SYTE Enterprise Diversified Inc (QB)

RISK FACTORS

An investment in our common stock or any other type of equity or debt securities that we may offer (together, our “Securities”) is speculative in nature and involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this Registration Statement on Form S-4, as well as the risks, uncertainties, and other information set forth in any reports and other materials we may file or furnish with the SEC before making an investment decision. If any of the following risks were to occur, our business, financial condition, results of operations, or future growth prospects may be materially and adversely affected. In that case, the price of our Securities could decline, and you may lose all or part of your investment. All terms used but otherwise not defined have the meaning given to them in the Merger Agreement.

Operational Risks Associated with the Business Combination

CrossingBridge Advisors, LLC (“CBA”) and Enterprise Diversified, Inc. (“ENDI”) may experience difficulties, unexpected costs and delays in integrating their businesses, business models and cultures and New Parent may not realize synergies, efficiencies or cost savings from the Business Combination.

CBA and ENDI have operated and, until the Business Combination is completed, will continue to operate, independently. The success of New Parent following the completion of the Business Combination may depend in large part on the ability to integrate the two companies’ businesses, business models and cultures. In particular, asset management businesses such as ENDI’s and CBA’s depend to a large degree on the efforts and performance of individual employees whose efforts and performance may be affected by any difficulties in the integration of the businesses. In the process of integrating CBA and ENDI, CBA and ENDI may experience difficulties, unanticipated costs and delays. The challenges involved in the integration may include:

The integration of certain operations following the Business Combination will take time and will require the dedication of significant management resources, which may temporarily distract management’s attention from the ongoing businesses of New Parent. Employee uncertainty and lack of focus during the integration process may also disrupt the businesses of New Parent.

It is possible that the integration process could result in the loss of key employees, diversion of each company’s management’s attention, the disruption or interruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect New Parent’s ability to maintain relationships with clients and employees or the ability to achieve the anticipated benefits of the Business Combination, or could reduce New Parent’s earnings or otherwise adversely affect the business and financial results of New Parent. In addition, the integration process may strain New Parent’s financial and managerial controls and reporting systems and procedures. This may result in the diversion of management and financial resources from New Parent’s core business objectives.

Even if CBA and ENDI are able to integrate their businesses and operations successfully, there can be no assurance that this integration will result in any synergies, efficiencies or cost savings or that any of these benefits will be achieved within a specific time frame. Any of these factors could adversely affect New Parent’s business and results of operations.

The announcement of the proposed Mergers could disrupt ENDI’s and CBA’s relationships with its customers, suppliers, business partners and others, as well as its operating results and business generally.

Whether or not the Mergers and related transactions are ultimately consummated, as a result of uncertainty related to the proposed transactions, risks related to the impact of the announcement of the Mergers on ENDI’s and CBA’s business include the following:

•its employees may experience uncertainty about their future roles, which might adversely affect ENDI’s or CBA’s ability to retain and hire key personnel and other employees and the success of New Parent post-closing is dependent on the continued services of certain key personnel of both CBA and ENDI; and

•each of ENDI and CBA has expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed Mergers.

If any of the aforementioned risks were to materialize, they could lead to significant costs which may impact ENDI’s and CBA’s results of operations and cash available to fund its business.

If completed, the Mergers may not be successful or achieve its anticipated financial and other benefits.

If the Mergers are completed, New Parent may not be able to successfully realize anticipated growth opportunities and synergies or integrate ENDI’s business and operations with CBA’s business and operations.

After the Mergers, New Parent will have increased expenses, assets and employees than ENDI did prior to the Mergers. Upon the completion of the Mergers, New Parent will also assume certain liabilities of ENDI and CBA and take on other obligations. New Parent may not successfully or cost-effectively integrate ENDI’s business and operations with CBA’s business and operations. Even if New Parent is able to integrate the combined businesses and operations successfully, this integration may not result in the realization of the full benefits of the synergies and other opportunities that ENDI currently expects from the Mergers within the anticipated time frame, or at all.

The Merger Agreement contains provisions that may discourage ENDI from seeking an alternative merger.

The Merger Agreement contains provisions that prohibit ENDI from seeking alternative transactions during the pendency of the Merger Agreement. Further, if ENDI is unable to obtain the requisite approval of the ENDI Stockholders, either party may terminate the Merger Agreement.

Some of the directors, managers, and executive officers of ENDI, the CBA Member and CBA, as the case may be, have interests in the business combination that are different from the interests of ENDI’s stockholders.

When considering the recommendation of the ENDI Board of Directors with respect to the Business Combination, you should be aware that some directors, managers and executive officers of ENDI, the CBA Member and CBA, as the case may be, may receive certain benefits as a result of the Business Combination. The ENDI Board of Directors was aware of these interests and considered them, among other matters, in approving the Merger Agreement and the Business Combination. These interests may include:

You should consider these interests in conjunction with the recommendation of the Board of Directors of ENDI with respect to approval of the proposals related to the Business Combination. These interests have been described more fully in the section entitled “The Business Combination.”

In the future, ENDI or New Parent may be the target of individual or class action securities or derivative lawsuits, which could result in substantial costs and may delay or prevent the Closing. 

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements in an effort to enjoin the relevant merger or seek monetary relief. Even if future lawsuits involving ENDI or New Parent are without merit, defending against these claims can result in substantial costs and divert management time and resources. ENDI and New Parent cannot predict the outcome of these lawsuits, or others, nor can either company predict the amount of time and expense that will be required to resolve such litigation. An unfavorable resolution of any such litigation surrounding the Mergers could delay or prevent its consummation. In addition, the costs of defending the litigation, even if resolved in ENDI’s or New Parent’s favor, could be substantial, and such litigation could distract ENDI or New Parent from pursuing the consummation of the Mergers and other potentially beneficial business opportunities.

Each party is subject to business uncertainties and contractual restrictions while the Mergers are pending, which could adversely affect each party’s business and operations.

In connection with the pendency of the Mergers, it is possible that some customers, suppliers and other persons with whom ENDI, CBA, or the CBA Member has a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with ENDI, CBA, or the CBA Member, as the case may be, as a result of the Mergers. Under the terms of the Merger Agreement, each of ENDI and CBA is subject to certain restrictions on the conduct of its respective business prior to completing the Merger, which may reduce the value of the ENDI common stock or adversely affect each party’s ability to acquire assets or to execute certain of its business strategies. Such limitations could adversely affect each party’s businesses and operations prior to the completion of the Mergers.

Our future results following the Mergers may differ materially from the unaudited pro forma financial statements included in this proxy statement/prospectus.

The unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus presents ENDI’s historical consolidated financial statements as adjusted to give effect to the contemplated Mergers, including ENDI’s combination with CBA. The unaudited pro forma condensed combined financial statements are not necessarily indicative of the financial condition or results of operations of ENDI or New Parent following the Mergers. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect our financial condition and results of operations following the Mergers. Any change in our financial condition or results of operations may cause significant variations in the price of our common stock. See “Unaudited Pro Forma Condensed Combined Financial Data” for more information.

The opinion received by the ENDI Board of Directors from its financial advisor prior to execution of the Merger Agreement does not reflect changes in circumstances subsequent to the date of the fairness opinion.

Empire Valuation Consultants, LLC, ENDI’s financial advisor in connection with the Mergers, delivered to the ENDI Board of Directors its opinion, dated as of December 28, 2021, to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations set forth in the opinion, the merger consideration in the Mergers is fair, from a financial point of view, to holders of ENDI’s common stock. The opinion speaks only as of the date of such opinion. The opinion does not reflect changes that may occur or may have occurred after the date of the opinion, including changes to the operations and prospects of CBA or ENDI, changes in general market and economic conditions or regulatory or other factors. Any such changes may materially alter or affect the relative values of ENDI and CBA.

The financial services industry is subject to government regulation in the United States, and our failure to comply with these regulations or regulatory action against us, CBA or New Parent could adversely affect our results of operations, financial condition or business.

The financial services industry is among the most extensively regulated industries in the United States. Both ENDI and CBA are subject to numerous state and federal laws and regulations of general application. It is very difficult to predict the future impact of the legislative and regulatory requirements affecting our business and our clients’ businesses. CBA is registered as an “investment adviser” with the SEC under the Investment Advisers Act of 1940 (as amended, the “Advisers Act”) and is regulated thereunder. The Advisers Act and the Investment Company Act, together with related regulations and interpretations of the SEC, impose numerous obligations and restrictions on investment advisers and registered investment companies (including mutual funds and exchange-traded funds), including requirements relating to the safekeeping of client funds and securities, limitations on advertising, disclosure and reporting obligations, prohibitions on fraudulent activities, restrictions on certain transactions between an adviser and its clients, and between a registered investment company and its advisers and affiliates, and other detailed operating requirements, as well as general fiduciary obligations. All of the foregoing laws and regulations, as well as any other laws and regulations we are or may become subject to, are complex and we are required to expend significant resources to monitor and maintain our compliance with such laws and regulations. Any failure on our part to comply with these and other applicable laws and regulations could result in regulatory fines, suspensions of personnel or other sanctions, including revocation of CBA’s registration as an investment adviser which could, among other things, have a material adverse effect on our results of operations, financial condition or business.

The Advisers Act effectively requires client consent for any assignment of an investment advisory contract. Under the Advisers Act and rules and guidance promulgated thereunder, an assignment includes a change of control of a registered investment adviser. With respect to clients that are registered investment companies, generally client consent requires consent of the board of directors or equivalent governing body of each registered investment company and the consent of the shareholders of the fund. We believe that the Mergers and related transactions do not constitute a change of control of CBA under the Advisers Act and therefore are not an assignment of CBA’s investment advisory contracts. Therefore, we have not sought the consent of CBA’s clients. If the Mergers and related transactions are deemed to be an assignment under the Advisers Act, we would likely need to seek the consent of CBA’s clients, which may require a lengthy and costly shareholder voting process. CBA may also lose assets under management, be subject to regulatory fines or be subject to other material adverse effects on our results of operations, financial condition or business.

Cybersecurity incidents and other issues related to our information systems, technology and data may materially and adversely affect us.

