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Item 9A. Controls and Procedures

2024-03-19 compared with 2023-03-09 · 1150 added, 794 removed, 838 unchanged (70% of the section changed)

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Report on Internal Controls Over Financial Reporting

Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting

or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the

SEC for newly public companies.

required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act (as defined in Rules 13a-15(e) and 15-

d-15(e) under the Securities Exchange Act of 1934, as amended), our management is responsible for establishing and maintaining

adequate internal control over financial reporting.

Our internal control over financial reporting is designed to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external

reporting purposes in accordance with GAAP.

Our internal control over financial reporting includes those policies and procedures

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of

the assets of our company,

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and

directors, and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets

that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our

consolidated financial statements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or

procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting at December 31,

In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the

Treadway Commission (COSO) in Internal Control - Integrated Framework (2013).

Based on our assessments and those criteria,

management determined that we maintained effective internal control over financial reporting as of December 31, 2023.

Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting

firm due to our status as an emerging growth company under the JOBS Act.

previously reported, in connection with the Second Special Meeting, the Company entered into a non-redemption agreement with an unaffiliated

investor (the “Holder”) which agreed to acquire from public stockholders of the Company 1,500,000 to 1,700,000 shares of

Class A common stock in the open market, at a prices no higher than the redemption price per share payable to stockholders who exercise

redemption rights in connection with the stockholder vote to approve the Company’s proposed business combination with SBC (as defined

below), prior to the Second Special Meeting and to agree to waive its redemption rights and hold the shares until after the closing of

the business combination.

The non-redemption agreement terminates on the earliest to occur of (i) the closing date of the business combination,

(ii) the termination of the related business combination agreement, or (iii) April 30, 2024 (the “Clearance Date”) if the

Company has not cleared all SEC comments to its proxy statement in connection with the business combination by that date.

March 15, 2024, the parties to the non-redemption agreement entered into an amendment to the non-redemption agreement to extend the Clearance

Date to June 30, 2024, and to agree to close the business combination on or before August 31, 2024.

A form of the amendment to the non-redemption

agreement is filed with this Annual Report on Form 10-K as Exhibit 10.19 and is incorporated herein by reference.

The foregoing description

of the amendment to the non-redemption agreement is not complete and is qualified in its entirety by reference to the amendment to the

non-redemption agreement filed herewith.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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2012 to February 2014, a seawater air conditioning startup where he was responsible for strategic decisions and project developments.

From 2014 to 2020, Mr.

In January 2024, Mr.

Nakamoto began serving as a board member of Big Brothers

Big Sisters Hawaii, and from 2014 to 2020, Mr.

Nakamoto served as Treasurer, Vice Chair and board member of the Japanese Cultural Center of Honolulu.

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executive, technologist, and a seasoned advisor with more than 25 years of industry experience.

Shindo currently also serves

as Chairman of the Board of Pono Capital Three, Inc.

Shindo previously served as Chief Executive Officer of Pono Capital Corp.

until the closing of its business combination

with AERWINS Technologies Inc.

Shindo previously served as

Chairman of the Board of Pono Capital Three, Inc.

until the closing of its business combination with New Horizon Aircraft Ltd.

January 2024.

Shindo also previously served as Chief Executive Officer of Pono Capital Corp.

until the closing of its business

combination with AERWINS Technologies Inc.

in February 2023.

Recently, Mr.

Shindo started Joynable Corporation,

a software company.

Shindo is also the Vice President and director of Perfect Game Hawaii, a non-profit entity supporting baseball.

Shindo started

Joyn Corporation, a software company.

Shindo is also the Vice President and director of Perfect Game Hawaii, a non-profit

entity supporting baseball.

From 2017 to July 2022, Mr.

Shindo served as the Chief Executive Officer of Junify

Corporation, which operates in California and Japan.

Junify offers zero trust network access software

(software defined border) to help companies better secure their cloud resources.

Shindo has also been retained for a number of

consulting positions since July 2014 for companies working in the health care, travel, technology, construction, and non-profit

From December 2012 to December 2018, Mr.

Shindo served as the Chief Executive Officer of Pono Health based in

California, Washington, and Hawaii, where he provided consulting, data management, analytics, and software development services.

Pono Health was the primary entity of Pono Corporation, founded in December 2012.

Shindo managed healthcare data for individuals

in Hawaii and for clinics in Washington, Oregon and Arizona.

Shindo also developed analytics platform used to calculate gaps in

care, cost savings, and other health metrics.

Shindo served as the Chief Executive Officer of Junify Corporation,

which operates in California and Japan.

Junify offers zero trust network access software (software defined border) to help companies

better secure their cloud resources.

Shindo has also been retained for a number of consulting positions since July 2014 for

companies working in the health care, travel, technology, construction, and non-profit industries.

From December 2012 to December

Shindo served as the Chief Executive Officer of Pono Health based in California, Washington, and Hawaii, where he provided

consulting, data management, analytics, and software development services.

Pono Health was the primary entity of Pono Corporation,

founded in December 2012.

Shindo managed healthcare data for individuals in Hawaii and for clinics in Washington, Oregon and

Shindo also developed analytics platform used to calculate gaps in care, cost savings, and other health

March 2001 to March 2010, Mr.

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Shindo’s entrepreneurial, executive, and advising experience, paired with his public company experience through

Pono Capital Corp and Hoku Scientific, make him a valuable member of our board of directors.

Pono Capital Corp., Pono Capital Three, Inc., and Hoku Scientific, make him a valuable member of our board of directors.

Independent Directors

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Chiba serves as an independent director.

Chiba currently also serves as an Independent Director of Pono Capital Three, Inc.

PTHR) and recently served as an Independent Director of Pono Capital Corp.

until the closing of its business combination

with AERWINS Technologies Inc.

Chiba previously served as an Independent Director of Pono Capital Three, Inc.

until the closing of its business combination with New Horizon Aircraft

in January 2024 and as an Independent Director of Pono Capital Corp.

until the closing of its business combination with AERWINS

Technologies Inc.

in February 2023.

Chiba is also the founder and General Partner of Chiba Dojo Fund, a venture

capital based fund in Tokyo focusing its investing on Internet and IOT related start-ups since September 2019.

Before launching the

Chiba Dojo Fund, Mr.

Chiba is also the founder and General Partner of Chiba Dojo Fund, a venture capital based fund

in Tokyo focusing its investing on Internet and IOT related start-ups since September 2019.

Before launching the Chiba Dojo Fund, Mr.

Chiba founded and continues to serve as the General Partner of the Drone Fund since in June 2017.

Fund is a venture capital-based fund in Tokyo focusing its investment on drones and air mobility start-ups.

The Drone Fund aims to

create a drone and air-mobility enabled society.

One of the Drone Fund’s portfolio companies went public on the Tokyo Mothers

Market in December 2019—the first drone company to make an IPO in Japan.

The Drone Fund is a venture capital-based

fund in Tokyo focusing its investment on drones and air mobility start-ups.

The Drone Fund aims to create a drone and air-mobility enabled

One of the Drone Fund’s portfolio companies went public on the Tokyo Mothers Market in December 2019—the first drone

company to make an IPO in Japan.

As an angel investor, Mr.

Chiba has invested in more

than 60 startups and 40 VC funds in Internet markets and other fields.

Chiba also currently serves or has served as Director of

various mobility and technology companies, including:

Chiba has invested in more than 60 startups and 40 VC funds in Internet markets

and other fields.

Chiba also currently serves or has served as Director of various mobility and technology companies, including:

Aeronext since April 2017, A.L.I.

Technologies, Inc.

since December 2017,

from October 2020 to October 2022, teTra aviation from May 2020 to August 2022, and VFR from October

2021 to November 2022.

since December 2017, Prodrone Co.

from October 2020 to October 2022, teTra

aviation from May 2020 to August 2022, and VFR from October 2021 to November 2022.

Chiba was the co-founder, Executive Vice President and director from January 2009 to July 2016 with COLOPL Inc., which focused

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Mike Sayama serves as an independent director.

Sayama currently also serves as an Independent Director of Pono Capital Three, Inc.

PTHR) and as an Independent Director for AERWINS Technologies Inc.

(f/k/a Pono Capital Corp.) (NASDAQ:

Sayama previously served as an Independent Director of Pono Capital Three, Inc.

until the closing of its business combination with New Horizon Aircraft

in January 2024 and as an Independent Director for AERWINS Technologies Inc.

(f/k/a Pono Capital Corp.).

formerly the Executive Director of Community First since it was established in July 2016 until January 2021.

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Nomura serves as an independent director and Chairwoman of our audit committee.

Nomura currently also serves as an Independent

Director of Pono Capital Three, Inc.

PTHR) and recently served as Chief Financial Officer of Pono Capital Corp.

closing of its business combination with AERWINS Technologies Inc.

Nomura previously served as an Independent

Director and Chairwoman of the audit committee of Pono Capital Three, Inc.

until the closing of its business combination with New Horizon Aircraft

in January 2024 and continues in these roles at the merged company.

She also previously served as Chief Financial

Officer of Pono Capital Corp.

until the closing of its business combination with AERWINS Technologies Inc.

in February 2023.

Since July 2018, Ms.

Nomura has owned a

consulting firm, Ascend Consulting, LLC.

July 2018, Ms.

Nomura has owned a consulting firm, Ascend Consulting, LLC.

Prior to opening her own firm, Ms.

Nomura worked in both public accounting and private

Nomura was the Chief Operating Officer of HiHR from July 2015 to December 2016, and the Vice President of Strategic

Services from May 2014 to July 2015.

Nomura also served as the Chief People Officer of ProService Hawaii from January 2017 to

Nomura began volunteering with the HSCPA since 2010 through the YCPA Squad, has been the Treasurer of Kaneohe Little

League since 2013, and is a member of the AICPA, where she was selected to attend the Leadership Academy, has served as an at-large

Council member and is now proudly serving on the Association Board of Directors.

Nomura is a CPA, not in public practice, and a

She is a graduate of Creighton University, where she obtained her Bachelor of Science in Business Administration in

accounting, and of the University of Hawaii at Manoa, where she earned her Master of Accountancy degree.

consulting, accounting and management skills and knowledge make her an important addition to our board of directors.

Nomura worked in both

public accounting and private industry.

Nomura was the Chief Operating Officer of HiHR from July 2015 to December 2016, and the

Vice President of Strategic Services from May 2014 to July 2015.

Nomura also served as the Chief People Officer of ProService

Hawaii from January 2017 to June 2018.

Nomura currently serves as Vice President of the Hawaii Society of

Certified Public Accountants.

Nomura began volunteering with the HSCPA since 2010 through the YCPA Squad, has been the

Treasurer of Kaneohe Little League since 2013, and is a member of the AICPA, where she was selected to attend the Leadership

Academy, has served as an at-large Council member and has also served on the Association Board of Directors.

CPA, not in public practice, and a CGMA.

She is a graduate of Creighton University, where she obtained her Bachelor of Science in

Business Administration in accounting, and of the University of Hawaii at Manoa, where she earned her Master of Accountancy degree.

Nomura’s consulting, accounting and management skills and knowledge make her an important addition to our board of

and Terms of Office of Officers and Directors

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in carrying out the responsibilities of a director.

Our independent directors will have regularly scheduled meetings at which only independent

Our independent directors have regularly scheduled meetings at which only independent

directors are present.

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have established an audit committee of the board of directors.

Kotaro Chiba, Mike Sayama, and Trisha Nomura will serve as members of

our audit committee.

Kotaro Chiba, Mike Sayama, and Trisha Nomura serve as members of our

audit committee.

Our board of directors has determined that Messrs.

Chiba, Sayama and Nomura meet the independent director standard

under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.

Trisha Nomura will serve as the chairwoman of the audit

Chiba, Sayama and Nomura meet the independent director standard under

Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.

Trisha Nomura serves as the chairwoman of the audit committee.

Each member of the audit committee is financially literate, and our board of directors has determined that Ms.

Nomura qualifies

as an “audit committee financial expert” as defined in applicable SEC rules.

We have adopted an audit committee charter,

which details the principal functions of the audit committee, including:

● appointing,

Nomura qualifies as an

“audit committee financial expert” as defined in applicable SEC rules.

We have adopted an audit committee charter, which

details the principal functions of the audit committee, including:

compensating and overseeing our independent registered public accounting firm;

and approving the annual audit plan for the company;

the integrity of our financial statements and our compliance with legal and regulatory requirements;

the annual audited financial statements and unaudited quarterly financial statements with

management and the independent registered public accounting firm;

the integrity of our consolidated financial statements and our compliance with legal and regulatory requirements;

the annual audited consolidated financial statements and unaudited quarterly consolidated financial statements with management and

the independent registered public accounting firm;

pre-approving

all audit services and permitted non-audit services to be performed by our independent registered

public accounting firm, including the fees and terms of the services to be performed;

all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including

the fees and terms of the services to be performed;

or replacing the independent registered public accounting firm;

● establishing

procedures for the receipt, retention and treatment of complaints (including anonymous complaints)

we receive concerning accounting, internal accounting controls, auditing matters or potential

violations of law;

procedures for the receipt, retention and treatment of complaints (including anonymous complaints) we receive concerning accounting,

internal accounting controls, auditing matters or potential violations of law;

our environmental sustainability and governance practices;

● establishing

procedures for the receipt, retention and treatment of complaints received by us regarding

accounting, internal accounting controls or reports which raise material issues regarding

our financial statements or accounting policies;

procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls

or reports which raise material issues regarding our consolidated financial statements or accounting policies;

audit and non-audit services provided by our independent registered public accounting firm;

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with management our policies and practices with respect to risk assessment and risk management;

any material transaction between our Chief Financial Officer that has been approved in accordance

with our Code of Ethics for our officers, and providing prior written approval of any material

transaction between us and our President;

an annual report for inclusion in our proxy statement, in accordance with applicable rules

and regulations.

any material transaction between our Chief Financial Officer that has been approved in accordance with our Code of Ethics for our

officers, and providing prior written approval of any material transaction between us and our President;

an annual report for inclusion in our proxy statement, in accordance with applicable rules and regulations.

audit committee is a separately designated standing committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

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Sayama, and Trisha Nomura, and Mr.

