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Item 2. Management’s Discussion and Analysis

2025-05-16 compared with 2024-11-14 · 100 added, 78 removed, 62 unchanged (74% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless otherwise stated or the context otherwise requires, references in this quarterly report to (i) the “Company,” “us” or “we” are to Southport Acquisition Corporation, a Delaware corporation;

Unless otherwise stated or the context otherwise requires, references in this quarterly report to (i) the “Company,” “SAC,” “Southport,” “us,” or “we” are to Southport Acquisition Corporation, a Delaware corporation;

(ii) “founder shares” are to shares of our Class B common stock initially purchased by our Sponsor in a Private Placement (as defined herein) prior to our IPO (as defined herein), and the shares of our Class A common stock issued upon the conversion thereof;

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Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

We are a blank check company incorporated as a Delaware corporation on April 13, 2021 and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

We have not identified any Business Combination target.

We intend to effectuate our initial business combination using cash from the proceeds from our IPO and the Private Placement, our capital stock, debt or a combination of cash, capital stock and debt.

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(“Merger Sub”), a direct wholly owned subsidiary of the Company, was formed in Delaware on September 9, 2024.

The Company’s unaudited condensed financial statements include Merger Sub and are presented on a consolidated basis.

On December 14, 2021, we consummated our initial public offering (our “IPO”) of 23,000,000 units (the “Units”), each unit consisting of one share of Class A common stock of the Company, par value $0.0001 per share and one-half of one warrant of the Company, each whole warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per share (subject to adjustment).

The 23,000,000 Units sold in our IPO include 3,000,000 Units sold to BofA Securities, Inc., the underwriter for our IPO (the “underwriter”), pursuant to the underwriter’s full exercise of its option under the underwriting agreement for our IPO to purchase up to 3,000,000 additional Units solely to cover over-allotments.

The Units were sold at a price of $10.00 per Unit, and our IPO generated gross proceeds of $230,000,000.

Simultaneously with the closing of our IPO, we consummated a private placement (the “Private Placement”) with our Sponsor of an aggregate of 11,700,000 warrants (the “private placement warrants”) at a price of $1.00 per private placement warrant, generating gross proceeds to the Company of $11,700,000.

On December 14, 2021, a total of $234,600,000 of the net proceeds from our IPO and the Private Placement were deposited in a trust account (the “Trust Account”) established for the benefit of the Company’s public stockholders at JPMorgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company, acting as trustee.

The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest and are available for a Business Combination, assuming no redemptions, before fees and expenses associated with our initial Business Combination.

Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), the proceeds deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of our initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide our public stockholders the right to have their public shares redeemed in connection with our initial Business Combination or to redeem 100% of our public shares if we do not complete our initial Business Combination by June 14, 2023 or during any extended time we have to consummate our initial Business Combination beyond June 14, 2023 as a result of a stockholder vote to amend our amended and restated certificate of incorporation (an “Extension Period”) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, and (c) the redemption of all of our public shares if we are unable to complete our initial Business Combination by June 14, 2023 or during any Extension Period, subject to applicable law.

The proceeds held in the Trust Account may only be invested in U.S.

government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S.

The Company’s condensed financial statements include Merger Sub and are presented on a consolidated basis.

On December 14, 2021, we completed our IPO of 23,000,000 units (including 3,000,000 units pursuant to the exercise in full of the underwriter’s over-allotment option) and the Private Placement of an aggregate of 11,700,000 private placement warrants.

An aggregate of $234,600,000 in proceeds from our IPO and the Private Placement has been placed in the Trust Account.

Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), the proceeds deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide our public stockholders the right to have their public shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by September 30, 2025 or during an extended time that the Company has to consummate its initial business combination as approved by the stockholders (an “Extension Period”) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (c) the redemption of all of our public shares if we are unable to complete our initial business combination by September 30, 2025 or during any Extension Period, subject to applicable law.

The proceeds held in the Trust Account may only be

invested in U.S.

government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S.

government treasury obligations.

On June 9, 2023, at the First Special Meeting, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to extend the time that the Company has to consummate its initial Business Combination from June 14, 2023 to September 14, 2023 and to allow the board of directors of the Company, without another stockholder vote, to elect to further extend the date to consummate an initial Business Combination after September 14, 2023 up to six times, by an additional month each time, up to March 14, 2024.

In connection with the First Special Meeting, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash, resulting in 4,150,065 shares of Class A common stock issued and outstanding and subject to possible redemption.

Accordingly, at December 31, 2023 and 2022, there were 8,350,065 and 23,000,000 shares of Class A common stock issued and outstanding, including 4,150,065 and 23,000,000 shares of Class A common stock subject to possible redemption, respectively.

