UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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NEW PROVIDENCE ACQUISITION CORP. II
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024
TABLE OF CONTENTS
i
Unless otherwise stated in this Report (as defined below), or the context otherwise requires, references to:
| ● | “2021 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC (as defined below) on March 25, 2022; |
| ● | “2022 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023; |
| ● | “2023 Annual Report” are to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2023, as filed with the SEC on April 9, 2024; |
| ● | “2023 Founder Share Conversion” are to the conversion of 3,000,000 shares of Class B Common Stock (as defined below) held by the Sponsor (as defined below)as Founder Shares (as defined below) into an equal number of shares of Class A Common Stock (as defined below) issued on May 5, 2023 to the Sponsor; |
| ● | “2023 Redemptions” are to the 19,732,125 Public Shares (as defined below) whose holders properly exercised their right to redeem such Public Shares for cash at a redemption price of approximately $10.41 per share in connection with the approval of the First Extension Amendment Proposal (as defined below) and Redemption Limitation Amendment Proposal (as defined below); |
| ● | “2024 SPAC Rules” are to the new rules and regulations for SPACs (as defined below) adopted by the SEC on January 24, 2024, which became effective on July 1, 2024; |
| ● | “2024 Founder Share Conversion” are to the conversion of an aggregate of 3,249,999 shares of Class B Common Stock held by the Founder Share Holders (as defined below) as Founder Shares into an equal number of shares of Class A Common Stock issued on July 29, 2024 to the Founder Share Holders; |
| ● | “2024 Redemptions” are to the 4,585,351 Public Shares whose holders properly exercised their right to redeem such Public Shares for cash at a redemption price of approximately $10.89 per share in connection with the approval of the Second Extension Amendment Proposal (as defined below); |
| ● | “Administrative Support Agreement” are to the Administrative Support Agreement, dated November 4, 2021, which we entered into with our Sponsor; |
| ● | “Amended and Restated Charter” are to our Amended and Restated Certificate of Incorporation, as amended and currently in effect; |
| ● | “ASC” are to the FASB (as defined below) Accounting Standards Codification; |
| ● | “ASU” are to the FASB Accounting Standards Update; |
| ● | “Board of Directors” or “Board” are to our board of directors; |
| ● | “Business Combination” are to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses; |
| ● | “Class A Common Stock” are to shares of our Class A common stock, par value $0.0001 per share; |
| ● | “Class B Common Stock” are to shares of our Class B common stock, par value $0.0001 per share; |
ii
| ● | “Combination Period” are to the 36-month period, from the closing of the Initial Public Offering (as defined below) to November 9, 2024 if all monthly extensions are implemented (or such earlier date as determined by the Board), as extended by the Second Extension Amendment Proposal, that we have to consummate an initial Business Combination; provided that the Combination Period may be further extended pursuant to an amendment to the Amended and Restated Charter and consistent with applicable laws, regulations and stock exchange rules; | |
| ● | “Common Stock” are to the Class A Common Stock and the Class B Common Stock, together; |
| ● | “Company,” “our,” “we,” or “us” are to New Providence Acquisition Corp. II, a Delaware corporation; |
| ● | “Continental” are to Continental Stock Transfer & Trust Company, trustee of our Trust Account (as defined below) and warrant agent of our Public Warrants (as defined below); |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| ● | “FASB” are to the Financial Accounting Standards Board; |
| ● | “First Extension Amendment Proposal” are to the proposal at the First Special Meeting (as defined below) to extend the Combination Period from May 9, 2023 to May 9, 2024; |
| ● | “First Special Meeting” are to our special meeting of stockholders in lieu of an annual meeting of stockholders held on May 5, 2023; |
| ● | “First Promissory Note” are to that certain unsecured promissory note in the principal amount of up to $300,000 issued to our Sponsor on September 15, 2023; |
| ● | “Founder Share Conversions” are to the 2023 Founder Share Conversion and the 2024 Founder Share Conversion, together; |
| ● | “Founder Share Holders” are to the (i) Sponsor and (ii) Rick Mazer, Dan Ginsberg, Tim Gannon, Terry Wilson and Greg Stevens, our independent directors at the time of the Initial Public Offering, collectively; |
| ● | “Founder Shares” are to the shares of Class B Common Stock initially purchased by our Sponsor prior to the Initial Public Offering and the shares of Class A Common Stock that (i) will be issued upon the automatic conversion of the shares of Class B Common Stock at the time of our Business Combination as described herein and (ii) were issued in connection with the Founder Share Conversions upon the conversion of an equal number of shares of Class B Common Stock (for the avoidance of doubt, such Class A Common Stock will not be “Public Shares”); |
| ● | “GAAP” are to the accounting principles generally accepted in the United States of America; |
| ● | “Initial Public Offering” or “IPO” are to the initial public offering that we consummated on November 9, 2021; |
| ● | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
| ● | “IPO Registration Statement” are to the Registration Statements on Form S-1, initially filed with the SEC on February 22, 2021, as amended, which were declared effective on November 4, 2021 (File Nos. 333-253337 and 333-260794)); |
| ● | “Management” or our “Management Team” are to our executive officers and directors; |
| ● | “MVLS” are to the Market Value of Listed Securities; |
| ● | “MVLS Requirement” are to Nasdaq (as defined below) Listing Rule 5450(b)(2); |
iii
| ● | “Nasdaq” are to the Nasdaq Stock Market LLC; |
| ● | “Nasdaq Compliance Date” are to January 17, 2025, the date by which we must regain compliance with the MVLS Requirement; |
| ● | “Nasdaq Staff” are to the Listing Qualifications Department of Nasdaq; |
| ● | “Private Placement” are to the private placement of Private Placement Warrants (as defined below) that occurred simultaneously with the closing of our Initial Public Offering; |
| ● | “Private Placement Warrants” are to the warrants issued to our Sponsor in the Private Placement; |
| ● | “Promissory Notes” are to First Promissory Note and the Second Promissory Note (as defined below), together; |
| ● | “Public Shares” are to the shares of Class A Common Stock sold as part of the Units (as defined below) in our Initial Public Offering (whether they were purchased in our Initial Public Offering or thereafter in the open market); |
| ● | “Public Stockholders” are to the holders of our Public Shares, including our Management Team to the extent the members of our Management Team purchase Public Shares, provided that each member of our Management Team’s status as a “Public Stockholder” will only exist with respect to such Public Shares; |
| ● | “Public Warrants” are to the redeemable warrants sold as part of the Units in our Initial Public Offering (whether they were subscribed for in our Initial Public Offering or purchased in the open market); |
| ● | “Redemption Limitation Amendment Proposal” are to the proposal at the First Special Meeting to amend the Amended and Restated Charter to remove the limitation that we may not redeem Public Shares to the extent that such redemption would result in us having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act), of less than $5,000,001; |
| ● | “Report” are to this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024; |
| ● | “SEC” are to the U.S. Securities and Exchange Commission; |
| ● | “Second Extension Amendment Proposal” are to the proposal at the Second Special Meeting (as defined below) to extend the Combination Period on a monthly basis, up to six (6) times, from May 9, 2024 until November 9, 2024, or such earlier date as may be determined by the Board; |
| ● | “Second Special Meeting” are to our special meeting of stockholders in lieu of an annual meeting of stockholders held on May 9, 2024; |
| ● | “Second Promissory Note” are to that certain non-interest bearing promissory note in the principal amount of up to $400,000 issued to our Sponsor on March 7, 2024; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended; |