Sayama will serve as chairman of the compensation committee.

Sayama serves as chairman of the compensation committee.

Under Nasdaq listing standards and applicable

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charter, which details the principal functions of the compensation committee, including:

and approving corporate goals and objectives relevant to our President’s compensation,

evaluating our President’s performance in light of those goals and objectives, and

setting our President’s compensation level based on this evaluation;

salaries and approving incentive compensation and equity awards, as well as compensation

policies, for all other officers who file reports of their ownership, and changes in ownership,

of the company’s common stock under Section 16(a) of the Exchange Act (the “Section

16 Officers”), as designated by our board of directors;

recommendations to the board of directors with respect to incentive compensation programs

and equity-based plans that are subject to board approval;

and approving corporate goals and objectives relevant to our President’s compensation, evaluating our President’s performance

in light of those goals and objectives, and setting our President’s compensation level based on this evaluation;

salaries and approving incentive compensation and equity awards, as well as compensation policies, for all other officers who file

reports of their ownership, and changes in ownership, of the company’s common stock under Section 16(a) of the Exchange Act

(the “Section 16 Officers”), as designated by our board of directors;

recommendations to the board of directors with respect to incentive compensation programs and equity-based plans that are subject

to board approval;

any employment or severance agreements with our Section 16 Officers;

any awards under equity compensation plans and annual bonus plans to our President and the

Section 16 Officers;

any awards under equity compensation plans and annual bonus plans to our President and the Section 16 Officers;

the compensation of our directors;

an annual report on executive compensation for inclusion in our proxy statement, in accordance

with applicable rules and regulations.

an annual report on executive compensation for inclusion in our proxy statement, in accordance with applicable rules and regulations.

Notwithstanding

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nominating committee are Kotaro Chiba, Mike Sayama, and Trisha Nomura and Mr.

Chiba will serve as chairman of the corporate governance

and nominating committee.

Under the Nasdaq listing standards, we are required to have a corporate governance and nominating committee

composed entirely of independent directors.

Chiba serves as chairman of the corporate governance and

nominating committee.

Under the Nasdaq listing standards, we are required to have a corporate governance and nominating committee composed

entirely of independent directors.

Our board of directors has determined that each of Messrs.

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primary function of the corporate governance and nominating committee include:

● identifying

individuals qualified to become members of the board of directors and making recommendations

to the board of directors regarding nominees for election;

the independence of each director and making a recommendation to the board of directors with

respect to each director’s independence;

and recommending to the board of directors the corporate governance principles applicable

to us and reviewing our corporate governance guidelines at least annually;

recommendations to the board of directors with respect to the membership of the audit, compensation

and corporate governance and nominating committees;

the evaluation of the performance of the board of directors and its committees on a continuing

basis, including an annual self-evaluation of the performance of the corporate governance

and nominating committee;

● considering

the adequacy of our governance structures and policies, including as they relate to our environmental

sustainability and governance practices;

● considering

individuals qualified to become members of the board of directors and making recommendations to the board of directors regarding

nominees for election;

the independence of each director and making a recommendation to the board of directors with respect to each director’s independence;

and recommending to the board of directors the corporate governance principles applicable to us and reviewing our corporate governance

guidelines at least annually;

recommendations to the board of directors with respect to the membership of the audit, compensation and corporate governance and

nominating committees;

the evaluation of the performance of the board of directors and its committees on a continuing basis, including an annual self-evaluation

of the performance of the corporate governance and nominating committee;

the adequacy of our governance structures and policies, including as they relate to our environmental sustainability and governance

director nominees recommended by stockholders;

our overall corporate governance and reporting to the board of directors on its findings

and any recommendations.

our overall corporate governance and reporting to the board of directors on its findings and any recommendations.

for Selecting Director Nominees

guidelines for selecting nominees generally provide that persons to be nominated:

possess personal qualities and characteristics, accomplishments and reputation in the business

have current knowledge and contacts in the communities in which we do business and, in our

industry, or other industries relevant to our business;

have the ability and willingness to commit adequate time to the board of directors and committee

demonstrate ability and willingness to commit adequate time to the board of directors and

committee matters;

possess the fit of the individual’s skills and personality with those of other directors

and potential directors in building a board of directors that is effective, collegial and

responsive to our needs;

demonstrate diversity of viewpoints, background, experience, and other demographics, and

all aspects of diversity in order to enable the board of directors to perform its duties

and responsibilities effectively, including candidates with a diversity of age, gender, nationality,

race, ethnicity, and sexual orientation.

possess personal qualities and characteristics, accomplishments and reputation in the business community;

have current knowledge and contacts in the communities in which we do business and, in our industry, or other industries relevant

to our business;

have the ability and willingness to commit adequate time to the board of directors and committee matters;

demonstrate ability and willingness to commit adequate time to the board of directors and committee matters;

possess the fit of the individual’s skills and personality with those of other directors and potential directors in building

a board of directors that is effective, collegial and responsive to our needs;

demonstrate diversity of viewpoints, background, experience, and other demographics, and all aspects of diversity in order to enable

the board of directors to perform its duties and responsibilities effectively, including candidates with a diversity of age, gender,

nationality, race, ethnicity, and sexual orientation.

year in connection with the nomination of candidates for election to the board of directors, the corporate governance and nominating

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requirements applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner, except

for (i) one Form 4 filed late by Dustin Shindo on March 8, 2023 and (ii) one Form 4 filed late by Mehana Capital LLC on March 8,

2023, each of which was filed late due to administrative error.

for one Form 3 filed late by ZUU Co.

on February 6, 2024, which was filed late due to administrative error.

have not entered into any employment agreements with our executive officers and have not made any agreements to provide benefits upon

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OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth as of March 7, 2023 the number of shares of common stock beneficially owned by (i) each person who is known by

us to be the beneficial owner of more than five percent of our issued and outstanding shares of common stock (ii) each of our officers

following table sets forth as of March 18, 2024 the number of shares of common stock beneficially owned by (i) each person who is known

by us to be the beneficial owner of more than five percent of our issued and outstanding shares of common stock (ii) each of our officers

and directors;

and (iii) all of our officers and directors as a group.

As of March 7, 2023, we had 15,066,875 shares of common stock issued

and outstanding, including 12,191,875 shares of Class A common stock, and 2,875,000 shares of Class B common stock.

As of March 18, 2024, we had 5,216,291 shares of common stock

issued and outstanding, including 5,216,290 shares of Class A common stock, and 1 share of Class B common stock.

otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares

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and Address of Beneficial Owner (1)

Capital LLC (Our Sponsor) (2)

officers and directors as a group

otherwise noted, the business address of each of these entities and individuals is 643 Ilalo

Street, #102, Honolulu, Hawaii 96813.

2,875,000 shares of Class B common stock which are convertible into Class A common stock

on a one-for-one basis at the time of our initial business combination.

Mehana Capital LLC,

the Sponsor, is the record holder of the securities reported herein.

Dustin Shindo is the

control person of the Sponsor, and possesses all voting power.

By virtue of this relationship,

Dustin Shindo may be deemed to share beneficial ownership of the securities held of record

Mehana Capital

LLC (Our Sponsor) (2)

Darryl Nakamoto

Allison Van Orman

Dustin Shindo (2)

Trisha Nomura

All officers and directors

(6 individuals)

otherwise noted, the business address of each of these entities and individuals is 643 Ilalo Street, #102, Honolulu, Hawaii 96813.

3,509,374 shares of Class A common stock and 1 share of Class B common stock, which is convertible into 1 share of Class A common

stock on a one-for-one basis at any time at the shareholder’s election.

Excludes 634,375 shares of Class A common stock issuable

upon the exercise of 634,375 private placement warrants.

Dustin Shindo is the control person of the Sponsor, and possesses all voting

By virtue of this relationship, Dustin Shindo may be deemed to share beneficial ownership of the securities held of record

by our sponsor.

Dustin Shindo disclaims any such beneficial ownership except to the extent

of his respective pecuniary interest

Dustin Shindo disclaims any such beneficial ownership except to the extent of his respective pecuniary interest

on the Schedule 13D/A filed by the holder on February 29, 2024.

The holder’s address is 3-6-28 Aobadai, Meguroku, Tokyo 154-0042, Japan.

The reported securities are held directly by ZUU Funders Co.

(“Funders”) and may be deemed to be held indirectly

by ZUU Target Fund for SBC Medical Group HD Investment Partnership (the “Fund”), ZUU Co.

Kazumasa Tomita (“Mr.

Tomita” and, together with Funders, the Fund, and ZUU, the “Reporting Persons”).

is the operating partner of the Fund and a wholly-owned subsidiary of ZUU.

ZUU is majority owned and controlled by Mr.

Reporting Persons disclaim beneficial ownership, except to the extent of their pecuniary interest.

RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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stock for cash, securities or other property.

On May 8, 2023, the Sponsor converted 2,874,999 Founder Shares of Class B common stock

into 2,874,999 shares of Class A common stock, which shares include these same transfer restrictions.

Note - Related Party

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services, as we may require from time to time.

We have agreed to pay to the Sponsor, $10,000 per month for these services during the

9-month period to complete a business combination.

For the period from March 11, 2022 (inception) through December 31, 2022, $50,000

was paid to Mehana Capital LLC for these services.

We have agreed to pay to the Sponsor, $10,000 per month for these services to complete

a business combination.

For the year ended December 31, 2023 and the period from March 11, 2022 (inception) through December 31, 2022,

$120,000 and $50,000 were paid to Mehana Capital LLC for these services, respectively.

Promissory Note

May 26, 2023, we entered into a Convertible Promissory Note with SBC, pursuant to which SBC agreed to loan us an aggregate principal

of $1,000,000 (the “Convertible Promissory Note”).

The Convertible Promissory Note is non-interest bearing and is due and

payable upon the earlier to occur of (i) the date on which our initial Business Combination is consummated and (ii) our liquidation on

or before November 9, 2024, or such later liquidation date as may be approved by our stockholders.

There is an outstanding balance of

$1,000,000 for this SBC loan as of December 31, 2023.

The Convertible Promissory Note may be converted into Class A Common Stock at one

share for each $10 of additional capital contribution at the option of SBC.

As of December 31, 2023 and December 31, 2022, the outstanding

balance under the Convertible Promissory Note amounted to an aggregate of $1,000,000 and $0, respectively.

order to finance transaction costs in connection with the initial business combination, the Sponsor or an affiliate of the Sponsor or

certain of our officers and directors may, but are not obligated to, loan us funds as may be required.

If we complete the initial business combination, we will repay such loaned amounts.

If we complete the initial business

combination, we will repay such loaned amounts.

In the event that the initial business combination does not close, we may use a portion

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to such loans.

As of December 31, 2022, we did not have any outstanding related party loans.

As of December 31, 2023 and December 31, 2022, we did not have any outstanding related party loans.

any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity

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of our initial business combination:

to Mehana Capital LLC, our Sponsor, of $10,000 per month, for up to 9 months or up to 18

months if we elect to extend the time to complete our initial business combination, for office

space, utilities and secretarial and administrative support;

to Mehana Capital LLC, our Sponsor, of $10,000 per month, for up to 27 months if we elect to extend the time to complete our initial

business combination, for office space, utilities and secretarial and administrative support;

Reimbursement

for any out-of-pocket expenses related to identifying, investigating and completing an initial

business combination;

of non-interest-bearing loans which may be made by our sponsor or an affiliate of our sponsor

or certain of our officers and directors to finance transaction costs in connection with

an intended initial business combination, the terms of which (other than as described above)

have not been determined nor have any written agreements been executed with respect thereto.

Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit

at the option of the lender, upon consummation of our initial business combination.

would be identical to the placement units.

of loans from our Sponsor to pay for any amount deposited to pay for any extension of the

time to complete our initial business combination.

All of such loans may be convertible into

units, at a price of $10.00 per unit at the option of the lender, upon consummation of our

initial business combination.

for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination;

of non-interest-bearing loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors

to finance transaction costs in connection with an intended initial business combination, the terms of which (other than as described

above) have not been determined nor have any written agreements been executed with respect thereto.

Up to $1,500,000 of such loans

may be convertible into units, at a price of $10.00 per unit at the option of the lender, upon consummation of our initial business

The units would be identical to the placement units.

of loans from our Sponsor to pay for any amount deposited to pay for any extension of the time to complete our initial business combination.

All of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender, upon consummation of

our initial business combination.

The units would be identical to the placement units.

audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates.

6 unchanged sentences

Marcum for services rendered.

For the period from March 11, 2022 (inception) through December 31, 2022, fees for our independent registered public accounting

firm were $108,184 for the services Marcum performed in connection with our Initial Public Offering and the audit of our

December 31, 2022 financial statements included in this Annual Report on Form 10-K.

the year ended December 31, 2023, fees for our independent registered public accounting firm were $120,902 for the services Marcum

performed in connection with the audit of our December 31, 2023 consolidated financial statements included in this Annual Report on

the period from March 11, 2022 (inception) through December 31, 2022, fees for our independent registered public accounting firm

were $108,184 for the services Marcum performed in connection with our Initial Public Offering and the audit of our December 31,

2022 consolidated financial statements included in this Annual Report on Form 10-K.

Audit-Related

For the period from March 11, 2022 (inception) through December 31, 2022, our independent registered public accounting firm

did not render assurance and related services that are reasonably related to the performance of the audit or review of financial statements.

For the period from March 11, 2022 (inception) through December 31, 2022, Marcum did not render any tax return services, planning

or tax advice.

