Maquia Capital Acquisition Corp

Item 1A. Risk Factors.

As of the date of this Report, other than as set forth below, there have been no material changes with respect to those risk factors previously disclosed in our (i) Registration Statement on Form S-1 initially filed with the SEC on February 16, 2021, as amended, and declared effective on May 4, 2021 (File No. 333-253167) (the Registration Statement), (ii) Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 4, 2023, (iii) Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022, as filed with the SEC on May 10, 2022, August 16, 2022 and November 10, 2022, respectively , (iv) DEF 14A as filed with the SEC on April 24, 2023 and Amendment No. 2 to the S4 Registrations Statement filed April 19, 2024. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Market conditions, economic uncertainty or downturns could adversely affect our business, financial condition, operating results and our ability to consummate a business combination.

In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including as a result of the COVID-19 pandemic, supply chain disruptions, the Ukraine-Russia conflict, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and high inflation and the possibility of a recession. A significant downturn in economic conditions may make it more difficult for us to consummate a business combination.

We cannot predict the timing, strength, or duration of any future economic slowdown or any subsequent recovery generally, or in any industry. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, operating results and our ability to consummate a business combination could be adversely affected. For example, in January 2023, the outstanding national debt of the U.S. government reached its statutory limit. The U.S. Department of the Treasury (the Treasury Department) has announced that, since then, it has been using extraordinary measures to prevent the U.S. governments default on its payment obligations, and to extend the time that the U.S. government has to raise its statutory debt limit or otherwise resolve its funding situation. The failure by Congress to raise the federal debt ceiling could have severe repercussions within the U.S. and to global credit and financial markets. If Congress does not raise the debt ceiling, the U.S. government could default on its payment obligations, or experience delays in making payments when due. A payment default or delay by the U.S. government, or continued uncertainty surrounding the U.S. debt ceiling, could result in a variety of adverse effects for financial markets, market participants and U.S. and global economic conditions. In addition, U.S. debt ceiling and budget deficit concerns have increased the possibility a downgrade in the credit rating of the U.S. government and could result in economic slowdowns or a recession in the U.S. Although U.S. lawmakers have passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States as a result of disputes over the debt ceiling. The impact of a potential downgrade to the U.S. governments sovereign credit rating or its perceived creditworthiness could adversely affect economic conditions, as well as our business, financial condition, operating results and our ability to consummate a business combination.

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The termination of the business combination agreement with Immersed, Inc. will severely limit the companys ability to consummate a business combination with a new target.

As reported above, the business combination agreement with Immersed, Inc. was mutually terminated on May 20, 2024. On August 7, 2024, the Companys shareholders voted to Amend the Companys amended and restated certificate of incorporation to extend the date by which the Company has to consummate a Business Combination from August 7, 2024 to January 7, 2025 or such earlier date as determined by the board of directors. To accomplish this the Company must locate a suitable target, engage that target with a business combination agreement, and submit the matter to shareholders for approval prior to January 7, 2025. Failure to do this will result in the liquidation of the Company unless the January 7, 2025 date is further extended. In addition, Nasdaq has delisted the company for failure to complete a business combination within 36 months of the effective date of its IPO. Because of the time limitations and the delisting, the Company faces significant limitations on its ability to complete the business combination in a timely manner and thus may be forced to liquidate.

Should NASDAQ finally determine to delist the companys securities, it will have a serious impact on the companys ability to complete a business combination.

Maquia is subject to compliance with Nasdaqs continued listing requirements in order to maintain the listing of our securities on Nasdaq. Maquia expects that if the Maquia Class A Common Stock fails to meet Nasdaqs continued listing requirements, the Maquia Units and Maquia Warrants will also fail to meet Nasdaqs continued listing requirements for those securities. If Maquias securities do not meet Nasdaqs continued listing requirements, Nasdaq may delist such securities from trading on its exchange.

On January 8, 2024, the Company received a notice from the Listing Qualifications Department of the Nasdaq Stock Market (Nasdaq) (the Notice) of failure to satisfy a continued listing standard from Nasdaq under Listing Rule 5620(a), as reported on the Companys January 12, 2024 8-K. The Notice indicated that the Company failed to hold an annual meeting of stockholders within the required twelve-month period from the end of the Companys fiscal year. Pursuant to the listing rules, the Company provided a plan for addressing the deficiency and becoming compliant. In response, the listing analyst granted the Company until May 20, 2024 to hold an annual shareholders meeting, which the Company did. As noted in the Companys 8-K filed May 21, 2024, the Company held its annual meeting on May 20, 2024 in compliance with the Listing Rule. On May 23, 2024, Nasdaq advised that the Company regained compliance with the annual meeting of shareholders requirement in Listing Rule Listing Rule 5620(a).

On May 22, 2024, Maquia, received a notice from the Listing Qualifications Department of the Nasdaq Stock Market (Nasdaq) (the Notice) that Maquia was delinquent in the filing of its periodic Form 10Q Report with the Securities and Exchange Commission (the SEC) for the period ending March 31, 2024 and that Nasdaq has initiated a process which could result in the delisting of the Companys securities from Nasdaq Stock Market as a result of the Company not being in compliance with Nasdaq Listing Rule 5250(c)(1) (the Listing Rule), which requires listed companies to file in a timely manner all required periodic financial reports with the SEC. The Company timely filed a request for a hearing before the Nasdaq Hearing Panel on May 29, 2024, in accordance with Listing Rule 5815(a)(1)(B), thus automatically extending the stay of suspension for 15 days, i.e., through June 13, 2024. The request for a stay also appealed to the Panel that the suspension be extended for an additional four days to June 17, 2024. On June 14, 2024, the Company filed its Form 10-Q with the SEC. On July 9, 2024, Nasdaq advised that the Company regained compliance with the Periodic Filing Rule.