| ● | “SPACs” are to special purpose acquisition companies; |
| ● | “Sponsor” are to New Providence Acquisition II LLC, a Delaware limited liability company; |
| ● | “Treasury” are to the U.S. Department of the Treasury; |
| ● | “Trust Account” are to the U.S.-based trust account in which an amount of $255,000,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants in the Private Placement was placed following the closing of the Initial Public Offering; |
| ● | “Underwriting Agreement” are to the Underwriting Agreement, dated November 4, 2021, which we entered into with Deutsche Bank Securities Inc.; |
| ● | “Units” are to the units sold in our Initial Public Offering, which consist of one Public Share and one-third of one Public Warrant; |
| ● | “Warrants” are to the Private Placement Warrants and the Public Warrants, together; and |
| ● | “Working Capital Loans” are to funds that, in order to provide working capital or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of our directors and officers may, but are not obligated to, loan us. |
iv
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
NEW PROVIDENCE ACQUISITION CORP. II
CONDENSED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Cash and marketable securities held in Trust Account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Income taxes payable | ||||||||
| Excise Taxes payable | ||||||||
| Promissory Notes - related party | ||||||||
| Total Current Liabilities | ||||||||
| Deferred underwriting payable | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Class A Common Stock subject to possible redemption, $ | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ | ||||||||
| Class A Common Stock, $ | ||||||||
| Class B Common Stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
NEW PROVIDENCE ACQUISITION CORP. II
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | For
the Six Months Ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating costs | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (loss): | ||||||||||||||||
| Interest earned on cash and marketable securities held in Trust Account | ||||||||||||||||
| Unrealized loss on cash and marketable securities held in Trust Account | ( | ) | ||||||||||||||
| Other income, net | ||||||||||||||||
| (Loss) Income before provision for income taxes | ( | ) | ||||||||||||||
| Provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average shares outstanding, Redeemable Class A Common Stock | ||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
| Weighted average shares outstanding, Non-Redeemable Class A Common Stock | ||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
| Weighted average shares outstanding, Class B Common Stock | ||||||||||||||||
| $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
2
NEW PROVIDENCE ACQUISITION CORP. II
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
| Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Remeasurement of Class A Common Stock to Redemption Value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Remeasurement of Class A Common Stock to Redemption Value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Excise Tax payable attributable to redemption of Class A Common Stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
| Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholder’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Remeasurement of Class A Common Stock to Redemption Value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of Class B Common Stock to Class A Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||
| Excise Tax payable attributable to redemption of Class A Common Stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Remeasurement of Class A Common Stock to Redemption Value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance – June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
NEW PROVIDENCE ACQUISITION CORP. II
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Interest earned on cash and marketable securities held in Trust Account | ( | ) | ( | ) | ||||
| Deferred tax provision | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Prepaid income taxes | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Income taxes payable | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash withdrawn from Trust Account to pay franchise and income taxes | ||||||||
| Cash withdrawn from Trust Account in connection with redemption of Common Stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Promissory Notes - related party | ||||||||
| Redemption of Common Stock | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ||||||
| Cash – Beginning of period | ||||||||
| Cash – End of period | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Cash paid for franchise and income taxes | $ | $ | ||||||
| Non-Cash investing and financing activities: | ||||||||
| Remeasurement of Class A Common Stock subject to redemption | $ | $ | ||||||
| Excise Tax payable attributable to redemption of Common Stock | $ | $ | ||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, LIQUIDITY, AND RISKS AND UNCERTAINTIES
New Providence Acquisition Corp. II (the “Company”)
is a blank check company incorporated in Delaware on November 16, 2020. The Company was formed for the purpose of effectuating a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
All activity through June 30, 2024 relates to the Company’s formation, the initial public offering that was consummated by the Company on November 9, 2021 (the “Initial Public Offering” or “IPO”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering held in the Trust Account (as defined and described below).
The Registration Statements on Form S-1 for the
Initial Public Offering, initially filed with the U.S. Securities and Exchange Commission (the “SEC”) on February
22, 2021, as amended (File Nos. 333-253337 and 333-260794) were declared effective on November 4, 2021 (the “IPO Registration
Statement”). On November 9, 2021, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of
Transaction costs amounted to $
Following the closing of the Initial Public Offering
on November 9, 2021, an amount of $
To mitigate the risk of being viewed as operating
an unregistered investment company, on April 12, 2024, the Company instructed Continental Stock Transfer & Trust Company (“Continental”),
the trustee with respect to the Trust Account, to liquidate the U.S. Department of the Treasury (the “Treasury”) obligations
or money market funds held in the Trust Account and thereafter to maintain the funds in the Trust Account in cash in an interest-bearing demand
deposit account at a bank until the earlier of the consummation of a Business Combination and the liquidation of the Company. As a result,
following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private
Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities. Interest
on such deposit account is currently
5
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The Company’s management (“Management”)
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations with one or more operating businesses or assets with a fair market value equal to at least
The Company will provide its holders of the outstanding Public Shares
(the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of
a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means
of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender
offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for
a pro rata portion of the amount then in the Trust Account ($
The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and
Restated Charter provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such
stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Founder Share Holders have agreed (i) to waive
its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business
Combination and (ii) not to propose an amendment to the Amended and Restated Charter (x) to modify the substance or timing of the ability
of the Public Stockholders to seek redemption in connection with the initial Business Combination or the Company’s obligation to
redeem
6
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The Company initially had 18 months from the closing of the Initial Public Offering to complete a Business Combination (the “Combination Period”). In connection with the First Special Meeting and the Second Special Meeting (as defined below), the Combination Period was extended until up to November 9, 2024 (see below).