For the period from March 11, 2022 (inception) through December 31, 2022, there were no fees billed for products and

services provided by our independent registered public accounting firm other than those set forth above.

the year ended December 31, 2023 and for the period from March 11, 2022 (inception) through December 31, 2022, our independent registered

public accounting firm did not render assurance and related services that are reasonably related to the performance of the audit or review

of consolidated financial statements.

For the year ended December 31, 2023 and the period from March 11, 2022 (inception) through December 31, 2022, Marcum did not

render any tax return services, planning or tax advice.

For the year ended December 31, 2023 and the period from March 11, 2022 (inception) through December 31, 2022, there

were no fees billed for products and services provided by our independent registered public accounting firm other than those set forth

audit committee was formed upon the consummation of our Initial Public Offering.

8 unchanged sentences

following documents are filed as part of this Form 10-K:

(1) Financial

of Independent Registered Public Accounting Firm

of Operations

of Changes in Stockholders’ Equity (Deficit)

of Cash Flows

to Financial Statements

(2) Financial

of Independent Registered Public Accounting Firm (PCAOB ID 688)

Balance Sheets

Statements of Operations

Statements of Changes in Stockholders’ Equity (Deficit)

Statements of Cash Flows

Notes to Consolidated Financial Statements

Statement Schedules:

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website at sec.gov.

Agreement, dated August 4, 2022, between the Company and EF Hutton, division of Benchmark Investments, LLC, as representative of

the underwriters named therein, (incorporated by reference to Exhibit 1.1 filed with the Form 8-K filed by the Registrant on August

and Plan of Merger, dated January 31, 2023, by and among Pono, Merger Sub, SBC, the Purchaser Representative, and the Seller Representative

(incorporated by reference to Exhibit 2.1 filed with the Form 8-K filed by the Registrant on February 2, 2023).

Amended and Restated Certificate of Incorporation dated August 4, 2022 (incorporated by reference to Exhibit 3.1 filed with the Form

8-K filed by the Registrant on August 9, 2022).

Laws (incorporated by reference to Exhibit 3.3 filed with the Form S-1 filed by the Registrant on June 14, 2022).

Unit Certificate (incorporated by reference to Exhibit 4.1 filed with the Form S-1/A filed by the Registrant on July 22, 2022).

Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 filed with the Form S-1/A filed by the Registrant on July

Warrant Certificate (incorporated by reference to Exhibit 4.1 filed with the Form 8-K filed by the Registrant on August 9, 2022).

Agreement, dated August 4, 2022, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference

to Exhibit 4.1 filed with the Form 8-K filed by the Registrant on August 9, 2022).

Underwriting Agreement, dated August 4, 2022, between the Company and EF Hutton, division of Benchmark Investments, LLC, as representative of the underwriters named therein, (incorporated by reference to Exhibit 1.1 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Amended and Restated Agreement and Plan of Merger, dated June 21, 2023, by and among Pono, Merger Sub, SBC, the Purchaser Representative, and the Seller Representative (incorporated by reference to Exhibit 2.1 filed with the Form 8-K filed by the Registrant on June 22, 2023) .

Amendment No.

1 to Amended and Restated Agreement and Plan of Merger, dated September 8, 2023, by and among Pono, Merger Sub, SBC, Yoshiyuki Aikawa, and the Seller Representative.

(incorporated by reference to Exhibit 2.2 filed with the Form 8-K filed by the Registrant on September 11, 2023) .

Amendment No.

2 to Amended and Restated Agreement and Plan of Merger, dated October 26, 2023, by and among Pono, Merger Sub, SBC, Yoshiyuki Aikawa, and the Seller Representative.

(incorporated by reference to Exhibit 2.2 filed with the Form 8-K filed by the Registrant on October 26, 2023) .

Amendment No.

3 to Amended and Restated Agreement and Plan of Merger, dated December 28, 2023, by and among Pono, Merger Sub, SBC, Yoshiyuki Aikawa, and the Seller Representative.

(incorporated by reference to Exhibit 2.2 filed with the Form 8-K filed by the Registrant on December 29, 2023) .

Third Amended and Restated Certificate of Incorporation dated August 4, 2022 (incorporated by reference to Exhibit 3.1 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Certificate of Amendment to Third Amended and Restated Certificate of Incorporation, dated May 8, 2023 (incorporated by reference to Exhibit 3.1 filed with the Form 8-K filed by the Registrant on May 9, 2023) .

Certificate of Amendment to Third Amended and Restated Certificate of Incorporation, dated February 5, 2024 (incorporated by reference to Exhibit 3.1 filed with the Form 8-K filed by the Registrant on February 8, 2024) .

By Laws (incorporated by reference to Exhibit 3.3 filed with the Form S-1 filed by the Registrant on June 14, 2022) .

Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 filed with the Form S-1/A filed by the Registrant on July 22, 2022) .

Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 filed with the Form S-1/A filed by the Registrant on July 22, 2022) .

Specimen Warrant Certificate (incorporated by reference to Exhibit 4.1 filed with the Form 8-K filed by the Registrant on August 9, 2022).

Warrant Agreement, dated August 4, 2022, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Description of Securities

and Restated Securities Subscription Agreement, dated May 17, 2022, between the Registrant and Mehana Capital LLC (incorporated by

reference to Exhibit 10.6 filed with the Form S-1 filed by the Registrant on June 14, 2022).

to the Amended and Restated Securities Subscription Agreement, dated July 21, 2022, between the Registrant and Mehana Capital LLC

(incorporated by reference to Exhibit 10.7 filed with the Form S-1/A filed by the Registrant on July 22, 2022).

Note, dated April 25, 2022, issued to Mehana Capital LLC (incorporated by reference to Exhibit 10.5 filed with the Form S-1 filed

by the Registrant on June 14, 2022).

Agreement, dated August 4, 2022, among the Company, Mehana Capital LLC, each of the executive officers and directors of the Company,

and EF Hutton, division of Benchmark Investments, LLC (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by

the Registrant on August 9, 2022).

Management Trust Agreement, dated August 4, 2022, between the Company and Continental Stock Transfer & Trust Company (incorporated

by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on August 9, 2022).

Management Trust Agreement, dated August 9, 2022, by and between the Company and American Stock Transfer & Trust Company, LLC

(incorporated by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on August 9, 2022).

Rights Agreement, dated August 4, 2022, among the Company and certain securityholders (incorporated by reference to Exhibit 10.3

filed with the Form 8-K filed by the Registrant on August 9, 2022).

Unit Purchase Agreement, dated August 4, 2022, between the Company and Mehana Capital LLC (incorporated by reference to Exhibit 10.4

filed with the Form 8-K filed by the Registrant on August 9, 2022).

of Indemnity Agreement (incorporated by reference to Exhibit 10.4 filed with the Form S-1/A filed by the Registrant on July 22, 2022).

Administrative

Support Agreement, dated August 4, 2022, by and between the Company and Mehana Capital LLC (incorporated by reference to Exhibit

10.6 filed with the Form 8-K filed by the Registrant on August 9, 2022).

of Lock-up Agreement (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on February 2, 2023).

of Non-Competition Agreement (incorporated by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on February

of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 filed with the Form 8-K filed by the Registrant on February

Support Agreement (incorporated by reference to Exhibit 10.4 filed with the Form 8-K filed by the Registrant on February 2, 2023).

Agreement (incorporated by reference to Exhibit 10.5 filed with the Form 8-K filed by the Registrant on February 2, 2023).

of Code of Ethics (incorporated by reference to Exhibit 14 filed with the Form S-1/A filed by the Registrant on July 22, 2022).

Amended and Restated Securities Subscription Agreement, dated May 17, 2022, between the Registrant and Mehana Capital LLC (incorporated by reference to Exhibit 10.6 filed with the Form S-1 filed by the Registrant on June 14, 2022) .

Amendment to the Amended and Restated Securities Subscription Agreement, dated July 21, 2022, between the Registrant and Mehana Capital LLC (incorporated by reference to Exhibit 10.7 filed with the Form S-1/A filed by the Registrant on July 22, 2022) .

Promissory Note, dated April 25, 2022, issued to Mehana Capital LLC (incorporated by reference to Exhibit 10.5 filed with the Form S-1 filed by the Registrant on June 14, 2022) .

Letter Agreement, dated August 4, 2022, among the Company, Mehana Capital LLC, each of the executive officers and directors of the Company, and EF Hutton, division of Benchmark Investments, LLC (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Investment Management Trust Agreement, dated August 4, 2022, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Registration Rights Agreement, dated August 4, 2022, among the Company and certain securityholders (incorporated by reference to Exhibit 10.3 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Placement Unit Purchase Agreement, dated August 4, 2022, between the Company and Mehana Capital LLC (incorporated by reference to Exhibit 10.4 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Form of Indemnity Agreement (incorporated by reference to Exhibit 10.4 filed with the Form S-1/A filed by the Registrant on July 22, 2022) .

Administrative Support Agreement, dated August 4, 2022, by and between the Company and Mehana Capital LLC (incorporated by reference to Exhibit 10.6 filed with the Form 8-K filed by the Registrant on August 9, 2022) .

Form of Lock-up Agreement (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on February 2, 2023) .

Form of Non-Competition Agreement (incorporated by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on February 2, 2023) .

Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 filed with the Form 8-K filed by the Registrant on February 2, 2023) .

Purchaser Support Agreement (incorporated by reference to Exhibit 10.4 filed with the Form 8-K filed by the Registrant on February 2, 2023) .

Voting Agreement (incorporated by reference to Exhibit 10.5 filed with the Form 8-K filed by the Registrant on February 2, 2023) .

Form of Non-Redemption Agreement (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on May 4, 2023) .

Note Purchase Agreement, dated as of May 18, 2023, by and between Pono Capital Two, Inc.

and SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on May 19, 2023) .

Form of Convertible Promissory Note (incorporated by reference to Exhibit 10.2 filed with the Form 8-K filed by the Registrant on May 19, 2023) .

Form of Non-Redemption Agreement (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on January 18, 2024) .

Amendment to the Non-Redemption Agreement.

Amendment to Note Purchase Agreement, dated as of February 27, 2024, by and between Pono Capital Two, Inc.

and SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 10.1 filed with the Form 8-K filed by the Registrant on March 1, 2024).

Form of Code of Ethics (incorporated by reference to Exhibit 14 filed with the Form S-1/A filed by the Registrant on July 22, 2022) .

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

4 unchanged sentences

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Clawback Policy .

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within

7 unchanged sentences

are embedded within the Inline XBRL document.

of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation

S-K Item 601(b)(2).

The Registrant agrees to furnish a copy of all omitted exhibits and schedules

to the Securities and Exchange Commission upon its request.

of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2).

The Registrant

agrees to furnish a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

10-K SUMMARY.

9 unchanged sentences

Executive Officer, Director

March 18, 2024

Executive Officer)

1 unchanged sentence

Financial Officer

March 18, 2024

Accounting and Financial Officer)

Dustin Shindo

March 18, 2024

Trisha Nomura

March 18, 2024

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm (PCAOB ID 688 )

Sheet as of December 31, 2022

of Operations for the period from March 11, 2022 (inception) through December 31, 2022

of Changes in Stockholders’ Equity (Deficit) for the period from March 11, 2022 (inception) through December 31, 2022

of Cash Flows for the period from March 11, 2022 (inception) through December 31, 2022

to Financial Statements

TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 688 )

Balance Sheets as of December 31, 2023 and December 31, 2022

Statements of Operations for the year ended December 31, 2023 and for the period from March 11, 2022 (inception) through December 31,

Statements of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2023 and for the period from March 11,

2022 (inception) through December 31, 2022

Statements of Cash Flows for the year ended December 31, 2023 and for the period from March 11, 2022 (inception) through December 31,

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

Pono Capital Two, Inc.

Capital Two, Inc.

on the Financial Statements

have audited the accompanying balance sheet of Pono Capital Two, Inc.

(the “Company”) as of December 31, 2022, the related

statements of operations, changes in stockholders’ equity (deficit) and cash flows for the period from March 11, 2022 (inception)

through December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and

the results of its operations and its cash flows for the period from March 11, 2022 (inception) through December 31, 2022, in conformity

with accounting principles generally accepted in the United States of America.

have audited the accompanying consolidated balance sheets of Pono Capital Two, Inc.

(the “Company”) as of December 31, 2023

and 2022, the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended

December 31, 2023 and for the period from March 11, 2022 (inception) through December 31, 2022, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the year

ended December 31, 2023 and for the period from March 11, 2022 (inception) through December 31, 2022, in conformity with accounting principles

generally accepted in the United States of America.

Paragraph – Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described

in Note 1 to the financial statements, if the Company is unable to complete a business combination by May 9, 2023, then the Company will

cease all operations except for the purpose of liquidating.

The date for mandatory liquidation and subsequent dissolution raises substantial

doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also

described in Note 1.

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

As described in Note

1 to the financial statements, the Company is a Special Purpose Acquisition Corporation that was formed for the purpose of entering into

a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more

businesses on or before November 9, 2024.

The Company entered into an agreement and plan of merger with a business combination target

on January 31, 2023;

however, the completion of this transaction is subject to the approval of the Company’s stockholders among

other conditions.

There is no assurance that the Company will obtain the necessary approvals, satisfy the required closing conditions,

raise the additional capital it needs to fund its operations, and complete the transaction prior to November 9, 2024, if at all.

Company also has no approved plan in place to extend the business combination deadline and fund operations for any period of time after

November 9, 2024, in the event that it is unable to complete a business combination by that date.

These matters raise substantial doubt

about the Company’s ability to continue as a going concern.

Management’s plans with regard to these matters are also described

The financial statements do not include any adjustments that may be necessary should the Company be unable to continue as

a going concern.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

financial statements based on our audit s .

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

1 unchanged sentence

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

We believe that our audits

provide a reasonable basis for our opinion.

have served as the Company’s auditor since 2022.

CAPITAL TWO, INC.