Cybersecurity incidents and cyberattacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. The information and technology systems used by us and our service providers, and other third parties, are vulnerable to damage or interruption from, among other things: hacking, ransomware, malware and other computer viruses; denial of service attacks; network failures; computer and telecommunication failures; phishing attacks; infiltration by unauthorized persons; security breaches; usage errors by their respective professionals; power outages; terrorism; and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.

Risks to Stock in Connection with the Business Combination

The market price of the shares of New Parent Class A Common Stock may be affected by factors different from those affecting the shares of ENDI common stock.

Upon completion of the Business Combination, holders of ENDI common stock will become holders of New Parent common stock. The businesses of New Parent and CBA differ from those of ENDI in certain respects and, accordingly, the results of operations of New Parent and the market price of New Parent common stock following the Business Combination may be affected by factors different from those currently affecting the independent results of operations of the CBA Member, CBA and ENDI. For example, CBA’s financial performance depends almost exclusively on investment advising.

On the other hand, ENDI’s financial performance also depends on its real estate, internet, and other operations. As a result of the Business Combination, the financial performance of New Parent, from the perspective of current ENDI stockholders, will be relatively more subject to the risks associated with CBA’s asset management business. For a discussion of the businesses of the CBA Member, CBA and ENDI and of certain factors to consider in connection with those businesses see “The Business Combination- Information About the Companies” on page 30.

The shares of New Parent common stock to be received by ENDI stockholders as a result of the Business Combination will have different rights from the shares of ENDI common stock.

The rights associated with ENDI common stock are different from the rights that will be associated with New Parent common stock. Please see “Comparison of Stockholders’ Rights” for a discussion of the different rights associated with ENDI and New Parent common stock.

The market price and trading volume of New Parent Class A Common Stock may be volatile, and could, upon quotation on the OTC, be subject to even greater volatility. Market volatility may affect the value of an investment in the New Parent Class A Common Stock and could subject us to litigation.

Although an active market for ENDI’s shares exists on the OTC, New Parent Class A Common Stock has not been trading and there can be no assurance that an active trading market for New Parent Class A Common Stock will develop or, to the extent an active market does develop, be maintained or continue to develop following the Mergers. The lack of a liquid market for the New Parent Class A Common Stock could also result because a relatively large percentage of the New Parent Class A Common Stock will be beneficially owned by the CBA Member. If an active market does not develop, you may have difficulty selling any shares of New Parent Class A Common Stock that you own. An inactive market may also impair our ability to raise capital by selling shares of New Parent Class A Common Stock and may impair our ability to acquire or make investments in companies, products or technologies for which we may issue equity securities to pay for such acquisition or investment. The absence of an active trading market may result in a significant negative effect on the price of the New Parent Class A Common Stock.

Changes in the value levels of the assets may cause CBA’s assets under management (“AUM”), revenue and earnings to decline.

CBA’s asset management business is primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees which are normally expressed as a percentage of returns to the client. Numerous factors, including price movements in the assets in the markets in which we manage assets, could cause:

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The occurrence of any of these events may cause CBA’s AUM, revenue and earnings, if any, to decline and may negatively impact the success of our asset management business, results of operations and financial condition after the Mergers.

The asset management business is highly regulated.

Asset management is a highly regulated business subject to numerous legal and regulatory requirements. These regulations are intended to protect customers whose assets are under management and, as such, may limit our ability to develop, expand or carry out our asset management business in the intended manner. In particular, we are required to act in the best interest of our clients. In addition, regulators have substantial discretion in determining what is in the best interest of a client and have increased their scrutiny of potential conflicts as well as the disclosure of such conflicts to an asset manager’s clients. Appropriately dealing with conflicts of interest is complex and if we fail, or appear to fail, to deal appropriately with any of these conflicts of interest, we may face reputational damage, litigation, regulatory proceedings, or penalties, fines or sanctions, any of which may have a material and negative impact on our asset management business. In addition, to the extent that we are required to obtain client or investor consent in connection with any potential conflict, any failure or delay in obtaining such consent may have a material and negative impact on our ability to take advantage of certain business opportunities.

Increased competition may cause CBA’s AUM, revenue and earnings to decline.

The asset management industry is highly competitive and has relatively low barriers to entry. CBA competes based on a number of factors including: investment performance, the level of fees charged, the quality and diversity of services and products provided, name recognition and reputation, and the ability to develop new investment strategies and products to meet the changing needs of investors. In addition, the introduction of new technologies, as well as regulatory changes, may significantly alter the competitive landscape for investment managers. This could lead to fee compression or require us to spend more to modify or adapt our product offerings to attract and retain customers and remain competitive with products and services offered by new competitors in the industry. Increased competition on the basis of any of these factors, including competition leading to fee reductions, may cause CBA’s AUM, revenue and earnings to decline and materially and negatively impact the success of our asset management business and affect our overall business, results of operations and financial condition.

Risks That the Business Combination May Be Delayed or Not Occur

The Business Combination is subject to conditions set forth in the Merger Agreement, including obtaining the requisite stockholder and regulatory approvals and no ENDI or CBA Material Adverse Effect existing on the closing date. If any of the conditions to the Business Combination are not satisfied or, where permissible, not waived, the Business Combination will not be consummated. Failure to consummate the Business Combination could negatively impact ENDI’s stock price, future business and operations, and financial condition. Any delay in the consummation of the Business Combination or any uncertainty about the consummation of the Business Combination may adversely affect the future businesses, growth, revenue and results of operations of ENDI or New Parent.

The Business Combination is subject to regulatory approvals. These regulatory approvals may not be received or may be received later than anticipated. Regulatory approvals that are received may impose restrictions or conditions that restrict New Parent’s activities or otherwise adversely affect New Parent’s business and results of operations.

Litigation against ENDI, CBA or the members of the ENDI Board of Directors, could result in significant costs, management distraction, and/or a delay of or injunction against the Mergers.

Transactions like the proposed Mergers are frequently subject to litigation or other legal proceedings, including actions alleging that the ENDI Board of Directors breached its fiduciary duties to the ENDI Stockholders by entering into the Merger Agreement, actions by other third parties affected by the proposed Mergers or otherwise. While ENDI believes that any claims that may be asserted by potential shareholder plaintiffs or others related to the Mergers would be without merit, the results of any such potential legal proceedings are difficult to predict and could delay or prevent the Mergers from being completed in a timely manner, and could result in reputational harm, liability, penalties, or sanctions, judgments, consent decrees, or orders, which could materially and adversely affect ENDI’s or New Parent’s business, operating results and financial condition. The existence of litigation related to the Mergers could affect the likelihood of obtaining the required approval from ENDI stockholders. Moreover, any litigation could be time consuming and expensive, could divert ENDI management’s attention away from their regular business and, any lawsuit adversely resolved against ENDI or members of the ENDI Board of Directors, could have an adverse effect on each party’s business, financial condition and results of operations.

Governmental agencies, self-regulatory organizations or third parties may delay or impose conditions on approval of the Business Combination, which may diminish the anticipated benefits of the Business Combination.

Completion of the Business Combination is conditioned upon the receipt of all necessary consents, approvals and authorizations of any governmental authority, self-regulatory organization or third party. While ENDI, the CBA Member and CBA intend to pursue vigorously any and all required consents, approvals and authorizations, and do not know of any reason why they would not be able to obtain the consents in a timely manner, any requirement to receive them before the closing of the Business Combination could delay the completion of the Business Combination after the stockholders of ENDI have approved the proposals required to effectuate the Business Combination.

In addition, these governmental agencies, self-regulatory organizations and third parties may attempt to condition their consents, approvals or authorizations on the imposition of conditions that could have a material adverse effect on ENDI’s operating results or the value of New Parent common stock after the Business Combination is completed. Any delay in the completion of the Business Combination could diminish the anticipated benefits of the Business Combination or result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the Business Combination, such as difficulty in retaining key personnel or in pursuing business strategies. In addition, until the Business Combination is completed, the attention of ENDI’s and CBA’s management may be diverted from ongoing business concerns and regular business responsibilities to the extent management is focused on matters relating to the Business Combination, such as obtaining governmental, self-regulatory organization or third party consents, approvals or authorizations. Additional information regarding regulatory approvals required for completion of the Business Combination is set forth in “The Agreement and Plan of Merger- Conditions to Closing”.

Risks Associated with a Failed Business Combination

If the Business Combination is not completed, the price of ENDI common stock and future business and operations could be harmed.

If the Business Combination is not consummated, ENDI may be subject to the following material risks, among others:

•         ENDI may not be able to find a party willing to pay an equivalent or more attractive exchange ratio than the exchange ratio offered by CBA;

•         the price of ENDI common stock may decline, including due to the extent that the current market price of ENDI common stock reflects an assumption that the Business Combination will be completed;

•         certain of ENDI’s costs related to the Business Combination, such as legal, accounting and certain financial advisory fees, must be paid even if the Business Combination is not completed;

•       the diversion of management attention from ENDI’s day-to-day business and the disruption to its employees and its relationships with clients as a result of efforts and uncertainties relating to the Business Combination may detract from ENDI’s ability to grow revenues and minimize costs, which, in turn may lead to a loss of market position that ENDI could be unable to regain if the Business Combination does not occur;

•         under the Merger Agreement, ENDI is subject to certain restrictions on the conduct of its business prior to completing the Business Combination, which may affect its ability to execute certain of its business strategies; and

•        ENDI may not be able to continue its present level of operations, may need to scale back its business and may not be able to take advantage of future opportunities or effectively respond to competitive pressures, any of which could have a material adverse effect on its business and results of operations.

Failure to complete the Mergers could negatively impact ENDI.

If the Mergers are not completed for any reason, including as a result of holders of ENDI common stock failing to approve the merger proposal, there may be various adverse consequences and ENDI may experience negative reactions from the financial markets and from its customers and employees. For example, ENDI’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Merger. Additionally, if the Merger Agreement is terminated, the market price of ENDI common stock could decline to the extent that current market prices reflect a market assumption that the Mergers will be beneficial and will be completed. ENDI, CBA, and the CBA Member also could be subject to litigation related to any failure to complete the Mergers or to proceedings commenced against ENDI, CBA, and the CBA Member to perform their respective obligations under the Merger Agreement. If the Merger Agreement is terminated under certain circumstances, ENDI may be required to pay a termination fee of $1 million to CBA. Additionally, each of ENDI, CBA, and the CBA Member has incurred and will incur incremental expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of preparing, filing, printing and mailing this proxy statement/prospectus, and all filing and other fees paid in connection with the Mergers. If the Mergers are not completed, ENDI, CBA, and the CBA Member would have to pay these expenses without realizing the expected benefits of the Merger.