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and
not previously released to the Company to pay its tax obligations (less up to $
The Founder Share Holders have agreed to waive its liquidation rights
with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if
the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter of the Initial
Public Offering has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account in the event
the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included
with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such
distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the per Unit
amount held in the Trust Account ($
In order to protect the amounts held in the Trust
Account, the Founder Share Holders greed to be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below the lesser of (i) $
Extensions of the Combination Period
On May 5, 2023, the Company held a special meeting
in lieu of an annual meeting of stockholders (the “First Special Meeting”), to, among other things, amend the Amended and
Restated Charter to (i) extend the date by which the Company has to consummate a Business Combination from May 9, 2023 to May 9, 2024
(the “First Extension Amendment Proposal”) and (ii) remove the limitation that the Company may not redeem Public Shares to
the extent that such redemption would result in the Company having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1)
of the Exchange Act), of less than $
7
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
In connection with the vote to approve the First
Extension Amendment Proposal and the Redemption Limitation Amendment Proposal, Public Stockholders elected to redeem an aggregate of
On May 9, 2024, the Company held a special meeting in lieu of an annual meeting of stockholders (the “Second Special Meeting”), to amend the Amended and Restated Charter to extend the date by which the Company has to consummate a Business Combination from May 9, 2024 on a monthly basis, up to six (6) times, until November 9, 2024, or such earlier date as may be determined by the Board (the “Second Extension Amendment Proposal”). The stockholders of the Company approved the Second Extension Amendment Proposal at the Second Special Meeting and on May 9, 2024, the Company filed the required amendment to the Amended and Restated Charter with the Secretary of State of Delaware.
In connection with the vote to approve the Second
Extension Amendment Proposal, Public Stockholders elected to redeem an aggregate of
2023 Founder Share Conversion
On May 5, 2023, the Company issued an aggregate
of
Share Transfer Agreements
In connection with the First Special Meeting,
the Company and the Sponsor entered into share transfer agreements with several holders of Public Shares, pursuant to which such holders
agreed not to redeem an aggregate of
Liquidity and Going Concern
As of June 30, 2024, the Company had $
Until the consummation of a Business Combination, the Company will continue to use the funds not held in the Trust Account for identifying and evaluating prospective Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.
8
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The Company expects to need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. In addition, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until November 9, 2024 to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate the proposed Business Combination by this time. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date that the accompanying unaudited condensed financial statement were issued. The accompanying unaudited condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the Excise Tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the Excise Tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
On May 5, 2023, in the 2023 Redemptions, Public
Stockholders elected to redeem
9
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
During the second quarter of 2024, the Internal Revenue Service issued final regulations with respect to the timing and payment of the Excise Tax. Pursuant to those regulations, the Company would need to file a return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024.
The Company is currently evaluating its options
with respect to payment of this obligation. If the Company is unable to pay its obligation in full, it will be subject to additional interest
and penalties which are currently estimated at
The Company’s results of operations and its ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. The Company’s business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, including geopolitical instability, such as the military conflicts in Ukraine and the Middle East. The Company cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact its business and its ability to complete an initial Business Combination.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated under the Exchange Act. Certain information or footnote disclosures normally included in the accompanying unaudited condensed financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of Management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the period ended December 31, 2023, as filed with the SEC on April 9, 2024. The interim results for the periods ended June 30, 2024 are not necessarily indicative of the results to be expected for the period ending December 31, 2024 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2022, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
10
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standards at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statement with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the accompanying unaudited condensed financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accompanying unaudited condensed financial statements.
Making estimates requires Management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the accompanying unaudited condensed financial statements, which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2024 and December 31, 2023.
Restricted Cash
The Company has withdrawn a total of $
Cash and Marketable Securities Held in Trust Account
To mitigate the risk of being viewed as operating
an unregistered investment company, on April 12, 2024, the Company instructed Continental, the trustee with respect to the Trust
Account, to liquidate the Treasury obligations or money market funds held in the Trust Account and thereafter to maintain the funds in
the Trust Account in cash in an interest-bearing demand deposit account at a bank until the earlier of the consummation of a Business
Combination and the liquidation of the Company. As a result, following the liquidation of investments in the Trust Account,
the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or
money market funds invested in U.S. government securities. Interest on such deposit account is currently
At June 30, 2024, substantially all of the assets held in the Trust Account consisted of cash held in a demand deposit account. At December 31, 2023, substantially all of the assets held in the Trust Account consisted of investments in money-market funds that invest in Treasury securities. Prior to the liquidation of the investments held in the Trust Account on April 12, 2024, all of the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in the Trust Account are included in interest earned on cash and marketable securities held in Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
11
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A Common Stock subject to possible redemption in accordance with the guidance in FASB Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”). Class A Common Stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A Common Stock (including Common Stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, Class A Common Stock are classified as stockholder’s equity. The Class A Common Stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2024 and December 31, 2023, Class A Common Stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the accompanying condensed balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Common Stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Common Stock are affected by charges against additional paid-in capital and accumulated deficit.
| Common Stock subject to possible redemption, December 31, 2023 | $ | |||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Common Stock subject to possible redemption, March 31, 2024 | $ | |||
| Less: | ||||
| Redemption of Class A Common Stock subject to redemption | ( | ) | ||
| Plus: | ||||
| Remeasurement of carrying value to redemption value | ||||
| Common Stock subject to possible redemption, June 30, 2024 | $ |
Offering Costs
Offering costs consist of underwriting, legal,
accounting and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering
costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis,
compared to total proceeds received. Offering costs associated with the equity Warrants and Class A Common Stock issued were initially
charged to temporary equity and then accreted to Common Stock subject to redemption upon the completion of the Initial Public Offering.