In advance of the First Special Meeting, on May 25, 2023, the Company entered into non-redemption agreements with unaffiliated third parties in exchange for each such party agreeing not to redeem public shares held by them in connection with such meeting.

In exchange for the foregoing commitments not to redeem public shares, the Sponsor agreed to transfer to such third parties an aggregate of up to 1,499,996 founder shares.

In addition, in advance of the First Special Meeting and the entry into the non-redemption agreements, on May 25, 2023, pursuant to the terms of the Company’s amended and restated certificate of incorporation, the Sponsor converted 4,200,000 founder shares held by it on a one-for-one basis into public shares.

Prior to March 31, 2024, the board of directors of the Company approved six monthly extensions from September 14, 2023 to March 14, 2024.

In connection with each of the six monthly extensions, the Sponsor transferred 166,666 shares of the Company’s Class B common stock held by the Sponsor to unaffiliated third parties in accordance with those certain voting and non-redemption agreements previously entered into between the Sponsor and such third parties.

In addition, on March 14, 2024, at the Second Special Meeting, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to further extend the time that the Company has to consummate its initial business combination from March 14, 2024 to December 14, 2024.

In connection with the Second Special Meeting, the holders of 2,986,952 shares of Class A common stock properly exercised their right to redeem their shares for an aggregate redemption amount of $32,214,591, resulting in 1,163,113 shares of Class A common stock issued and outstanding and subject to possible redemption.

As of September 30, 2024, we had not yet commenced any operations.

All activity from inception through September 30, 2024 relates to our formation, our IPO and our pursuit of an initial business combination.

The Company has selected December 31 as its fiscal year end.

Agreement and Plan of Merger

On September 11, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company (or “Southport”), Merger Sub, and Angel Studios, Inc., a Delaware Corporation (“Angel Studios”).

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, (i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions thereof, and in accordance with the Delaware General Corporation Law, as amended, Merger Sub will merge with and into Angel Studios, with Angel Studios continuing as the surviving corporation and a wholly owned subsidiary of Southport (the “Merger”);

(ii) at the Closing, all of the outstanding capital stock of Angel Studios (other than shares subject to Angel Studios options, shares held in treasury and any dissenting shares) will be converted into the right to receive shares of common stock, par value $0.0001 per share, of Southport (“Southport Common Stock”), in an aggregate amount equal to (x) $1,500,000,000 plus the aggregate gross proceeds of any capital raised by Angel Studios prior to the Closing, divided by (y) $10.00;

(iii) at the Closing, all of the outstanding options to acquire capital stock of Angel Studios will be converted into comparable options to acquire shares of Southport Common Stock (subject to appropriate adjustments to the number of shares of Southport Common Stock underlying such options and the exercise price of such options);

(iv) subject to the approval of the holders of Southport’s public warrants, Southport will amend its public warrants so that, immediately prior to the Closing, each of the issued and outstanding Southport public warrants automatically will convert into 0.1 newly issued share of Southport Class A Common Stock and such warrants will cease to be outstanding;

and (v) at the Closing, Southport will be renamed “Angel Studios, Inc.”.

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, the approval of the Merger Agreement and the transactions contemplated thereby by the respective stockholders of Southport and Angel Studios, and the approval by Southport’s stockholders of an extension to Southport’s deadline to consummate a business combination to September 30, 2025.

On October 2, 2024, the Company filed a definitive proxy statement with respect to a third special meeting of stockholders (the “Third Special Meeting”) to obtain stockholder approval to further amend the Company’s amended and restated certificate of incorporation to extend the time by which the Company must consummate its initial Business Combination from December 14, 2024 to September 30, 2025, as contemplated by the Merger Agreement (the “Third Extension Amendment Proposal”).

On June 9, 2023, at the First Extension Special Meeting, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to extend the time that the Company has to consummate its initial business combination from June 14, 2023 to September 14, 2023 and to allow the board of directors of the Company, without another stockholder vote, to elect to further extend the date to consummate an initial business combination after September 14, 2023 up to six times, by an additional month each time, up to March 14, 2024, providing the Company a 21-month period (or up to 27-month period) from the closing of the IPO to consummate its initial business combination.

Prior to the First Extension Special Meeting, on May 25, 2023, the Company and our sponsor entered into the Non-Redemption Agreements with the unaffiliated third party investors (“Third-Party SAC Investors”) in exchange for the Third-Party SAC Investors agreeing (i) not to redeem the Non-Redeemed Shares in connection with the First Extension Special Meeting and (ii) to vote in favor of the First Extension Amendment Proposal and the First Extension at the First Extension Special Meeting (other than with respect to certain shares acquired or to be acquired pursuant to the Non-Redemption Agreements).