BALANCE SHEETS

Current assets:

Securities held in Trust Account

Prepaid expenses

Total Current Assets

Marketable securities

held in Trust Account

$ 119,942,205

and Stockholders’ Deficit:

Liabilities and Stockholders’

Current liabilities:

underwriting fee payable

and Contingencies (Note 6)

A common stock subject to possible redemption, 11,500,000

shares at redemption value of $ 10.32

$ 118,709,864

Stockholders’

stock, $ 0.0001 par

1,000,000 shares

issued and outstanding

A common stock, $ 0.0001

Accounts payable

Accrued expenses

Convertible Promissory

Franchise tax payable

Income tax payable

Total Current Liabilities

Deferred underwriting

Commitments and Contingencies

Class A common stock subject to possible redemption,

1,922,750 and 11,500,000 shares at redemption value of $ 10.72 and $ 10.32 per share as of December 31, 2023 and 2022, respectively

Stockholders’ Deficit:

Preferred stock, $ 0.0001

1,000,000 shares authorized;

shares issued and outstanding (excluding 11,500,000

shares subject to possible redemption)

B common stock, $ 0.0001

no shares issued and outstanding

A common stock, $ 0.0001 par value;

100,000,000 shares authorized;

issued and outstanding

paid-in capital

3,566,874 1 and 691,875 shares issued and outstanding

(excluding 1,922,750 and 11,500,000 shares subject to possible redemption) at December 31, 2023 and December 31, 2022, respectively

Class B common stock, $ 0.0001

10,000,000 shares authorized;

1 and 2,875,000 issued and outstanding at December 31, 2023 and December 31, 2022, respectively

Common stock value

Additional paid-in capital

( 5,995,269 )

( 3,359,028 )

Stockholders’ Deficit

( 5,994,912 )

( 3,358,671 )

Liabilities and Stockholders’ Deficit

$ 119,942,205

accompanying notes are an integral part of these financial statements.

1 2,874,999 converted Class

B shares are not subject to possible redemption

accompanying notes are an integral part of these consolidated financial statements.

CAPITAL TWO, INC.

OF OPERATIONS

and formation costs

from Operations

and dividend income on investments held in Trust Account

before income taxes

and diluted weighted average shares outstanding, Class A common stock

and diluted net income per share, Class A common stock

and diluted weighted average shares outstanding, Class B common stock

and diluted weighted average shares outstanding

and diluted net income per share, Class B common stock

and diluted net income per share

accompanying notes are an integral part of these financial statements.

STATEMENTS OF OPERATIONS

the year ended

the period from

Operating and formation costs

Franchise tax expense

Loss from Operations

( 1,772,831 )

Other Income:

Interest and dividend

income on investments held in Trust Account

Income before income taxes

Income tax expense

weighted average shares outstanding, Class A common stock

net income per share, Class A common stock

weighted average shares outstanding, Class A common stock

net income per share, Class A common stock

weighted average shares outstanding, Class B common stock

net income per share, Class B common stock

weighted average shares outstanding, Class B common stock

net income per share, Class B common stock

accompanying notes are an integral part of these consolidated financial statements.

CAPITAL TWO, INC.

OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

THE YEAR ENDED DECEMBER 31, 2023

Stockholders’

Balance at December

$ ( 3,359,028 )

$ ( 3,358,671 )

non-redemption agreement

of Class B common stock to Class A common stock

( 2,874,999 )

( 1,000,789 )

of Class A common stock subject to redemption to redemption amount

( 1,975,219 )

at December 31, 2023

$ ( 5,995,269 )

$ ( 5,994,912 )

accompanying notes are an integral part of these consolidated financial statements.

CAPITAL TWO, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

THE PERIOD FROM MARCH 11, 2022 (INCEPTION) THROUGH DECEMBER 31, 2022

A Common Stock

B Common Stock

Stockholders’

at March 11, 2022 (inception)

Balance at March 11, 2022

of Class B common stock to Sponsor (1)

of Placement Units

of Representative shares

Issuance of Representative

allocated to Public Warrants

of offering costs allocated to the fair value of equity instruments

offering costs allocated to the fair value of equity instruments

of Class A common stock subject to redemption to redemption amount

5 unchanged sentences

$ ( 3,358,671 )

accompanying notes are an integral part of these financial statements.

$ ( 3,359,028 )

$ ( 3,358,671 )

(1) Includes up to

375,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the

underwriters (see Note 5).

The underwriters exercised their over-allotment option in full on August 9, 2022;

thus, no shares of common

stock remain subject to forfeiture as of August 9, 2022 (see Note 5).

accompanying notes are an integral part of these consolidated financial statements.

CAPITAL TWO, INC.

OF CASH FLOWS

THE PERIOD FROM MARCH 11, 2022 (INCEPTION) THROUGH DECEMBER 31, 2022

Flows from Operating Activities:

to reconcile net income to net cash used in operating activities:

earned on Marketable securities held in Trust Account

STATEMENTS OF CASH FLOWS

the year ended

the period from

March 11,2022

(inception) through

Cash Flows from Operating

Adjustments to reconcile

net income to net cash used in operating activities:

Interest and dividend income on investments

held in Trust Account

( 2,641,407 )

in operating assets and liabilities:

( 1,345,016 )

Changes in operating assets

and liabilities:

Prepaid expenses

Accounts payable

Accrued expenses

Franchise tax payable

cash used in operating activities

Flows from Investing Activities:

of cash in Trust Account

( 2,132,921 )

cash used in investing activities

Cash Flows from Investing

Investment of cash in Trust

( 117,875,000 )

Flows from Financing Activities:

from sale of placement units

from issuance of Class B common stock to Sponsor

from sale of Units, net of underwriting discount paid

from Sponsor for payment of formation costs

from promissory note - related party

of Promissory note - related party

to Sponsor for payment of formation costs

Proceeds from Trust Account

from Trust Account for payment to redeeming shareholders

cash provided by (used in) investing activities

( 117,875,000 )

Cash Flows from Financing

Proceeds from convertible

promissory note

Payment to redeeming shareholders

( 100,078,879 )

Proceeds from sale of private

placement units

Proceeds from issuance

of Class B common stock to Sponsor

Proceeds from sale of Units,

net of underwriting discount paid

Proceeds from promissory

note - related party

Repayment of Promissory

note - related party

Advance from Sponsor for

payment of formation costs

Repayment to Sponsor for

payment of formation costs

of offering costs

cash provided by financing activities

Change in Cash

- Beginning of period

- End of period

disclosure of non-cash investing and financing activities:

of Class A common stock subject to redemption to redemption amount

value of Representative Shares

underwriting fee payable

accompanying notes are an integral part of these financial statements.

cash (used in) provided by financing activities

( 99,078,879 )

Net Change in Cash

Cash - Beginning of period

Cash - End of period

Supplemental disclosure

of non-cash investing and financing activities:

Excise tax related to redemption of Class A

Shareholder non-redemption

Accretion of Class A

common stock subject to redemption to redemption amount

Fair value of Representative Shares

Deferred underwriting

Cash paid for income

and franchise taxes

accompanying notes are an integral part of these consolidated financial statements.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN

1 unchanged sentence

(the “Company”) is a blank check company incorporated in Delaware on March 11, 2022 .

The Company was formed for the purpose

of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination

with one or more businesses (a “business combination”).

The Company is not limited to a particular industry or geographic

region for purposes of consummating a business combination.

The Company is an early stage and emerging growth company and, as such, the

Company is subject to all of the risks associated with early stage and emerging growth companies.

The Company was formed

for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business

combination with one or more businesses (a “business combination”).

The Company is not limited to a particular industry or

geographic region for purposes of consummating a business combination.

The Company is an early stage and emerging growth company and,

as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

of December 31, 2023, the Company had not commenced any operations.

All activity for the period from March 11, 2022 (inception) through

December 31, 2022 relates to the Company’s formation and initial public offering (“Initial Public Offering”).

will not generate any operating revenues until after the completion of a business combination, at the earliest.

The Company will generate

non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The Company has selected

December 31 as its fiscal year end.

December 31, 2023 relates to the Company’s formation and initial public offering (“Initial Public Offering”) and subsequent

costs related to completing a business combination.

The Company will not generate any operating revenues until after the completion of

a business combination, at the earliest.

The Company will generate non-operating income in the form of interest income from the proceeds

derived from the Initial Public Offering.

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

registration statement for the Company’s Initial Public Offering was declared effective on August 4, 2022.

On August 9, 2022, the

Company consummated the Initial Public Offering of 11,500,000

units, (the “Units” and, with respect

to the Class A common stock included in the Units sold, the “Public Shares”), including 1,500,000

Units issued pursuant to the exercise of the

underwriters’ over-allotment option in full, generating gross proceeds of $ 115,000,000 ,

which is discussed in Note 3.

Company consummated the Initial Public Offering of 11,500,000 units, (the “Units” and, with respect to the Class A common

stock included in the Units sold, the “Public Shares”), including 1,500,000 Units issued pursuant to the exercise of the

underwriters’ over-allotment option in full, generating gross proceeds of $ 115,000,000 , which is discussed in Note 3.

Simultaneously

with the closing of the Initial Public Offering, the Company consummated the sale of 634,375

units (the “Placement Units”) at

a price of $ 10.00

per Placement Unit in a private placement to

Mehana Capital LLC (the “Sponsor”), including 63,000

Placement Units issued pursuant to the exercise

of the underwriters’ over-allotment option in full, generating gross proceeds of $ 6,343,750 ,

with the closing of the Initial Public Offering, the Company consummated the sale of 634,375 units (the “Placement Units”)

at a price of $ 10.00 per Placement Unit in a private placement to Mehana Capital LLC (the “Sponsor”), including 63,000 Placement

Units issued pursuant to the exercise of the underwriters’ over-allotment option in full, generating gross proceeds of $ 6,343,750 ,

which is described in Note 4.

the closing of the Initial Public Offering on August 9, 2022, an amount of $ 117,875,000

per Unit) from the net proceeds of the sale of

the Units in the Initial Public Offering and the sale of the Placement Units was placed in a trust account (the “Trust Account”),

and will be invested only in U.S.

government treasury obligations with maturities 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,

until the earlier of:

(i) the completion of a business combination and (ii) the distribution of the funds held in the Trust Account,

as described below.

costs related to the issuances described above amounted to $ 6,637,645 ,

consisting of $ 1,955,000

of cash underwriting fees, $ 4,025,000

of deferred underwriting fees and $ 67,275

of costs related to Representative Shares and

of other offering costs.

In addition, at December

31, 2022, $ 485,564 of

cash was held outside of the Trust Account and is available for working capital purposes.

the closing of the Initial Public Offering on August 9, 2022, an amount of $ 117,875,000 ($ 10.25 per Unit) from the net proceeds of the

sale of the Units in the Initial Public Offering and the sale of the Placement Units was placed in a trust account (the “Trust

Account”), and will be invested only in U.S.

government treasury obligations with maturities 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, until the earlier of:

(i) the completion of a business combination and (ii) the distribution of the funds held in the Trust

Account, as described below.

costs related to the issuances described above amounted to $ 6,637,645 , consisting of $ 1,955,000 of cash underwriting fees, $ 4,025,000

of deferred underwriting fees and $ 67,275 of costs related to Representative Shares and $ 590,370 of other offering costs.

at December 31, 2023, $ 284,394 of cash was held outside of the Trust Account and is available for working capital purposes.

September 23, 2022, the Company announced that the holders of the Units may elect to separately trade the Public Shares and the Public

4 unchanged sentences

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering

3 unchanged sentences

must complete a business combination with one or more target businesses that together have an aggregate fair market value of at least

of the value of the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income earned

on the Trust Account) at the time of the agreement to enter into an initial business combination.

The Company will only complete a business combination if the post-transaction company owns or acquires 50 %

or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for

it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment

Company Act”).

80 % of the value of the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income

earned on the Trust Account) at the time of the agreement to enter into an initial business combination.

The Company will only complete

a business combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target

or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company

under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

Company will provide its holders of Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion

4 unchanged sentences

The Public Stockholders will

be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $ 10.25

per Public Share, plus any pro rata interest

earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).

There will be no

redemption rights upon the completion of a business combination with respect to the Company’s warrants.

The Public Shares subject

to redemption will be recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering

in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)

Topic 480, Distinguishing Liabilities from Equity (“ASC 480”).

Company will proceed with a business combination if the Company has net tangible assets of at least $ 5,000,001

upon consummation of such business combination

and a majority of the shares voted are voted in favor of the business combination.

If the Company seeks stockholder approval of a business combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation

(the “Amended and Restated Certificate of Incorporation”) provides that a Public Stockholder, together with any affiliate

of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under

Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption

rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.

be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $ 10.25 per Public

Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its

tax obligations).

There will be no redemption rights upon the completion of a business combination with respect to the Company’s

The Public Shares subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion

of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards

Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”).

Company will proceed with a business combination if the Company has net tangible assets of at least $ 5,000,001 upon consummation of such

business combination and a majority of the shares voted are voted in favor of the business combination.

If the Company seeks stockholder

approval of a business combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate

of incorporation (the “Amended and Restated Certificate of Incorporation”) provides that a Public Stockholder, together with

any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as

defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from

seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.

a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the

17 unchanged sentences

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

Company will have until 9 months (or up to 18 months from the closing of the Initial Public Offering at the election of the Company pursuant

to nine one month extensions subject to satisfaction of certain conditions, including the deposit of $379,500 ($0.033 per unit) for such

one month extension, into the Trust Account, or as extended by the Company’s stockholders in accordance with the Amended and Restated

Certificate of Incorporation) from the closing of the Initial Public Offering to consummate a business combination (the “Combination

If the Company is unable to complete a business combination within the Combination Period, the Company will (i) cease

all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter,

redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in

the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $100,000), divided

by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders

(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably

possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors,

proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations

to provide for claims of creditors and the requirements of applicable law .

