What changed in this filing

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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-19 · 281 added, 1971 removed, 17 unchanged (99% of the section changed)

and Procedures.

controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our

reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed,

summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include,

without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted

under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,

to allow timely decisions regarding required disclosure.

of Disclosure Controls and Procedures

required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation

of the effectiveness of our disclosure controls and procedures as of December 31, 2023.

Based upon their evaluation, our Chief Executive

Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15

(e) under the Exchange Act) were effective.

management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure

controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual

Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of December

31, 2024 to provide reasonable assurance that information required to be disclosed in periodic SEC filings is recorded, processed, summarized

and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated

to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding

required disclosure.

Specifically, as previously disclosed, as of the fiscal year ended December 31, 2023, and as described below, we

identified material weaknesses in our internal control over financial reporting.

the identified material weaknesses, we believe that our consolidated financial statements and other information contained in this Annual

Report fairly present, in all material respects, our financial condition, and results of operations for the periods presented.

remain committed to ongoing improvements in our disclosure controls and internal control over financial reporting, as outlined in the

remediation plan below.

material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that

there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely

connection with the discovery of the misappropriations of funds as described in more details under “Part II, Item 7.

Discussion and Analysis of Financial Condition and Results of Operations—Misappropriations of Funds”, we

have identified material weaknesses as of December 31, 2023, which remain un-remediated as of December 31, 2024, in our internal control

over financial reporting resulting from our failure to maintain an effective control environment, risk assessment processes and monitoring

system of internal control failed to detect the misappropriations of funds due to the following material weaknesses of the Company:

Control Environment .

We did not maintain an effective control environment that fully emphasized the establishment of adherence

to effective internal control over financial reporting throughout our management.

not give sufficient consideration to the risk of senior management override of internal control.

had not ensured that certain personnel were adequately trained to properly execute critical internal control.

Control Activities .

We did not effectively implement or maintain control activities, such as ensuring a sufficient functioning

of the mechanism of reconciliation of invoices to contracts and multi-level approvals of contracts, invoices and payments.

We did not maintain sufficient segregation of duties with respect to certain activities and did not maintain adequate

monitoring and oversight for those activities.

Risk Assessment .

We did not have an effective risk assessment process and the related documentation.

Information and Communication .

We did not adequately communicate to all employees of the organization information regarding

the importance of internal control over financial reporting and employees’ duties and responsibilities, including segregation of

Monitoring Activities .

We did not maintain effective monitoring controls related to the evaluation and testing of our internal

control over financial reporting.

addition, the Company completed its business combination in September 2024.

Prior to the business combination, the Company operated as

a private corporation with limited accounting personnel and supervisory resources necessary to support its accounting processes and address

its internal control over financial reporting requirements.

As a result, the existing internal control are no longer sufficient to meet

the post-business combination financial reporting demands, and the Company is actively updating these controls.

The design and implementation

of internal control over financial reporting in a post-business combination environment has required, and will continue to require, significant

time and resources from management and other personnel.

the process of assessing the Company’s internal controls, management has summarized the material

weaknesses in our internal control over financial reporting as follows:

of sufficient controls implemented to ensure all the related party transactions are identified, approved and reported in compliance with the established related party

of sufficient financial reporting and accounting personnel to formalize, design, implement and operate key controls over financial

reporting process in order to report financial information in accordance with U.S.

GAAP and SEC reporting requirements.

of well-established procedures to ensure all the services provided by subcontractors or vendors are reviewed and verified before

the approval of payments.

of well-established procedures to prevent and detect fraudulent transactions or override of control activities, specifically failure

to maintain sufficient segregation of duties with respect to certain activities of its former manager of general affairs and legal

department of one of its subsidiaries and failure to maintain adequate monitoring and oversight of the work performed by this former

respect to the material weaknesses identified in connection with the misappropriations of funds, management has implemented, or is in

the process of implementing, the following changes to our internal control systems and procedures:

established a related party policy in September 2024 to identify, approve, and report related party transactions;

and implemented

the corresponding procedures since November 2024.

will clarify the organization structure and employee positions promoting (i) segregation of duties, (ii) monitoring and oversight,

(iii) reconciliation of invoices to contracts and (iv) multi-level approvals of contracts, invoices and payments.

will communicate to all employees of the organization information regarding the importance of internal control and employees’

duties and responsibilities, including segregation of duties.

have updated our delegation of authority over banking activities and are establishing a new treasury function.

This improvement enhances

the segregation of duties related to the general manager role, thereby strengthening the safeguarding of cash.

are progressing with a project, led by our Head of Internal Control and Internal Audit Office, to design, implement, and

document internal controls to address risks related to financial reporting.

This year, our activities are focused on “laying

the foundation to complete our response to key financial reporting risks by the end of 2025,” and we are making progress as

management is fully committed to addressing the control deficiencies that contributed to the material weaknesses in a post-business combination

The steps we have already taken in 2024, and those we plan to take in 2025, are as follows:

added accounting and finance personnel to strengthen our team.

This has allowed us to enhance segregation of duties in the preparation

and review of financial reporting, while improving oversight, structure, and reporting lines.

have improved the financial reporting process of our group, including consolidated subsidiaries.

As a result, the monitoring

function over the application of U.S.

GAAP, including financial statement disclosures, has been enhanced, allowing for more accurate

and timely reporting than before.

support the execution of the aforementioned project for designing, implementing, and documenting internal controls, we have engaged

external consultants with expertise in SOX (The Sarbanes-Oxley Act of 2002）compliance.

As a result, we expect to complete

our response to key financial reporting risks by the end of 2025.

plan to confirm at the end of the fiscal year (end of 2025) that internal controls are operating effectively as a result of the implementation

of the above remediation plans.

