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United States securities and exchange commission logo
May 24, 2024
Darryl Nakamoto
Chief Executive Officer
Pono Capital Two, Inc.
643 Ilalo St. #102
Honolulu, Hawaii 96813
Re:Pono Capital Two, Inc.
Revised Preliminary Proxy Statement on Schedule 14A
Filed May 7, 2024
File No. 001-41462
Dear Darryl Nakamoto:
            We have reviewed your filing and have the following comment(s).
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments.
Revised Preliminary Proxy Statement on Schedule 14A filed May 7, 2024
Letter to Shareholders, page 2
1.Please revise to highlight that the Combined Entity will be a “controlled company” within
the meaning of the applicable rules of Nasdaq and, upon closing, Dr. Yoshiyuki Aikawa
will control approximately 66.9% of the voting power of your outstanding common stock
if there are no additional redemptions by the Combined Company’s public stockholders.
Risk Factors
Risks Related to Pono and the Business Combination
If Pono is deemed to be an investment company for purposes of the Investment Company Act of
1940..., page 68
2.We note your revised disclosure in response to prior comment 22 and re-issue the
comment in part. Please expand on this risk factor to address the risk that if you are found
to be operating as an unregistered investment company, you may be required to change
your operations or register as an investment company under the Investment Company Act.
If you believe that under such circumstances, Pono would abandon its efforts to complete

 FirstName LastNameDarryl Nakamoto
 Comapany NamePono Capital Two, Inc.
 May 24, 2024 Page 2
 FirstName LastNameDarryl Nakamoto
Pono Capital Two, Inc.
May 24, 2024
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an initial business combination and liquidate rather than attempt to change its
operations or register as an investment company, please state that clearly in the risk
factor.
Nasdaq may delist Pono's securities from its exchange which could limit investors' ability to
make transactions in its securities..., page 90
3.Please update this risk factor to disclose the recent notices from Nasdaq informing Pono
of its non-compliance with continued listing rules and describe how Pono will address the
non-compliance and its potential impact on your ability to close an initial business
combination.
Non-redemption Agreement, page 98
4.We note your disclosure regarding the non-redemption agreement with an unaffiliated
investor pursuant to which the investor will acquire 1,500,00 to 1,700,000 shares of Class
A common stock from public stockholders in the open market, at prices no higher than the
redemption price per share payable to stockholders who exercise redemption rights in
connection with the stockholder vote to approve the Company’s proposed business
combination. The non-redemption agreement appears to contemplate the purchase of
Class A common stock by the investors outside the redemption offer in exchange for
consideration paid by the Company or its affiliates. Please provide us with your analysis
as to how the purchases under these agreements comply with Rule 14e-5. To the extent
you are relying on Tender Offer Rules and Schedules Compliance and Disclosure
Interpretation 166.01 (March 22, 2022), please provide an analysis regarding how it
applies to your circumstances. In particular, please clarify if the shares being
purchased could be voted in favor of approving the business combination transaction.
5.We note your description here of a non-redemption agreement with one unaffiliated
investor. You also define "Non-Redemption Agreements” to be "the non-redemption
agreements entered into by Pono and the Sponsor and certain unaffiliated stockholders
owning, in the aggregate, 998,682 shares of Pono Class A common stock prior to entering
into the Non-Redemption Agreements, pursuant to which such stockholders agreed,
among other things, not to redeem or exercise any right to redeem such public shares in
connection with the extension of Pono from May 9, 2023 to February 9, 2024." Please
consider revising your disclosure to distinguish between the non-redemption agreements.
Background of the Business Combination, page 125
6.We note your disclosure that "[o]n January 22, 2023, SBC provided Pono management
with revised financial statements. The statements reflected a reduction of revenue and net
income to $321 million and $54 million, respectively. The revised projections were
primarily a result of the restructuring of the SBC business entities and the change in
reporting to US GAAP." Please clarify if these revised financial statements were the
reason the valuation of SBC was revised from $2.5 billion in the initial LOI to $1.2 billion

 FirstName LastNameDarryl Nakamoto
 Comapany NamePono Capital Two, Inc.
 May 24, 2024 Page 3
 FirstName LastNameDarryl Nakamoto
Pono Capital Two, Inc.
May 24, 2024
Page 3
in the initial draft of the Business Combination Agreement.
Note 2(a), page F-36
7.We note your response to prior comment 21 and re-issue in part. Please expand your
disclosure to clearly identify all unconsolidated entities in which you own a majority
equity interest. Quantify the voting interest you have in each of these entities. Disclose
whether you are applying the cost method or the equity method for these investments. If
you do not apply the VIE accounting model to these entities based on the not-for-profit
entities scope exception then that accounting policy should be clearly disclosed. If these
equity investments do not include any substantive voting or profit distribution rights, then
please clearly disclose the business purpose of these investments. If asset recoverability
can only be accomplished through liquidation of the investees, which are all non-profit
entities, then clearly disclose how you reasonably concluded that the assets are
recoverable. It appears that these assets should be classified as equity investments on your
Balance Sheets instead of as "long-term payments" and that the guidance and disclosures
required by ASC 321 are applicable. Disclose how purchases of these investments are
classified in the Statements of Cash Flows. Compliance with ASC 230-10-45-13b. should
be clearly evident. In this regard it appears that these equity investments convey certain
rights of ownership.
Note 2(u), page F-43
8.Based on the disclosure in Note 16, it appears that only $1.4 million of your $29.4 million
December 31, 2022 "Advances from Customers -- related parties" balance was recognized
as revenue in 2023. Please expand your revenue recognition policy disclosure to fully
describe the transactions included in this liability account and the relevant material rights
and obligations of the Company and of the Customer. Explain why only a minimal
amount was recognized as revenue.
Note 18, page F-66
9.You disclose that in January 2024, in connection with a routine tax examination of the
Company’s income tax returns, the Japanese tax authority discovered misappropriations of
Company funds by a former director. Please clarify for us how you were able to measure
the impact of the misappropriations on your reported revenue and advances from
customers accounts. Specifically, it is not clear why your restated 2022 net income
decreased by $1.1 million and advances from customers increased by $4.2 million. In light
of the related party disclosure on page 232, please disclose whether the "former director"
is a relative of the CEO. Regarding the corresponding risk factor disclosure on page 84,
please tell us why your system of internal controls failed to detect this misappropriation of
funds and whether you are implementing any responsive changes in your system of
internal controls. Explain to us how the information in your tax return enabled the
misappropriation to be detected by the tax authority.

 FirstName LastNameDarryl Nakamoto
 Comapany NamePono Capital Two, Inc.
 May 24, 2024 Page 4
 FirstName LastName
Darryl Nakamoto
Pono Capital Two, Inc.
May 24, 2024
Page 4
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Please contact Al Pavot at 202-551-3738 or Terence O'Brien at 202-551-3355 if you have
questions regarding comments on the financial statements and related matters. Please contact
Conlon Danberg at 202-551-4466 or Lauren Nguyen at 202-551-3642 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Industrial Applications and
Services
cc:       Alexandria E. Kane, Esq.