We may be materially adversely affected by the ongoing COVID-19 pandemic.

The outbreak of the COVID-19 pandemic led much of the world to institute stay-at-home orders, restrictions on travel, bans on public gatherings, the closing of non-essential businesses or limiting their hours of operation and other restrictions on businesses and their operations, which has adversely impacted global commercial activity and contributed to significant volatility and a downturn in global financial markets. While some of these restrictions are being relaxed or lifted, the risk of future COVID-19 outbreaks remains, and we are unable to predict the ultimate adverse impact of the pandemic, but it has affected, and may further affect, our business in various ways. The ability of our employees to conduct their daily work in our offices helps to ensure a level of productivity that may not be achieved when coming to the office every day is not an option. The extended period of remote working by our employees could strain our technology resources and introduce operational risks, including heightened cybersecurity risk, as remote working environments can be less secure and more susceptible to hacking attacks. If our senior management or other key personnel become ill or are otherwise unable to perform their duties for an extended period of time, we may experience a loss of productivity or a delay in the implementation of certain strategic plans. Further, local COVID-19-related laws can be subject to rapid change depending on public health developments, which can lead to confusion and make compliance with laws uncertain and subject us to increased risk of litigation for non-compliance. In the event that the U.S. or international financial markets suffer a severe or prolonged downturn, investments may lose value and investors may choose to withdraw assets from financial advisers and use the assets to pay expenses or transfer them to investments that they perceive to be more secure, such as bank deposits and Treasury securities. Any prolonged downturn in financial markets, or increased levels of asset withdrawals could have a material adverse effect on our results of operations, financial condition or business.

THE BUSINESS COMBINATION

Background of the Business Combination

As part of its ongoing consideration and evaluation of ENDI’s long-term prospects and goals, ENDI’s Board of Directors and ENDI’s management have regularly reviewed and assessed ENDI’s business strategies and objectives, including strategic opportunities and challenges, all with the goal of enhancing stockholder value.

In early 2020, the Board of Directors, ENDI’s management and its advisors formalized the discussion of strategic options for ENDI. ENDI’s ongoing requirements for a public reporting company were given specific consideration.

On February 12, 2020, Mr. Steven Kiel, Chairman of the Board of Directors, surveyed members of the Board of Directors, ENDI’s management and its advisors to ascertain their thoughts regarding the minimum market cap of a company that justified it being publicly-listed, the ideal business models that support growth of a company of ENDI’s size and nature, and workable ideas for future growth opportunities for ENDI to adopt.

On May 7, 2020, at a meeting of the Board of Directors, the Board of Directors discussed the results of the survey as well as the expenditures – both from a financial and resource perspective – that ENDI incurs as a result of its being a publicly-traded company. After extensive discussion by the Board of Directors, weighing the perceived benefits and costs associated with being a sub-$25 million publicly-reporting company, the Board of Directors requested further investigation in the form of a report detailing ENDI’s options and the consequent ramifications, qualitatively and reputationally, of each, which report was later delivered by ENDI’s management.

On May 29, 2020, members of the Board of Directors, ENDI’s management and its advisors held a planning meeting to discuss in detail various business models that represented attractive opportunities for Willow Oak Asset Management, a wholly-owned subsidiary of ENDI (“Willow Oak Asset Management”).

On July 8, 2020, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management discussed ENDI’s options with consideration of the following: overall cost savings; benefits and challenges of remaining a publicly-traded entity; accounting and reporting requirements; prior and future capital raises; liquidity for stockholders; and proposed business plans for Willow Oak Asset Management. The Board of Directors determined that there were two paths to consider: de-registration or an acquisition. The Board of Directors directed ENDI’s management to research the process and implications of de-registration and decided that members of the Board of Directors would make informal inquiries within their respective networks to ascertain a potential acquisition pipeline.

On September 30, 2020, Willow Oak Asset Management announced its newest partnership with SVN Capital, in furtherance of Willow Oak Asset Management’s business plan.

On January 28, 2021, at a meeting of the Board of Directors, the Board of Directors was presented by ENDI’s management with the steps necessary to de-register, which the Board of Directors agreed to consider if material growth of ENDI could not otherwise be achieved.

On March 3, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met and determined that the best course forward for ENDI was to pursue an acquisition of an asset management-related company that offered diversification in revenue and audience streams, complementary resources, and strategic growth opportunities. Following this meeting, members of the Board of Directors provided introductions to relevant contacts within their respective networks. In furtherance of making an acquisition, the Board of Directors determined that a withdrawal of ENDI’s direct investment in Alluvial Fund, LP would also be pursued.

Between March 4, 2021 and March 22, 2021, representatives of the Board of Directors and ENDI’s management conducted several introductory and follow-up meetings with various companies matching the criteria previously identified for desirable acquisition prospects. These criteria included a wide range of considerations including, but not limited to: transaction size, potential timing, acceptable terms and purchase considerations, established distribution networks and personnel resources, revenue diversification, risk profile, financial projections and valuations, and compatibility of company culture

Between March 21, 2021 and July 7, 2021, Mr. Steven Kiel, Chairman of the Board of Directors, and CrossingBridge Advisors LLC’s (“CBA”) managing member, Mr. David Sherman, conducted regular calls to ascertain the seriousness and compatibility of the potential parties and entities of ENDI and CBA that may be involved in a potential merger or acquisition (the “Business Combination”).

On March 23, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met and Mr. Steven Kiel, Chairman of the Board of Directors, noted that ENDI was continuing to evaluate potential acquisition opportunities. He provided an update on the two leading options under consideration. Discussion took place regarding these options and relevant next steps.

On April 27, 2021, Mr. David Sherman discussed potential deal terms with Mr. Steven Kiel.

On April 29, 2021, ENDI retained Seward & Kissel LLP (“S&K”) as its counsel in connection with the potential Business Combination.

In early May, 2021, CBA retained Sheppard Mullin Richter & Hampton LLP (“SM”) as its counsel in connection with the potential Business Combination.

On May 11, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met and Mr. Steven Kiel, Chairman of the Board of Directors, provided an update on potential acquisition opportunities. Further discussions took place regarding these options and relevant next steps.

On May 13, 2021, Mr. David Sherman and Mr. Steven Kiel met in New York, New York.

On May 20, 2021, ENDI retained Empire Valuation Consultants, LLC (“Empire”) to provide valuation consulting services regarding the determination of a reasonable range of fair market values for the CBA.

On May 24, 2021, Mr. David Sherman had a diligence call with Empire.

On May 26, 2021, members of the Board of Directors and ENDI’s management met with Mr. David Sherman and other employees of CBA to further their acquaintance and understanding of their respective corporate operations and corporate culture.

Also on May 26, 2021, ENDI sent CBA a due diligence request list regarding the potential Business Combination and gave CBA access to an online virtual data room for due diligence purposes.

On May 31, 2021, ENDI, through its wholly-owned subsidiary Willow Oak Asset Management, made its first scheduled divestment of its seed investment in Alluvial Fund, LP. By December 31, 2021, ENDI was fully divested from Alluvial Fund, LP and is subject only to a routine 10% hold back amount.

On June 24, 2021, Empire provided ENDI with a preliminary valuation analysis detailing CBA’s enterprise value range. This analysis was used in framing the proposed terms of the potential Business Combination.

On July 8, 2021, a Letter of Intent regarding the potential Business Combination (the “Letter of Intent”) was entered into by and between ENDI and CBA.

Between July 8, 2021 and December 28, 2021, ENDI and CBA held frequent discussions regarding matters pertaining to current business activities and the potential Business Combination.

On July 21, 2021, CBA gave ENDI access to an online virtual data room for due diligence purposes.

Between July 23, 2021 and August 2, 2021, pursuant to the Letter of Intent, an expense reimbursement letter agreement was negotiated by ENDI and CBA, and such agreement was entered into on August 2, 2021.

On July 25, 2021, CBA sent ENDI a due diligence request list regarding the potential Business Combination.

On August 10, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met and Mr. Steven Kiel, Chairman of the Board of Directors, provided an update on the Letter of Intent process and ensuing legal discussions regarding the potential Business Combination. Further discussion took place regarding the strategy and potential structure of the potential Business Combination, its benefit to ENDI stockholders, and the long-term legal and financial considerations presented in the potential Business Combination.

On September 3, 2021, SM sent S&K an initial draft of the Agreement and Plan of Merger (the “Merger Agreement”) for the potential Business Combination. Also on September 3, 2021, CBA gave ENDI access to an online virtual data room for due diligence purposes. On September 10, 2021, S&K and SM conducted a telephonic conference call to discuss certain material issues in connection with the Merger Agreement.

On September 26, 2021, S&K sent SM a revised draft of the Merger Agreement. On October 4, 2021, S&K sent SM initial drafts of the Stockholder Agreement and the Voting Agreement.

On October 6, 2021, S&K and SM conducted a telephonic conference call to discuss certain material issues in connection with the Merger Agreement. On October 13, 2021, SM sent S&K a revised draft of the Merger Agreement. On October 21, 2021, S&K and SM conducted a telephonic conference call to discuss certain material issues in connection with the Merger Agreement.

On October 13, 2021, representatives of ENDI and CBA met in CBA’s New York office to discuss matters of operational due diligence and strategic resource allocation presented by the potential Business Combination.

On October 26, 2021, SM sent S&K a list of open material issues in connection with the Merger Agreement and the potential Business Combination in general. On October 27, 2021, S&K and SM agreed to have an “all-hands” telephonic conference call, with representatives of ENDI, CBA, S&K and SM, on October 29, 2021, to resolve certain issues in connection with the Merger Agreement.

On October 29, 2021, representatives of ENDI, CBA, S&K and SM attended an “all-hands” telephonic conference call, which resolved many of those issues relating to the Merger Agreement. Also on October 29, 2021, S&K sent SM initial drafts of the Additional Purchase Subscription Agreement and the Voting and Support Agreement.