In particular, we plan to focus on verifying the remediation status of the identified material weaknesses.

under the direction of our Audit Committee, management will continue to strengthen corporate governance and aim to establish a system

in which internal controls operate effectively throughout the year.

During this process, we may adjust our remediation plans or take

additional measures to address control deficiencies as necessary.

We believe that these continuous efforts will remediate the deficiencies

in internal controls, including the identified material weaknesses, and significantly improve our internal control over financial reporting.

Report on Internal Control over Financial Reporting

discussed elsewhere in this Annual Report, we completed the Business Combination on September 17, 2024.

Prior to the Business Combination,

Pono was a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,

stock purchase, reorganization or similar business combination with one or more businesses.

As a result, previously existing internal

controls are no longer applicable or comprehensive enough as of the assessment date as the operations prior to the Business Combination

were insignificant compared to those post-Business Combination.

The design of internal controls over financial reporting for the Company

post-Business Combination has required and will continue to require significant time and resources from management and other personnel.

As a result, management was unable, without incurring unreasonable effort or expense to conduct an assessment

of our internal control over financial reporting as of December 31, 2024.

Accordingly, we are excluding management’s report on internal

control over financial reporting pursuant to Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance &

Disclosure Interpretations.

Limitation on the Effectiveness of Internal Control

effectiveness of any system of internal control over financial reporting is subject to inherent limitations.

These include the exercise

of judgment in designing, implementing, and operating controls, as well as the inherent inability to completely eliminate the risk of

misconduct or error.

Accordingly, while we aim to establish robust controls, any system, no matter how well designed and operated, can

provide only reasonable assurance of achieving the desired control objectives.

Additionally,

the design of our disclosure controls and procedures is impacted by resource constraints and the necessity for management to balance

the benefits of potential controls against their associated costs.

Moreover, projections of effectiveness into future periods are subject

to risks that controls may become inadequate over time due to evolving conditions or diminished compliance.

We will continue to monitor

and enhance our internal control as necessary or appropriate, but we cannot provide assurance that these improvements will fully eliminate

all risks of material misstatement.

in Internal Control over Financial Reporting

the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in

Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our

internal control over financial reporting.

Report on Internal Controls Over Financial Reporting

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

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

following table sets forth information about our directors and executive officers.

Executive Officer, Director

Financial Officer

Director, and Chairwoman of the Audit Committee

Nakamoto, Chief Executive Officer and Director

Nakamoto serves as our Chief Executive Officer and Director.

He is an entrepreneur and executive with over 20 years of industry experience,

including his former role as CFO of a publicly traded company.

Since 2017, Mr.

Nakamoto serves as President and Owner of Viv, LLC, a

successful accounting and finance solutions provider.

Since 2021, Mr.

Nakamoto has also served as Controller of Hawaiian Springs, LLC.

From May 2016 to July 2017, Mr.

Nakamoto served as President and CFO of DKI808 LLC, dba Premier Restoration Hawaii, where he secured

financing for the purchase of Maui Fire & Flood and expanded the full-service restoration business from Maui to Oahu.

Between March

2014 and March 2016, Mr.

Nakamoto served as President of Island Flooring.

Nakamoto served as President of Kaiuli Energy from April

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

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.

January 2005 to March 2012, Mr.

Nakamoto was CFO, Treasurer and Secretary of Hoku Scientific, a then publicly traded clean energy firm

based in Honolulu, Hawaii, where he managed all finance, accounting, and treasury functions.

Between January 2003 and December 2004,

Nakamoto was a Finance Analyst for Frito-Lay of Hawaii.

From March 2001 to January 2003, he worked as a Consultant for Akamai Consulting

Group/Syntera Solutions.

He was a Regional Director for software development startup ActivityMax from 2000 to 2001.

Nakamoto began

his career as an Accountant at KPMG from 1996 to 2000.

Nakamoto is a CPA, not in public practice.

He graduated from the University

of Washington in 1996 with a Bachelor of Arts in Accounting and a Bachelor of Arts in Finance.

Nakamoto is a former Treasurer and

board member of the Make-A-Wish foundation of Hawaii.

Nakamoto’s public company experience, paired with his entrepreneurial

and management skills in a diverse array of industries makes him a valuable member of our management team and board of directors.

Van Orman, Chief Financial Officer

Van Orman is an experienced Certified Public Accountant and entrepreneur.

Since December 2000, Ms.

Van Orman has served as Principal

at Allison D T Van Orman, CPA LLC, where she helps clients navigate complex tax compliance and tax planning issues and consults small

business owners to improve operations and identify areas of growth.

Van Orman was sole proprietor of Grumpy Girl Clothing between

October 2003 and December 2010, performing duties such as product design, product costing and distribution, graphic design and marketing,

and public relations and communications for her business.

From 1998 to 2000, Ms.

Van Orman was an auditor/accountant at Chinaka, Siu,

& Co., CPAs in Honolulu, where she performed accounting and tax duties for small business clients as well as preparing audit programs

and supervising assistants on audits of non-profit organizations.

Van Orman received her Bachelor of Science, Magna Cum Laude in

Accounting from Santa Clara University in 1995 and her MBA from the University of Hawaii in 1997.

She is a licensed CPA in the State

of Hawaii, and currently a member of the American Institute of Certified Public Accountants (“AICPA”).

accounting experience makes her an invaluable asset to the management team.

Shindo, Chairman of the Board

Shindo serves as our Chairman of the Board.

He is the Manager of Mehana Capital, LLC, our Sponsor, and is an entrepreneur,

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

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

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 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.