Offering costs amounted to $
Income Taxes
The Company accounts for income taxes under FASB
ASC Topic 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities
for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities
and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of June
30, 2024 and December 31, 2023, the Company’s deferred tax asset for start up organizational expenses had a full valuation allowance
recorded against it. The effective tax rate was (
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in a company’s condensed financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
12
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction. The Company has been subject to income taxation by major taxing authorities since its inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period is they are significant, unusual or infrequent. Computing the effective tax rate for the Company is complicated due to the potential impact of the timing of any Business Combination expenses and the actual interest income that will be recognized during the year. The Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “[i]f an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (benefit) but is otherwise able to make a reasonable estimate, the tax (or benefit) applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effect tax rate. As such, the Company is computing its taxable income (loss) and associated income tax provision based on actual results through June 30, 2024.
Net (Loss) Income per Common Stock
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net (loss) income per Common Stock is computed by dividing net (loss) income by the weighted average number of Common Stock outstanding for the period. Remeasurement associated with the redeemable shares of Class A Common Stock is excluded from (loss) income per share as the redemption value approximates fair value.
The calculation of diluted (loss) income per share
does not consider the effect of the Warrants issued in connection with the (i) Initial Public Offering, and (ii) the Private Placement
since the exercise of the Warrants is contingent upon the occurrence of future events. The Warrants are exercisable to purchase
| For the Three Months Ended June 30, 2024 | For the Six Months Ended June 30, 2024 | |||||||||||||||||||||||
| Class A | Class A | Class A | Class A | |||||||||||||||||||||
| Redeemable | Non-Redeemable | Class B | Redeemable | Non-Redeemable | Class B | |||||||||||||||||||
| Basic and diluted net loss per share of Common Stock | ||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||
| Allocation of net loss, as adjusted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | ( | ) | |||||||||
13
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
| For the Three Months Ended June 30, 2023 | For the Six Months Ended June 30, 2023 | |||||||||||||||||||||||
| Class A | Class A | Class A | Class A | |||||||||||||||||||||
| Redeemable | Non-Redeemable | Class B | Redeemable | Non-Redeemable | Class B | |||||||||||||||||||
| Basic and diluted net income per share of Common Stock | ||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||
| Allocation of net income, as adjusted | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurement” (“ASC 820”), approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature, except for warrant liabilities (see Note 8).
Warrant Liabilities
The Company accounts for Warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. Upon review of the warrant agreement the Company entered into with Continental on November 4, 2021 (the “Warrant Agreement”), Management concluded that the Public Warrants and Private Placement Warrants issued pursuant to the Warrant Agreement qualify for equity accounting treatment.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of a cash account in a financial institution which, at times, may exceed the Federal
Depository Insurance Corporation coverage limit of $
14
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU Topic 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the accompanying unaudited condensed financial statements.
In December 2023, the FASB issued ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Management does not believe the adoption of ASU 2023-09 will have a material impact on the accompanying unaudited condensed financial statements and disclosures.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On January 19, 2021, the Sponsor paid $
15
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The sale of the Founder Shares to the Company’s
independent directors is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under
ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Company
has hired a valuation firm who used the lattice model to assess the fair value associated with the Founder Shares granted. The fair value
of the
The Founder Share Holders have agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after
the completion of a Business Combination or (ii) subsequent to a Business Combination, (x) if the last reported sale price of the Class
A Common Stock equals or exceeds $
On May 5, 2023, in connection with the First Special
Meeting, the Company issued an aggregate of
Administrative Support Agreement
The Company entered into an agreement, commencing
on November 4, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the
Sponsor a total of up to $
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $
16
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
Promissory Note — Related Party
On September 15, 2023, the Company issued
an unsecured promissory note in the principal amount of $
On March 7, 2024, the Company issued a non-interest
bearing promissory note to the Sponsor to borrow up to $
On May 20, 2024, the Promissory Notes were amended and restated to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of the Company’s liquidation. The principal balance may be prepaid at any time. The rest of the terms of the Promissory Notes remain the same, including that the Promissory Notes bear no interest.
As of June 30, 2024 and December 31, 2023, respectively,
there was an aggregate of $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration and Stockholders Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of Class A Common Stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration and stockholder rights agreement entered into on November 4, 2021, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A Common Stock) (the “Registration Rights Agreement”). The holders of the majority of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Registration Rights Agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter is entitled to a deferred fee
of $
Consulting Services Arrangements
The Company had arrangements with third-party
consultants to provide services to the Company relating to identification of and negotiation with potential targets, assistance with due
diligence, marketing, financial analyses and investor relations. These arrangements, which were terminated in June 2023, provide for aggregate
monthly fees of approximately $
17
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company filed an Amended and Restated Charter
prior to the closing date of the Initial Public Offering such that the Company is authorized to issue up to
Class A Common Stock
The Company is authorized to issue up to
Class B Common Stock
The Company is authorized to issue up to
Holders of Class A Common Stock and Class B Common Stock vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law.
The shares of Class B Common Stock will automatically
convert into shares of Class A Common Stock (a) at any time and from time to time at the option of the holder thereof and (b) automatically
upon the closing of the Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like). In the case that additional shares of Class A Common Stock, or equity-linked securities, are issued or
deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the
ratio at which shares of Class B common stock shall convert into shares of Class A Common Stock will be adjusted (unless the holders of
a majority of the outstanding shares of Class B Common Stock agree to waive such adjustment with respect to any such issuance or deemed
issuance) so that the number of shares of Class A Common Stock issuable upon conversion of all shares of Class B Common Stock will equal,
in the aggregate, on an as-converted basis,
On May 5, 2023, the Company issued an aggregate
of
18
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
Warrants
At June 30, 2024 and December 31, 2023, there
were
The Company will not be obligated to deliver any Class A Common Stock pursuant to the exercise of a Warrant and will have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the Class A Common Stock underlying the Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No Warrant will be exercisable and the Company will not be obligated to issue a share of Class A Common Stock upon exercise of a Warrant unless the share of Class A Common Stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, it will use commercially reasonable efforts to file with the SEC a registration statement covering the shares of Class A Common Stock issuable upon exercise of the Warrants, and thereafter will use commercially reasonable efforts to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A Common Stock until the Warrants expire or are redeemed, as specified in the Warrant Agreement. If a registration statement covering the shares of Class A Common Stock issuable upon exercise of the Warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when it will have failed to maintain an effective registration statement, exercise Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption by surrendering such Warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (i) the product of the number of shares of Class A Common Stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” by (x) the fair market value; provided, however, that no cashless exercise shall be permitted unless the fair market value is equal to or higher than the exercise price. The “fair market value” shall mean the average reported last sale price of the Class A Common Stock for the ten (10) trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent. If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis.