The underwriters have agreed to waive their rights to the deferred underwriting commission held in the Trust Account in the event the

Company does not complete a business combination within the Combination Period and, in such event, such amounts will be included with

the funds held in the Trust Account that will be available to fund the redemption of the Public Shares.

In the event of such distribution,

it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering

price per Unit ($ 10.00 ).

TO CONSOLIDATED FINANCIAL STATEMENTS

to the Third Amended and Restated Certificate of Incorporation of the Company, the Company had until 9 months (or up to 18 months from

the closing of the Initial Public Offering at the election of the Company pursuant to nine one month extensions subject to satisfaction

of certain conditions, including the deposit of $379,500 ($0.033 per unit) for such one month extension, into the Trust Account, or as

extended by the Company’s stockholders in accordance with the Amended and Restated Certificate of Incorporation) from the closing

of the Initial Public Offering to consummate a business combination (the “Combination Period”).

On February 5, 2024, the

Company filed an amendment to the Third Amended and Restated Certificate of Incorporation of the Company (i) to extend the Combination

Period from February 9, 2023 to November 9, 2024 for no additional amount to be paid by the Sponsor into the Trust Account and (ii) to

provide for the right of a holder of Class B common stock to convert such shares into shares of Class A common stock on a one-for-one

basis prior to the closing of a business combination at the election of the holder If the Company is unable to complete a business combination

within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably

possible but no more than ten business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in

cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest

to pay dissolution expenses up to $100,000), divided by the number of then outstanding Public Shares, which redemption will completely

extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any),

subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining

stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution

of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law.

underwriters have agreed to waive their rights to the deferred underwriting commission held in the Trust Account in the event the Company

does not complete a business combination within the Combination Period and, in such event, such amounts will be included with the funds

held in the Trust Account that will be available to fund the redemption of the Public Shares.

In the event of such distribution, it is

possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price

per Unit ($ 10.00 ).

Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products

sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce

the amounts in the Trust Account to below $ 10.25

per share, except as to any claims by a third

party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s

indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities

Act of 1933, as amended (the “Securities Act”).

In the event that an executed waiver is deemed to be unenforceable against

a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.

The Company will seek

to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have

all vendors, service providers (except for the Company’s independent registered accounting firm), prospective target businesses

or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim

of any kind in or to monies held in the Trust Account.

Concern and Liquidity

Company has incurred and expects to continue to incur significant costs in pursuit of the Company’s financing and acquisition plans.

Management plans to address this uncertainty with the successful closing of the business combination.

The Company will have until May

9, 2023 (or up to February 9, 2024, as applicable) to consummate a business combination.

If a business combination is not consummated

by May 9, 2023, less than one year after the date these financial statements are issued, there will be a mandatory liquidation and subsequent

dissolution of the Company.

Management has determined that the mandatory liquidation, should a business combination not occur, and potential

subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have

been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 9, 2023.

intends to complete the initial business combination before the mandatory liquidation date.

However, there can be no assurance that the

Company will be able to consummate any business combination by May 9, 2023.

the amounts in the Trust Account to below $ 10.25 per share, except as to any claims by a third party who executed a waiver of any and

all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of

the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities

In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible

to the extent of any liability for such third-party claims.

The Company will seek to reduce the possibility that the Sponsor will have

to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s

independent registered accounting firm), prospective target businesses or other entities with which the Company does business, execute

agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Concern and Liquidity

of December 31, 2023, the Company had $ 284,394 in cash held

outside of the Trust Account, working capital deficit, net of income tax payable and franchise tax payable of $ 1,129,417

and accumulated deficit of $ 5,995,269 .

The Company has incurred and expects to continue to incur significant costs in pursuit of the Company’s financing and

acquisition plans.

For the year ended December 31, 2023, the Company had a loss from operations of $ 1,772,831

and net cash used in operating activities was $ 2,132,921 .

The Company’s liquidity needs to date have been further satisfied through a Convertible Promissory Note of $ 1,000,000

issued on May 26, 2023.

The Company expects that it will need additional capital to satisfy its liquidity needs beyond the net

proceeds from the consummation of the Initial Public Offering held outside of the Trust Account for paying existing accounts payable

and consummating the Business Combination.

Although certain of the Company’s initial stockholders, officers and directors or

their affiliates have committed up to $ 1,500,000

Working Capital Loans (see Note 5) from time to time or at any time, there is no guarantee that the Company will receive such funds.

In addition, the Company will have until November 9, 2024 to consummate a business combination.

If a business combination is not

consummated by November 9, 2024, less than one year after the date these consolidated financial statements are

issued, there will be a mandatory liquidation and subsequent dissolution of the Company.

Management has determined that the

mandatory liquidation, along with the lack of liquidity, should a business combination not occur, and potential subsequent

dissolution, raises substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have been

made to the carrying amounts of assets or liabilities should the Company be required to liquidate after November 9, 2024.

Company intends to complete the initial business combination before the mandatory liquidation date.

However, there can be no

assurance that the Company will be able to consummate any business combination by November 9, 2024.

and Uncertainties

continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that

the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target

company, the specific impact is not readily determinable as of the date of these financial statements.

The financial statements do not

include any adjustments that might result from the outcome of this uncertainty.

Additionally,

as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related

economic sanctions, the Company’s ability to consummate a business combination, or the operations of a target business with which

the Company ultimately consummates a business combination, may be materially and adversely affected.

Further, the Company’s ability

to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events,

including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms

acceptable to the Company or at all.

The impact of this action and related sanctions on the world economy and the specific impact on

the Company’s financial position, results of operations and/or ability to consummate a business combination are not yet determinable.

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

military action commenced in February 2022 between the Russian Federation and Belarus in the country of Ukraine and related economic sanctions,

as well as the military action between Hamas and Israel and the risk of escalations of other military conflicts have created and are

expected to create global economic consequences.

As a result, the Company’s ability to consummate a business combination, or the

operations of a target business with which the Company ultimately consummates a business combination, may be materially and adversely

Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing

which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party

financing being unavailable on terms acceptable to the Company or at all.

The impact of this action and related sanctions on the world

economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a business

combination are not yet determinable.

These consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.

12 unchanged sentences

out and prevent the abuse or avoidance of the Excise Tax.

redemption or other repurchase that occurs after December 31, 2022, in connection with a business combination, votes relating to certain

amendments to the Company’s Amended and Restated Certificate of Incorporation or otherwise, may be subject to the Excise Tax.

and to what extent the Company would be subject to the Excise Tax in connection with a business combination, votes relating to certain

amendments to the Company’s Amended and Restated Certificate of Incorporation or otherwise would depend on a number of factors,

including (i) the fair market value of the redemptions and repurchases in connection with the business combination, extension or otherwise,

(ii) the structure of a business combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection

with a business combination (or otherwise issued not in connection with a business combination but issued within the same taxable year

of a business combination) and (iv) the content of regulations and other guidance from the Treasury.

The mechanics of any required payment

of the Excise Tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete a business combination and in the Company’s ability to effect an extension of the time in which the Company must complete a business combination

or complete a business combination.

redemption or other repurchase that occurs on or after January 1, 2023, in connection with a business combination, votes relating to

certain amendments to the Company’s Amended and Restated Certificate of Incorporation or otherwise, may be subject to the Excise

Whether and to what extent the Company would be subject to the Excise Tax in connection with a business combination, votes relating

to certain amendments to the Company’s Amended and Restated Certificate of Incorporation or otherwise would depend on a number

of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business combination, extension

or otherwise, (ii) the structure of a business combination, (iii) the nature and amount of any “PIPE” or other equity issuances

in connection with a business combination (or otherwise issued not in connection with a business combination but issued within the same

taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury.

The mechanics of any

required payment of the Excise Tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete

a business combination and in the Company’s ability to effect an extension of the time in which the Company must complete a business

combination or complete a business combination.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Consideration

of IR Act Excise Tax

May 8, 2023, the Company’s stockholders redeemed 9,577,250 Class A shares for a total of $ 100,078,879 .

The Company evaluated the

classification and accounting of the stock redemption under ASC 450, “Contingencies”.

ASC 450 states that when a loss contingency

exists the likelihood that the future events will confirm the loss or impairment of an asset or the incurrence of a liability can range

from probable to remote.

A contingent liability must be reviewed at each reporting period to determine appropriate treatment.

evaluated the current status and probability of completing a Business Combination as of December 31, 2023 and determined that a contingent

liability should be calculated and recorded.

As of December 31, 2023, the Company recorded $ 1,000,789 of excise tax liability calculated

as 1% of shares redeemed.

Business Combination

January 31, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company,

Pono Two Merger Sub, Inc., a Delaware corporation incorporated in January 2023, and a wholly-owned subsidiary of the Company (“Merger

Sub”), SBC Medical Group Holdings Incorporated, a Delaware corporation (“SBC”), Mehana Capital, LLC, in its capacity

as Purchaser Representative, and Yoshiyuki Aikawa, in his capacity as Seller Representative.

to the Merger Agreement, at the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into

SBC, with SBC continuing as the surviving corporation.

The transactions contemplated by the Merger Agreement are referred to herein as

the “Business Combination.”

a condition to closing of the Business Combination, SBC will complete certain restructuring transactions pursuant to which SBC Medical

Group Co., Ltd., a Japanese corporation (“SBC-Japan”) and certain related entities which carry on the business of SBC-Japan

and such other related entities, will become subsidiaries of SBC.

consideration for the Business Combination, the holders of SBC securities as of the closing of the Business Combination, collectively

will be entitled to receive from the Company, in the aggregate, a number of the Company’s securities with an aggregate value equal

to (a) $1,000,000,000, minus (b) the amount, if any, by which $3,000,000 exceeds SBC’s Net Working Capital, plus (c) the amount,

if any, by which SBC’s Net Working Capital exceeds $3,000,000, minus (d) the aggregate amount of any outstanding indebtedness (minus

cash held by SBC) of SBC at Closing, minus (e) specified transaction expenses of SBC associated with the Business Combination.

Merger Consideration otherwise payable to SBC stockholders at the Closing is subject to a number of shares of Pono Class A common stock

equal to three percent (3.0%) of the Merger Consideration being placed in escrow with an escrow agent to be agreed by the parties, for

post-closing adjustments (if any) to the Merger Consideration.

Merger Consideration is subject to adjustment after the Closing based on confirmed amounts of the Closing Net Indebtedness, Net Working

Capital and transaction expenses as of the Closing Date.

If the adjustment is a negative adjustment in favor of the Company, the escrow

agent shall distribute to the Company a number of shares of the Company’s Class A common stock with a value equal to the absolute

value of the adjustment amount.

If the adjustment is a positive adjustment in favor of SBC, the Company will issue to the SBC stockholders

an additional number of shares of the Company’s Class A common stock with a value equal to the adjustment amount.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

April 26, 2023, the Company entered into an amendment to the Merger Agreement (the “Amendment”) with the other parties thereto.

Prior to the Amendment, the Merger Agreement provided that the 1,200,000 newly issued shares of Class A Common Stock (“Sponsor

Shares”) will be issued to the Sponsor on the date that is the earlier of (a) the six (6) month anniversary of the Closing or (b)

the expiration of the “Founder Shares Lock-up Period” (as defined in the Company’s Insider Letter with the initial

stockholders).

Pursuant to the Amendment, the Sponsor in its sole discretion may direct the Company to issue all or a portion of the

Sponsor Shares on an earlier or later date as it may determine, which date will not be earlier than the Closing.

In addition, pursuant

to the Amendment, the date by which (i) SBC will complete its agreed upon disclosure schedules, (ii) the Company will complete its due

diligence review of SBC, and (iii) the parties to the Merger Agreement will agree upon any modifications or amendments to the Merger

Agreement to the terms and conditions therein, among other related matters, was extended from April 28, 2023 to May 31, 2023.

agreed to purchase, or to cause one of its Affiliates to purchase, equity in the Sponsor in an amount equal to $ 1,000,000 , by way of

a separate agreement.

In the event that the parties failed to agree upon and execute the investment documents by May 5, 2023, then, for

a period of two business days thereafter, either party could have terminated the Merger Agreement by providing written notice to the

In the event that the investment documents were agreed upon and executed by all parties by May 5, 2023, but SBC did not

make payment for the investment on or before May 15, 2023, then, for a period of two business days thereafter, the Company could have

terminated the Merger Agreement by providing written notice to SBC.

Neither party provided notice of termination of the Merger Agreement

within two business days as a result of failing to agree upon the investment documents by May 5, 2023.

May 5, 2023, the Company held a special meeting of stockholders (the “Special Meeting”), and the chairman adjourned the Special

Meeting to May 8, 2023.

During the Special Meeting, stockholders approved an amendment to the Company’s amended and restated certificate

of incorporation (i) to extend the date by which the Company has to consummate a business combination from May 9, 2023 to February 9,

2024 for no additional amount to be paid by the Sponsor into the Trust Account and (ii) to provide for the right of a holder of Class

B common stock to convert such shares into shares of Class A common stock on a one-for-one basis prior to the closing of a business combination

at the election of the holder (the “Extension Amendment”).

The Company’s stockholders elected to redeem an aggregate

of 9,577,250 shares of Class A common stock of the Company in connection with the Special Meeting.

Following such redemptions, the amount

of funds remaining in the trust account is approximately $ 20.0 million.

connection with the Special Meeting, the Company and the Sponsor entered into non-redemption agreements with certain unaffiliated stockholders

owning, in the aggregate, 998,682 shares of the Company’s Class A common stock, pursuant to which such stockholders agreed, among

other things, not to redeem or exercise any right to redeem such public shares in connection with the Extension Amendment.

In connection

with the non-redemption agreements, the Sponsor agreed to transfer to the stockholders that entered into such agreements Sponsor Shares

upon the consummation of the Company’s initial business combination.

May 8, 2023, the Sponsor converted 2,874,999 Founder Shares of Class B common stock into 2,874,999 shares of Class A common stock, pursuant

to the Third Amended and Restated Certificate of Incorporation of the Company.

February 3, 2024, the Company held a special meeting of stockholders (the “Special Meeting”), and the chairman adjourned

the Special Meeting to February 3, 2024.

During the Special Meeting, stockholders approved an amendment to the Company’s amended

and restated certificate of incorporation (i) to extend the date by which the Company has to consummate a business combination from February

9, 2024 to November 9, 2024 for no additional amount to be paid by the Sponsor into the Trust Account and (ii) to provide for the right

of a holder of Class B common stock to convert such shares into shares of Class A common stock on a one-for-one basis prior to the closing

of a business combination at the election of the holder (the “Extension Amendment”).

The Company’s stockholders elected

to redeem an aggregate of 273,334 shares of Class A common stock of the Company in connection with the Special Meeting.

Following such

redemptions, the amount of funds remaining in the trust account is approximately $ 17.9 million.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

February 27, 2024, the Company and SBC entered into an Amendment to the Note Purchase Agreement (the “Amended Note Purchase Agreement”),

which increased the purchase price of the Note from $ 1,000,000 to $ 2,700,000 .

In connection with entering into the Amended Note Purchase

Agreement, the Company and SBC amended the Note (the “Amended Note”) to increase the Principal Amount from $ 1,000,000 to

$ 2,700,000 .

In consideration for entering into the Amended Note, each of the parties to the Merger Agreement agreed to release each other

party from any claims arising out of any termination of the Merger Agreement or failure to consummate the transactions contemplated thereby.

and Restated Merger Agreement

June 21, 2023, the Company entered into an Amended and Restated Agreement and Plan of Merger (the “A&R Merger Agreement”)

with the parties thereto.

Prior to the A&R Merger Agreement, the Merger Agreement provided that by June 22, 2023:

(i) SBC shall complete

its agreed upon disclosure schedules, (ii) the Company shall complete its due diligence review of SBC, and (iii) the parties to the Original

Agreement shall agree upon any modifications or amendments to the Original Agreement to the terms and conditions therein.

entered into the A&R Merger Agreement in connection with such requirements.

A&R Merger Agreement revised the target companies to be directly or indirectly purchased by the Company following a restructuring

of SBC’s corporate structure, to include only the Service Companies and Other Entities, and to no longer include the direct or

indirect purchase of SBC’s Medical Corporations, and as a result, removed other references to the Medical Corporations, including

the related representations and warranties, among others.

Pursuant to the A&R Merger Agreement, the parties agreed that, following

the date of the A&R Merger Agreement, SBC used its commercially reasonable efforts to complete its disclosure schedules and delivered

them to the Company by August 31, 2023.

Upon delivery of the disclosure schedules to the Company, the disclosure schedules were deemed

to modify and supplement SBC’s representations and warranties set forth in the A&R Merger Agreement.

The A&R Merger Agreement

also extended the date by which the Closing shall occur from September 30, 2023 (subject to extension) to December 31, 2023.

to the A&R Merger Agreement, the parties also agreed that any future expenses incurred in connection with the extension of the time

by which the Company must complete its initial business combination shall be borne entirely by the Company, which replaces and supersedes

the prior requirement under the Original Agreement for the Company and SBC to share such expenses equally.

See the Current Report on

Form 8-K filed by the Company with the SEC on June 22, 2023 for additional details.

September 8, 2023, Pono entered into the First Amendment to the A&R Merger Agreement (the “Amendment”) with the parties

Prior to the Amendment, the A&R Merger Agreement provided for the holders of SBC securities collectively to be entitled

to receive from Pono, in the aggregate, a number of Pono securities with an aggregate value equal to (the “Merger Consideration”)

(a) $1,200,000,000, minus (b) the amount, if any, by which $3,000,000 exceeds SBC’s Net Working Capital, plus (c) the amount, if

any, by which SBC’s Net Working Capital exceeds $3,000,000, minus (d) the aggregate amount of any outstanding indebtedness (minus

cash held by SBC) of SBC at Closing, minus (e) specified transaction expenses of SBC associated with the Business Combination.

to the Amendment, the $1,200,000,000 amount in the Merger Consideration calculation above was reduced to $1,000,000,000.

October 26, 2023, Pono entered into the Second Amendment to the Merger Agreement (the “Amendment”) with the parties thereto.

Prior to the Amendment, the Pono board of directors as of the Closing was to be designated as follows:

(i) three persons designated prior

to the Closing by SBC, two of whom must qualify as independent directors;

(ii) one person designated prior to the Closing by Pono;

(iii) one person mutually agreed upon and designated prior to the Closing by Pono and SBC, who must qualify as an independent director.

Following the Amendment, the Pono board of directors as of the Closing will be designated as follows:

(i) three persons designated prior

to the Closing by SBC, at least one of whom must qualify as an independent director;

(ii) one person designated prior to the Closing

by Pono, who must qualify as an independent director;

and (iii) one person mutually agreed upon and designated prior to the Closing by

Pono and SBC, who must qualify as an independent director.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

December 28, 2023, Pono entered into the Third Amendment to the Merger Agreement (the “Amendment”) with the parties thereto.

The Amendment was entered into solely to extend the Outside Date (as defined in the Merger Agreement) from December 31, 2023 to March

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United

States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

accompanying consolidated financial statements of the Company are presented in conformity with accounting principles generally

accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

of Consolidation

accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

All significant

intercompany balances and transactions have been eliminated in consolidation.

Growth Company

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adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which

is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult

or impossible because of the potential differences in accounting standards used.

preparation of the financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of expenses during the reporting period.

This may make comparison of the Company’s consolidated financial statements

with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the

extended transition period difficult or impossible because of the potential differences in accounting standards used.

preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the

reporting period.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

estimates requires management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of

a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating

its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ

from those estimates.

a condition, situation or set of circumstances that existed at the date of the consolidated financial statements,

which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

the actual results could differ from those estimates.

Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company did no t

have any cash equivalents as of December 31, 2022.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

The Company did no t have any cash equivalents as of December 31, 2023 and December 31, 2022.

Held in Trust Account

of December 31, 2022, the assets held in the Trust Account were held in money market funds, which were invested in U.S.

of December 31, 2023 and December 31, 2022, the assets held in the Trust Account were held in money market funds, which were invested

Treasury securities.

All of the Company’s investments held in the Trust Account are classified as trading securities.

Such trading securities are presented

on the balance sheet at fair value at the end of each reporting period.

Gains and losses resulting from the change in fair value of investments

held in Trust Account are included in interest and dividend income on investments held in Trust Account in the accompanying statement

of operations.

The estimated fair values of investments held in the Trust Account are determined using available market information.

The Company had $ 119,220,016 in

investments held in the Trust Account as of December 31, 2022.

trading securities are presented on the balance sheets at fair value at the end of each reporting period.

Gains and losses resulting

from the change in fair value of investments held in Trust Account are included in interest and dividend income on investments held in

Trust Account in the accompanying statements of operations.

The estimated fair values of investments held in the Trust Account are determined

using available market information.

The Company had $ 20,850,793 and $ 119,220,016 in investments held in the Trust Account as of December

31, 2023 and December 31, 2022, respectively.

Stock Subject to Possible Redemption

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in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $ 5,000,001 .

However, the threshold in its charter would not change the nature of the underlying shares as redeemable and thus Public Shares would

be required to be disclosed outside of permanent equity.

The Company recognizes changes in redemption value immediately as they occur

and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period.

are reflected in additional paid-in capital, or in the absence of additional paid-in capital, in accumulated deficit.

of December 31, 2022, the Class A common stock reflected in the balance sheet is reconciled in the following table:

However, the threshold

in its charter would not change the nature of the underlying shares as redeemable and thus Public Shares would be required to be disclosed

outside of permanent equity.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value

of redeemable common stock to equal the redemption value at the end of each reporting period.

Such changes are reflected in additional

paid-in capital, or in the absence of additional paid-in capital, in accumulated deficit.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2023, the Class A common stock reflected in the balance sheets is reconciled in the following table:

OF REDEEMABLE CLASS A COMMON STOCK

Gross proceeds

$ 115,000,000

allocated to Public Warrants

Proceeds allocated to Public

( 2,978,500 )

costs allocated to Class A common stock

Issuance costs allocated

to Class A common stock

( 6,432,257 )

1 unchanged sentence

A common stock subject to possible redemption as of December 31, 2022

Accretion of Class A common

stock subject to redemption to redemption amount

Redemption of Class A common

stock subject to redemption

( 100,078,879 )

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

A common stock subject to possible redemption as of December 31, 2023

Company complies with the accounting and reporting requirements of Accounting Standards Codification (“ASC”) Topic 740 -

Income Taxes (“ASC 740”) which requires an asset and liability approach to financial accounting and reporting for income

Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets

and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods

in which the differences are expected to affect taxable income.

Valuation allowances are established, when necessary, to reduce deferred

tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial

statement recognition and measurement of tax positions taken or expected to be taken in a tax return.

For those benefits to be recognized,

a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The Company’s management determined

the United States is the Company’s only major tax jurisdiction.

The Company recognizes accrued interest and penalties related to

unrecognized tax benefits, if any, as income tax expense.

There were no unrecognized tax benefits as of December 31, 2022 and no amounts

accrued for interest and penalties.

The Company is currently not aware of any issues under review that could result in significant payments,

accruals or material deviation from its position.

The Company is subject to income tax examinations by major taxing authorities since

Income Taxes (“ASC 740”) which requires an asset and liability approach to financial accounting and reporting for

income taxes.

Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial

statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws

and rates applicable to the periods in which the differences are expected to affect taxable income.

Valuation allowances are established,

when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and a

measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken

or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained

upon examination by taxing authorities.

The Company’s management determined the United States is the Company’s only major

tax jurisdiction.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense.

There were no unrecognized tax benefits as of December 31, 2023 and December 31, 2022 and no amounts accrued for interest and penalties.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation

from its position.

The Company is subject to income tax examinations by major taxing authorities since inception.

Income Per Share

4 unchanged sentences

The Company has not considered the effect of the Public Warrants

(as defined in Note 3) and Placement Warrants (as defined in Note 4), to purchase an aggregate of 12,134,375

shares in the calculation of income per share,

since the exercise of the warrants is contingent upon the occurrence of future events.

(as defined in Note 3) and Placement Warrants (as defined in Note 4), to purchase an aggregate of 12,134,375 shares in the calculation

of income per share, since the exercise of the warrants is contingent upon the occurrence of future events.

The 100,000 Class A Shares

(as defined in Note 5) that would be issuable upon conversion of the Convertible Promissory Note have been included in the calculation

of diluted net income per ordinary share.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

following table reflects the calculation of basic and diluted net income per share:

OF BASIC AND DILUTED NET INCOME PER SHARE

the period from March 11,

(inception) through

and diluted net income per share:

Basic and diluted

weighted average shares outstanding

and diluted net income per share

the year ended

December 31, 2023

the period from

Basic net income per share:

Basic weighted average shares outstanding

Basic net income per share

Diluted net income per share:

Diluted weighted average shares outstanding

Diluted net income per share

Concentration

2 unchanged sentences

which, at times may exceed the Federal depository insurance coverage of $ 250,000 .

The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such

The Company has not experienced losses on this account

and management believes the Company is not exposed to significant risks on such account.

Value of Financial Instruments

11 unchanged sentences

and are to be developed based on the best information available in the circumstances.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term

5 unchanged sentences

are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying

27 unchanged sentences

date thereafter.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

Company complies with the requirements of ASC Topic 340, Other Assets and Deferred Costs and SEC Staff Accounting Bulletin (“SAB”)

Topic 5A-Expenses of Offering.

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through

the Initial Public Offering date that are directly related to the Initial Public Offering.

The Company recorded offering costs as a reduction

of temporary equity in connection with the warrants and shares.

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the Initial

Public Offering date that are directly related to the Initial Public Offering.

The Company recorded offering costs as a reduction of

temporary equity in connection with the warrants and shares.

Accounting Standards

August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options

(Subtopic 470-0) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”)

to simplify accounting for certain financial instruments.

ASU 2020-06 eliminates the current models that require separation of beneficial

conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining

to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible

debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

ASU 2020-06 amends the diluted earnings

per share guidance, including the requirement to use the if-convened method for all convertible instruments.

ASU 2020-06 is effective

for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption

permitted for fiscal years beginning after December 15, 2020.

The Company adopted ASU 2020-06 effective March 11, 2022 (inception).

adoption of ASU 2020-06 did not have a material impact on the financial statements.

does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material

effect on the Company’s financial statements.

December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires

public entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The guidance is effective

for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted.

The accounting pronouncement

is not expected to have a material impact on our consolidated financial statements and related disclosures.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

INITIAL PUBLIC OFFERING

1 unchanged sentence

On August 9, 2022, the

Company consummated the Initial Public Offering of 11,500,000

Units, including 1,500,000

Units issued pursuant to the exercise of the

Company consummated the Initial Public Offering of 11,500,000 Units, including 1,500,000 Units issued pursuant to the exercise of the

underwriters’ over-allotment option in full, generating gross proceeds of $ 115,000,000 .

Each Unit consisted of one share of Class A common stock and one redeemable warrant (“Public Warrant”).

Each Public Warrant

entitles the holder to purchase one share of Class A common stock at an exercise price of $ 11.50

per whole share (see Note 7).

Each Unit consisted of one share of Class

A common stock and one redeemable warrant (“Public Warrant”).

Each Public Warrant entitles the holder to purchase one share

of Class A common stock at an exercise price of $ 11.50 per whole share (see Note 7).

PRIVATE PLACEMENT

Simultaneously

with the closing of the Initial Public Offering, the Company consummated the sale of 634,375

Placement Units at a price of $ 10.00

per Placement Unit in a private placement to

the Sponsor, including 63,000

Placement Units issued pursuant to the exercise

of the underwriters’ over-allotment option in full, generating gross proceeds of $ 6,343,750 .