Shindo served as the Chief Executive Officer of Hoku Scientific based in Honolulu, Hawaii, where he led

the company through an IPO on the NASDAQ Global Market and signed customer contracts totaling USD 2+ billion.

From December 1995 to August

Shindo served as the President of Mehana Brewing Company based in Hilo, Hawaii.

In June 1995, Mr.

Shindo received his Bachelor

of Art’s degree in Accounting/Finance/Marketing at University of Washington based in Seattle, Washington.

In May 1999, Mr.

received his Master’s in Business Administration at Darden Graduate School of Business Administration, University of Virginia based

in Charlottesville, Virginia.

In August 2015, Mr.

Shindo completed the SEP program at Stanford Graduate School of Business, Stanford

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

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

Independent Directors

efforts to seek a suitable business combination target will be complemented and augmented by the expertise and network of relationships

of our directors, who each have extensive experience in business and financial matters.

In addition to our seasoned executive team, we

have assembled a strong group of directors.

The board is expected to be comprised of five individuals.

These individuals bring together

a breadth of operating experience, industry connectivity and proprietary access to leading companies that enhance our value proposition.

Our board will be a driving force in our efforts to identify a target and effect a business combination and may invest personal capital

in the transaction.

The Company’s independent directors’ bios are presented here.

Chiba, Independent Director

Chiba serves as an independent director.

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

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:

Aeronext since April 2017, A.L.I.

Technologies, Inc.

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

on mobile gaming services on smartphone applications as well as VR services and location data analysis consulting services, research

service dedicated to smartphones.

In 2012, he helped lead the company’s listing on the Tokyo Stock Exchange (Mothers) and then

in 2014 led the company to a US$4 billion IPO on the Tokyo Exchange market (first section).

Prior to that, Mr.

Chiba was the founder

and director from January 2000 to March 2007 for K Laboratory Inc.

(now KLab Inc.) that develops mobile games and online games.

joining KLab Inc., Mr.

Chiba was a mobile web media planner from April 1997 to December 1999 for Recruit Co.

Ltd., which is Japan’s

largest recruitment company and provides services such as job advertising, temporary staffing, sales promotion, and IT solution.

April 2019, Mr.

Chiba has been a guest Professor at Keio University, a research-oriented campus located in the city of Fujisawa, Kanagawa

Prefecture, Japan where he teaches students to become technology innovators.

Chiba is Keio University, SFC Campus graduate, in March

1997, with a Bachelor of Arts in Environment and Information Studies.

He is also the first domestic customer of Honda Jet in Japan and

holds a private pilot license (FAA Japan).

Chiba’s extensive experience and knowledge in developing start-ups and working in

venture capital provides him with a unique perspective and makes him a valuable addition to our board of directors.

Sayama, Ph.D., Independent Director

Mike Sayama serves as an independent director.

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.

As the founding executive

director, he was responsible for operations, developing a strategic plan for an accountable health community in East Hawaii, community

relations, and fund raising.

From January 2021 to June 2021 he served as the Director of Strategy to facilitate the transition to a new

management team.

October 2013 to December 2018, Dr.

Sayama served as a Vice President at Pono Health and was Director of Learning Health Homes, a project

where he was responsible for managing the East Hawaii Independent Physicians Association and implementing a data platform integrating

health plan, hospital, and physician data.

Sayama also facilitated the reorganization of EHI and development of its strategic direction.

Community First, a 501(c) 3 non-profit, which serves as a neutral forum for healthcare stakeholders in East Hawaii, grew out of the Learning

Health Homes Initiative.

August 1997 to October 2013, Dr.

Sayama served as a Vice President of the Hawaii Medical Service Association, first in Health Benefits

Management and then in Customer Relations.

In the first position, he streamlined preauthorization and appeal processes, including the

elimination of preauthorization for inpatient admissions without increase in inpatient utilization.

In his second position he established

call centers in Hilo which stabilized the call center work force and improved the timeliness and accuracy of customer service.

April 2001 to April 2005, Dr.

Sayama was a Director on the City Bank Board, and from April 2005 to April 2009, was a Director on the

Boards of Central Pacific Bank and Central Pacific Financial Corporation.

In May 1975, he received his Bachelor of Arts degree in Psychology from Yale University, and in August 1979, his Master of

Arts degree in Clinical Psychology from University of Michigan.

In August 1982, Dr.

Sayama received his Ph.D.

degree in Clinical Psychology

from University of Michigan.

He is the author of several books on psychotherapy and Zen Buddhism.

community service includes having been a Director on the Bay Clinic Board (the Federally Qualified Health Center in East Hawaii) and

currently serving as the Abbot of Chozen-ji, International Zen Dojo.

Sayama brings broad knowledge of the healthcare technology industry,

as well as prior experience serving as a founding executive director, which makes him a valuable addition to our board of directors.

Nomura, Independent Director and Chairperson of the Board’s Audit Committee

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

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.

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 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

have five directors.

Our board of directors is divided into three classes, with only one class of directors being elected in each year

and with each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term.

In accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our

first fiscal year end following our listing on Nasdaq.

term of office of the first class of directors, consisting of Kotaro Chiba, will expire at our first annual meeting of stockholders.

The term of office of the second class of directors, consisting of Darryl Nakamoto and Mike Sayama, will expire at our second annual

meeting of the stockholders.

The term of office of the third class of directors, consisting of Trisha Nomura and Dustin Shindo, will

expire at our third annual meeting of stockholders.

We may not hold an annual meeting of stockholders until after we complete our initial

business combination.

We may not hold an annual meeting of stockholders until after we complete our initial business combination.

to the completion of an initial business combination, any vacancy on the board of directors may be filled by a nominee chosen by holders

of a majority of our founder shares.