The Warrants will expire at 5:00 p.m., New York
City time,
Redemption of Warrants
Once the Warrants become exercisable, the Company may redeem the outstanding Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the reported last sale price of the shares of Class A Common Stock equals or exceeds $ |
If and when the warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of Class A Common Stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.
19
NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
The exercise price and number of Class A Common Stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A Common Stock at a price below their exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (i) the Company issues additional
shares of Common Stock or equity-linked securities for capital raising purposes in connection with the closing of an initial Business
Combination at an issue price or effective issue price of less than $
As of June 30, 2024 and December 31, 2023, there
were
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects Management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
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NEW PROVIDENCE ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2024
At June 30, 2024, the assets held in the Trust Account consisted of cash held in a demand deposit account. At December 31, 2023, the assets held in the Trust Account consisted of investments in money-market funds that invest in Treasury securities.
| Description | Level | June 30, 2024 | December 31, 2023 | |||||||||
| Assets: | ||||||||||||
| Cash and marketable securities held in Trust Account | 1 | $ | $ | |||||||||
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued. Based upon this review, other than as set forth below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the accompanying unaudited condensed financial statements.
On July 18, 2024, the Second Promissory Note was
amended and restated to increase the principal balance available under the Second Promissory Note from $
On July 23, 2024, the Company received a deficiency
letter from the Listing Qualifications Department (the “Nasdaq Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”)
notifying the Company that, for the preceding 30 consecutive business days, the Company’s Market Value of Listed Securities (“MVLS”)
was below the $
The notification received had no immediate effect
on the Company’s Nasdaq listing. In accordance with Nasdaq rules, the Company has been provided an initial period of 180 calendar
days, or until January 17, 2025 (the “Nasdaq Compliance Date”), to regain compliance with the MVLS Requirement. If, at any
time before the Nasdaq Compliance Date, the Company’s MVLS closes at $
On July 29, 2024, the Company issued an aggregate
of
The shares of Class A Common Stock issued upon the 2024 Founder Share Conversion have not been registered under the Securities Act in reliance on the exemption from registration provided by Section 3(a)(9) thereof.
The Company effected the 2024 Founder Share Conversion to regain compliance with the MVLS Requirement.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of Management for future operations, are forward-looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our Management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our Management, as well as assumptions made by, and information currently available to, our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto included in this Report under “Item 1. Financial Statements”.
Overview
We are a blank check company incorporated under the laws of the State of Delaware on November 16, 2020 for the purpose of effectuating a Business Combination. We intend to effectuate our Business Combination using cash from the proceeds of our Initial Public Offering and our Private Placement, our capital stock, debt or a combination of cash, stock and debt.
On November 9, 2021, we consummated the Initial Public Offering of 25,000,000 Units, which included the partial exercise by the underwriter of its over-allotment option in the amount of 2,500,000 Units, at $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 8,000,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrants in the Private Placement to our Sponsor, generating gross proceeds of $12,000,000.
Following our Initial Public Offering and the Private Placement, a total of $255,000,000 was placed in our Trust Account. We incurred $14,566,172 in Initial Public Offering related costs, including $5,000,000 of underwriting fees, $8,750,000 of deferred underwriting fees, and $816,172 of other offering costs.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
On January 24, 2024, the SEC adopted the 2024 SPAC Rules, which became effective on July 1, 2024. The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC Business Combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and Business Combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed Business Combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial Business Combination and may increase the costs and time related thereto.
Recent Developments
On July 18, 2024, the Second Promissory Note was amended and restated to increase the principal balance available under the Second Promissory Note from $400,000 to $900,000. The rest of the terms of the Second Promissory Note remain the same, including that the Second Promissory Note bears no interest. Since June 30, 2024, we have borrowed an additional $100,000 under the Second Promissory Note and an aggregate of $400,000 remains available to borrow under the Promissory Notes, as amended and restated.
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On July 23, 2024, we received a deficiency letter from the Nasdaq Staff notifying us that, for the preceding 30 consecutive business days, our MVLS was below the $50 million minimum requirement for continued listing on The Nasdaq Global Market pursuant to the MVLS Requirement.
The notification received had no immediate effect on our Nasdaq listing. In accordance with Nasdaq rules, we have been provided an initial period of 180 calendar days, or until January 17, 2025, to regain compliance with the MVLS Requirement. If, at any time before the Nasdaq Compliance Date, our MVLS closes at $50 million or more for a minimum of 10 consecutive business days, the Nasdaq Staff will provide us with written confirmation of compliance with the MVLS Requirement.
On July 29, 2024, we issued an aggregate of 3,249,999 shares of Class A Common Stock to the Founder Share Holders upon the conversion of an equal number of shares of Class B Common Stock held by the Founder Share Holders. The shares of Class A Common Stock issued in connection with the 2024 Founder Share Conversion are subject to the same restrictions applicable to the shares of Class B Common Stock prior to the 2024 Founder Share Conversion, including certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of a Business Combination, as described in the IPO Registration Statement. Following the 2024 Founder Share Conversion there are 6,932,523 shares of Class A Common Stock issued and outstanding and one share of Class B Common Stock issued and outstanding.
The shares of Class A Common Stock issued upon the 2024 Founder Share Conversion have not been registered under the Securities Act in reliance on the exemption from registration provided by Section 3(a)(9) thereof.
We effected the 2024 Founder Share Conversion to regain compliance with the MVLS Requirement.
Extensions of Our Combination Period
On May 5, 2023, we held the First Special Meeting, to, among other things, amend the Amended and Restated Charter to (i) extend the Combination Period from May 9, 2023 to May 9, 2024 and (ii) remove the limitation that we may not redeem Public Shares to the extent that such redemption would result in us having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act), of less than $5,000,001. Our stockholders approved the First Extension Amendment Proposal and the Redemption Limitation Amendment Proposal at the First Special Meeting and on May 5, 2023, we filed the required amendments to the Amended and Restated Charter with the Secretary of State of Delaware.
