Angel Studios, Inc. 10-Q

Item 2. 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,” “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; and (iii) “Sponsor” are to Southport Acquisition Sponsor LLC, a Delaware limited liability company. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This quarterly report, including statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying some of the important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the discussion under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2024 and our quarterly reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”). 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, 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. Overview 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 (“Business Combination”). 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. Sigma Merger Sub, Inc. (“Merger Sub”), a direct wholly owned subsidiary of the Company, was formed in Delaware on September 9, 2024. The Company’s condensed financial statements include Merger Sub and are presented on a consolidated basis. On December 14, 2021, we consummated our initial public offering of 23,000,000 units (“SAC Units”), with each SAC Unit consisting of one share of Class A common stock (“SAC Class A Common Stock”) and one-half of one warrant (“SAC Public Warrant”), each whole SAC Public Warrant entitling the holder thereof to purchase one share of SAC Class A Common Stock for $11.50 per share (subject to adjustment) (the “IPO”). The 23,000,000 SAC Units sold in our IPO include 3,000,000 SAC 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 SAC Units solely to cover over-allotments. The SAC Units were sold at a price of $10.00 per SAC Unit, and our IPO generated gross proceeds of $230.0 million. 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 (“SAC Private Placement Warrants”) at a price of $1.00 per SAC Private Placement Warrant, generating gross proceeds to SAC of $11.7 million. On December 14, 2021, a total of $234.6 million of the net proceeds from our IPO and the Private Placement were deposited in the Trust Account established for the benefit of SAC’s public stockholders at JPMorgan Chase Bank, N.A., with Continental Stock Transfer and Trust (“Continental”), acting as trustee. 25 Table of Contents 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 $100.0 thousand 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 SAC Public Shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (the “SAC Charter”) (i) to modify the substance or timing of our obligation to provide our public stockholders the right to have their SAC 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 SAC 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 of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. Extensions On June 9, 2023 (the “First Extension Special Meeting”), SAC’s stockholders approved a proposal to amend the SAC Charter (the “First Extension Amendment Proposal”) to extend the time that the Company has to consummate its initial Business Combination (the “First Extension”) from June 14, 2023 to September 14, 2023 and to allow the board of directors of SAC, 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. Prior to the First Extension Special Meeting, on May 25, 2023, SAC entered into voting and non-redemption agreements (the “Non-Redemption Agreements”) with unaffiliated third parties (“the Third-Party SAC Investors”) agreeing (i) not to redeem an aggregate of 4,000,000 shares of Class A common stock sold in its IPO (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 the Sponsor agreed to transfer to the Third-Party SAC Investors an aggregate of up to 1,499,996 shares of Class B common stock held by the Sponsor (“SAC Class B Common Stock”), 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 the SAC Charter, the Sponsor converted 4,200,000 shares of SAC Class B Common Stock held by it on a one-for-one basis into shares of SAC Class A Common Stock. After giving effect to the Conversion, SAC had an aggregate of 27,200,000 shares of SAC Class A Common Stock issued and outstanding, comprised of 4,200,000 shares held by the Sponsor and not subject to possible redemption and 23,000,000 shares of SAC Class A Common Stock subject to possible redemption, and 1,550,000 shares of SAC Class B Common Stock issued and outstanding. In connection with the First Extension Special Meeting, the holders of 18,849,935 shares of SAC Class A Common Stock properly exercised their right to redeem their shares for an aggregate redemption amount of $197.7 million, resulting in 4,150,065 shares of SAC Class A Common Stock issued and outstanding and subject to possible redemption. The trustee processed the redemptions and withdrew the $197.7 million payable to the holders redeeming 18,849,935 shares of SAC Class A Common Stock on July 7, 2023. The board of directors of SAC approved six monthly extensions to extend the time SAC had to consummate an initial Business Combination from September 14, 2023 to March 14, 2024. In connection with each of the six monthly extensions, the Sponsor transferred 166,666 shares of SAC 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 (the “Second Extension Special Meeting”), SAC’s stockholders approved a proposal to amend the SAC Charter to further extend the time that the Company has to consummate its initial Business Combination from March 14, 2024 to December 14, 2024. 26 Table of Contents In connection with the Second Extension Special Meeting, the holders of 2,986,952 shares of SAC Class A Common Stock properly exercised their right to redeem their shares for an aggregate redemption amount of $32.2 million, resulting in 1,163,113 shares of SAC Class A Common Stock issued and outstanding and subject to possible redemption. Accordingly, as of September 11, 2024, there were 5,363,113 shares of SAC Class A Common Stock issued and outstanding (including 1,163,113 shares of SAC Class A Common Stock subject to possible redemption) and approximately $12.8 million held in the Trust Account. On March 21, 2024, SAC received correspondence from the staff of NYSE Regulation of the NYSE indicating that the staff has determined to commence proceedings to delist the SAC Class A Common Stock, SAC Public Warrants and SAC Units, because SAC 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 the SAC 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. The SAC 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 September 11, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Merger Sub and Angel Studios, Inc., a Delaware Corporation (“Angel Studios”) (refer to Proposed Business Combination section below). On October 2, 2024, SAC filed a definitive proxy statement (the “Third Extension Proxy Statement”) with respect to a third meeting of the stockholders (the “Third Extension Special Meeting”) to obtain stockholder approval to further amend the SAC Charter to extend the time by which SAC 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 October 11, 2024, SAC received a redemption report from Continental indicating that, as of October 11, 2024, the holders of 985,170 shares of SAC 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, SAC determined to postpone the Third Extension Special Meeting originally scheduled for October 15, 2024, to October 22, 2024, to allow additional time for SAC to engage with its stockholders and solicit redemption reversals. On October 21, 2024, SAC 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 a new proposal to amend the SAC Charter to eliminate the limitation that the SAC may not redeem its outstanding shares of SAC Class A Common Stock to the extent that such redemption would result in SAC having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act), of less than $5,000,001, in order to allow SAC 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 Continental in connection with the Third Extension Special Meeting were not processed. On October 29, 2024, SAC filed an amendment to the Third Extension Proxy Statement that amended and restated the Third Extension Proxy Statement to: (1) reschedule the Third Extension Special Meeting originally scheduled for October 15, 2024, and postponed to October 22, 2024, to November 13, 2024 and (2) reflect the addition of the Redemption Limitation Amendment Proposal. On November 13, 2024, SAC held the Third Extension Special Meeting, at which SAC’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 SAC Class A Common Stock properly exercised their right to redeem their shares for an aggregate redemption amount of $12.5 million, resulting in 37,987 shares of SAC Class A Common Stock issued and outstanding and subject to possible redemption. Accordingly, following such redemptions, there were 4,237,987 shares of SAC Class A Common Stock issued and outstanding (including 37,987 shares of SAC Class A Common Stock subject to possible redemption) and approximately $423.5 thousand held in the Trust Account. On January 15, 2025, certain of the Third-Party SAC Investors transferred an aggregate of 262,502 shares of SAC Class B Common Stock back to the Sponsor for no additional consideration in connection with the liquidation of certain of such investors’ investment vehicles. Accordingly, as of June 30, 2025, the Sponsor holds 4,200,000 shares of SAC Class A Common Stock, 312,506 shares of SAC Class B Common Stock and 11,700,000 SAC Private Placement Warrants. 27 Table of Contents On February 14, 2025, SAC, Angel Studios and Merger Sub entered into the Merger Agreement Amendment (refer to Proposed Business Combination section below). As of June 30, 2025, we had not yet commenced any operations. All activity from inception through June 30, 2025 relates to our formation, our IPO and our pursuit of a target company with which to effect our initial Business Combination. The Company has selected December 31 as its fiscal year end. 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. 28 Table of Contents 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. 29 Table of Contents Results of Operations and Known Trends or Future Events Our entire activity from inception through June 30, 2025 relates solely to our formation, our IPO and our 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. We will generate non-operating income in the form of interest income on cash and cash equivalents. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. 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 June 30, 2025, we had net loss of $1.6 million, which consisted of $4.5 thousand dividend income on marketable securities held in the Trust Account, offset by a $1.2 million loss on the change in fair value of warrant liability, provision for income tax of $277, $170.7 thousand in legal and accounting expenses, $3.6 thousand of franchise tax expense, $142.2 thousand of administrative expenses (of which $45.0 thousand are due to related party), and $25.7 thousand of insurance expense. For the six months ended June 30, 2025, we had net loss of $1.7 million, which consisted of $9.0 thousand dividend income on marketable securities held in the Trust Account and a $182.8 thousand adjustment to franchise tax expense, offset by a $1.2 million loss on the change in fair value of warrant liability, provision for income tax of $88.6 thousand, $345.0 thousand in legal and accounting expenses, $206.0 thousand of administrative expenses (of which $90.0 thousand are due to related party), $50.6 thousand of insurance expense, and $163 of bank fees. For the three months ended June 30, 2024, we had net loss of $505.0 thousand, which consisted of $163.6 thousand dividend income on marketable securities held in the Trust Account, offset by a $331.5 thousand loss on the change in fair value of warrant liability, provision for income tax of $49.4 thousand, $82.8 thousand in legal and accounting expenses, $50.0 thousand of franchise tax expense, $57.1 thousand of administrative expenses (of which $45.0 thousand are due to related party), $80.1 thousand of insurance expense, $21.3 thousand of listing fees, and $1.5 thousand of bank fees. For the six months ended June 30, 2024, we had net loss of $243.4 thousand, which consisted of $723.5 thousand dividend income on marketable securities held in the Trust Account and a $116.5 thousand gain on the change in fair value of warrant liability, offset by a non-redemption agreement expense of $275.0 thousand related to the excess fair value of Class B common stock transferred by the Sponsor, provision for income tax of $114.1 thousand, $143.3 thousand in legal and accounting expenses, $125.9 thousand of franchise tax expense, $203.8 thousand of administrative expenses (of which $90.0 thousand are due to related party), $175.3 thousand of insurance expense, $42.5 thousand of listing fees, and $3.5 thousand of bank fees. Liquidity and Capital Resources As of June 30, 2025 and December 31, 2024, we had cash of $328.6 thousand and $495.0 thousand, respectively, and working capital deficit of $4.4 million and $3.9 million, respectively. For the six months ended June 30, 2025, net cash used in by operating activities was $534.0 thousand. Net loss of $1.7 million was increased by $1.5 thousand of accrued dividends on marketable securities held in the Trust Account and a $33.9 thousand decrease in changes in operating assets and liabilities, offset by a $1.2 million loss on the change in fair value of the warrant liability. For the six months ended June 30, 2024, net cash used in by operating activities was $1.8 million. Net loss of $243.4 thousand was increased by a non-redemption agreement expense of $275.0 thousand related to the transfer of Class B shares by the Sponsor, and decreased by a $116.5 thousand gain on the change in fair value of warrant liability, $54.2 thousand of accrued dividends on marketable securities held in the Trust Account, and $1.7 million decrease in changes in operating assets and liabilities. As of June 30, 2025 and December 31, 2024, we had marketable securities held in the Trust Account of $438.2 thousand and $429.2 thousand, 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. 30 Table of Contents As of June 30, 2025 and December 31, 2024, we had cash of $328.6 thousand and $495.0 thousand, 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. The Sponsor has committed to making capital contributions to SAC in order to fund its search for and consummation of an initial Business Combination. The Sponsor has not provided cash contributions for the three and six months ended June 30, 2025, respectively, and has provided cash contributions of $97.6 thousand and $372.6 thousand for the three and six months ended June 30, 2024. On October 3, 2024, the Sponsor agreed to loan SAC an aggregate of up to $1.0 million to cover expenses related to the Business Combination pursuant to 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 SAC consummates an initial Business Combination. If SAC 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 SAC has funds available to it outside of the Trust Account. As of June 30, 2025 and December 31, 2024, SAC drew $814.1 thousand and $439.0 thousand, 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 in connection with an initial Business Combination. These conditions raise substantial doubt about our ability to continue as a going concern for a period of time through September 30, 2025 which is the termination of the current Extension Period. 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 $1.5 million 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. These warrants would be identical to the SAC 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 Shares or any other form. 