In addition, prior to the completion of an initial business combination, holders of a majority of

our founder shares may remove a member of the board of directors for any reason.

Pursuant to an agreement to be entered into concurrently

with the issuance and sale of our securities, our sponsor, upon completion of an initial business combination, will be entitled to nominate

individuals for election to our board of directors, as long as our sponsor holds any securities covered by the registration rights agreement.

officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms

Our board of directors is authorized to nominate persons to the offices set forth in our amended and restated certificate

of incorporation as it deems appropriate.

Our amended and restated certificate of incorporation provides that our officers may consist

of one or more chairman of the board of directors, chief executive officer, president, chief financial officer, vice presidents, secretary,

treasurer and such other offices as may be determined by the board of directors.

listing standards require that a majority of our board of directors be independent.

An “independent director” is defined

generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship

which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment

in carrying out the responsibilities of a director.

Our independent directors have regularly scheduled meetings at which only independent

directors are present.

Kotaro Chiba, Mike Sayama and Trisha Nomura are our independent directors.

of the Board of Directors

board of directors has three standing committees:

an audit committee, a compensation committee and a corporate governance and nominating

Subject to phase-in rules and a limited exception, the rules of Nasdaq and Rule 10A-3 of the Exchange Act require that the

audit committee of a listed company be comprised solely of independent directors.

Subject to phase-in rules and a limited exception,

the rules of Nasdaq require that the compensation committee of a listed company be comprised solely of independent directors.

have established an audit committee of the board of directors.

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 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:

compensating and overseeing our independent registered public accounting firm;

and approving the annual audit plan for the company;

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;

or replacing the independent registered public accounting firm;

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;

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;

earnings press releases and financial information provided to analysts and rating agencies;

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.

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

Experts on Audit Committee

to Nasdaq rules, the audit committee will at all times be composed exclusively of “independent directors” who are able to

read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.

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, which generally is any person who has past employment experience

in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results

in the individual’s financial sophistication.

have established a compensation committee of our board of directors.

The members of our compensation committee are Kotaro Chiba, Mike

Sayama, and Trisha Nomura, and Mr.

Sayama serves as chairman of the compensation committee.

Under Nasdaq listing standards and applicable

SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent directors.

board of directors has determined that each Messrs.

Chiba, Sayama and Nomura is independent.

We have adopted a compensation committee

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;

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;

the compensation of our directors;

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

Notwithstanding

the foregoing, as indicated above, other than the payment to Mehana Capital LLC, the Sponsor, of $10,000 per month, for up to nine months,

or 18 months if we have elected to extend the time to complete our initial business combination, for office space, utilities and secretarial

and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of

our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order

to effectuate the consummation of an initial business combination.

Accordingly, it is likely that prior to the consummation of an initial

business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements

to be entered into in connection with such initial business combination.

charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant,

legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such

However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the

compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.

Governance and Nominating Committee

have established a corporate governance and nominating committee of our board of directors.

The members of our corporate governance and

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

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.

Chiba, Sayama and Nomura is independent.

primary function of the corporate governance and nominating committee include:

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.

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 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

committee will evaluate the background of each candidate, including candidates that may be submitted by our stockholders.

have adopted a Code of Ethics applicable to our directors, officers and employees.

You can review these documents by accessing our public

filings at the SEC’s web site at www.sec.gov.

In addition, a copy of the Code of Ethics will be provided without charge upon request

We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons

who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission

initial reports of ownership and reports of changes in ownership of our shares of common stock and other equity securities.

These executive

officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a)

forms filed by such reporting persons.

Section 16(a) Reports

solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing

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

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

termination of employment.

Officers and Director Compensation

of our executive officers or directors have received any cash compensation for services rendered to us.

In addition, our sponsor, executive

officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection

with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

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

our or their respective affiliates.

Any such payments prior to an initial business combination will be made using funds held outside

the trust account.

Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls

in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection

with our activities on our behalf in connection with identifying and completing an initial business combination.

The founder shares will

be worthless if we do not complete an initial business combination.

Other than these payments and reimbursements, no compensation of

any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors,

or any of their respective affiliates, prior to completion of our initial business combination.

the completion of our initial business combination, members of our management team who remain with us may be paid consulting or management

fees from the combined company.

All of these fees will be fully disclosed to stockholders, to the extent then known, in the proxy solicitation

materials or tender offer materials furnished to our stockholders in connection with a proposed business combination.

We have not established

any limit on the amount of such fees that may be paid by the combined company to our members of management.

It is unlikely the amount

of such compensation will be known at the time of the proposed business combination because the directors of the post-combination business

will be responsible for determining executive officer and director compensation.

Any compensation to be paid to our executive officers

will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely

by independent directors or by a majority of the independent directors on our board of directors.

do not intend to take any action to ensure that members of our management team maintain their positions with us after the completion

of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment

or consulting arrangements to remain with us after our initial business combination.

The existence or terms of any such employment or

consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting

a target business but we do not believe that the ability of our management to remain with us after the completion of our initial business

combination will be a determining factor in our decision to proceed with any potential business combination.

We are not party to any

agreements with our executive officers and directors that provide for benefits upon termination of employment.

Committee Interlocks and Insider Participation

of our executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity

that has one or more executive officers serving on our board of directors.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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 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

of common stock beneficially owned by them.

The following table does not reflect record of beneficial ownership of any shares of common

stock issuable upon exercise of the warrants, as the warrants are not exercisable within 60 days of March 18, 2024.

and Address of Beneficial Owner (1)

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

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

May 17, 2022, the Sponsor paid an aggregate of $25,000 to cover certain expenses on our behalf in exchange for the issuance of 2,875,000

shares of Class B common stock (the “Founder Shares”).

