 3, 2022, July 7, 2023, and January 3, 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 at www.sec.gov.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 1C. Cybersecurity

As a blank check company, we do not have any operations and our sole business activity has been to search for and consummate a Business Combination. However, because we have investments in our Trust Account and bank deposits and we depend on the digital technologies of third parties, we and third parties may be subject to attacks on or security breaches in our or their systems. Because of our reliance on the technologies of third parties, we also depend upon the personnel and the processes of third parties to protect against cybersecurity threats, and we have no personnel or processes of our own for this purpose. In the event of a cybersecurity incident impacting us, the Management Team will report to the Board of Directors and provide updates on the Management Team’s incident response plan for addressing and mitigating any risks associated with such an incident. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have material adverse consequences on our business and lead to financial loss. We have not encountered any cybersecurity incidents since our Initial Public Offering.

Item 2. Properties.

Our executive offices are located at 1450 Brickell Avenue, Suite 2520, Miami, FL 33131, and our telephone number is (305) 577-0031. Our executive offices are providedThe cost for our use of this space is included in the $10,000  per month fee we pay to us by an affiliate of our sponsor. Commencing on July 19, 2021, we have agreed to pay an affiliate of our sponsor a total of $10,000 per monthSponsor for office space, utilities and secretarial and administrative support.support, pursuant to the Administrative Support Agreement. We consider our current office space adequate for our current operations.

Item 3. Legal Proceedings.

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

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Our units, public sharesUnits, Public Shares and public rightsPublic Rights are each traded on Thethe Nasdaq StockCapital Market LLC under the symbols CLOEU, CLOE and CLOER, respectively. Our unitsUnits commenced public trading on July 20, 2021, and our public sharesPublic Shares and public rightsPublic Rights commenced separate public trading on September 9, 2021.

On August 31, 2023, we received a deficiency letter from the Staff of Nasdaq notifying us that we no longer meet the Minimum Public Holders Requirement. The notification received has no immediate effect on our Nasdaq listing. On October 16, 2023, we submitted to Nasdaq a plan to regain compliance with the Minimum Public Holders Requirement. On October 25, 2023, in response to such compliance plan, the Staff granted us an extension of time to regain compliance with the Minimum Public Holders Requirement. Pursuant to the extension, on or before February 27, 2024, we must have filed with Nasdaq documentation that demonstrated that our Common Stock has a minimum of 300 public holders.

On January 23, 2024, we received a deficiency notice from the Staff of Nasdaq notifying us that we are not in compliance with the Annual Meeting Requirement because we did not hold an annual meeting of stockholders within twelve months of our fiscal year ended December 31, 2022. The notification received had no immediate effect on our Nasdaq listing. In accordance with Nasdaq rules, we had 45 calendar days, or until March 8, 2024, to submit a plan to regain compliance with the Annual Meeting Requirement.

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 the Delisting 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 Delisting Notice to us on March 1, 2024, we chose to forego submitting a plan of compliance to Nasdaq related to the Annual Meeting Requirement. Because we were unable to demonstrate compliance with the Minimum Public Holders Requirement and did not submit to Nasdaq a plan of compliance related to the Annual Meeting Requirement, our securities may be subject to suspension and delisting pending the outcome of a hearing before the Panel, which we requested on March 8, 2024.

On April 1, 2022,March 21, 2024, there were 3three holders of record of our units, 2Units, three holders of record of our shares of Class A common stock, 1 record of our shares of Class B common stockCommon Stock, and 1 holdersone holder of record of our rights.Public Rights.

We have not paid any cash dividends on our common stockCommon Stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination.Business Combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination.Business Combination. The payment of any cash dividends subsequent to our initial business combinationBusiness Combination will be within the discretion of our boardBoard of directorsDirectors at such time. In addition, our boardBoard of directorsDirectors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination,Business Combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

None.