In connection with the vote to approve the First Extension Amendment Proposal and the Redemption Limitation Amendment Proposal, Public Stockholders elected to redeem an aggregate of 19,732,125 Public Shares for cash at a redemption price of approximately $10.41 per share, for an aggregate redemption amount of approximately $205,478,750 in the 2023 Redemptions.
On May 9, 2024, we held the Second Special Meeting, to amend the Amended and Restated Charter to extend the Combination Period from May 9, 2024 on a monthly basis, up to six (6) times, until November 9, 2024, or such earlier date as may be determined by the Board. Our stockholders approved the Second Extension Amendment Proposal at the Second Special Meeting and on May 9, 2024, we filed the required amendment to the Amended and Restated Charter with the Secretary of State of Delaware.
In connection with the vote to approve the Second Extension Amendment Proposal, Public Stockholders elected to redeem an aggregate of 4,585,351 Public Shares for cash at a redemption price of approximately $10.89 per share, for an aggregate redemption amount of approximately $49.95 million in the 2024 Redemptions. Following the 2024 Redemptions, we have 682,524 Public Shares outstanding.
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We may seek to further extend the Combination Period consistent with applicable laws, regulations and stock exchange rules. Such an extension would require the approval of our Public Stockholders, who will be provided the opportunity to redeem all or a portion of their Public Shares. Such redemptions will likely have a material adverse effect on the amount held in our Trust Account, our capitalization, principal stockholders and other impacts on our Company, such as our ability to maintain our listing on Nasdaq.
2023 Founder Share Conversion
On May 5, 2023, we issued an aggregate of 3,000,000 shares of Class A Common Stock to the Sponsor upon the conversion of an equal number of shares of Class B Common Stock held by the Sponsor as Founder Shares. The 3,000,000 shares of Class A Common Stock issued in connection with the 2023 Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the 2023 Founder Share Conversion. As a result of the 2023 Founder Share Conversion, the 2023 Redemptions and the 2024 Redemptions, we had an aggregate of (x) 3,682,524 shares of Class A Common Stock and (y) 3,250,000 shares of Class B Common Stock issued and outstanding at June 30, 2024.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through June 30, 2024 were organizational activities, those necessary to prepare for our Initial Public Offering and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on cash and marketable securities held in our Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and other expenses in connection with searching for, and completing, a Business Combination.
For the three months ended June 30, 2024, we had a net loss of $263,400, which consisted of operating costs of $562,652 and a provision for income taxes of $68,384, offset by interest earned on cash and marketable securities held in Trust Account of $367,636.
For the three months ended June 30, 2023, we had net income of $808,809, which consisted of interest earned on marketable securities held in the Trust Account of $1,697,318, offset by operating and formation costs of $464,598, a change in unrealized loss on marketable securities held in the Trust Account of $98,701 and a provision for income taxes of $325,210.
For the six months ended June 30, 2024, we had a net loss of $63,777, which consisted of operating costs of $961,907 and a provision for income taxes of $214,288, offset by interest earned on cash and marketable securities held in the Trust Account of $1,112,418.
For the six months ended June 30, 2023, we had net income of $2,719,695, which consisted of interest earned on marketable securities held in the Trust Account of $4,416,657, offset by operating and formation costs of $790,464 and a provision for income taxes of $906,498.
Factors That May Adversely Affect our Results of Operations
Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.
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Liquidity, Capital Resources and Going Concern
For the six months ended June 30, 2024, cash used in operating activities was $908,085. Net loss of $63,777 was affected by interest income on cash and marketable securities held in the Trust Account of $1,112,418. Changes in operating assets and liabilities provided $268,110 of cash for operating activities.
For the six months ended June 30, 2023, cash used in operating activities was $1,489,010. Net income of $2,719,695 was affected by interest income on marketable securities held in the Trust Account of $4,416,657 and a deferred tax provision of $148,862. Changes in operating assets and liabilities provided $356,814 of cash for operating activities.
As of June 30, 2024, we had cash and marketable securities held in the Trust Account of $7,486,644 (including approximately $525,000 of interest income) consisting of cash held in a demand deposit account. Interest income on the balance in the Trust Account may be used by us to pay taxes. From our inception through June 30, 2024, we have withdrawn an aggregate of $2,663,682 of interest earned from the Trust Account to pay tax obligations, in which $2,470,403 was used to pay for taxes and $193,279 was restricted cash to pay for taxes.
We plan to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable and up to $100,000 of interest to pay dissolution expenses), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of June 30, 2024, we had cash held outside the Trust Account of $206,179, of which $193,279 was restricted to pay for taxes. We use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
On September 15, 2023, we issued the First Promissory Note in the principal amount of $300,000 to the Sponsor. The First Promissory Note bears no interest and was amended and restated on May 20, 2024 to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of our liquidation. We agreed with the Sponsor that we may request up to $300,000 for costs reasonably related to the Business Combination. The principal of the First Promissory Note may be drawn down upon written request from us to the Sponsor. Each such request must state the amount to be drawn down, and must not be an amount less than $1,000, unless agreed upon by us and the Sponsor. As of June 30, 2024 and December 31, 2023, there was $290,000 outstanding under the First Promissory Note.
On March 7, 2024, we issued the Second Promissory Note to our Sponsor to borrow up to $400,000. The Second Promissory Note bears no interest and was amended and restated on May 20, 2024 to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of our liquidation. The principal balance may be prepaid at any time. As of June 30, 2024 there was $400,000 outstanding under the Second Promissory Note.
As of June 30, 2024 and December 31, 2023, respectively, there was an aggregate of $690,000 and $290,000 outstanding under the Promissory Notes.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us Working Capital Loans as may be required. If we complete a Business Combination, we would repay such Working Capital Loans. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such Working Capital Loans, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant. Any warrants issued upon conversion of the Working Capital Loans would be identical to the Private Placement Warrants.
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We may need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors, or third parties. Our officers, directors and our Sponsor may, but are not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. In addition, in connection with our assessment of going concern considerations in accordance with FASB ASU Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have until November 9, 2024 to consummate the proposed Business Combination, if all available six monthly extensions are utilized. It is uncertain that we will be able to consummate the proposed Business Combination by this time. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date that the unaudited condensed financial statements included in this Report under “Item 1. Financial Statements” were issued. The unaudited condensed financial statements included in this Report under “Item 1. Financial Statements” do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.