In exchange for the foregoing commitments, our sponsor agreed to transfer to the Third-Party SAC Investors an aggregate of up to 1,499,996 shares of our Class B common stock held by our sponsor, with 500,000 of such shares to be transferred to the Third-Party SAC Investors promptly upon consummation of the First Extension, and an additional 166,666 shares to be transferred to the Third-Party SAC Investors monthly beginning on September 14, 2023 and up to, and including, February 14, 2024, if the board of directors of SAC elects to further extend the deadline to consummate an initial business combination at or prior to such date, in each case, if the Third-Party SAC Investors continue to hold such Non-Redeemed Shares through the First Extension Special Meeting.

In connection with the First Extension Special Meeting and the entry into the Non-Redemption Agreements, on May 25, 2023, pursuant to the terms of our amended and restated certificate of incorporation, our sponsor converted 4,200,000 shares of our Class B common stock held by it on a one-for-one basis into shares of our Class A common stock.

After giving effect to the Conversion, we had an aggregate of 27,200,000 shares of our Class A common stock issued and outstanding, comprised of 4,200,000 shares held by our sponsor and not subject to possible redemption and 23,000,000 shares of our Class A common stock subject to possible redemption, and 1,550,000 shares of our Class B common stock issued and outstanding.

In connection with the First Extension Special Meeting, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash, resulting in 4,150,065 shares of Class A common stock issued and outstanding and subject to possible redemption.

The board of directors of the Company approved six monthly extensions to extend the time the Company had to consummate an initial business combination from September 14, 2023 to March 14, 2024.

In connection with each of the six monthly extensions, our sponsor transferred 166,666 shares of our Class B common stock held by the sponsor to the Third-Party SAC Investors in accordance with the Non-Redemption Agreements.

In addition, on March 14, 2024, at the Second Extension Special Meeting, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to further extend the time that the Company has to consummate its initial business combination from March 14, 2024 to December 14, 2024.

In connection with the Second Extension Special Meeting, the holders of 2,986,952 shares of Class A common stock properly exercised their right to redeem their shares for an aggregate redemption amount of $32,214,591, resulting in 1,163,113 shares of Class A common stock issued and outstanding and subject to possible redemption.

On March 21, 2024, the Company received correspondence from the staff of NYSE Regulation of the NYSE indicating that the staff has determined to commence proceedings to delist our Class A common stock, SAC Public Warrants and SAC Units, because the Company had fallen below the NYSE’s continued listing standard requiring a listed acquisition company to maintain an average aggregate global market capitalization attributable to its publicly held shares over a consecutive 30 trading day period of at least $40.0 million.

On April 8, 2024, the NYSE filed a Form 25 to delist our Class A common stock, SAC Public Warrants and SAC Units, and to remove such securities from registration under Section 12(b) of the Exchange Act.

The delisting became effective ten days after the filing of the Form 25, and the deregistration became effective 90 days after the Form 25 filing.

Our Class A common stock, SAC Public Warrants and SAC Units remain registered under Section 12(g) of the Exchange Act, and began trading on the OTC Pink Marketplace on or about March 22, 2024 under the ticker symbols “PORT,” “PORTW” and “PORTU,” respectively.

On October 2, 2024, the Company filed a definitive proxy statement with respect to the Third Extension Special Meeting to obtain stockholder approval of the Third Extension Amendment Proposal.

On October 11, 2024, the Company received a redemption report from the Trustee indicating that, as of October 11, 2024, the holders of 985,170 shares of the Company’s Class A common stock had properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.08 per share.

On October 14, 2024, the Company determined to postpone the Third Special Meeting originally scheduled for October 15, 2024, to October 22, 2024, to allow additional time for the Company to engage with its stockholders and solicit redemption reversals.

On October 21, 2024, the Company cancelled the Third Special Meeting and announced that it intended to file an amendment to the definitive proxy statement to reflect the addition of a new proposal to amend the Company’s amended and restated certificate of incorporation to eliminate the limitation that the Company may not redeem its outstanding shares of Class A common stock to the extent that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended), of less than $5,000,001, in order to allow the Company to redeem such shares irrespective of whether such redemption would exceed this limitation (the “Redemption Limitation Amendment Proposal”).

Accordingly, the redemptions indicated on the October 11, 2024 redemption report from the Trustee in connection with the Third Special Meeting were not processed.

On October 29, 2024, the Company filed an amendment to the definitive proxy statement that was filed with the SEC on October 2, 2024 (the “Original Filing”) that amends and restates the Original Filing to:

1) reschedule the Third Special Meeting originally scheduled for October 15, 2024 and postponed to October 22, 2024 (as previously disclosed in the Current Report on Form 8-K filed with the SEC on October 15, 2024) to November 13, 2024 and 2) reflect the addition of the Redemption Limitation Amendment Proposal.