On November 1, 2021, S&K sent SM a revised draft of the Merger Agreement. On November 4, 2021, S&K sent SM a draft of the ENDI Disclosure Letter. On November 6, 2021, SM sent S&K revised drafts of the Voting Agreement and the Stockholder Agreement. Also on November 6, 2021, SM sent S&K an initial draft of the New Parent Certificate of Incorporation.

On November 8, 2021, SM sent S&K a revised draft of the Voting and Support Agreement. On November 10, 2021, S&K sent SM revised drafts of the Voting Agreement, the Stockholder Agreement, the New Parent Certificate of Incorporation, and the Voting and Support Agreement.

On November 11, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met, and Mr. Steven Kiel, Chairman of the Board of Directors, provided an update on the status of legal discussions regarding the potential Business Combination. He noted that while discussions were progressing, the timeline for the potential Business Combination had been extended due to the complexity of the transaction, among other items.

Also on November 11, 2021, S&K sent SM initial drafts of the Registration Rights Agreement and the form of Warrant. On November 12, 2021, SM sent S&K a revised draft of the ENDI Disclosure Letter as well as an initial draft of the CBA Disclosure Letter. On November 14, 2021, SM sent S&K an initial draft of the Cohanzick Services Agreement. On November 15, 2021, SM sent S&K a further revised draft of the ENDI Disclosure Letter.

On November 17, 2021, SM sent S&K revised drafts of the Merger Agreement, the Additional Purchase Subscription Agreement, the New Parent Certificate of Incorporation, and the Stockholder Agreement. On November 18, 2021, SM sent S&K a revised draft of the Voting Agreement. Also on November 18, 2021, S&K and SM conducted a telephonic conference call to discuss the ENDI Disclosure Letter.

On November 19, 2021, S&K sent SM revised drafts of the Merger Agreement, the Additional Purchase Subscription Agreement and the ENDI Disclosure Letter. On November 21, 2021, SM sent S&K a revised draft of the Registration Rights Agreement.

On November 22, 2021, S&K and SM conducted a telephonic conference call to discuss certain material issues in connection with the Merger Agreement and the other ancillary agreements.  S&K and SM also discussed the required S-4 filing, listing and OTC matters.

On November 23, 2021, SM sent S&K a revised draft of the form of Warrant. Also on November 23, 2021, S&K sent SM revised drafts of the CBA Disclosure Letter, the Parent Certificate of Incorporation, the Voting Agreement, the Stockholder Agreement, and the Cohanzick Services Agreement.

On November 24, 2021, SM sent S&K a revised draft of the Merger Agreement. Also on November 24, 2021, S&K and SM conducted a telephonic conference call to discuss certain remaining material issues in connection with the Merger Agreement and the ancillary agreements.

On November 25, 2021, SM sent S&K a revised draft of the ENDI Disclosure Letter. On November 28, 2021, S&K sent SM drafts of the organizational documents of Merger Sub 1 and Merger Sub 2. On November 29, 2021, ENDI, S&K, CBA and SM attended an “all-hands” telephonic conference call, to discuss certain material issues in connection with the Merger Agreement and the ancillary agreements.  On November 30, 2021, S&K and SM conducted a telephonic conference call to discuss certain remaining material issues in connection with the Merger Agreement and the ancillary agreements.

On December 1, 2021, SM sent S&K a revised draft of the Cohanzick Services Agreement. Also on December 1, 2021, S&K sent SM revised drafts of the Merger Agreement, the ENDI Disclosure Letter, the Registration Rights Agreement, and the form of Warrant. On December 2, 2021, SM sent S&K a revised draft of the Stockholder Agreement.

On December 3, 2021, SM sent S&K revised drafts of the Merger Agreement, the New Parent Certificate of Incorporation, the Stockholder Agreement, New Parent’s Amended and Restated Bylaws, the ENDI Disclosure Letter, the CBA Disclosure Letter, and the Voting Agreement.

On December 9, 2021, SM sent S&K the initial draft of an Employment Agreement for David Sherman (the “Sherman Employment Agreement”), as well as an initial draft of a Form of Assignment and Assumption of Employment Agreement and Offer Letter in connection with the Merger Agreement. Also on December 9, 2021, SM sent S&K an initial draft of the original organizational documents of New Parent, and an initial draft of the terms of a Form of Side Letter related to the allocation to CBA of a portion of the office space leased by CBA Member in connection with the Merger Agreement

On December 10, 2021, S&K and SM conducted a telephonic conference call to discuss certain remaining material issues in connection with the Merger Agreement and the ancillary agreements. Also on December 10, 2021, S&K sent SM revised drafts of the Merger Agreement and the ENDI Disclosure Letter.  Also on December 10, 2021, SM sent S&K an initial draft of the Form of Director and Officer Resignation in connection with the Merger Agreement. 

Also on December 10, 2021, ENDI’s management conducted an informal meeting with members of the Board of Directors to apprise them of the status of negotiations and expected next steps.

On December 13, 2021, S&K sent SM a revised draft of the terms of the Form of Side Letter in connection with the Merger Agreement.  Also on December 13, 2021, SM sent S&K revised drafts of the Registration Rights Agreement and the form of Warrant.

On December 14, 2021, S&K and SM conducted a telephonic conference call to discuss certain remaining material issues in connection with the Merger Agreement and the ancillary agreements. Also on December 14, 2021, S&K sent SM revised drafts of the Voting Agreement, the Amended and Restated Articles of Incorporation of New Parent, and the Amended and Restated Bylaws of Parent. Also on December 14, 2021, SM sent S&K revised drafts of the Cohanzick Services Agreement and the Sherman Employment Agreement.

On December 15, 2021, S&K sent SM revised drafts of the Form of Assignment and Assumption of Employment Agreement and Offer Letter, the Amended and Restated Certificate of Incorporation of New Parent, and the Amended and Restated Bylaws of Parent. Also on December 15, 2021, SM sent S&K a revised draft of the form of Warrant.

On December 16, 2021, SM sent S&K a revised draft of the Merger Agreement. On December 20, 2021, S&K sent SM a revised draft of the Registration Rights Agreement.

On December 17, 2021, ENDI and CBA management conducted a telephonic conference call to discuss the revised and updated terms of the Merger Agreement.

On December 21, 2021, S&K sent SM revised drafts of the form of Warrant and the Parent Certificate of Incorporation. Also on December 21, 2021, ENDI sent updated CBA projections and current year-to-date financial results to Empire in order to refresh the valuation provided in June, 2021.

On December 22, 2021, S&K and SM conducted a telephonic conference call to discuss certain remaining material issues in connection with the Merger Agreement and the ancillary agreements.

On December 23, 2021, S&K sent SM revised drafts of the ENDI Disclosure Letter and the CBA Disclosure Letter. Also on December 23, 2021, SM sent S&K a revised draft of the Merger Agreement. Also on December 23, 2021, Empire provided ENDI with an updated valuation that included further analysis of current year CBA results to date and various updated Merger Agreement terms.

On December 24, 2021, S&K sent SM revised drafts of the Stockholder Agreement, the forms of Warrant-1, Warrant-2 (to reflect the addition of a warrant for 250,000 shares) and the Sherman Employment Agreement. On December 26, 2021, SM sent S&K revised drafts of the Stockholder Agreement and the Sherman Employment Agreement. Also on December 26, 2021, S&K sent SM a revised draft of the CBA Disclosure Letter.

On December 27, 2021, ENDI, S&K, CBA and SM attended an “all-hands” telephonic conference call, to discuss certain material issues in connection with the Merger Agreement and the ancillary agreements.  Also on December 27, 2021, S&K sent SM a revised draft of the Sherman Employment Agreement. Also on December 27, 2021, SM sent S&K close-to-final drafts of the Merger Agreement and the ancillary agreements.

On December 28, 2021, S&K and SM conducted a telephonic conference call to discuss certain final issues that arose related to the close-to-final drafts of the Merger Agreement and the ancillary agreements. Also on December 28, 2021, SM sent S&K final drafts of the Registration Rights Agreement, the Additional Purchase Subscription Agreement, and the CBA Disclosure Letter.

Also on December 28, 2021, S&K sent SM final drafts of the Voting Agreement and the Voting and Support Agreement. Also on December 28, 2021, SM sent S&K final drafts of the remaining ancillary agreements.

On December 29, 2021, at a meeting of the Board of Directors, the Board of Directors and ENDI’s management met, and Mr. Steven Kiel, Chairman of the Board of Directors, provided a final update on the status of the Business Combination. At the meeting, a third-party fairness opinion from Empire Valuation Consultants, LLC was presented to the Board of Directors, in which Empire Valuation Consultants, LLC presented its opinion that the Business Combination is fair, from a financial point of view, to ENDI and ENDI’s stockholders.

After this presentation, Mr. Nick Katsanos and Mr. Edward Horton from S&K presented to the Board of Directors a summary of the Merger Agreement and the ancillary agreements, as well as a summary of the fiduciary duties that applied to the Board of Directors when considering the approval of the Merger Agreement and the Business Combination.

The Board of Directors then discussed and questioned various topics and issues at great length regarding the Business Combination, as well as regarding the Merger Agreement and the ancillary agreements. After such lengthy discussion and questioning, Mr. Steven Kiel, Chairman of the Board of Directors, called for a vote regarding the Business Combination, the Merger Agreement and the ancillary agreements. Such call was seconded.

Upon such call, the Board of Directors voted unanimously, by a 5-0 vote, to approve the Business Combination and adopt the Merger Agreement. The Board of Directors then resolved to present a proposal to ENDI’s stockholders, at a special meeting to be convened for such purpose, to consider and vote upon the Business Combination, and to approve the adoption of the Merger Agreement and the Business Combination.

On December 29, 2021, after the meeting of the Board of Directors, the applicable parties executed the Merger Agreement. After such execution, ENDI filed a Form 8-K on the Securities and Exchange Commission’s EDGAR database regarding the Business Combination and the Merger Agreement.

On January 4, 2022, ENDI filed an “Issuer Company Related Action Notification form for Enterprise Diversified, Inc.” with the Financial Industry Regulatory Authority (“FINRA”) regarding the Business Combination

On January 10, 2022, FINRA responded to ENDI with a list of items required to be provided by ENDI in connection with FINRA’s review of the Business Combination.

On January 24, 2022, ENDI responded to FINRA’s request by providing FINRA with certain of the items requested by FINRA, as well as a listing of the items that ENDI would be able to provide FINRA at a later date as they became available.

ENDI’s Reasons for the Business Combination; Recommendation of the Board of Directors

After careful consideration, the Board of Directors determined that the Business Combination is advisable and in the best interests of ENDI and its stockholders, and approved the Business Combination. Accordingly, the Board of Directors recommends that ENDI stockholders vote “FOR” adoption and approval of the Business Combination Proposal, including the adoption and approval of the Merger Agreement.

In reaching its decision, the Board of Directors consulted with its senior management team and outside legal counsel, engaged an outside valuation firm to perform a valuation analysis, and considered a number of factors, including, but not limited to, the following material factors (not in any relative order of importance):

The Board of Directors also considered a variety of potentially negative factors in its deliberations concerning the Merger Agreement and the Business Combination, including, but not limited to, the following (not in any relative order of importance):

The foregoing discussion of the information and factors considered by the Board of Directors is not intended to be exhaustive, but includes the material factors considered by the Board of Directors. In view of the variety of factors considered in connection with its evaluation of the Business Combination, the Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board of Directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board of Directors based its recommendation on the totality of the information presented.

The ENDI Board of Directors unanimously recommends that you vote “FOR” the Business Combination Proposal and “FOR” the Adjournment Proposal.

It should be noted that this explanation of the reasoning of ENDI’s Board of Directors and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Special Note Regarding Forward-Looking Statements” on page 18.

Opinion of Financial Advisor

A summary description of the Empire Fairness Opinion is set forth below. ENDI stockholders should refer to the Empire Fairness Opinion for more complete and detailed information about the terms and conditions of the Empire Fairness Opinion.

ENDI retained Empire as its financial advisor in connection with the Business Combination. At the meeting of the Board of Directors on December 29, 2021, Empire delivered its written opinion to the Board of Directors that, as of the date of such opinion and based upon and subject to the assumptions made, matters considered, and qualifications and limitations stated in its opinion, the Business Combination is fair, from a financial point of view, to ENDI and the stockholders of ENDI.

The Fairness Opinion was addressed to the Board of Directors (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed Business Combination. The opinion does not constitute a recommendation to any stockholder of ENDI as to how such stockholder should vote with respect to the Business Combination or any other matter.

Information About the Companies

Unless the context otherwise requires, all references in this section to ENDI refer to ENDI prior to the consummation of the Business Combination, and all references to CBA refer to CBA prior to the consummation of the Business Combination.

Enterprise Diversified, Inc. (“ENDI”)

Enterprise Diversified, Inc. (formerly White Dove Systems, Inc., Interfoods Consolidated, Inc., and then Sitestar Corporation) was incorporated in Nevada on December 17, 1992. On June 1, 2018, the Company amended its Articles of Incorporation to change the name of the Company to “Enterprise Diversified, Inc.” Unless the context otherwise requires, and when used in this Report, the “Company,” “ENDI,” “we,” “our,” or “us” refers to Enterprise Diversified, Inc. and its subsidiaries.

During the year ended December 31, 2021, the Company operated through three reportable segments:

Prior to the Merger, ENDI also reported real estate operations.

During periods prior to the quarter ended June 30, 2019, the Company also operated through a fifth reportable segment, Home Services Operations, comprised of former subsidiary, Specialty Contracting Group, LLC’s operation of HVAC and plumbing companies in Arizona. However, for the year ended December 31, 2020, and for all prior periods presented, Home Services Operations are reported as discontinued operations.

The management of the Company also continually reviews various business opportunities for the Company, including those in other lines of business.

Asset Management Operations

The Company operates its asset management operations business through its wholly-owned subsidiaries, Willow Oak Asset Management, LLC (“Willow Oak”) and Willow Oak Capital Management, LLC.

Willow Oak is an asset management platform focused on growing and enhancing the alternative investment landscape. Willow Oak seeks partnerships with alternative investment managers in the early stages of growth in order to build a network of unique investment opportunities for investors and scalable, professional operations for managers. Willow Oak offers affiliated managers strategic consulting, operational support and growth opportunities through minority partnerships and other bespoke relationships. Affiliations to date include fund seeding and reinvestments, fund launching, investor relations, and fund management administrative support. The Company intends to actively expand its Willow Oak platform with additional offerings that enhance the value of the Willow Oak platform to managers and funds across the investing community.

On August 21, 2020, Willow Oak created two wholly-owned entities, Willow Oak Asset Management Affiliate Management Services, LLC (“Willow Oak AMS”) and Willow Oak Asset Management Fund Management Services, LLC (“Willow Oak FMS”), to support this partnership model in perpetuity. Willow Oak AMS earns gross revenue shares commensurate with ownership stakes in investment management firms in exchange for the provision of benefits of affiliation and ongoing fund management services (“FMS”). Willow Oak FMS earns a direct fee from affiliated limited partnerships for rendering administrative, compliance, and tax and audit liaison services.

Internet Operations

The Company operates its internet operations segment through Sitestar.net, a wholly-owned subsidiary that offers consumer and business-grade internet access, wholesale managed modem services, web hosting, third-party software as a reseller, and various ancillary services. Sitestar.net provides services to customers in the United States and Canada.

Other Operations

Other operations include nonrecurring or one-time strategic funding or similar activity that is not considered to be one of the Company’s primary lines of business. This activity includes opportunities such as the Company’s former investment activity with Huckleberry Real Estate Fund II, LLC and its existing financing arrangement regarding Triad Guaranty, Inc.

Other operations also include any revenue or expenses derived from corporate office operations, as well as expenses related to public company reporting, the oversight of subsidiaries, and other items that affect the overall Company.

CrossingBridge Advisors, LLC (“CBA”) and Cohanzick Management, LLC (the “CBA Member”)

CBA was founded in December 2016 and is a wholly-owned subsidiary of the CBA Member, which was founded in 1996 by David Sherman. CBA registered as a Registered Investment Adviser on February 17, 2017 under the Investment Advisers Act of 1940, as amended. CBA provides investment advisory services to investment companies (including mutual funds and exchange-traded funds) registered under the Investment Company Act of 1940, as amended, , both as an adviser and a sub-adviser. As of December 31, 2021, the assets under management of CBA were in excess of $1.37 billion. The investment strategies for CBA include ultra-short duration, low duration high yield, responsible credit, and special purpose acquisition companies (“SPACs”). These strategies primarily employ high yield and investment grade corporate debt as well as credit opportunities in event-driven securities, post reorganization investments, and stressed and distressed debt.

As of the Closing, CBA will have 9 employees, comprised of investment professionals and operations professionals. All members of the investment team with portfolio management responsibilities have at least 15 years of industry experience. Each senior member of the operations team has at least 10 years of experience. CBA is wholly-owned by the CBA Member. The CBA Member is owned by David Sherman, David Sherman’s affiliates and certain employees of the CBA Member.

New Parent

New Parent is a newly incorporated corporation formed under the laws of Delaware on December 23, 2021, that will become the parent company of ENDI and CBA upon the completion of the Business Combination. To date, New Parent has not conducted any material activities other than those incidental to its formation and the matters contemplated by the Merger Agreement.

Zelda Merger Sub 1, Inc. (“Merger Sub 1”)

Merger Sub 1 is a Delaware corporation and wholly-owned subsidiary of New Parent that was formed on December 23, 2021, solely for the purpose of effecting the Merger. To date, Merger Sub 1 has not conducted any material activities other than those incidental to its formation and the matters contemplated by the Merger Agreement. Upon effectiveness of the Merger, Merger Sub 1 will merge with and into ENDI, with ENDI surviving the merger as a direct wholly-owned subsidiary of New Parent.

Zelda Merger Sub 2, LLC (“Merger Sub 2”)

Merger Sub 2 is a Delaware corporation and wholly-owned subsidiary of New Parent that was formed on December 23, 2021, solely for the purpose of effecting the Merger. To date, Merger Sub 2 has not conducted any material activities other than those incidental to its formation and the matters contemplated by the Merger Agreement. Upon effectiveness of the Merger, Merger Sub 2 will merge with and into CBA, with CBA surviving the merger as a direct wholly-owned subsidiary of New Parent.

THE AGREEMENT AND PLAN OF MERGER

The following is a summary of the material terms of the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference into this joint proxy statement/prospectus. The Merger Agreement has been attached to this joint proxy statement/prospectus to provide you with information regarding its terms. It is not intended to provide any other factual information about ENDI, Merger Sub 1, Merger Sub 2, CBA, or the CBA Member. The following description does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement. All terms used but otherwise not defined have the meaning given to them in the Merger Agreement. You should refer to the full text of the Merger Agreement for details of the Mergers (as defined below) and the terms and conditions of the Merger Agreement.

The Merger Agreement contains representations and warranties that ENDI, Merger Sub 1, Merger Sub 2, CBA, and the CBA Member (each, a “Merger Party” and collectively, the “Merger Parties”), have made to one another as of specific dates. These representations and warranties have been made for the benefit of the Merger Parties and may be intended not as statements of fact, but rather as a way of allocating the risk to one of the Merger Parties if those statements prove to be incorrect. In addition, the assertions embodied in the representations and warranties are qualified by information in confidential disclosure letters exchanged by the Merger Parties in connection with signing the Merger Agreement. While the Merger Parties do not believe that these disclosure letters contain information required to be publicly disclosed under the applicable securities laws, other than information that has already been so disclosed, the disclosure letters do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the attached Merger Agreement. These representations and warranties were made as of specific dates and may be intended merely as a risk allocation mechanism between the Merger Parties. Accordingly, you should not rely on the representations and warranties as current characterizations of factual information about any Merger Party as they are modified by the disclosure letters.

General; Structure of the Mergers

On December 29, 2021, Enterprise Diversified Inc., a Nevada corporation (the “Company” or “ENDI”), Crossing Bridge Advisors LLC, a Delaware limited liability company (“CBA”), and Cohanzick Management, LLC, a Delaware limited liability company (the “CBA Member”) (each, a “Party” and collectively, the “Parties”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which ENDI would become a wholly-owned subsidiary of ENDI Corp., a new parent entity that is a Delaware corporation (the “New Parent”), through a series of mergers (the “Mergers” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). Upon closing of the Business Combination (the “Closing”), all of the outstanding shares of ENDI capital stock will be exchanged for and converted into the right to receive shares of New Parent, which will become ENDI’s sole stockholder. In order to effect the Mergers and the Business Combination, New Parent will form two merger subsidiaries. Upon the closing of the Merger Agreement, the first merger subsidiary (“Merger Sub 1”) will merge with and into ENDI (the “First Merger”), with ENDI as the surviving entity. Upon consummation of the First Merger, ENDI will become a direct, wholly-owned subsidiary of New Parent. Concurrently with the First Merger, and as part of the same overall transaction, the second merger subsidiary (“Merger Sub 2”) will merge with and into CBA (the “Second Merger”), with CBA as the surviving entity. Upon consummation of the Second Merger, Merger Sub 2 will cease to exist, and CBA shall be the surviving company and a direct, wholly-owned Subsidiary of New Parent.

The Mergers are to become effective upon the filing of the Certificates of Merger with the Delaware Secretary of State and the Nevada Secretary of State, in the case of the First Merger, and with the Delaware Secretary of State, in the case of the Second Merger, or at such other time as the Parties may agree in writing and specify in the applicable Certificate of Merger (the time that both the Second Merger and the First Merger have become effective, the “Effective Time”). It is the Parties’ intention that the First Merger and the Second Merger be effective concurrently.

Conversion of Capital Stock; Conversion of Membership Interest

Each share of ENDI common stock issued and outstanding immediately prior to the Effective Time (other than any Excluded Shares or Dissenting Shares) shall be converted into the right to receive one validly issued, fully paid, and non-assessable share of New Parent Class A Common Stock. Each ENDI Stockholder who held shares of ENDI common stock immediately prior to the Effective Time (other than any Excluded Shares or Dissenting Shares) shall hold an identical number of shares of New Parent Class A Common Stock at the Effective Time. Each share of ENDI common stock held in treasury immediately prior to the Effective Time (the “Excluded Shares”) shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

One hundred percent (100%) of the membership interest of CBA issued and outstanding immediately prior to the Effective Time shall, with no payment or distribution with respect thereto, be converted into and become (i) two million four hundred thousand (2,400,000) validly issued, fully paid and non-assessable shares of New Parent Class A Common Stock; (ii) one million eight hundred thousand (1,800,000) validly issued, fully paid, and non-assessable shares of New Parent Class B Common Stock; (iii) warrants to purchase one million eight hundred thousand (1,800,000) shares of New Parent Class A Common Stock (the “W-1 Warrants”); and (iv) warrants to purchase two hundred fifty thousand (250,000) shares of New Parent Class A Common Stock (the “W-2 Warrants”).

Withholding Rights; Dissenters’ Rights

Each Party shall be entitled to deduct and withhold, or cause to be deducted and withheld, from the consideration otherwise payable, such amounts as New Parent, the applicable Merger Sub, CBA or ENDI reasonably determines it is required to deduct and withhold under the Internal Revenue Code (the “Code”), or any provision of state, local or foreign Tax Law. To the extent that amounts are so deducted and withheld and are remitted to the applicable taxing authority, such amounts shall be treated as having been paid to the Person in respect of whom such deduction and withholding was made.

Each share of ENDI common stock (other than Excluded Shares) that is outstanding immediately prior to the Effective Time, as defined below, that is held by a holder who is (a) entitled to dissent under Nevada Revised Statutes (the “NRS”) 92A.380 and (b) has properly exercised such right in the manner required by NRS 92A.400 to 92A.480 (the “Dissenting Shares”), shall not be converted into or be exchangeable for the right to receive the shares of New Parent common stock (the “ENDI Stockholder Issuance”) unless and until such holder fails to perfect, withdraws, or otherwise loses such holder’s right as a dissenter under the NRS. If, after the Effective Time, any such holder fails to perfect, withdraws, or loses such holder’s right as a dissenter, such Dissenting Shares shall be treated as if they had, as of the Effective Time, been converted into the right to receive the portion of the ENDI Stockholder Issuance, if any, to which such holder is entitled pursuant to the Merger Agreement.

Representations and Warranties

The Merger Agreement contains customary representations, warranties and covenants of (a) CBA, (b) ENDI and (c) New Parent and Merger Subs, in each case relating to, among other things, each entities’ ability to enter into the Merger Agreement and their respective outstanding capitalization. These representations and warranties are subject to materiality, knowledge and other similar qualifications in many respects and expire at the Effective Time. These representations and warranties have been made solely for the benefit of the other parties to the Merger Agreement.

The Merger Agreement contains representations and warranties made by CBA to ENDI relating to multiple matters, including the following:

The Merger Agreement contains representations and warranties made by ENDI to CBA relating to multiple matters, including the following:

The Merger Agreement contains representations and warranties made by New Parent to CBA and ENDI relating to several matters, including the following:

Conduct of Business Pending the Merger

ENDI and CBA each covenant and agree that, between the date of the Merger Agreement and the earlier to occur of the Effective Time and the date, if any, on which the Merger Agreement is terminated, each Party shall use commercially reasonable efforts to conduct its business in the ordinary course (the “Ordinary Course of Business”) and shall cause each, if any, of its Subsidiaries to do the same.

In addition to the general covenants above, ENDI and CBA have agreed that prior to the Effective Time or the earlier termination of the Merger Agreement, each of ENDI and CBA shall not, nor permit any Subsidiary to, take any of the following actions without the other’s prior written consent:

Conditions to Closing

Mutual

Both ENDI’s and CBA’s obligations to consummate the Merger Agreement are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following conditions: approval of ENDI’s stockholders; no issuance of a law or order which has the effect of making the Business Combination illegal or otherwise prohibits same; the effectiveness of this joint proxy statement/prospectus; FINRA’s approval of the Business Combination; and the New Parent Class A Common Stock shall be quoted on the over-the-counter (OTC) market.

ENDI

ENDI’s obligations to effect the Mergers and consummate the transactions contemplated by the Merger Agreement are subject to satisfaction or waiver (where permissible) at or prior to the Effective Time of the following conditions: the truth and correctness of the representations and warranties of CBA and New Parent contained in the Agreement as of the date of the Merger Agreement and as of the Effective Time; Parent’s and CBA’s material performance of all relevant obligations and material compliance with all relevant agreements and covenants; the lack of any circumstance that would constitute a CBA Material Adverse Effect; CBA’s delivery of the certificate of merger for the Second Merger, duly executed by Merger Sub 2 and CBA; a certificate of an authorized officer of CBA certifying that (i) attached thereto are true and complete copies of all resolutions adopted by the Manager of CBA authorizing the execution, delivery and performance of the Merger Agreement and the other transaction documents to which CBA is a party and the consummation of the transactions contemplated hereby and thereby, and (ii) all such resolutions are in full force and effect and are all the resolutions adopted by the Manager in connection with the transactions contemplated thereby; a certificate of an authorized officer of CBA certifying that certain conditions set forth in the Merger Agreement were satisfied; the Certificate of Formation of CBA, certified within ten (10) Business Days prior to closing by the secretary of state of the state of Delaware and a good standing certificate from the secretary of state of the state of Delaware, dated within ten (10) Business Days of Closing; a notice to the Internal Revenue Service, in accordance with the requirements of Treasury Regulations Section 1.1445-11T(d)(2)(i), dated as of the Closing Date and executed by CBA, together with written authorization for New Parent to deliver such notice to the Internal Revenue Service on behalf of CBA after the Closing, and a certification that the CBA Equity Interests are not “United States real property interests” as defined in Section 897(c) of the Code prepared in accordance with the Treasury Regulations under Sections 897 and 1445 of the Code (in a form reasonably acceptable to ENDI), in each case, validly executed by a duly authorized officer of CBA; the Cohanzick Services Agreement, duly executed by CBA and the CBA Member; the Stockholders Agreement, duly executed by the CBA Member; the Voting Agreement, duly executed by New Parent and certain stockholders of ENDI; and the Registration Rights Agreement, duly executed by the CBA Member.

CBA

CBA’s obligations to effect the Mergers and to consummate the other transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver (where permissible) by CBA at or prior to the Effective Time of the following additional conditions: the truth and correctness of the representations and warranties of ENDI and New Parent contained in the Merger Agreement as of the date of the Merger Agreement and as of the Effective Time; material performance by New Parent and ENDI of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed by it under the Merger Agreement on or prior to the Effective Time; the lack of any circumstance that would constitute an ENDI Material Adverse Effect; ENDI delivery of the certificate of merger for the First Merger, duly executed by Merger Sub 1 and ENDI; a certificate of the secretary of ENDI certifying that attached thereto are true and complete copies of all resolutions adopted by the ENDI Board authorizing the execution, delivery and performance of the Merger Agreement and the other transaction documents to which ENDI is a party and the consummation of the transactions contemplated thereby, including the ENDI Recommendation, and all such resolutions are in full force and effect and are all the resolutions adopted by the ENDI Board in connection with the transactions contemplated thereby; a certificate of the secretary of New Parent certifying that attached thereto are true and complete copies of all resolutions adopted by the Board of Directors of New Parent authorizing the execution, delivery and performance of the Merger Agreement and the other transaction documents to which New Parent is a party and the consummation of transactions contemplated thereby, and all such resolutions are in full force and effect and are all the resolutions adopted by the Board of Directors of New Parent in connection with the transactions contemplated thereby; a certificate of the secretary of ENDI certifying that certain conditions set forth in the Merger Agreement have been satisfied; the Articles of Incorporation of ENDI, certified within ten (10) Business Days prior to Closing by the secretary of state of the state of Nevada, and a good standing certificate from the secretary of state of the state of Nevada, dated within ten (10) Business Days of Closing; the Stockholder Agreement, duly executed by New Parent; the Voting Agreement, duly executed by New Parent and certain stockholders of ENDI; the A&R Certificate of Incorporation, duly executed by Parent and filed with the Delaware Secretary of State, and the A&R Bylaws, each of which shall have been adopted by Parent’s Board of Directors; a notice to the Internal Revenue Service, in accordance with the requirements of Treasury Regulations § 1.897-2(h)(2), dated as of the Closing Date and executed by ENDI, together with written authorization for the New Parent to deliver such notice to the Internal Revenue Service on behalf of ENDI after the Closing, and a certification that the shares of ENDI common stock are not “United States real property interests” as defined in Section 897(c) of the Code prepared in accordance with the Treasury Regulations under Sections 897 and 1445 of the Code (in a form reasonably acceptable to CBA) for purposes of satisfying the New Parent’s obligations under Treasury Regulations § 1.1445-2(c)(3)), in each case, validly executed by a duly authorized officer of ENDI; and ENDI and its Subsidiaries shall have delivered evidence reasonably satisfactory to CBA that they own (or otherwise possess) no more than 4.99% of the voting interest, and no more than 49.99% of the economic interest, in and to Bonhoeffer Fund, L.P.; provided, however, that if, after using its reasonable best efforts ENDI reasonably and in good faith determines that this cannot be achieved, it shall notify the CBA Member of such fact in writing and the CBA Member shall purchase, at the Closing, all of Willow Oak Asset Management, LLC’s membership interest in Bonhoeffer Capital Management, LLC for a purchase price of $25,000 in cash (provided, that Willow Oak Asset Management, LLC shall have the continued right to receive 45% of the economic interest held by Bonhoeffer Capital Management, LLC in Bonhoeffer Fund, L.P.), and in connection with any such purchase, ENDI shall agree to indemnify and defend the CBA Member for any third party claims arising from actions taken by ENDI or its Subsidiaries in connection with Bonhoeffer Fund, L.P. prior to the consummation of such purchase; and each director and officer of ENDI as of immediately prior to the Effective Time shall have resigned.

Termination

The Merger Agreement may be terminated, and the Mergers and other actions contemplated by the Merger Agreement may be abandoned at any time prior to the Effective Time, notwithstanding receipt of the Stockholder Approval, as follows:

Effect of Termination

If the Merger Agreement is terminated, the Merger Agreement will become void, and there will be no termination fee payable or any other liability under the Merger Agreement on the part of any party thereto, except in the case of termination for the occurrence of an ENDI Adverse Recommendation Change, for which ENDI will be required to pay CBA a $1,000,000 fee within 5 Business Days of the termination.

Additional Agreements

Proxy Statement; Registration Statement

Pursuant to the terms of the Merger Agreement, each of ENDI and New Parent shall use its reasonable best efforts to (A) have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, (B) ensure that the Form S-4 complies in all material respects with the applicable provisions of the Exchange Act and the Securities Act, and (C) keep the Form S-4 effective for so long as necessary to complete the Merger, unless the Merger Agreement is terminated pursuant to its terms.

Resale Registration Statement

New Parent shall prepare and file or cause to be prepared and filed with the SEC, as soon as practicable following the Closing Date (but in no event later than 45 days following the Closing Date), a Registration Statement for an offering to be made on a continuous basis, pursuant to Rule 415 of the Securities Act or any successor thereto, registering the resale from time to time by the CBA Member and certain other parties of all of the Closing Consideration and ENDI Stockholder Issuance, and all shares of New Parent Class A Common Stock acquired by the CBA Member and certain other parties (the “Resale Shelf Registration Statement”). The Resale Shelf Registration Statement shall be on Form S-3 (or, if Form S-3 is not available to be used by New Parent at such time, on Form S-1 or another appropriate form permitting Registration of such Closing Consideration for resale).

ENDI Stockholders’ Meeting; Merger Subs’ Approval

As promptly as practicable following the S-4 being declared effective, ENDI shall establish a record date for, duly call, give notice of, convene and hold the Stockholders Meeting solely for the purpose of obtaining ENDI Stockholder Approval (and other matters that shall be submitted to the holders of ENDI common stock at such meeting). ENDI shall use its reasonable best efforts to cause the definitive joint proxy statement/prospectus to be mailed to its stockholders entitled to vote at the Stockholders Meeting and to hold the Stockholders Meeting as soon as practicable after the Form S-4 is declared effective under the Securities Act. ENDI shall, through the Board of Directors, unanimously recommend to its stockholders that they provide Stockholder Approval, include the ENDI Board recommendation in the Proxy Statement and solicit and use its reasonable best efforts to obtain Stockholder Approval.

New Parent shall take all actions necessary to cause the Merger Subs to perform their obligations under the Merger Agreement and to consummate the Mergers on the terms and conditions set forth in the Merger Agreement.

Exclusivity

ENDI shall not, and shall cause its Subsidiaries and its or its Subsidiaries’ Representatives not to, directly or indirectly, solicit, initiate, or knowingly take any action to facilitate or encourage the submission of any Takeover Proposal, or, subject to the terms of the Merger Agreement, conduct or engage in any discussions or negotiations with, disclose any non-public information relating to ENDI or its Subsidiaries to, afford access to the business, properties, assets, books, or records of ENDI or its Subsidiaries to, or knowingly assist, participate in, facilitate, or encourage any effort by, any third party (or its potential sources of financing) that is seeking to make, or has made, any Takeover Proposal.

Notwithstanding the above, the ENDI Board, directly or indirectly through any Representative, may: (i) participate in negotiations or discussions with any third party that has made (and not withdrawn) a bona fide, unsolicited Takeover Proposal in writing that the ENDI Board believes in good faith, after consultation with its financial advisors and outside legal counsel, constitutes or would reasonably be expected to result in a Superior Proposal; and (ii) following receipt of and on account of a Superior Proposal, make an ENDI Adverse Recommendation Change, but in each case, only if the ENDI Board determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties under applicable law. Nothing contained in the Merger Agreement shall prevent the ENDI Board from disclosing to ENDI’s stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with regard to a Takeover Proposal, if ENDI determines, after consultation with its financial advisors and outside legal counsel, that failure to disclose such position would be inconsistent with its fiduciary duties under applicable law.

Post-Closing Purchase of Parent Shares

No later than five (5) trading days following the Closing Date, the CBA Member, or its designee(s), shall enter into a short-form securities purchase agreement (the “Additional Purchase Subscription Agreement”), pursuant to which the CBA Member (and/or such designee(s)) shall subscribe and purchase from New Parent, and New Parent shall issue and sell to the CBA Member (and/or such designee(s)), 100,000 shares of New Parent Class A Common Stock, at a price per share of New Parent Class A Common Stock equal to the lesser of (a) $8.00 and (b) the VWAP on the Closing Date. Additionally, (i) the CBA Member, or its designee(s), shall have the right, but not the obligation, no later than five (5) trading days following the Closing Date, to elect to purchase up to 250,000 shares of New Parent Class A Common Stock and (ii) certain employees, officers or directors of ENDI (as of immediately prior to the Closing), as approved by ENDI’s Board prior to Closing, shall have the right, but not the obligation, no later than five (5) trading days following the Closing Date, to elect to purchase up to 55,000 shares of New Parent Class A Common Stock, in the aggregate, in each case at a price per share of New Parent Class A Common Stock equal to the lesser of (1) $8.00 and (2) the VWAP on the Closing Date, in each case pursuant to an Additional Purchase Subscription Agreement.

FINRA Notification; Delisting; Investment Advisory Services

ENDI has prepared and filed an Issuer Company-Related Action Notification Form (the “FINRA Notification”) in accordance with FINRA Rule 6490 with the Financial Industry Regulatory Authority (“FINRA”) regarding the Merger. In the event of a deficiency determination by FINRA pursuant to FINRA Rule 6490(d)(3), ENDI shall promptly commence and diligently pursue an appeal of such determination in accordance with FINRA Rule 6490(e) and shall make any reasonable changes to the FINRA Notification that may be required in connection with a successful appeal.

Prior to the Closing, ENDI shall use its commercially reasonable efforts to (a) remove the ENDI common stock from the OTCQB Marketplace, and (b) cause ENDI’s ticker symbol to cease being quoted on the OTCQB Marketplace, in each case, effective as of the Closing.

If and to the extent, after the date of the Merger Agreement, ENDI or any Subsidiary thereof becomes required (as reasonably determined by the CBA Member upon advice of its regular funds counsel (or any replacement thereof) and following consultation with ENDI (provided, in the event of a disagreement with ENDI with respect to the foregoing, the advice of the CBA Member’s counsel shall control)) to be registered as an investment adviser under applicable Law as a result of services it renders pursuant to a Contract then in effect to which it is a party (each a “Fund Services Agreement”), ENDI or such Subsidiary shall use its reasonable best efforts to amend such Fund Services Agreement so as to remove the obligation to provide any service which requires ENDI or such Subsidiary to be registered as an investment adviser under applicable Law.

CERTAIN AGREEMENTS RELATED TO THE BUSINESS COMBINATION

This section describes, but does not purport to describe all the terms of, the material provisions of certain additional agreements entered into or to be entered into pursuant to or in connection with the transactions contemplated by the Merger Agreement (the “Related Agreements”). The descriptions below are qualified by reference to the actual text of these agreements. Copies of the forms of each of the Related Agreements are attached as exhibits hereto, and are incorporated by reference into this joint proxy statement/prospectus. You are encouraged to read each of the Related Agreements in their entirety.

Securities Purchase Agreement

A summary description of the Securities Purchase Agreement between New Parent and each purchaser (the “Purchaser”) party thereto is set forth below.

Agreement to Purchase. Pursuant to the Merger Agreement, depending on the Purchaser party, Purchaser either (i) is obligated to purchase (or cause a third party designee to purchase) 100,000 shares of New Parent Class A Common Stock and has the right to purchase from New Parent an additional number of shares of New Parent Class A Common Stock or (ii) has the right to purchase from New Parent a certain number of shares of New Parent Class A Common Stock, for an aggregate purchase price determined pursuant to the Securities Purchase Agreement.

Exemption from Registration. In connection with the shares to be purchased pursuant to the Securities Purchase Agreement, New Parent and the Purchaser will rely on the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission under the Securities Act.

Voting Agreement

A summary description of the Voting Agreement by and among New Parent, the CBA Member, and the individual or entity set forth on the signature page thereto (the “Voting Party”) is set forth below. All terms used but otherwise not defined have the meaning given to them in the Voting Agreement.

Agreement to Vote. The Voting Party agrees to vote, and to cause its Affiliates (as defined therein) to vote, all securities of the New Parent that may vote in the election of the New Parent’s directors that such Voting Party or its Affiliates own from time to time and at all times (the “Voting Shares”) in such manner as may be necessary to elect or maintain in office the CBA Member Designees, whether at a regular or special meeting of stockholders or any class or series of stockholders or by written consent. Nothing in the Voting Agreement restricts a Voting Party’s or its Affiliates’ right to sell or transfer Voting Shares at any time.

Termination. The Voting Agreement will terminate automatically on the earlier of the date that (i) the holders of the Class B Common Stock’s or the CBA Member’s right to designate the CBA Member Designees is terminated or expires for any reason, (ii) Steven Kiel is no longer a member of the Board of Directors of New Parent, and (iii) the Voting Party and its Affiliates cease to hold any Voting Shares. The Voting Agreement will also terminate automatically with respect to any Voting Shares no longer held by the Voting Party or its Affiliates.

Stockholder Agreement

A summary description of the Stockholder Agreement by and between New Parent and Cohanzick Management, LLC is set forth below. All terms used but otherwise not defined have the meaning given to them in the Stockholder Agreement.

Nomination and Election of Directors. From and after the date that the holders of Class B Common Stock are no longer entitled to elect at least one Class B Director to the Board of Directors pursuant to the Certificate of Incorporation, the following provisions apply:

Redemption by the New Parent. If on or after the fifth (5^th) anniversary of the Closing, any shares of Class B Common Stock held by the Principal Stockholder remain outstanding, then the New Parent may redeem all, but not less than all, of such outstanding shares at the Redemption Price, which is $0.0001 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the shares of Class B Common Stock. Upon the exercise of any Class W-1 Warrant by any Class W-1 Warrant holder, the New Parent shall redeem the number of shares of Class B Common Stock (on a pro rata basis from the holders of Class B Common Stock) that are equal to the number of shares of Class A Common Stock issued to the Class W-1 Warrant holder upon exercise of the Class W-1 Warrant (a “Mandatory Redemption”). Such Mandatory Redemption shall be at the Redemption Price.

Services Agreement

A summary description of the Services Agreement by and between CBA and the CBA Member is set forth below.

For a term commencing on the Effective Date and ending on the first anniversary thereof, which term will automatically renew unless either CBA or the CBA Member elects to terminate with one hundred twenty (120) days’ prior written notice, CBA will make available to the CBA Member certain of its employees to provide investment advisory, portfolio management and other services to CBA Member and, through the CBA Member, to the CBA Member’s clients. Any such individuals will be subject to the oversight and control of the CBA Member, and any services so provided to the CBA Member or a client of the CBA Member will be provided by such CBA employees in the capacity of a supervised person of the CBA Member. The CBA Member additionally may use the systems of CBA or its affiliates for its daily operations; provided that appropriate policies, procedures and other safeguards are established to assure that (a) the books and records of each of CBA and the CBA Member are created and maintained in a manner so as to be clearly separate and distinct from those of the other person and the clients of such person, and (b) confidential client and/or other material non-public information relating to the investment advisory activities of CBA or the CBA Member, as applicable, or other proprietary information regarding either such person or its clients, is safeguarded and maintained for the benefit of such person. Each of CBA and the CBA Member must make the other aware of any potential investments that such person or any of its affiliates evaluates or participates in that are made in connection with any investment strategy the other person also provides to its clients.

As consideration for its services, the CBA Member will pay CBA a quarterly fee equal to 0.05% per annum of the monthly weighted average assets under management during such quarter with respect to all clients for which the CBA Member has full investment discretion. The fee shall be payable quarterly in arrears, within ten (10) days following the end of each quarter. The CBA Member and CBA will also split the payment of certain costs of other systems which use is shared between the CBA Member and CBA.

Voting Support Agreement

In connection with the Merger Agreement, the Company and certain of its stockholders holding an aggregate of approximately 34% of the issued and outstanding voting capital stock of the Company have entered into a voting and support agreement (the “Voting Support Agreement”) dated December 29, 2021, pursuant to which such stockholders of the Company have agreed to vote their shares of capital stock of the Company in favor of the Merger Agreement and the transactions contemplated therein, including the Merger, and against any action, agreement, transaction or proposal that would result in a breach of any covenant or other provision of the Merger Agreement or that would reasonably be expected to result in the transactions contemplated by the Merger Agreement from not being completed. Pursuant to the Voting Support Agreement, the stockholders party thereto have also agreed to waive their dissenters rights under Nevada law with respect to the Merger, not to solicit or support any corporate transaction that constitutes or could reasonably be expected to constitute, an alternative to the Merger, and not to sell, transfer, assign or otherwise take any action that would have the effect of preventing or disabling the stockholder from voting its shares of the Company in accordance with its obligations under the Voting Support Agreement. The Voting Support Agreement automatically terminates upon the termination of the Merger Agreement or upon the mutual agreement of the parties to the Voting Support Agreement.

Registration Rights Agreement

New Parent and the CBA Member will enter into a registration rights agreement pursuant to which New Parent has agreed to prepare and file or cause to be prepared and filed with the SEC, as soon as practicable following the Closing Date (but in no event later than 45 days following the Closing Date), a Registration Statement for an offering to be made on a continuous basis, pursuant to Rule 415 of the Securities Act or any successor thereto, registering the resale from time to time by the CBA Member and certain other parties of all of the Closing Consideration and ENDI Stockholder Issuance, and all shares of New Parent Class A Common Stock acquired by the CBA Member and certain other parties (the “Resale Shelf Registration Statement”). The Resale Shelf Registration Statement shall be on Form S-3 (or, if Form S-3 is not available to be used by New Parent at such time, on Form S-1 or another appropriate form permitting Registration of such Closing Consideration and other New Parent Class A Common Stock for resale).

Employment Agreement

A summary description of the Employment Agreement by and between CBA and David Sherman is set forth below. All terms used but otherwise not defined have the meaning given to them in the Employment Agreement.

CBA has entered into an Employment Agreement with David Sherman dated December 29, 2021, to be effective as of the Effective Date. Pursuant to the Employment Agreement, David Sherman is employed by CBA to serve as its President and the Chief Executive Officer of New Parent, for a five (5) year term (unless earlier terminated by its terms). As consideration for his services, David Sherman will be paid a salary of $400,000 per annum, plus a discretionary bonus. Upon a termination of the Employment Agreement by (i) David Sherman for Good Reason, or (ii) CBA without Cause, David Sherman will be entitled to receive six (6) months of severance.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

In connection with the Merger, each share of common stock of ENDI held by ENDI’s shareholders will be converted into the right to receive one (1) share of Class A common stock, par value $0.0001 per share, of New Parent Class A Common Stock. The CBA Member, as the sole member of CBA, will receive (i) 2,400,000 shares of New Parent Class A Common Stock, (ii) 1,800,000 shares of New Parent Class B Common Stock, (iii) a Class W-1 Warrant to purchase 1,800,000 shares of New Parent Class A Common Stock within five (5) years of Closing, (iv) options to purchase up to 250,000 shares of New Parent Class A Common Stock within five (5) trading days of Closing, and (v) a Class W-2 Warrant to purchase 250,000 shares of Class A Common Stock within five (5) years of Closing. In addition, the CBA Member shall have the obligation to acquire 100,000 shares of New Parent Class A Common Stock within five trading days of Closing.

The New Parent Class A Common Stock and New Parent Class B Common Stock are identical other than the shares of New Parent Class B Common Stock (i) have the right to designate directors (as described below), (ii) shall not be entitled to participate in earnings, dividends or other distributions with respect to the Class A Common Shares, (iii) shall not receive any assets of New Parent in the event of a liquidation and (iv) shall be subject to redemption in certain circumstances.

The Class W-1 and Class W-2 Warrants may be exercised in whole or in part at any time prior to the date that is five (5) years after the date of the Closing (defined below), at an exercise price of $8.00 per share of New Parent Class A Common Stock subject to certain customary adjustments. Each of the warrants may also be exercised on a “cashless” basis at any time at the election of the holder and if not fully exercised prior to the expiration date of the warrant, shall be automatically exercised on a “cashless” basis.

In addition, the CBA Member, or its designee, has agreed to purchase an aggregate of 100,000 shares of New Parent Class A Common Stock, and shall have the right, but not the obligation, to purchase an additional 250,000 shares of New Parent Class A Common Stock (collectively the “Additional Shares”), not later than five (5) trading days following the consummation of the Merger at a price equal to the lesser of $8.00 or the 60 day volume weighted average price of the Company’s common shares as of the Merger closing date (the “Closing”), excluding the highest and lowest trading days. Certain officers, directors and employees of the Company shall have the right, but not the obligation, to purchase up to a further 55,000 shares of New Parent Class A Common Stock on the same terms as the purchase of the Additional Shares.

The following unaudited pro forma condensed combined balance sheet as of September 30, 2021 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and for the year ended December 31, 2020 are based on the historical audited and unaudited financial statements of the Company and CBA after giving the pro forma effects of the Merger. The Merger will be accounted for as a reverse acquisition business combination, using the acquisition method of accounting.

The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and for the year ended December 31, 2020 give effect to the Merger as if it had occurred on January 1, 2020. The unaudited pro forma condensed combined balance sheet as of September 30, 2021 assumes that the Merger took place on that date.

These unaudited pro forma condensed combined financial statements (the “Pro Forma Financial Statements”) are provided for informational purposes only and are subject to a number of uncertainties and assumptions and do not purport to represent what the companies’ actual performance or financial position would have been had the Mergers occurred on the dates indicated and does not purport to indicate the financial position or results of operations as of any future date or for any future period. With respect to the Pro Forma Financial Statements:

The unaudited pro forma condensed combined financial statements reflect management’s preliminary and best estimate of the fair value of the tangible and intangible assets acquired and liabilities assumed in the Mergers based on information currently available. Certain valuations and studies necessary to finalize the determination of estimated fair values and estimated useful lives, are incomplete as of the date of this filing. As final valuations are performed, increases or decreases in the unaudited pro forma condensed combined fair value of assets acquired and liabilities assumed may result in adjustments, which may be material, to the balance sheet and/or statements of operations.

The unaudited pro forma condensed combined financial statements include adjustments which give effect to the events that are directly attributable to the Merger, are expected to have a continuing impact and are factually supportable.