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 will own, on an as-converted basis, 20% of our 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 our 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, we consummate a subsequent liquidation,

merger, stock exchange or other similar transaction which results in all of our 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.

Note - Related Party

April 25, 2022, the Sponsor agreed to loan us an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering

pursuant to a promissory note (the “Promissory Note”).

This loan was non-interest bearing and payable on the earlier of (i)

March 31, 2023 or (ii) the date on which we consummated the Initial Public Offering.

Prior to the Initial Public Offering, we 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

Support Agreement

Sponsor has agreed, commencing from the date of the Initial Public Offering through the earlier of our consummation of a business combination

and its liquidation, to make available to us certain general and administrative services, including office space, utilities and administrative

services, as we may require from time to time.

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.

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

of the working capital held outside the Trust Account to repay such loaned amounts, 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.

The Units would be identical to the Placement

The terms of such loans by our 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, 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

to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations

to present such opportunity to such entity.

Our officers and directors currently have certain relevant fiduciary duties or contractual

obligations that may take priority over their duties to us.

than equity provided to our independent directors, no compensation of any kind, including finder’s and consulting fees, will be

paid to our sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with

the completion of an initial business combination.

However, these individuals will be reimbursed for any out-of-pocket expenses incurred

in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable

business combinations.

The Sponsor has agreed to pay for the formation costs, and waived to seek reimbursement from the Company for such

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

their respective affiliates and will determine which expenses and the amount of expenses that will be reimbursed.

There is no cap or

ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.

our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees

from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender

offer or proxy solicitation materials, as applicable, furnished to our stockholders.

It is unlikely the amount of such compensation will

be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial

business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director

compensation.

We have entered into a registration rights agreement pursuant to which our sponsor is entitled to certain registration

rights with respect to the placement warrants and the shares of our Class A common stock issuable upon conversion of the Founder Shares.

for Approval of Related Party Transactions

audit committee of our board of directors has adopted a charter, providing for the review, approval and/or ratification of “related

party transactions,” which are those transactions required to be disclosed pursuant to Item 404 of Regulation S-K as promulgated

by the SEC, by the audit committee.

At its meetings, the audit committee shall be provided with the details of each new, existing or

proposed related party transaction, including the terms of the transaction, any contractual restrictions that the company has already

committed to, the business purpose of the transaction and the benefits of the transaction to the company and to the relevant related

Any member of the audit committee who has an interest in the related party transaction under review by the committee shall abstain

from voting on the approval of the related party transaction, but may, if so requested by the chairman of the committee, participate

in some or all of the committee’s discussions of the related party transaction.

Upon completion of its review of the related party

transaction, the committee may determine to permit or to prohibit the related party transaction.

An affirmative vote of a majority of

the members of the audit committee, present at a meeting at which a quorum is present, will be required in order to approve a related

party transaction.

A majority of the members of the entire audit committee will constitute a quorum.

Without a meeting, the unanimous

written consent of all of the members of the audit committee will be required to approve a related party transaction.

Our audit committee

will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors, or our or any of their affiliates.

procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a

conflict of interest on the part of a director, employee or officer.

To further minimize conflicts of interest, we have agreed not to

consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors unless we,

or a committee of independent directors, have obtained an opinion from either an independent investment banking firm that is a member

of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.

no finder’s fees, reimbursements, consulting fee, monies in respect of any payment of a loan or other compensation will be paid

by us to our Sponsor, officers or directors or any affiliate of our Sponsor, officers or directors prior to, for services rendered to

us prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination

(regardless of the type of transaction that it is).

However, the following payments will be made to our Sponsor, officers or directors,

or our or their affiliates, none of which will be made from the proceeds of the IPO held in the trust account prior to the completion

of our initial business combination:

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

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.

listing standards require that a majority of our board of directors be independent.

For a description of the director independence, see

“— Part III, Item 10 - Directors, Executive Officers and Corporate Governance” .

ACCOUNTANT FEES AND SERVICES.

firm of Marcum LLP, or Marcum, acts as our independent registered public accounting firm.

The following is a summary of fees paid to

Marcum for services rendered.

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

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.

As a result, the audit committee did not pre-approve

all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board

of directors.

Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve

all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject

to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to

the completion of the audit).

than the remediation efforts described above, there have been no material changes in our internal control over financial reporting during

the three months ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal

control over financial reporting.

Other Information.

On March 27, 2025, the Company’s Board of Directors

approved certain executive officer updates, including the replacement of Ryoji Murata, the Company’s current Chief Financial Officer

(principal financial officer), effective April 1, 2025.

Yuya Yoshida, 46, the Company’s current Chief Operating Officer will

continue in that role and also serve as Chief Financial Officer (principal financial officer), effective April 1, 2025.

will continue to serve as the Company’s principal accounting officer.

Yoshida has served as our Chief Operating Officer

and member of our Board of Directors since September 17, 2024, and in the same positions, since September 29, 2023, with SBC Medical Group, Inc.

(the legacy business that because the Company’s business).

Yoshida has also served as the Executive Vice President and the Chief Financial Officer of SBC Medical Group Co., Ltd.

since July 1, 2023.

From January 2016 to June 2023, Mr.

Yoshida worked in Corporate Development (Global Head and Director of Corporate

Development in 2018) at Rakuten Group Co., Ltd.

From 2003 to 2016, Mr.

Yoshida worked in securities, principal M&A, and investment

banking at Mitsubishi UFJ Financial Group.