On October 14, 2024, the Company determined to postpone the Third Extension Special Meeting originally scheduled for October 15, 2024, to October 22, 2024, to allow additional time for the Company to engage with its stockholders and solicit redemption reversals.

On October 21, 2024, the Company cancelled the Third Extension Special Meeting and announced that it intended to file an amendment to the definitive proxy statement to reflect the addition of the Redemption Limitation Amendment Proposal.

Accordingly, the redemptions indicated on the October 11, 2024 redemption report from the Trustee in connection with the Third Extension Special Meeting were not processed.

On October 29, 2024, the Company filed an amendment to the Original Filing that amends and restates the Original Filing to:

1) reschedule the Third Extension Special Meeting originally scheduled for October 15, 2024 and postponed to October 22, 2024 (as previously disclosed in the Current Report on Form 8-K filed with the SEC on October 15, 2024) to November 13, 2024 and 2) reflect the addition of the Redemption Limitation Amendment Proposal.

On November 12, 2024, the Company filed a Registration Statement on Form S-4 with the SEC in connection with the Business Combination with Angel Studios.

On November 13, 2024, the Company held the Third Special Meeting, at which the Company’s stockholders approved the Third Extension Amendment Proposal and the Redemption Limitation Amendment Proposal.

cash at a redemption price of approximately $11.08 per share of Class A common stock, for an aggregate redemption amount of approximately $12 million.

On November 13, 2024, the Company held the Third Extension Special Meeting, at which the Company’s stockholders approved the Third Extension Amendment Proposal and the Redemption Limitation Amendment Proposal.

In connection with the vote to approve the Third Extension Amendment Proposal and the Redemption Limitation Amendment Proposal, the holders of 1,125,126 shares of the Company’s Class A common stock properly exercised their right to redeem their shares (and did not withdraw their redemption) for cash at a redemption price of approximately $11.15 per share of Class A common stock, for an aggregate redemption amount of $12,543,118.

On January 15, 2025, certain third-party investors in the Company transferred an aggregate of 262,502 shares of Class B common stock, par value $0.0001 per share, of the Company, which had previously been transferred by the Sponsor to such investors, back to the Sponsor for no additional consideration in connection with the liquidation of certain of such investors’ investment vehicles.

Proposed Business Combination

Merger Agreement

On September 11, 2024, the Company entered into the Merger Agreement, by and among the Company, Merger Sub, and Angel Studios.

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, (i) at the Closing, upon the terms and subject to the conditions thereof, and in accordance with the Delaware General Corporation Law, as amended, Merger Sub will merge with and into Angel Studios, with Angel Studios continuing as the surviving corporation and a wholly owned subsidiary of SAC;

(ii) at the Closing, all of the outstanding capital stock of Angel Studios (other than shares subject to Angel Studios options, shares held in treasury and any dissenting shares) will be converted into the right to receive shares of our common stock, in an aggregate amount equal to (x) $1,500,000,000 plus the aggregate gross proceeds of any capital raised by Angel Studios prior to the Closing, divided by (y) $10.00;

(iii) at the Closing, all of the outstanding options to acquire capital stock of Angel Studios will be converted into comparable options to acquire shares of our common stock (subject to appropriate adjustments to the number of shares of our common stock underlying such options and the exercise price of such options);

(iv) subject to the approval of the holders of SAC’s public warrants, SAC will amend its public warrants so that, immediately prior to the Closing, each of the issued and outstanding SAC public warrants automatically will convert into 0.1 newly issued share of our Class A common stock and such warrants will cease to be outstanding;

and (v) at the Closing, SAC will be renamed “Angel Studios, Inc.”

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) the absence of any law or injunction prohibiting the consummation of the Business Combination, (ii) the effectiveness of the registration statement on Form S-4 filed by SAC in connection with the transaction, (iii) the approval of the Merger Agreement and the transactions contemplated thereby by the respective stockholders of SAC and Angel Studios, and (iv) the receipt of approval for listing on the New York Stock Exchange or the Nasdaq Stock Market (or any other nationally recognized stock exchange in the United States as may be agreed by Angel Studios and SAC) of our Class A common stock (including shares issued in the transaction).

Each party’s obligations to consummate the Business Combination are also conditioned upon the accuracy of the other party’s representations and warranties, subject to customary materiality and material adverse effect qualifiers, and the performance in all material respects by the other party of its covenants in the Merger Agreement to be performed as of or prior to the Closing.

The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) SAC to prepare and file a registration statement on Form S-4, including a joint proxy statement/prospectus, and take certain other actions to obtain the requisite approval of SAC stockholders of certain proposals regarding the Business Combination and SAC warrant holders regarding the warrant conversion, and (iv) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies.