Each Placement Unit consists of one share of Class A common stock (“Placement Share”) and one warrant (“Placement Warrant”).

The proceeds from the sale of the Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account.

If the Company does not complete a business combination within the Combination Period, the proceeds from the sale of the Placement Units

held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and

the Placement Units will expire worthless.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

with the closing of the Initial Public Offering, the Company consummated the sale of 634,375 Placement Units at a price of $ 10.00 per

Placement Unit in a private placement to the Sponsor, including 63,000 Placement Units issued pursuant to the exercise of the underwriters’

over-allotment option in full, generating gross proceeds of $ 6,343,750 .

Each Placement Unit consists of one share of Class A common stock

(“Placement Share”) and one warrant (“Placement Warrant”).

The proceeds from the sale of the Placement Units

were added to the net proceeds from the Initial Public Offering held in the Trust Account.

If the Company does not complete a business

combination within the Combination Period, the proceeds from the sale of the Placement Units held in the Trust Account will be used to

fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Placement Units will expire worthless.

RELATED PARTY TRANSACTIONS

May 17, 2022, the Sponsor paid an aggregate of $ 25,000

to cover certain expenses on behalf of the Company

in exchange for the issuance of 2,875,000

shares of Class B common stock (the “Founder

The Founder Shares included an aggregate of up to 375,000

shares of Class B common stock subject to forfeiture

by the Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Sponsor

would own, on an as-converted basis, 20 %

of the Company’s issued and outstanding shares after the Initial Public Offering.

The underwriters exercised the over-allotment

option in full, so those shares are no longer subject to forfeiture.

May 17, 2022, the Sponsor was issued 2,875,000 shares (the “Founder Shares”) of Class B common stock for an aggregate price

of $ 25,000 .

The Founder Shares included an aggregate of up to 375,000 shares of Class B common stock subject to forfeiture by the Sponsor

to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Sponsor would own,

on an as-converted basis, 20 % of the Company’s issued and outstanding shares after the Initial Public Offering.

The underwriters

exercised the over-allotment option in full, so those shares are no longer subject to forfeiture.

Sponsor has agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees as disclosed

herein) until, with respect to any of the Class B common stock, the earlier of (i) six months after the date of the consummation of a

business combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $ 12.00

per share (as adjusted for stock splits, stock

dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a business combination, with respect to the remaining any of the Class B common stock, upon six months after the date of the consummation of a business combination, or earlier, in each case, if, subsequent to a business combination, the Company consummates a subsequent liquidation, merger,

stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their

common stock for cash, securities or other property.

business combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $ 12.00 per share

(as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading

day period commencing after a business combination, with respect to the remaining any of the Class B common stock, upon six months after

the date of the consummation of a business combination, or earlier, in each case, if, subsequent to a business combination, the Company

consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s

stockholders having the right to exchange their common stock for cash, securities or other property.

On May 8, 2023, the Sponsor converted

2,874,999 Founder Shares of Class B common stock into 2,874,999 shares of Class A common stock, which shares include these same transfer

restrictions.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Note - Related Party

April 25, 2022, the Sponsor agreed to loan the Company an aggregate of up to $ 300,000

to cover expenses related to the Initial Public

April 25, 2022, the Sponsor agreed to loan the Company an aggregate of up to $ 300,000 to cover expenses related to the Initial Public

Offering pursuant to a promissory note (the “Promissory Note”).

2 unchanged sentences

Prior to the Initial Public Offering,

the Company had borrowed $ 300,000

under the Promissory Note.

The outstanding balance

under the Promissory Note of $ 300,000

was repaid at the closing of the Initial Public

Offering on August 9, 2022.

the Company had borrowed $ 300,000 under the Promissory Note.

The outstanding balance under the Promissory Note of $ 300,000 was repaid

at the closing of the Initial Public Offering on August 9, 2022.

Administrative

4 unchanged sentences

The Company has agreed to

pay to Mehana Capital LLC, the Sponsor, $ 10,000

per month for these services during the 9-month

period to complete a business combination.

For the period from March 11, 2022 (inception) through December 31, 2022, $ 50,000

was paid to Mehana Capital LLC for these services.

pay to Mehana Capital LLC, the Sponsor, $ 10,000 per month for these services to complete a business combination.

For the year ended December

31, 2023, $ 120,000 was incurred and paid to Mehana Capital LLC for these services.

For the period from March 11, 2022 (inception) through

December 31, 2022, $ 50,000 was incurred and paid to Mehana Capital LLC for these services.

Promissory Note

May 26, 2023, the Company entered into a Convertible Promissory Note with SBC, pursuant to which SBC agreed to loan the Company an aggregate

principal of $ 1,000,000 (the “Convertible Promissory Note”).

The Convertible Promissory Note is non-interest bearing and

is due and payable upon the earlier to occur of (i) the first business day following the consummation of the Company’s initial

Business Combination and (ii) May 17, 2024, unless accelerated upon the occurrence of an event of default.

There is an outstanding balance

of $ 1,000,000 for this SBC loan as of December 31, 2023.

The Convertible Promissory Note will automatically convert into Class A Common

Stock at one share for each $10 in outstanding principal amount .

As of December 31, 2023 and December 31, 2022, the outstanding balance

under the Convertible Promissory Note amounted to an aggregate of $ 1,000,000 and $ 0 , respectively.

order to finance transaction costs in connection with the initial business combination, the Sponsor or an affiliate of the Sponsor or

1 unchanged sentence

Company completes the initial business combination, the Company will repay such loaned amounts.

In the event that the initial business combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned

In the event that the initial business

combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned

amounts, including the repayment of loans from the Sponsor to pay for any amount deposited to pay for any extension of the time to complete

the initial business combination, but no proceeds from the Trust Account would be used for such repayment.

Up to $ 1,500,000

of such loans may be convertible into Units,

at a price of $ 10.00

per Unit at the option of the lender, upon consummation

of the initial business combination.

Up to $ 1,500,000 of such loans

may be convertible into Units, at a price of $ 10.00 per Unit at the option of the lender, upon consummation of the initial business combination.

The Units would be identical to the Placement Units.

The terms of such loans by the Company’s

officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.

As of December 31,

2022, the Company did not have any outstanding related party loans.

The terms of such loans by the Company’s officers and directors, if any, have

not been determined and no written agreements exist with respect to such loans.

As of December 31, 2023 and December 31, 2022, the Company

did not have any outstanding related party loans other than the Convertible Promissory Note referenced above.

Non-redemption

May 5, 2023, the Company held a special meeting of stockholders (the “Special Meeting”), and the chairman adjourned the Special

Meeting to May 8, 2023.

On May 8, 2023, the Company held the Special Meeting.

During the Special Meeting, stockholders approved an amendment

to the Company’s amended and restated certificate of incorporation (i) to extend the date by which the Company has to consummate

a business combination from May 9, 2023 to February 9, 2024 for no additional amount to be paid by the Sponsor into the Trust Account,

and (ii) to provide for the right of a holder of Class B common stock to convert such shares into shares of Class A common stock on a

one-for-one basis prior to the closing of a business combination at the election of the holder.

As approved by the stockholders of the

Company, the Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State

on May 8, 2023.

The Company’s stockholders elected to redeem an aggregate of 9,577,250 shares of Class A common stock of the Company

in connection with the Special Meeting.

Following such redemptions, the amount of funds remaining in the trust account was approximately

$ 20 million.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

connection with the Special Meeting, the Company and the Sponsor entered into non-redemption agreements with certain unaffiliated stockholders

owning, in the aggregate, 998,682 shares of the Company’s Class A common stock, pursuant to which such stockholders agreed, among

other things, not to redeem or exercise any right to redeem such public shares in connection with the Extension Amendment.

Company estimated the aggregate fair value of the 339,565 Sponsor Shares attributable to the Non-Redeeming Stockholders to be $ 709,691

or $ 2.09 per share.

Each Non-Redeeming Stockholder acquired from the Sponsor an indirect economic interest in the Sponsor Shares.

excess of the fair value of the Sponsor Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic

Accordingly, in substance, it was recognized by the Company as a capital contribution by the Sponsor to induce these holders of the

Class A shares not to redeem, with a corresponding charge to additional paid-in capital to recognize the fair value of the shares transferred

as an offering cost.

COMMITMENTS AND CONTINGENCIES

13 unchanged sentences

Simultaneously

with the Initial Public Offering, the underwriters fully exercised the over-allotment option to purchase an additional 1,500,000

Units at an offering price of $ 10.00

per Unit for an aggregate purchase price of $ 15,000,000 .

underwriters were paid a cash underwriting discount of $ 0.17

per Unit, or $ 1,955,000

in the aggregate, upon the closing of the Initial

with the Initial Public Offering, the underwriters fully exercised the over-allotment option to purchase an additional 1,500,000 Units

at an offering price of $ 10.00 per Unit for an aggregate purchase price of $ 15,000,000 .

underwriters were paid a cash underwriting discount of $ 0.17 per Unit, or $ 1,955,000 in the aggregate, upon the closing of the Initial

Public Offering.

In addition, $ 0.35

per unit, or $ 4,025,000

in the aggregate will be payable to the underwriters

for deferred underwriting commissions.

The deferred fee will become payable to the underwriters from the amounts held in the Trust Account

solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement.

In addition, $ 0.35 per unit, or $ 4,025,000 in the aggregate will be payable to the underwriters for deferred underwriting

The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event

that the Company completes a business combination, subject to the terms of the underwriting agreement.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Representative

closing of the Initial Public Offering, the Company issued 57,500

shares of Class A common stock to the underwriters.

The underwriters have agreed not to transfer, assign or sell the Representative Shares until the completion of the initial business combination.

In addition, the underwriters have agreed (i) to waive their redemption rights with respect to the Representative Shares in connection

with the completion of the initial business combination and (ii) to waive their rights to liquidating distributions from the Trust Account

with respect to the Representative Shares if the Company fails to complete its initial business combination within 9 months (or up to

18 months if the Company extends such period) from the closing of the Initial Public Offering.

closing of the Initial Public Offering, the Company issued 57,500 shares of Class A common stock to the underwriters.

The underwriters

have agreed not to transfer, assign or sell the Representative Shares until the completion of the initial business combination.

the underwriters have agreed (i) to waive their redemption rights with respect to the Representative Shares in connection with the completion

of the initial business combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to

the Representative Shares if the Company fails to complete its initial business combination within 18 months from the closing of the

Initial Public Offering.

Representative Shares are subject to a lock-up for a period of 180 days immediately following the commencement of sales of the registration

6 unchanged sentences

Initial Public Offering and their bona fide officers or partners, registered persons or affiliates or as otherwise permitted under Rule

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

initial measurement of the fair value of the Representative Shares was determined using the market approach to value the subject interest.

Based on the indication of fair value using the market approach, the Company determined the fair value of the Representative Shares to

be $ 1.17 per

share or $ 67,275

(for the 57,500

Representative Shares issued) as of the date

of the Initial Public Offering (which is also the grant date).

be $ 1.17 per share or $ 67,275 (for the 57,500 Representative Shares issued) as of the date of the Initial Public Offering (which is also

the grant date).

of First Refusal

4 unchanged sentences

right of first refusal shall not have a duration of more than three years from the effective date of the registration statement.

STOCKHOLDERS’ EQUITY (DEFICIT)

stock — The Company is authorized to issue 1,000,000

shares of preferred stock with a par value of

share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board

of directors.

As of December 31, 2022, there were no

shares of preferred stock issued or outstanding.

A common stock — The Company is authorized to issue 100,000,000

shares of Class A common stock with a par value

of the Company’s Class A common stock are entitled to one vote for each share .

As of December 31, 2022, there were 12,191,875

shares of Class A common stock issued and outstanding,

including 11,500,000

shares of Class A common stock subject to possible

redemption and classified as temporary equity.

The remaining 691,875

shares are classified as permanent equity and

are comprised of 634,375

shares included in the Placement Units and 57,500

Representative Shares.

B common stock — The Company is authorized to issue 10,000,000

shares of Class B common stock with a par value

of Class B common stock are entitled to one vote for each share .

As of December 31, 2022, there were 2,875,000

shares of Class B common stock issued and outstanding.

Of the 2,875,000

shares of Class B common stock outstanding, up

shares were subject to forfeiture to the extent

that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively

of the Company’s issued and outstanding common stock after the Initial Public Offering.

On August 9, 2022, the underwriters exercised

the over-allotment option in full, so those shares are no longer subject to forfeiture.

STOCKHOLDERS’ DEFICIT

stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share with

such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.

As of December 31, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

A common stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $ 0.0001

Holders of the Company’s Class A common stock are entitled to one vote for each share .

As of December 31, 2023 and December

31, 2022, there were 5,489,624 and 12,191,875 shares of Class A common stock issued and outstanding, including 1,922,750 and 11,500,000

shares of Class A common stock subject to possible redemption and classified as temporary equity.

As of December 31, 2023 and December

31, 2022, the remaining 3,566,874 and 691,875 shares are classified as permanent equity and are comprised of 2,874,999 shares that were

converted from Class B common stock into Class A common stock, 634,375 shares included in the Placement Units and 57,500 Representative

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

B common stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $ 0.0001

Holders of Class B common stock are entitled to one vote for each share .

As of December 31, 2023 and December 31, 2022, there

were 1 and 2,875,000 shares of Class B common stock issued and outstanding, respectively.

Of the 2,875,000 shares of Class B common stock

outstanding as of December 31, 2022, up to 375,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment

option was not exercised in full or in part, so that the initial stockholders would collectively own 20 % of the Company’s issued

and outstanding common stock after the Initial Public Offering.

On August 9, 2022, the underwriters exercised the over-allotment option

in full, so those shares are no longer subject to forfeiture.

holders of record of the common stock are entitled to one vote for each share held on all matters to be voted on by stockholders.