To mitigate the risk of being viewed as operating an unregistered investment company, on April 12, 2024, we instructed Continental, the trustee with respect to the Trust Account, to liquidate the Treasury obligations or money market funds held in the Trust Account and thereafter to maintain the funds in the Trust Account in cash in an interest-bearing demand deposit account at a bank until the earlier of the consummation of a Business Combination and our liquidation. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities. Interest on such deposit account is currently 4.5% per annum, but such deposit account carries a variable rate and we cannot assure our stockholders that such rate will not decrease or increase significantly.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities that would be considered off-balance sheet arrangements as of June 30, 2024. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as “variable interest entities”, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the Administrative Support Agreement, pursuant to which, we pay our Sponsor a total of up to $20,000 per month for, among other things, the provision of the services of one or more investment professionals, who may be related parties of our Sponsor or of one of our executive officers.
The underwriter of the Initial Public Offering is entitled to a deferred fee of $0.35 per Unit, or $8,750,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the Underwriting Agreement.
In connection with the First Special Meeting, we entered into share transfer agreements with the Sponsor and several holders of Public Shares, pursuant to which such holders agreed not to redeem an aggregate of 5,000,000 shares of Class A Common Stock. In exchange for the foregoing commitments not to redeem such Public Shares, the Sponsor agreed to forfeit and surrender to us, for no consideration, an aggregate of 1,500,000 shares of Class A Common Stock and Class B Common Stock held by the Sponsor, at the closing of the initial Business Combination, and we agreed to issue an aggregate of 1,500,000 shares of Class A Common Stock to such holders at such time.
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Critical Accounting Estimates
The preparation of the unaudited condensed financial statements included in this Report under “Item 1. Financial Statements” requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed financial statements included in this Report under “Item 1. Financial Statements”. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Such estimates may be subject to change as more current information becomes available and, accordingly, actual results may differ from these estimates under different assumptions or conditions.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our unaudited condensed financial statement that require estimation but are not deemed critical, as defined above.
As of the end of the reporting period, we have not identified any critical accounting estimates.
Recent Accounting Standards
In June 2016, the FASB issued ASU Topic 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the unaudited condensed financial statements and notes thereto included in this Report under “Item 1. Financial Statements”.
In December 2023, the FASB issued ASU Topic 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. Management does not believe the adoption of ASU 2023-09 will have a material impact on the unaudited condensed financial statements and notes thereto included in this Report under “Item 1. Financial Statements”.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements included in this Report under “Item 1. Financial Statements”.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to Management, including our Chief Executive Officer and Chief Financial Officer (the “Certifying Officer”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
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Under the supervision and with the participation of our Management, including our Certifying Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officer concluded that our disclosure controls and procedures were not effective as of the end of the quarterly period ended June 30, 2024, due to (i) identified material weaknesses in our internal controls over financial reporting related to properly recording and accruing expenses, as disclosed in our 2023 Annual Report and (ii) a material weakness identified during the December 31, 2023 audit related to proper safeguarding of Trust Account assets, reporting of appropriate disclosure and monitoring process over the use of Trust Account funds. As a result, we performed additional analysis as deemed necessary to ensure that our unaudited condensed financial statements included in this Report under “Item 1. Financial Statements” were prepared in accordance with GAAP. Accordingly, Management believes that the unaudited condensed financial statements included in this Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented. As of June 30, 2024, the identified material weaknesses in our internal controls over financial reporting have not yet been remediated.
In light of this material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements including making greater use of third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there have been no changes to our internal control over financial reporting during the quarterly period ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our Management, there is no material litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations, other than as set forth below, see the section titled “Risk Factors” contained in our (i) IPO Registration Statement, (ii) 2023 Annual Report, 2022 Annual Report and 2021 Annual Report, (iii) Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2022 and March 31, 2022, as filed with the SEC on May 21, 2024, August 10, 2022 and May 13, 2022, respectively, and (iv) Definitive Proxy Statement on Schedule 14A, as filed with the SEC on April 18, 2024 Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
If we fail to consummate our initial Business Combination by November 4, 2024, our securities will be suspended from trading on Nasdaq and subject to potential delisting, which may have a material adverse effect on the trading of our securities and our ability to consummate an initial Business Combination.
Our IPO Registration Statement was declared effective by the SEC on November 4, 2021 and our securities are currently listed on the Nasdaq Global Market. Pursuant to our Amended and Restated Charter, we have until November 9, 2024 if all monthly extensions are implemented (or such earlier date as determined by the Board) to consummate our initial Business Combination. Nasdaq’s rules and guidance currently provide that SPACs (such as us) must satisfy certain listing conditions, including that a SPAC must complete one or more Business Combinations meeting certain conditions within 36 months of the effectiveness of its initial public offering registration statement (the “36-Month Requirement”). If a SPAC does not meet the 36-Month Requirement, it will receive a Staff Delisting Determination from Nasdaq which, among other things, informs the SPAC that (i) its securities will be suspended as of a date certain; (ii) it has a right to request review of the Staff Delisting Determination by a Hearings Panel; and (iii) a timely request for such review will stay the suspension and delisting action pending the issuance of a written decision of the Hearings Panel. The Hearings Panel may, where it deems appropriate, grant an exception to the continued listing standards for a period not to exceed 180 days from the date of the Staff Delisting Determination. The basis for the Staff Delisting Determination may be cured if, for example, a SPAC completes an initial Business Combination during the period of the stay.
On July 8, 2024, Nasdaq filed with the SEC a proposal to change the rules applicable to the foregoing procedures (the “Proposed Nasdaq Rules”) that includes removing the stay referred to above so that a SPAC’s securities will be immediately suspended from trading on Nasdaq through the pendency of the Hearings Panel’s review. In addition, under the Proposed Nasdaq Rules, the scope of the Hearings Panel’s review would be limited, as the Hearings Panel may only reverse a Staff Delisting Determination where it determines that the Staff Delisting Determination was in error and that the SPAC never failed to satisfy the 36-Month Requirement. In such cases, the Hearings Panel would not be able to consider facts indicating that the SPAC had regained compliance since the date of the Staff Delisting Determination, nor may the Hearings Panel grant an exception allowing the SPAC additional time to regain compliance. If a SPAC completes a Business Combination after receiving a Staff Delisting Determination and/or demonstrates compliance with all applicable initial listing requirements, the combined company could apply to list its securities on Nasdaq pursuant to the normal application review process. The Proposed Nasdaq Rules contained a list of deficiencies that would immediately result in a Staff Delisting Determination, which includes noncompliance with the 36-Month Requirement.