The Merger Agreement contains customary representations and warranties by SAC, Merger Sub and Angel Studios.

The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing.

The Merger Agreement may be terminated at any time prior to the Closing (i) by written consent of SAC and Angel Studios, (ii) by either Angel Studios or SAC, if certain approvals of the stockholders of SAC or Angel Studios, to the extent required under the Merger Agreement, are not obtained as set forth therein, (iii) by Angel Studios, if there is a Modification in Recommendation (as defined in the Merger Agreement), or by SAC, if there is a Company Modification in Recommendation (as defined in the Merger Agreement), and (iv) by either SAC or Angel Studios in certain other circumstances set forth in the Merger Agreement, including (a) if any governmental authority shall have issued or otherwise entered a final, non-appealable order making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger, (b) in the event of certain uncured material breaches by the other party or (c) if the Closing has not occurred on or before September 30, 2025.

On February 14, 2025, SAC, Angel Studios and Merger Sub entered into Amendment No.

1 to the Merger Agreement (the “Merger Agreement Amendment”), which amended the Merger Agreement to (i) remove the closing condition that SAC have at least $5,000,001 of net tangible assets upon the Closing, (ii) amend the definitions of “Acquiror Expense Cap” (as defined in the Merger Agreement Amendment) and “Transaction Expenses” (as defined in the Merger Agreement Amendment) and (iii) amend the provision regarding expense statements.

In connection with the Merger Agreement and subject to the approval of the holders of Southport’s Public Warrants, Southport will amend its Public Warrants so that, immediately prior to the Closing, each of the issued and outstanding Public Warrants automatically will convert into 0.1 newly issued share of Southport Class A common stock and such warrants will cease to be outstanding.

Additionally, in connection with the Sponsor Support Agreement (defined below), the Sponsor has agreed to forfeit all of the Private Placement Warrants held by it at the Closing for no additional consideration.

Support Agreement

On September 11, 2024, SAC entered into a Sponsor Support Agreement (the “Sponsor Support Agreement”), by and among SAC, our sponsor and Angel Studios, pursuant to which our sponsor has agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and (ii) not redeem its shares of our common stock in connection therewith.

In addition, our sponsor has agreed to forfeit all of the private placement warrants held by it at the Closing for no additional consideration.

Our Sponsor has also agreed to cover certain expenses incurred by SAC that are unpaid and payable at the Closing in excess of a specified cap.

The Sponsor Agreement will terminate upon the earlier of the termination of the Merger Agreement or written agreement by the parties.

Angel Studios Stockholder Support Agreement

On September 11, 2024, SAC entered into a Stockholder Support Agreement (the “Angel Studios Stockholder Support Agreement”) by and among SAC, Angel Studios and certain stockholders of Angel Studios (the “Key Stockholders”).

Under the Angel Studios Stockholder Support Agreement, the Key Stockholders agreed, with respect to the outstanding shares of Angel Studios common stock held by such Key Stockholders, to vote their shares or execute and deliver a written consent adopting the Merger Agreement and related transactions and approving the Merger Agreement and transactions contemplated thereby.

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, SAC, our sponsor, certain equity holders of Angel Studios, Jared Stone and the other parties thereto, will enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which SAC will grant customary registration rights to the other parties thereto, including to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of SAC common stock that are held by the other parties thereto.

Lock-Up Agreement

The Merger Agreement contemplates that, at the Closing, SAC and the Key Holders (as defined in the Merger Agreement) will enter into a Lock-Up Agreement (the “Lock-Up Agreement”).

The Lock-Up Agreement contains certain restrictions on transfer with respect to shares of SAC common stock held by the Key Holders immediately following the Closing (other than shares purchased in the public market after the Closing) and the shares of SAC common stock issued to directors and executive officers of the combined company upon settlement or exercise of stock options or other equity awards outstanding as of immediately following the Closing in respect of awards of Angel Studios outstanding immediately prior to the Closing (the “Lock-Up Shares”).

Such restrictions begin at the Closing and end on the earlier of (i) one year after the Closing and (ii) (a) for 33% of the Lock-Up Shares, the date on which the last reported sale price of SAC common stock equals or exceeds $12.50 per share for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing and (b) for an additional 50% of the Lock-Up Shares, the date on which the last reported sale price of SAC common stock equals or exceeds $15.00 per share for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing.

Results of Operations and Known Trends or Future Events

Our entire activity from inception through September 30, 2024 relates solely to our formation, our IPO and, pursuit of an initial business combination.

Our entire activity from inception through March 31, 2025 relates solely to our formation, our IPO, and pursuit of an initial business combination.

We have not generated any operating revenues to date, and we will not generate any operating revenues until after completion of our initial business combination.