None.On July 20, 2023, upon the approval of the Conversion Amendment Proposal by our stockholders at the 2023 Special Meeting, we issued an aggregate of 3,457,806 shares of Class A Common Stock to our Sponsor, upon the conversion of an equal number of Class B Common Stock held by the Sponsor in 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 others, 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; consequently, the shares of Class A Common Stock issued in connection with the Founder Share Conversion are not registered under the Securities Act and will remain unregistered until registration is demanded by the Sponsor pursuant to the Letter Agreement we entered into with our Sponsor, officers and directors. Following the Founder Share Conversion, the 2023 Redemptions and the 2024 Redemptions, (i) there were (i) 5,320,507 shares of Class A Common Stock issued and outstanding and one share of Class B Common Stock issued and outstanding, and (ii) the Sponsor held 75.7% of the outstanding Class A Common Stock. For more information on the Founder Share Conversion and the Founder Shares’ transfer restrictions, see “Item 1. Business.”

On July 22, 2021, pursuant to the filingFor 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 March 31, 2021, as filed with the SEC on September 2, 2021. 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, which was declared effective on July 19, 2021, the Company consummated its initial public offering of 13,831,230 units, including 1,331,230 units issued pursuantStatement. Our specific investments in our Trust Account may change from time to the partial exercise of the underwriters’ over-allotment option. Each unit consists of one share of Class A common stock and a right to receive one-eighth (1/8) of a share of Class A common stock at the closing of the initial business combination. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $138,312,300. time.

A totalOn 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 $140,386,985the 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 (which amount includes $4,840,931 of the underwriters’ deferred discountInitial Public Offering and $2,074,685 of the proceeds of the sale of the private placement units) was placed in a U.S.-based trust account at JPMorgan Chase Bank N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee. The proceeds held in the trust account may bePrivate Placement are no longer invested by the trustee only in U.S. government securities with a maturity of 185 days or less or in money market funds investing solelyinvested in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act.securities.

Item 6. [Reserved]On January 17, 2024, we held the 2024 Special Meeting at which our stockholders approved, the 2024 Extension, which extended the date by which we must consummate a Business Combination from January 22, 2024 to July 22, 2024 (or such earlier date as determined by the Board). In connection with the 2024 Extension, Public Stockholders holding 202,360 Public Shares properly exercised their right to redeem such shares for a pro rata portion of the Trust Account. We paid cash in the aggregate amount of $2,369,636, or approximately $11.71 per share to such redeeming Public Stockholders in the 2024 Redemptions.

None.There were no such repurchases of our equity securities by us or an affiliate during the further quarter of the fiscal year covered by the Report.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ReferencesCautionary 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 “Company,” “us,” “our”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 “we” referoral forward-looking statements attributable to Clover Leaf Capital Corp., a Delaware corporation. 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 our auditedthe financial statements and relatedthe notes included herein.

Cautionary Note Regarding Forward-Looking Statements

This Report includes forward-looking statements within the meaning of Section 27A of the Securities Act), and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact includedthereto contained elsewhere in this Report. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company recently incorporated in the State of Delaware for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similaran initial Business Combination with one or more businesses (the “Business Combination”).Combination. We may pursue the initial Business Combination target in any industry or geographic location, and we intend to focuswere focusing our search for a target business engaged in the cannabis industry.

The registration statement for our initial public offeringIPO Registration Statement was declared effective on July 19, 2021 (the “Effective Date”).2021. On July 22, 2021, we consummated our initial public offeringInitial Public Offering of 13,831,230 Units at $10.00 per unit,Unit, and the sale of 675,593 units,Units, at a price of $10.00 per unit,Unit, in a private placementthe Private Placement to our Sponsor and Maxim, the representative of the underwriters (the “Representative”),Representative that closed simultaneously with the initial public offering.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 unitsUnits available and subsequently forfeited the remainder of their option as of July 28, 2021. Our managementManagement has broad discretion with respect to the specific application of the net proceeds of the initial public offeringInitial Public Offering and sale of the private placement units,Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating aan initial Business Combination.