Yoshida has extensive knowledge in E-Commerce, logistics, settlement, finance, mergers

and acquisitions and divestiture transactions.

Yoshida graduated with a Master of Law degree from Keio University in 2003.

also graduated with a Master of Business Administration degree from UCLA Anderson Business School in 2014.

Yoshida was not

appointed pursuant to any arrangement or understanding with any other person, has no family relationships with any director or

executive officer of the Company, and other than his previously reported employment arrangement with the Company, and other than his

previously reported employment arrangement with the Company, and there are no transactions involving Mr.

Yoshida that would be

required to be reported under Item 404(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

information required by this Item will be set forth in our definitive proxy statement for our 2025 Annual Meeting of Stockholders (the

“Proxy Statement”) and is incorporated herein by reference.

Executive Compensation.

information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence.

information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Principal Accountant Fees and Services.

information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

and Financial Statement Schedules

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

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:

following exhibits are filed with this report.

Exhibits which are incorporated herein by reference can be obtained from the SEC’s

website at sec.gov.

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) .

Statements and Schedules:

The required information is set forth in “Part II, Item 8

- Financial Statements and Supplementary Data” in this Annual Report.

The following exhibits are filed or furnished as an exhibit to this Annual Report on Form

and Plan of Merger, dated January 31, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings

Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki

Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pono Capital Two, Inc.

with the SEC on February

Amendment to the Agreement and Plan of Merger, dated April 26, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc.,

SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital

Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical

Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two,

with the SEC on May 1, 2023).

Amendment to the Agreement and Plan of Merger, dated May 30, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc.,

SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital,

Two Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical

Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two,

with the SEC on June 2, 2023).

Amendment to the Agreement and Plan of Merger, dated June 15, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc.,

SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital

Two Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical

Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two,

with the SEC on June 16, 2023).

and Restated Agreement and Plan of Merger, dated June 21, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC

Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital

Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical

Group Holdings Incorporated (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pono Capital Two,

with the SEC on June 22, 2023).

Amendment to the Amended and Restated Agreement and Plan of Merger, dated September 8, 2023, by and among Pono Capital Two, Inc.,

Pono Two Merger Sub, Inc., SBC Medical Group Medical Holdings Incorporated, Mehana Capital LLC in its capacity as the representative

of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative

of the stockholders of SBC (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two,

with the SEC on September 11, 2023).

Amendment to the Amended and Restated Agreement and Plan of Merger, dated October 26, 2023, by and among Pono Capital Two Inc., Pono

Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders

of Pono Capital Two Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders

of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to Form 8-K filed by Pono Capital Corp.

the SEC on October 26, 2023).

Amendment to the Amended and Restated Agreement and Plan of Merger, dated December 28, 2023, by and among Pono Capital Two, Inc.,

Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the

stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the

stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K

filed by Pono Capital Two, Inc.

with the SEC on December 29, 2023).

Amendment to the Amended and Restated Agreement and Plan of Merger, dated April 22, 2024, by and among Pono Capital, Two Inc., Pono

Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated Mehana Capital LLC in its capacity as the representative of the stockholders

of Pono Capital, Two Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders

of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono

Capital Two, Inc.

with the SEC on April 23, 2024).

Amended and Restated Certificate of Incorporation of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit

3.1 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024) .

and Restated Bylaws of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 3.2 to the Current Report on

Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).

Agreement, dated August 4, 2022, by and between Pono Capital Two, Inc.

and Continental Stock Transfer & Trust Company, as warrant

agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by Pono Capital Two, Inc.

with the SEC on

August 9, 2022).

Warrant Certificate (incorporated by reference to Exhibit 4.4 to the Amendment No.

1 to the Registration Statement on Form S-1, filed

by Pono Capital Two, Inc.

on July 22, 2022).

Description of Securities

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.

Certification of Principal Financial 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.

Certification of Principal Executive Officer Pursuant to 18 U.S.C.

Form of SBC Medical Group Holdings Incorporated Equity Incentive Plan.

of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by SBC Medical Group

Holdings Incorporated on September 20, 2024).

Form of Registration Rights Agreement by certain SBC Medical Group Holdings Incorporated equity holders.

Form of Lock-Up Agreement by certain SBC Medical Group Holdings Incorporated equity holders .

Agreement, dated August 4, 2022, by and among Pono Capital Two Inc., its officers, directors, and Mehana Capital LLC (incorporated

by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Pono Capital Two, Inc.

with the SEC on August 9, 2022).

Support Agreement, dated January 31, 2023 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by Pono

Capital Two, Inc.

with the SEC on February 2, 2023).

Agreement, dated January 31, 2023 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed by Pono Capital

with the SEC on February 2, 2023).

Employment Agreement between SBC Medical Group Holdings and Yoshiyuki Aikawa, dated September 17, 2024 (incorporated by reference

to Exhibit 10.8 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).

Employment Agreement between SBC Medical Group Holdings and Yuya Yoshida, dated September 17, 2024 (incorporated by reference to Exhibit

10.9 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).

Employment Agreement between SBC Medical Group Holdings and Ryoji Murata, dated September 17, 2024 (incorporated by reference to Exhibit

10.10 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).

Employment Agreement between SBC Medical Group Holdings and Akira Komatsu, dated September 17, 2024 (incorporated by reference to

Exhibit 10.11 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).

Form of Non-Competition and Non-Solicitation Agreement.

Policy on Insider Trading

of Subsidiaries of the Registrant

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

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Certification of the Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Certification of Principal Financial Officer Pursuant to 18 U.S.C.

Certification of the Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Clawback Policy .

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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.

to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf

by the undersigned, thereunto duly authorized.

Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

a management or compensatory plan

to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

The Registrant hereby agrees to furnish a copy of

any omitted schedules to the SEC upon request.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

Medical Group Holdings Incorporated

March 28, 2025

CAPITAL TWO, INC.

Darryl Nakamoto

Executive Officer, Director

/s/ Yoshiyuki Aikawa

Chairman and Chief Executive Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Darryl Nakamoto

Executive Officer, Director

March 18, 2024

/s/ Yoshiyuki Aikawa

Chairman and Chief Executive Officer

Executive Officer)

Allison Van Orman

/s/ Ryoji Murata

Financial Officer

March 18, 2024

Accounting and Financial Officer)

Dustin Shindo

March 18, 2024

Trisha Nomura

March 18, 2024

CAPITAL TWO, INC.

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

Capital Two, Inc.

on the Financial Statements

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 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 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 audits

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

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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 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 audits

provide a reasonable basis for our opinion.

have served as the Company’s auditor since 2022.

CAPITAL TWO, INC.

BALANCE SHEETS

Current assets:

Prepaid expenses

Total Current Assets

Marketable securities

held in Trust Account

$ 119,942,205

Liabilities and Stockholders’

Current liabilities:

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;

no shares issued and outstanding

A common stock, $ 0.0001 par value;

100,000,000 shares authorized;

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

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.

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.

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

Stockholders’

Balance at March 11, 2022

of Class B common stock to Sponsor (1)

of Placement Units

Issuance of Representative

allocated to Public Warrants

offering costs allocated to the fair value of equity instruments

of Class A common stock subject to redemption to redemption amount

( 9,208,780 )

( 3,911,841 )

( 13,120,621 )

at December 31, 2022

$ ( 3,359,028 )

$ ( 3,358,671 )

$ ( 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.

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 )

( 1,345,016 )

Changes in operating assets

and liabilities:

Prepaid expenses

Accounts payable

Accrued expenses

Franchise tax payable

cash used in operating activities

( 2,132,921 )

Cash Flows from Investing

Investment of cash in Trust

( 117,875,000 )

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 (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 CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN

Capital Two, Inc.

(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.

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

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

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.

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 ,

which is described in Note 4.

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

Warrants (as defined in Note 3) commencing on September 26, 2022.

Those Public Shares not separated will continue to trade on The Nasdaq

Global Market under the symbol “PTWOU,” and the Class A Common Stock and warrants that are separated will trade on The Nasdaq

Global Market under the symbols “PTWO” and “PTWOW,” respectively.

CAPITAL TWO, INC.

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

and the sale of the Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating

a business combination.

There is no assurance that the Company will be able to complete a business combination successfully.

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

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

of their Public Shares upon the completion of a business combination either (i) in connection with a stockholder meeting called to approve

the business combination or (ii) by means of a tender offer.

The decision as to whether the Company will seek stockholder approval of

a business combination or conduct a tender offer will be made by the Company, solely in its discretion.

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

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

Company will offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”),

and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC

prior to completing a business combination.

Sponsor has agreed (a) to vote its Class B common stock, the common stock included in the Placement Units and the Public Shares purchased

in the Initial Public Offering in favor of a business combination, (b) not to propose an amendment to the Amended and Restated Certificate

of Incorporation with respect to the Company’s pre-business combination activities prior to the consummation of a business combination

unless the Company provides dissenting Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any

such amendment;

into the right to receive cash from the Trust Account in connection with a stockholder vote to approve a business combination (or to

sell any shares in a tender offer in connection with a business combination if the Company does not seek stockholder approval in connection

therewith) or a vote to amend the provisions of the Amended and Restated Certificate of Incorporation relating to stockholders’

rights of pre-business combination activity and (d) that the Class B common stock and Placement Units (including underlying securities)

shall not participate in any liquidating distributions upon winding up if a business combination is not consummated.

However, the Sponsor

will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased in the Initial Public

Offering if the Company fails to complete its business combination.

CAPITAL TWO, INC.

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

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 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

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.

The IR Act provides for,

among other things, a new U.S.

federal 1% excise tax on certain repurchases of stock by publicly traded U.S.

domestic corporations and

domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023 (the “Excise Tax”).

The Excise Tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.

of the Excise Tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes

of calculating the Excise Tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against

the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the Excise Tax.

Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry

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

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 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 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

Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our

Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required

to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced

disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements

of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting

standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do

not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements

that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of

such extended transition period which means that when a standard is issued or revised and it has different application dates for public

or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies

adopt the new or revised standard.

This may make comparison of the Company’s 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 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, 2023 and December 31, 2022.

Held in Trust Account

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.

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

of the Class A common stock sold as part of the Units in the Initial Public Offering contain a redemption feature which allows for the

redemption of such Public Shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in

connection with the business combination and in connection with certain amendments to the Company’s Amended and Restated Certificate

of Incorporation.

In accordance with ASC 480, conditionally redeemable Class A common stock (including shares of Class A common stock

that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain

events not solely within the Company’s control) is classified as temporary equity.

Ordinary liquidation events, which involve the

redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480.

Company did not specify a maximum redemption threshold, its charter provides that currently, the Company will not redeem its Public Shares

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.

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

Proceeds allocated to Public

( 2,978,500 )

Issuance costs allocated

to Class A common stock

( 6,432,257 )

of Class A common stock subject to redemption to redemption amount

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 )

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 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

income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period.

the income per share calculation allocates income shared pro rata between Class A and Class B common stock.

As a result, the calculated

net income per share is the same for Class A and Class B common stock.

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.

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 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

of Credit Risk

instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution

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 account.

Value of Financial Instruments

Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair

value and clarifies the definition of fair value within that framework.

ASC 820 defines fair value as an exit price, which is the price

that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an

orderly transaction between market participants on the measurement date.

The fair value hierarchy established in ASC 820 generally requires

an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market

data obtained from sources independent of the reporting entity.

Unobservable inputs reflect the entity’s own assumptions based

on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability

and are to be developed based on the best information available in the circumstances.

carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level

1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges.

Inputs to the fair value measurement

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

terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted

3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when

little or no market data exists for the assets or liabilities.

Note 9 for additional information on assets measured at fair value.

Financial Instruments

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

derivatives in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”).

For derivative financial instruments

that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then

re-valued at each reporting date, with changes in the fair value reported in the statement of operations.

For derivative instruments

that are classified as equity, the derivative instruments are initially measured at fair value (or allocated value), and subsequent changes

in fair value are not recognized as long as the contracts continue to be classified in equity.

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s

specific terms and applicable authoritative guidance in ASC 480 and ASC 815.

The assessment considers whether the warrants are freestanding

financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all

of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common

stock, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted

at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component

of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification,

the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statement of operations.

warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet

date thereafter.

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.

Accounting Standards

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

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, 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).

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.

RELATED PARTY TRANSACTIONS

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.

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

Offering pursuant to a promissory note (the “Promissory Note”).

This loan is non-interest bearing and payable on the earlier

of (i) March 31, 2023 or (ii) the date on which Company consummates the Initial Public Offering.

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.

Administrative

Support Agreement

Company’s Sponsor has agreed, commencing from the date of the Initial Public Offering through the earlier of the Company’s

consummation of a business combination and its liquidation, to make available to the Company certain general and administrative services,

including office space, utilities and administrative services, as the Company may require from time to time.

The Company has agreed to

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

certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required.

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

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.

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, 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 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

and Stockholder Rights Agreement

holders of the Founder Shares and Placement Units (including securities contained therein) and Units (including securities contained

therein) that may be issued upon conversion of working capital loans and extension loans, and any shares of Class A common stock issuable

upon the exercise of the Placement Warrants and any shares of Class A common stock and warrants (and underlying Class A common stock)

that may be issued upon conversion of the Units issued as part of the working capital loans and extension loans and Class A common stock

issuable upon conversion of the Founder Shares, will be entitled to registration rights pursuant to a registration rights agreement signed

on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale (in the case of the

Founder Shares, only after conversion to the Class A common stock).

The holders of these securities are entitled to make up to two demands,

excluding short form demands, that the Company registers such securities.

In addition, the holders have certain “piggy-back”

registration rights with respect to registration statements filed subsequent to the completion of the initial business combination and

rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act.

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

Public Offering.

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.

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

statement pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules.

Pursuant to FINRA Rule 5110(e)(1), these securities may not

be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging, short sale, derivative, put or call transaction

that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective

date of the registration statement, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately

following the commencement of sales of the Initial Public Offering except to any underwriter and selected dealer participating in the

Initial Public Offering and their bona fide officers or partners, registered persons or affiliates or as otherwise permitted under Rule

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).

of First Refusal

a period beginning on the closing of the Initial Public Offering and ending 12 months from the closing of a business combination, the

Company has granted EF Hutton a right of first refusal to act as lead-left book running manager and lead left manager for any and all

future private or public equity, convertible and debt offerings during such period.

In accordance with FINRA Rule 5110(g)(3)(A)(i), such

right of first refusal shall not have a duration of more than three years from the effective date of the registration statement.

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.

connection with any vote held to approve the initial business combination, the insiders, officers and directors, have agreed to vote

their respective shares of common stock acquired in the Initial Public Offering or following the Initial Public Offering in the open

market, in favor of the proposed business combination.

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;

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

prospectus relating to those shares of Class A common stock until the Public Warrants expire or are redeemed, as specified in the warrant

If a registration statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not

effective by the 60th business day after the closing of the initial business combination, Public Warrant holders may, until such time

as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration

statement, exercise Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act;

that such exemption is available.

If that exemption, or another exemption, is not available, holders will not be able to exercise their

Public Warrants on a cashless basis.

the Public Warrants become exercisable, the Company may call the Public Warrants for redemption:

whole and not in part;

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

of common stock upon exercise of the Public Warrants is not exempt from registration or qualification under applicable state blue sky

laws or the Company is unable to effect such registration or qualification.

addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes

in connection with the closing of the initial business combination at a Newly Issued Price of less than $9.20 per share of Class A common

stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any

such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates,

as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity

proceeds, and interest thereon, available for the funding of the initial business combination on the date of the consummation of the

initial business combination (net of redemptions), and (z) the market value is below $9.20 per share, then the exercise price of the

warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and

the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the greater

of the Market Value and the Newly Issued Price.

Placement Warrants are identical to the Public Warrants except that, so long as they are held by the Sponsor or its permitted transferees,

(i) they (including the Class A common stock issuable upon exercise of these Placement Warrants) may not, subject to certain limited

exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of the initial business combination, and

(ii) the holders thereof (including with respect to shares of Class A common stock issuable upon exercise of such Placement Warrants)

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.

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,

net of allowance

income tax provision for the year ended December 31, 2023 and 2022 consists of the following:

OF INCOME 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

of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of

future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies

in making this assessment.

After consideration of all of the information available, management believes that significant uncertainty

exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

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

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 and the state of Hawaii jurisdictions and is subject to examination by the taxing

CAPITAL TWO, INC.

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, 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

SUBSEQUENT EVENTS

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.

Financial and Accounting Officer)

/s/ Yuya Yoshida

and Chief Operating Officer

/s/ Mike Sayama

Fumitoshi Fujiwara

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