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We have incurred and expect to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2024, we had net loss of $1,495,898, which consisted of $165,500 dividend income on marketable securities held in the Trust Account, offset by a $1,392,000 loss on the change in fair value of warrant liability, provision for income tax of $24,220, $87,371 in legal and accounting expenses, $51,268 of franchise tax expense, $56,000 of administrative expenses (of which $45,000 are due to related party), $25,813 of insurance expense, $21,250 of listing fees, $3,108 of other operating costs, and $368 of bank fees.

For the nine months ended September 30, 2024, we had net loss of $1,739,275, which consisted of $889,022 dividend income on marketable securities held in the Trust Account, offset by a $1,275,000 loss on the change in fair value of warrant liability, non-redemption agreement expense of $274,973 related to the excess fair value of Class B common stock transferred by the Sponsor, provision for income tax of $138,344, $230,702 in legal and accounting expenses, $177,142 of franchise tax expense, $259,828 of administrative expenses (of which $135,000 are due to related party), $201,102 of insurance expense, $63,750 of listing fees, $3,108 of other operating costs and $3,848 of bank fees.

For the three months ended September 30, 2023, we had net loss of $10,518, which consisted of $731,196 dividend income on marketable securities held in the Trust Account, offset by a loss of $325,000 on the change in fair value of the warrant liability, a $135,986 financing expense related to the excess fair value of Class B common stock transferred by the Sponsor, provision for income tax of $142,965, $56,330 in legal and accounting expenses, $50,411 of franchise tax expense, $7,845 of administrative expenses, $21,250 of listing fees, and $1,927 of bank fees.

For nine months ended September 30, 2023, we had net income of $2,831,194, which consisted of $6,120,704 dividend income on marketable securities held in the Trust Account, offset by a loss of $725,950 on the change in fair value of the warrant liability, $522,948 of financing expenses related to the excess fair value of Class B common stock transferred by the Sponsor, provision for income tax of $1,253,934, $211,771 in legal and accounting expenses, $149,589 of franchise tax expense, $227,594 of insurance expense, $128,248 of administrative expenses, $63,750 of listing fees, and $5,726 of bank fees.

For the three months ended March 31, 2025, we had net loss of $101,682, which consisted of $4,494 dividend income on marketable securities held in the Trust Account, a $58,900 gain on the change in fair value of warrant liability, and a $186,364 gain on the adjustment of franchise tax expense, offset by, $174,317 in legal and accounting expenses, and $88,327 provision for income tax, $63,766 of administrative expenses (of which $45,000 are due to related party), $24,867 of insurance expense, and $163 of formation and operating costs.

For the three months ended March 31, 2024, we had net income of $261,607, which consisted of $559,907 dividend income on marketable securities held in the Trust Account and a $447,950 gain on the change in fair value of warrant liability and offset by a non-redemption agreement expense of $274,973 related to the excess fair value of Class B common stock transferred by the Sponsor, provision for income tax of $64,703, $60,546 in legal and accounting expenses, $75,874 of franchise tax expense, $151,749 of administrative expenses (of which $45,000 are due to related party), $95,151 of insurance expense, $21,250 of listing fees, and $2,004 of bank fees.

Liquidity and Capital Resources

As of September 30, 2024 and December 31, 2023, we had cash of $517,975 and $2,171,553, respectively, and working capital deficit of $3,166,088 and $2,808,465, respectively.

For the nine months ended September 30, 2024, net cash used in operating activities was $1,860,000.

Net loss of $1,739,275 was decreased by a non-redemption agreement expense of $274,973 related to the transfer of Class B shares by the Sponsor and a $1,275,000 loss on the change in fair value of warrant liability, and increased by $53,099 of accrued dividends on marketable securities held in the Trust Account, and $1,618,101 decrease in changes in operating assets and liabilities.

For the nine months ended September 30, 2023, net cash provided by operating activities was $5,745,670.

Net income of $2,831,194 was increased by a $725,950 loss on the fair value of the warrant liability, $522,948 of non-cash financing expense related to the transfer of Class B shares by the Sponsor, and a $1,853,840 increase in changes in operating assets and liabilities, offset by a decrease for $188,262 of accrued dividends on marketable securities held in the Trust Account.

As of September 30, 2024 and December 31, 2023, we had marketable securities held in the Trust Account of $12,895,117 and $44,709,805, respectively, consisting of securities held in a money market fund that invests in U.S.

As of March 31, 2025 and December 31, 2024, we had cash of $354,346 and $494,974, respectively, and working capital deficit of $4,027,523 and $3,862,447, respectively.

As of March 31, 2025, net cash used in by operating activities was $341,803.