On July 15, 2024, the SEC issued a release approving the immediate effectiveness of the Proposed Nasdaq Rules. The Proposed Nasdaq Rules will become operative on October 7, 2024.
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Accordingly, unless we are able to consummate our initial Business Combination on or prior to November 4, 2024, our securities will be suspended from trading on Nasdaq and subject to potential delisting. If Nasdaq were to suspend our securities from trading, or delist our securities, our securities could potentially be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | our ability to complete an initial Business Combination with a target company contemplating a Nasdaq listing, as we would be a less attractive acquiror absent a listing on a national exchange; |
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A Common Stock is a “penny stock,” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
In addition, if our securities are delisted from Nasdaq, offers and sales of our securities by us may be subject to regulation and we may be subject to additional compliance costs in each state in which we offer or sell our securities.
Our Public Stockholders’ exercise of redemption rights with respect to a large number of Public Shares in the 2023 Redemptions and 2024 Redemptions may affect our ability to complete an initial Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all.
Over the past two years, the redemption rate of shares held by public stockholders of SPACs at the time of a stockholder meeting that approves an amendment to the charter of the SPAC or the initial Business Combination of the SPAC has been very high, thereby increasing the likelihood that we, too, may be subject to significant redemptions that may affect our ability to complete an initial Business Combination.
In connection with the (i) First Special Meeting, 19,732,125 Public Shares were redeemed at a price per Public Share of approximately $10.41, and (ii) Second Special Meeting, 4,585,351 Public Shares were redeemed at a price per Public Share of approximately $10.89, thereby reducing the number of outstanding Public Shares to 682,524, and reducing the total amount held in the Trust Account to approximately $7,486,644 (as of June 30, 2024).
Due to the high rates of redemptions of Public Shares in connection with stockholder votes on extensions or Business Combinations of SPACs, we may need to rely upon significant PIPE or other outside financing to provide cash to our post- Business Combination company. Obtaining financing in connection with initial Business Combinations of SPACs has in recent times been very difficult, with many financings available only on terms that are onerous to the surviving company of the Business Combination. The failure to secure additional financing on reasonable terms could have a material adverse effect on the continued development or growth of the target business. None of the Sponsor or our other stockholders is required to provide any financing to us in connection with or after our initial Business Combination. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels or on onerous terms. The above considerations may limit our ability to complete a Business Combination in the most desirable manner that will optimize the capital structure of the combined company, or at all. If we are unable to complete an initial Business Combination, our Public Stockholders may only receive approximately $10.95 per Public Share on the liquidation of our Trust Account (as of June 30, 2024, net of taxes paid or payable), and our Warrants will expire worthless. In certain circumstances, our Public Stockholders may receive less than $10.95 per share on the redemption of their Public Shares.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
There were no sales of unregistered securities during the quarterly period covered by the Report. However, on July 29, 2024 we issued an aggregate of 3,249,999 shares of Class A Common Stock to the Founder Share Holders, upon the conversion of an equal number of shares of Class B Common Stock held by the Founder Share Holders in the 2024 Founder Share Conversion. For more information on the 2024 Founder Share Conversion, see “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
Use of Proceeds
For a description of the use of proceeds generated in our Initial Public Offering and Private Placement, see Part II, Item 2 of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, as filed with the SEC on December 20, 2021.There has been no material change in the planned use of proceeds from our Initial Public Offering and Private Placement as described in the IPO Registration Statement. The specific investments in our Trust Account may change from time to time.
On April 12, 2024, we instructed Continental to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in an interest-bearing demand deposit account at a bank, with Continental continuing to act as trustee, until the earlier of the consummation of our initial Business Combination or our liquidation. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering and Private Placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On May 9, 2024, we held the 2024 Special Meeting and our stockholders approved, among other things, the Second Extension Amendment Proposal, which extended the date by which we must consummate a Business Combination from May 9, 2024 on a monthly basis, up to six (6) times, until November 9, 2024, or such earlier date as may be determined by the Board. In connection with the vote to approve the Second Extension Amendment Proposal, Public Stockholders holding 4,585,351 Public Shares properly exercised their right to redeem such Public Shares for a pro rata portion of the funds in the Trust Account. We paid cash in the aggregate amount of approximately $49,949,579, or approximately $10.89 per share to such redeeming Public Stockholders in the 2024 Redemptions.
The following table contains monthly information about the repurchases of our equity securities for the three months ended June 30, 2024:
| Period | (a) Total number of shares (or units) purchased | (b) Average price paid per share (or unit) | (c) Total number of shares (or units) purchased as part of publicly announced plans or programs | (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs | ||||||||||||
| April 1 – April 30, 2024 | — | — | — | — | ||||||||||||
| May 1 – May 31, 2024 | 4,585,351 | $ | 10.89 | — | — | |||||||||||
| June 1 – June 30, 2024 | — | — | — | — | ||||||||||||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Trading Arrangements
During the quarterly period
ended June 30, 2024,
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Additional Information
On July 18, 2024, the Second Promissory Note was amended and restated to increase the principal balance available under the Second Promissory Note from $400,000 to $900,000. The rest of the terms of the Second Promissory Note remain the same, including that the Second Promissory Note bears no interest. Since June 30, 2024, we have borrowed an additional $100,000 under the Second Promissory Note and an aggregate of $400,000 remains available to borrow under the Second Promissory Note, as amended and restated.
The issuance of the Second Promissory Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The foregoing description is qualified in its entirety by reference to the Second Promissory Note, a copy of which is filed as Exhibit 10.1 to the Report, respectively, and is incorporated herein by reference.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Report.
| No. | Description of Exhibit | |
| 10.1 | Second Amended and Restated Second Promissory Note issued to New Providence Acquisition II LLC on July 18, 2024.* | |
| 31.1 | Certification of the Principal Executive and Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 32.1 | Certification of the Principal Executive and Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
| 101.INS | Inline XBRL Instance Document.* | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |
| 104 | Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).* |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: August 14, 2024 | By: | /s/ Gary P. Smith |
| Name: | Gary P. Smith | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, Accounting and Financial Officer) |
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