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Previous to this, and as reported by the Company, on May 7, 2024, Maquia received a notice from the Listing Qualifications Department of Nasdaq (the May 7th Notice) that Maquia was not in compliance with Nasdaq Listing Rule IM-5101-2 requiring a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement triggering the issuance of a Staff Delisting Determination under Rule 5810 to delist the Companys securities. Because the Company was unable to complete a business combination by the end of the 36-month period, the Company was not in compliance. In conformity with the Listing Rules, the Company filed an appeal on May 13, 2024. A hearing on this matter was held on June 20, 2024. On July 29, 2024, Nasdaq advised the Company that the Panel granted the Companys request for continued listing on the Nasdaq Capital Market, subject to the following: (1) on or before July 15, 2024, the Company will enter into a definitive business combination agreement with Regulus 333, S.A.P.I. de C.V.; and (2) on or before November 4, 2024, the Company will complete the business combination agreement with Regulus and demonstrate compliance with all applicable initial listing standards for the Nasdaq Capital Market. Nasdaq advised the Company that November 4, 2024 represents the full extent of the Panels discretion to grant continued listing while the Company is non-compliant with Listing Rule IM-5101-2. Nasdaq advised it is a requirement during the exception period that the Company provide prompt notification of any significant events that occur during this time that may affect the Companys compliance with Nasdaq requirements. This includes, but is not limited to, any event that may call into question the Companys ability to meet the terms of the exception granted. The Panel reserved the right to reconsider the terms of this exception based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Companys securities on the Exchange inadvisable or unwarranted. In addition, any compliance document will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the Company has complied with the terms of the exception. On July 15, 2024, the Company executed a Business Combination Agreement with Merger Sub and Velocium, Inc. On July 17, 2024, the Company provided to Nasdaq a copy of the Business Combination Agreement between the Company, Merger Sub, and Velocium. On July 19, 2024, the Company filed a Form 8-K with the SEC regarding the Business Combination Agreement with Merger Sub and Velocium. A copy of that Form 8-K was provided to Nasdaq on July 23, 2024. On July 29, 2024, the Nasdaq Hearings Panel (Panel) determined to delist the securities of the Company from The Nasdaq Stock Market (Nasdaq or the Exchange) due to its failure to comply with the terms of the Panel decision dated July 9, 2024 (the Decision) following a hearing held before the Panel on June 20, 2024 (the Hearing). The Panel advised that trading in the Companys securities will be suspended at the open of trading on July 31, 2024. Pursuant to the representations and information provided by the Company at the Hearing, the Decision required the Company to enter into a definitive business combination agreement with Regulus 333, S.A.P.I. de C.V. (Regulus) on or before July 15, 2024. On July 16, 2024, the Company provided an update to the Panel that it had entered into a business combination agreement. On July 17, 2024, the Company provided a copy of the business combination agreement reflecting the Companys agreement to enter into a business combination with Velocium Inc. The Decision required the Company to notify the Panel promptly of any significant events that occur during the exception period that may affect Companys compliance with Nasdaq requirements. This includes, but is not limited to, any event that may call into question the Companys ability to meet the terms of the exception granted. Prior to July 17, 2024, the Panel was not informed that the Company had changed targets or that it had elected not to proceed with a business combination with Regulus as described at the Hearing. The Panels decision to grant an extension following the Hearing was based, in part, on the facts and timeline presented at the Hearing and the expedited review process and negotiations anticipated by the Company with respect to a specific target (Regulus). The Panel stated the Companys failure to provide timely and accurate information to the Panel, in particular notification of this significant change in the target entity, raises serious doubts that the Company has an appropriate understanding of the exacting standards required of a Nasdaq listed company. Further, the Company did not provide the Panel with any substantive evidence or definitive timelines to evidence that the Company will be able to complete the business combination within the time available to the Panel under Listing Rules, in this case, November 4, 2024. The Panel stated an extension by the Panel is reserved for companies that have presented a compliance plan with definitive evidence that the company can regain and sustain compliance with Nasdaq Listing Rules. The Company has not provided any substantive information or detailed plan on the necessary steps it must take to facilitate the business combination, including when it expects to begin or complete the SEC registration review process or obtain shareholder approvals for the business combination. Combined with the Companys failure to inform the Panel of a significant change impacting the Companys compliance plan, the absence of definitive information and timeline on the Companys plan to complete a business combination with a new target within the time remaining leaves the Panel with no choice but to determine that delisting the Companys securities is the appropriate action to maintain the quality of and public confidence in the Exchange. For the foregoing reasons, the Panel determined to delist the Companys securities from the Exchange and suspended trading in those securities effective at the open of business on July 31, 2024. The Exchange will complete the delisting by filing a Form 25 Notification of Delisting with the U.S. Securities Exchange Commission, after applicable appeal periods have lapsed. On July 29, 2024, the Company submitted a request to Nasdaq for the Panel to reconsider its delisting decision. The Company intends to challenge the delisting through its reconsideration request. The Company filed a report on Form 8-K announcing the Panels delisting decision.

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If Nasdaq delists any of Maquias securities from trading on its exchange and Maquia is not able to list such securities on another national securities exchange, Maquia expects such securities could be quoted on an over-the-counter market. If this were to occur, Maquia could face significant material adverse consequences, including:

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