Net loss of $101,682 was increased by a $58,900 gain on the change in fair value of warrant liability, $1,541 of accrued dividends on marketable securities held in the Trust Account and a $179,680 decrease in changes in operating assets and liabilities.

As of March 31, 2024, net cash used in by operating activities was $1,989,167.

Net income of $261,607 was increased by a non-redemption agreement expense of $274,973 related to the transfer of Class B shares by the Sponsor, and decreased by a $447,950 gain on the change in fair value of warrant liability, $175,923 of accrued dividends on marketable securities held in the Trust Account, and $1,901,874 decrease in changes in operating assets and liabilities.

As of March 31, 2025 and 2024, we had marketable securities held in the Trust Account of $433,645 and $429,151, respectively, consisting of securities held in a money market fund that invests in U.S.

Treasury securities with a maturity of 185 days or less.

As of September 30, 2024 and December 31, 2023, we had cash of $517,975 and $2,171,553, respectively, held outside the Trust Account.

As of March 31, 2025 and 2024, we had cash of $354,346 and $494,974, respectively, held outside the Trust Account.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

Our management does not expect that we will be able to fund our liquidity requirements in the next 12 months from our current working capital.

In order to fund the expected working capital deficiency or to finance transaction costs in connection with an intended initial Business Combination, our management plans to seek capital contributions or loans from our management team or our Sponsor or any of their respective affiliates.

However, neither our management team nor our Sponsor or their respective affiliates are obligated to provide capital contributions or loan us these funds, and, as such, there is no assurance that we will be able to obtain sufficient loans to fund any working capital deficiency.

If we receive such loans, up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender.

These warrants would be identical to the Private Placement Warrants.

For the three and nine months ended September 30, 2024, the Sponsor has provided $220,000 and $553,227, respectively, in cash through a capital contribution and no amounts through loans.

For the three and nine months ended September 30, 2023, the Sponsor did not provide cash through a capital contribution or loans.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within 12 months from September 30, 2024.

Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

In addition, we may target businesses with enterprise values that are greater than we could acquire with the net proceeds from our IPO and the Private Placement, and, as a result, if the cash portion of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial Business Combination.

If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.

On May 25, 2023, pursuant to the terms of the amended and restated certificate of incorporation of the Company, the Sponsor converted 4,200,000 shares of the Company’s Class B common stock held by it on a one-for-one basis into shares of the Company’s Class A common stock, resulting in an aggregate of 27,200,000 shares of Class A common stock issued and outstanding, comprised of 4,200,000 shares of Class A common stock held by the Sponsor and not subject to possible redemption and 23,000,000 shares of Class A common stock subject to possible redemption.

On June 9, 2023, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares in connection with the First Special Meeting for $197,694,657 in cash, resulting in 4,150,065 shares of Class A common stock issued and outstanding that are subject to possible redemption.

On March 14, 2024, the holders of 2,986,952 shares of Class A common stock properly exercised their right to redeem their shares in connection with the Second Special Meeting for $32,214,591 in cash, resulting in 1,163,113 shares of Class A common stock issued and outstanding that are subject to possible redemption.

The sponsor has committed to making capital contributions to the Company in order to fund its search for and consummation of an initial business combination.

The sponsor has provided cash contributions of $0 and $235,647 for the three months ended March 31, 2025 and 2024, respectively.

On October 3, 2024, the sponsor agreed to loan the Company an aggregate of up to $1,000,000 to cover expenses related to the Business Combination (the “Sponsor Promissory Note”).

The Sponsor Promissory Note is non-interest bearing and payable on the earlier of September 30, 2025 or the date on which the Company consummates an initial business combination.

If the Company does not consummate a business combination, the Sponsor Promissory Note will not be repaid and all amounts owed under the Sponsor Promissory Note will be forgiven except to the extent that the Company as funds available to it outside of the Trust Account.

As of March 31, 2025 and December 31, 2024, the Company drew $643,132 and $439,004, respectively, under the Sponsor Promissory Note.

We do not believe we will have sufficient funds in order to meet the expenditures required for operating our business prior to our initial business combination.

We expect to incur significant costs related to identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination.

These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.

If we complete our initial

business combination, we would repay such loaned amounts.

In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment.

Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender.

The warrants would be identical to the private placement warrants.

However, the Sponsor Support Agreement provides that if there are any amounts outstanding under any working capital loan extended to SAC by the Sponsor as of the Closing, then notwithstanding the terms of any such working capital loan, SAC will repay such outstanding amounts to the Sponsor at the Closing solely in cash, and not in the form of SAC common stock or any other form.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2024 or December 31, 2023.

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2025 or December 31, 2024.

We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

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Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of September 30, 2024 or December 31, 2023.

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of March 31, 2025 or December 31, 2024.