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 SAC 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. If we are unable to complete our initial cusiness 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 SAC Charter, the Sponsor converted 4,200,000 shares of SAC Class B Common Stock held by it on a one-for-one basis into shares of SAC Class A Common Stock, resulting in an aggregate of 27,200,000 shares of SAC Class A Common Stock issued and outstanding, comprised of 4,200,000 shares of SAC Class A Common Stock held by the Sponsor and not subject to possible redemption and 23,000,000 shares of SAC Class A Common Stock subject to possible redemption. On June 9, 2023, the holders of 18,849,935 shares of SAC Class A Common Stock properly exercised their right to redeem their shares in connection with the First Extension Special Meeting for $197.7 million in cash, resulting in 4,150,065 shares of SAC 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 SAC Class A Common Stock properly exercised their right to redeem their shares in connection with the Second Extension Special Meeting for $32.2 million in cash, resulting in 1,163,113 shares of Class A common stock issued and outstanding that are subject to possible redemption. On November 13, 2024, the holders of 1,125,126 shares of SAC Class A Common Stock properly exercised their right to redeem their shares in connection with the Third Extension Special Meeting for $12.5 million in cash, resulting in 37,987 shares of SAC Class A Common Stock issued and outstanding that are subject to possible redemption. 31 Table of Contents Off-Balance Sheet Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 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. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of June 30, 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. However, on August 22, 2022, the underwriter delivered a letter to the Company pursuant to which the underwriter waived its entitlement to the payment of the deferred underwriting fee. On October 3, 2024, the Sponsor agreed to lend SAC an aggregate of up to $1.0 million 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 SAC consummates a Business Combination. If SAC 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 SAC has funds available to it outside of the Trust Account. 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. Commitments and Contingencies Registration rights The holders of the SAC Class B Common Stock, SAC Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and in each case holders of the underlying securities thereof, as applicable) are entitled to registration rights pursuant to a registration rights agreement signed on December 9, 2021, requiring the Company to register such securities for resale (in the case of the SAC Class B Common Stock, only after conversion to our SAC Class A Common Stock). The holders of these securities are entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). However, the registration rights agreement provides that the Company is not required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period with respect to such securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement We granted the underwriter a 45-day option from the date of our IPO to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discount. On December 13, 2021, the underwriter exercised the option in full, closing the sale of the 3,000,000 additional Units on December 14, 2021. The underwriter was paid an underwriting commission of $4,600,000 upon the closing of our IPO. In addition, the underwriter 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. 32 Table of Contents On August 22, 2022, the underwriter delivered a letter to the Company pursuant to which the underwriter waived its entitlement to the payment of the deferred underwriting fee. The $8,050,000 waived fee was recorded to accumulated deficit. Non-redemption Agreements Prior to the First Extension Special Meeting, on May 25, 2023, SAC and the Sponsor entered into Non-Redemption Agreements with 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, the Sponsor has agreed to transfer to the Third-Party SAC Investors an aggregate of up to 1,499,996 shares of SAC Class B common stock held by the 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 Fist Extension 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 SAC Class B Common Stock being transferred to the Third-Party SAC Investors. SAC accounted for the Non-Redemption Agreements in accordance with Staff Accounting Bulletin Topic 5T (“SAB Topic 5T”). SAC considered the Sponsor’s transfer of SAC Class B Common Stock to the Third-Party SAC Investors in exchange for the Non-Redemption Agreements as a capital contribution by the Sponsor, and recognized the excess fair value of the transferred SAC Class B Common Stock as a non-redemption agreement expense on the condensed statements of operations for the three and six months ended June 30, 2024. The Company determined the excess fair value of the 1,499,996 SAC Class B Common Stock transferred to the Third-Party SAC Investors to be $1.2 million as of June 30, 2025. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates as of June 30, 2025. Recent Accounting Pronouncements Refer to Note 2. Summary of Significant Accounting Policies of the Notes to the Financial Statements. ​ 33 Table of Contents