2 unchanged sentences

market, in favor of the proposed business combination.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

of Class B common stock shall be convertible into shares of Class A common stock on a one-for-one basis automatically on the closing

of the business combination at a ratio for which the numerator shall be equal to the sum of 20 %

of all shares of Class A Common Stock issued and outstanding or issuable (upon the conversion or exercise of any Equity-linked Securities

or otherwise) by the Company, related to or in connection with the consummation of the initial business combination (excluding any securities

issued or issuable to any seller in the initial business combination, any Placement Warrants issued to the Sponsor or its affiliates

upon conversion of loans to the Company) plus the number of shares of Class B Common Stock issued and outstanding prior to the closing

of the initial business combination;

and the denominator shall be the number of shares of Class B Common Stock issued and outstanding

prior to the closing of the initial business combination.

— As of December 31, 2022, there were 11,500,000

Public Warrants and 634,375

Placement Warrants outstanding.

Each whole Public

Warrant entitles the registered holder to purchase one share of Class A common stock at a price of $ 11.50

per share, subject to adjustment as discussed

below, at any time commencing on the later of 12 months from the closing of the Initial Public Offering and 30 days after the completion

of the initial business combination.

Pursuant to the warrant agreement, a warrant holder may exercise its Public Warrants only for a

whole number of shares of Class A common stock.

No fractional Public Warrants will be issued upon separation of the units and only whole

Public Warrants will trade.

The Public Warrants will expire five years after the completion of the initial business combination, at 5:00

p.m., New York City time, or earlier upon redemption or liquidation.

Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial business combination, the Company will use its best efforts to file with the SEC a registration statement covering the shares of Class A common

of the business combination at a ratio for which the numerator shall be equal to the sum of 20 % of all shares of Class A Common Stock

issued and outstanding or issuable (upon the conversion or exercise of any Equity-linked Securities or otherwise) by the Company, related

to or in connection with the consummation of the initial business combination (excluding any securities issued or issuable to any seller

in the initial business combination, any Placement Warrants issued to the Sponsor or its affiliates upon conversion of loans to the Company)

plus the number of shares of Class B Common Stock issued and outstanding prior to the closing of the initial business combination;

the denominator shall be the number of shares of Class B Common Stock issued and outstanding prior to the closing of the initial business

May 8, 2023, the Sponsor converted 2,874,999 Founder Shares of Class B common stock into 2,874,999 shares of Class A common stock.

— As of December 31, 2023 and December 31, 2022, there were 11,500,000 Public Warrants and 634,375 Placement Warrants outstanding.

Each whole Public Warrant entitles the registered holder to purchase one share of Class A common stock at a price of $ 11.50 per share,

subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of the Initial Public Offering

and 30 days after the completion of the initial business combination.

Pursuant to the warrant agreement, a warrant holder may exercise

its Public Warrants only for a whole number of shares of Class A common stock.

No fractional Public Warrants will be issued upon separation

of the units and only whole Public Warrants will trade.

The Public Warrants will expire five years after the completion of the initial

business combination or earlier upon redemption or liquidation.

Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial business

combination, the Company will use its best efforts to file with the SEC a registration statement covering the shares of Class A common

stock issuable upon exercise of the Public Warrants, to cause such registration statement to become effective and to maintain a current

9 unchanged sentences

whole and not in part;

a price of $ 0.01

Public Warrant;

not less than 30 days’ prior written notice of redemption given after the Public Warrants

become exercisable (the “30-day redemption period”) to each Public Warrant holder;

and only if, the reported last sale price of the Class A common stock equals or exceeds $ 18.00

share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations

and the like) for any 20 trading days within a 30-trading day period commencing once the

Public Warrants become exercisable and ending three business days before the Company sends

the notice of redemption to the Public Warrant holders.

a price of $ 0.01 per Public Warrant;

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

upon not less than 30 days’

prior written notice of redemption given after the Public Warrants become exercisable (the “30-day redemption period”)

to each Public Warrant holder;

if, and only if, the reported

last sale price of the Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,

recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the Public Warrants become

exercisable and ending three business days before the Company sends the notice of redemption to the Public Warrant holders.

and when the Public Warrants become redeemable by the Company, the Company may not exercise the redemption right if the issuance of shares

1 unchanged sentence

laws or the Company is unable to effect such registration or qualification.

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes

8 unchanged sentences

of the Market Value and the Newly Issued Price.

order to extend the period of time the Company has to consummate a business combination, the Sponsor or its affiliates or designees may,

but are not obligated to, loan the Company up to $ 379,500

The Company may extend the period in

which the Company must complete the initial business combination nine times, for an additional month (for a total of up to 18 months

to complete the business combination).

Such loans may be convertible into up to an additional 341,550

units, at a price of $ 10.00

per unit, and the Company will issue and deliver

up to an aggregate of 341,550

warrants (the “Extension Warrants”).

Placement Warrants are identical to the Public Warrants except that, so long as they are held by the Sponsor or its permitted transferees,

3 unchanged sentences

are entitled to registration rights.

Company accounts for the 12,134,375

warrants issued in connection with the Initial

Public Offering (including 11,500,000

Public Warrants and 634,375

Placement Warrants) in accordance with the guidance

contained in ASC 815-40.

Such guidance provides that the warrants described above are not precluded from equity classification.

Equity-classified

contracts are initially measured at fair value (or allocated value).

Subsequent changes in fair value are not recognized as long as the

contracts continue to be classified in equity.

Company’s net deferred tax assets (liabilities) as of December 31, 2022 are as follows:

Company accounts for the 12,134,375 warrants issued in connection with the Initial Public Offering (including 11,500,000 Public Warrants

and 634,375 Placement Warrants) in accordance with the guidance contained in ASC 815-40.

Such guidance provides that the warrants described

above are not precluded from equity classification.

Equity-classified contracts are initially measured at fair value (or allocated value).

Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity.

CAPITAL TWO, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s net deferred tax assets (liabilities) as of December 31, 2023 and 2022 are as follows:

OF NET DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets

Start-up costs

operating loss carryforwards

Total deferred tax assets

Valuation allowance

Deferred tax assets,

tax assets, net of allowance

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

income tax provision for the year ended December 31, 2022 consists of the following:

net of allowance

income tax provision for the year ended December 31, 2023 and 2022 consists of the following:

OF INCOME TAX PROVISION

in valuation allowance

tax provision

Change in valuation

Income tax provision

assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all

6 unchanged sentences

exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

period ended December 31, 2022 the change in the valuation allowance was $ 80,230 .

period ended December 31, 2023 and 2022 the change in the valuation allowance was $ 253,634 and $ 80,230 , respectively.

As of December 31, 2023 and 2022,

the Company has $ 299,023 and $ 0 , respectively, of state net operating loss carryovers, which do not expire, to offset future taxable

reconciliation of the federal income tax rate to the Company’s effective tax rate are as follows:

OF FEDERAL INCOME TAX RATE

federal income tax rate

taxes, net of federal tax benefit

in valuation allowance

tax provision

Statutory federal income tax rate

State taxes, net of federal tax benefit

Previous tax year adjustment

Non-deductible transaction costs

Other permanent items, net

Change in valuation

Income tax provision

Company files income tax returns in the U.S.

federal jurisdiction and is subject to examination by the taxing authorities.

federal and the state of Hawaii jurisdictions and is subject to examination by the taxing

CAPITAL TWO, INC.

TO FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE MEASUREMENTS

following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis

as of December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

OF FINANCIAL ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

held in Trust Account:

as of December 31, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to

determine such fair value:

SCHEDULE OF FINANCIAL ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

December 31, 2023

Investments held in Trust

Treasury Securities

at Fair Value

December 31, 2022

Investments held in Trust

Treasury Securities

$ 119,220,016

1 unchanged sentence

SUBSEQUENT EVENTS

Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure

in the financial statements other than as described below.

January 31, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company,

Pono Two Merger Sub, Inc., a Delaware corporation incorporated in January 2023, and a wholly-owned subsidiary of the Company (“Merger

Sub”), SBC Medical Group Holdings Incorporated, a Delaware corporation (“SBC”), Mehana Capital, LLC, in its capacity

as Purchaser Representative, and Yoshiyuki Aikawa, in his capacity as Seller Representative.

to the Merger Agreement, at the closing of the transactions contemplated by the Merger Agreement, Merger Sub will merge with and into

SBC, with SBC continuing as the surviving corporation.

The transactions contemplated by the Merger Agreement are referred to herein as

the “Business Combination.”

a condition to closing of the Business Combination, SBC will complete certain restructuring transactions pursuant to which SBC Medical

Group Co., Ltd., a Japanese corporation (“SBC-Japan”) and certain related entities which carry on the business of SBC-Japan

and such other related entities, will become subsidiaries of SBC.

consideration for the Business Combination, the holders of SBC securities as of the closing of the Business Combination, collectively

will be entitled to receive from the Company, in the aggregate, a number of the Company’s securities with an aggregate value equal

$1,200,000,000, minus (b) the amount, if any, by which $3,000,000 exceeds SBC’s Net Working Capital, plus (c) the amount, if any,

by which SBC’s Net Working Capital exceeds $3,000,000, minus (d) the aggregate amount of any outstanding indebtedness (minus cash

held by SBC) of SBC at Closing, minus (e) specified transaction expenses of SBC associated with the Business Combination .

Company has evaluated subsequent events and transactions that occurred after the consolidated balance sheet date up to the date that

the consolidated financial statements were issued.

Based upon this review, other than those subsequent events described below, the Company

did not identify any other subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

January 11, 2024, Pono Capital Two, Inc., a Delaware corporation (the “Company” or “Pono”), filed an amended

preliminary proxy statement with the U.S.

Securities and Exchange Commission (“SEC”) in connection with the special meeting

of stockholders.

As more fully described in the proxy statement, the special meeting will be held for the purpose of considering and

voting on a proposal to amend (the “Extension Amendment”) the Company’s Third Amended and Restated Certificate of Incorporation

(the “Charter”), to extend the date by which the Company has to consummate a business combination from February 9, 2024 to

November 9, 2024.

connection with the Extension Amendment, public stockholders may elect to redeem their shares for a per-share price, payable in cash,

equal to the aggregate amount then on deposit in the trust account established in connection with the Company’s initial public

offering (the “Trust Account”), including interest not previously released to the Company to pay franchise and income taxes,

divided by the number of then outstanding public shares.

If the Extension Amendment is approved by the requisite vote of stockholders,

the remaining holders of public shares will retain their right to redeem their public shares when the business combination is submitted

to the stockholders, subject to any limitations set forth in the Charter, as amended by the Extension Amendment.

January 11, 2024, the Company entered into a non-redemption agreement with an unaffiliated investor (the “Holder”) which

agreed to acquire from public stockholders of the Company 1,500,000

shares of Class A common stock, par value $ 0.0001

per share, of the Company (“Common Stock”) in the open market, at a prices no higher than the redemption price per share

payable to stockholders who exercise redemption rights in connection with the stockholder vote to approve the Company’s

proposed business combination (“Business Combination”) with SBC Medical Group Holdings Incorporated, a Delaware

corporation (the “Target”), prior to the stockholder meeting to vote on the Extension Amendment (the “Meeting

Date”) and to agree to waive its redemption rights and hold the shares until after the closing of the Business Combination.

consideration of the Holder’s agreement to waive its redemption rights with respect to the shares, and subject to (i) the

Holder acquiring 1,500,000

shares of Common Stock in the open market, and (ii) Holder’s satisfaction of its other obligations under the non-redemption

agreement, the Company, on the closing date of the Business Combination, provided that Holder has continued to hold the

Holder’s shares through the closing date, Target and Yoshiyuki Aikawa, the chief executive officer of the Target, shall cause

to be issued or transferred to Holder a number of shares of Common Stock held by Dr.

Aikawa (the “Incentive Shares”),

which will equal one (1) Incentive Share for each public share purchased in the open market pursuant to the non-redemption agreement

that is continuously owned by Holder until the closing date of the Business Combination.

This non-redemption agreement terminates on

the earliest to occur of (i) the closing date of the Business Combination, (ii) the termination of the related Business Combination

Agreement, or (iii) April 30, 2024 (the “Clearance Date”) if the Company has not cleared all SEC comments to its proxy

statement in connection with the Business Combination by that date.

On March 15, 2024, the parties to the non-redemption agreement entered into an amendment to the non-redemption agreement

to extend the Clearance Date to June 30, 2024, and to agree to close the business combination on or before August 31, 2024.

February 3, 2024, the Company held a special meeting of stockholders (the “Special Meeting”), and the chairman adjourned

the Special Meeting to February 3, 2024.

During the Special Meeting, stockholders approved an amendment to the Company’s amended

and restated certificate of incorporation (i) to extend the date by which the Company has to consummate a business combination from February

9, 2024 to November 9, 2024 for no additional amount to be paid by the Sponsor into the Trust Account and (ii) to provide for the right

of a holder of Class B common stock to convert such shares into shares of Class A common stock on a one-for-one basis prior to the closing

of a business combination at the election of the holder (the “Extension Amendment”).

The Company’s stockholders elected

to redeem an aggregate of 273,334 shares of Class A common stock of the Company in connection with the Special Meeting.

Following such

redemptions, the amount of funds remaining in the trust account is approximately $ 17.9 million.

February 27, 2024, the

Company and SBC entered into an Amendment to the Note Purchase Agreement (the “Amended Note Purchase Agreement”), which increased

the purchase price of the Note from $ 1,000,000 to $ 2,700,000 .

In connection with entering into the Amended Note Purchase Agreement, the

Company and SBC amended the Note (the “Amended Note”) to increase the Principal Amount from $ 1,000,000 to $ 2,700,000 .

consideration for entering into the Amended Note, each of the parties to the Merger Agreement agreed to release each other party from

any claims arising out of any termination of the Merger Agreement or failure to consummate the transactions contemplated thereby.

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-K

Item 9A. Controls and Procedures