Pursuant to the underwriting agreement for our IPO, the underwriter of our IPO was entitled to a deferred fee of $0.35 per unit, or $8,050,000 in the aggregate, payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

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We have entered into a letter agreement with our Sponsor pursuant to which we are required to pay our Sponsor a total of $15,000 per month for office space, utilities, and secretarial and administrative services, commencing on December 10, 2021, the date that our securities were first listed on the NYSE, through the earlier of our initial Business Combination and our liquidation.

On October 3, 2024, the Sponsor agreed to loan the Company an aggregate of up to $1,000,000 to cover expenses related to the Business Combination (the “Sponsor Promissory Note”).

The Sponsor Promissory Note is non-interest bearing and payable on the earlier of September 30, 2025 or the date on which the Company consummates a Business Combination.

On October 3, 2024, the sponsor agreed to loan the Company an aggregate of up to $1,000,000 to cover expenses related to the Business Combination.

The Sponsor Promissory Note is non-interest bearing and payable on the earlier of September 30, 2025 or the date on which the Company consummates an initial business combination.

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Non-redemption Agreements

On May 25, 2023, the Company and the Sponsor entered into Non-Redemption Agreements with unaffiliated third parties in exchange for such third parties agreeing (i) not to redeem an aggregate of 4,000,000 shares of Class A common stock sold in its initial public offering (the “Non-Redeemed Shares”) in connection with the First Special Meeting and (ii) to vote in favor of the First Extension Amendment Proposal and the First Extension at the First Special Meeting (other than with respect to certain shares acquired or to be acquired pursuant to the Non-Redemption Agreements).

In exchange for the foregoing commitments, the Sponsor agreed to transfer to such third parties an aggregate of up to 1,499,996 shares of Class B common stock held by the Sponsor, with 500,000 of such shares to be transferred to such third parties promptly upon consummation of the First Extension, and an additional 166,666 shares to be transferred to such third parties monthly beginning on September 14, 2023 and up to, and including, February 14, 2024, if the board of directors of the Company elects to further extend the deadline to consummate an initial Business Combination at or prior to such date, in each case, if such third parties continue to hold such Non-Redeemed Shares through the First Special Meeting.

Prior to March 31, 2024, the Company had extended the deadline to complete the business combination six times, to March 14, 2024, resulting in a total of 1,499,996 shares of Class B common stock being transferred to such third parties.

On May 25, 2023, the Company and the Sponsor entered into Non-Redemption Agreements with unaffiliated third parties in exchange for such third parties agreeing (i) not to redeem an aggregate of 4,000,000 shares of Class A common stock sold in its initial public offering (the “Non-Redeemed Shares”) in connection with the First Special Meeting and (ii) to vote in favor of the First Extension Amendment Proposal and the First Extension at the First Extension Special Meeting (other than with respect to certain shares acquired or to be acquired pursuant to the Non-Redemption Agreements).

In exchange for the foregoing commitments, the Sponsor has agreed to transfer to such third parties an aggregate of up to 1,499,996 shares of Class B common stock held by the Sponsor, with 500,000 of such shares to be transferred to such third parties promptly upon consummation of the First Extension, and an additional 166,666 shares to be transferred to such third parties monthly beginning on September 14, 2023 and up to, and including, February 14, 2024, if the board of directors of the Company elects to further extend the deadline to consummate an initial Business Combination at or prior to such date, in each case, if such third parties continue to hold such Non-Redeemed Shares through the First Extension Special Meeting.

As of March 31, 2024, the Company had extended the deadline to complete the business combination six times, to March 14, 2024, resulting in a total of 1,499,996 shares of Class B common stock being transferred to such third parties.

The Company accounted for the Non-Redemption Agreements in accordance with Staff Accounting Bulletin Topic 5T (“SAB Topic 5T”).

The Company considered the Sponsor’s transfer of Class B common stock to the unaffiliated third parties in exchange for the Non-Redemption Agreements as a capital contribution by the Sponsor, and recognized the excess fair value of the transferred Class B common stock as a non-redemption agreement expense on the condensed consolidated statements of operations for the three and nine months ended September 30, 2024.

The Company considered the Sponsor’s transfer of Class B common stock to the unaffiliated third parties in exchange for the Non-Redemption Agreements as a capital contribution by the Sponsor, and recognized the excess fair value of the transferred Class B common stock as a non-redemption agreement expense on the condensed statements of operations for the three months ended March 31, 2024.

The Company determined the excess fair value of the 1,499,996 Class B shares transferred to such third parties to be $1,209,879.

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Actual results could materially differ from those estimates.

We have not identified any critical accounting estimates as of September 30, 2024.

We have not identified any critical accounting estimates as of March 31, 2025.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis