New Providence Acquisition Corp. II(NPABU) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited interim financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Interim Financial Statements This section presents the unaudited condensed financial statements, including the balance sheets, statements of operations, changes in stockholders' equity (deficit), and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial instruments Condensed Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific reporting dates Condensed Balance Sheet Highlights (June 30, 2022 vs. December 31, 2021) | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :----------------------------------- | :-------------------------- | :------------------ | | Cash | $772,239 | $1,081,525 | | Marketable securities held in Trust Account | $255,223,647 | $254,992,893 | | Total Assets | $256,417,941 | $256,638,831 | | Total Liabilities | $9,890,305 | $9,653,350 | | Class A common stock subject to possible redemption | $255,000,000 | $255,000,000 | | Total Stockholders' Deficit | $(8,472,364) | $(8,014,519) | - The company's cash decreased from $1,081,525 at December 31, 2021, to $772,239 at June 30, 2022[11] - Marketable securities held in the Trust Account slightly increased from $254,992,893 to $255,223,647, reflecting interest earned[11] Unaudited Condensed Statements of Operations This section details the company's financial performance over specific periods, outlining revenues, expenses, and net loss Condensed Statements of Operations Highlights | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Period from Jan 1, 2021 through June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :---------------------------------------------- | | Formation and operating costs | $310,187 | $65 | $654,445 | $1,065 | | Interest earned on marketable securities | $248,900 | — | $313,454 | — | | Unrealized loss on marketable securities | $(41,103) | — | $(82,700) | — | | Net loss | $(136,544) | $(65) | $(457,845) | $(1,065) | | Basic and diluted net loss per share, Class A | $(0.00) | — | $(0.01) | — | | Basic and diluted net loss per share, Class B | $(0.00) | $(0.00) | $(0.01) | $(0.00) | - The company reported a net loss of $136,544 for the three months ended June 30, 2022, and $457,845 for the six months ended June 30, 2022, primarily due to formation and operating costs, partially offset by interest income from the Trust Account[13] - Interest earned on marketable securities held in the Trust Account was $248,900 for the three months and $313,454 for the six months ended June 30, 2022[13] Unaudited Condensed Statements of Changes in Stockholders' (Deficit) Equity This section tracks changes in the company's equity or deficit over time, reflecting net income or loss and other equity transactions Changes in Stockholders' Deficit (January 1, 2022 to June 30, 2022) | Metric | January 1, 2022 | March 31, 2022 | June 30, 2022 | | :-------------------- | :-------------- | :------------- | :------------ | | Accumulated Deficit | $(8,015,144) | $(8,336,445) | $(8,472,989) | | Total Stockholders' Deficit | $(8,014,519) | $(8,335,820) | $(8,472,364) | - The accumulated deficit increased from $(8,015,144) at January 1, 2022, to $(8,472,989) at June 30, 2022, reflecting the net losses incurred[15] Unaudited Condensed Statement of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a period Condensed Statements of Cash Flows Highlights | Metric | Six Months Ended June 30, 2022 | Period from Jan 1, 2021 through June 30, 2021 | | :-------------------------------- | :----------------------------- | :---------------------------------------------- | | Net loss | $(457,845) | $(1,065) | | Net cash used in operating activities | $(309,286) | — | | Net cash provided by financing activities | — | — | | Cash – End of period | $772,239 | $0 | - Net cash used in operating activities was $309,286 for the six months ended June 30, 2022[19] - Cash at the end of the period was $772,239 as of June 30, 2022[19] Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and additional information supporting the figures presented in the condensed financial statements NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS, LIQUIDITY, AND RISKS AND UNCERTAINTIES This note describes the company's nature as a blank check company, its purpose to effectuate a business combination, details of its Initial Public Offering (IPO) and private placement, the establishment and use of the Trust Account, and the associated liquidity and going concern risks - The Company is a blank check company formed on November 16, 2020, to pursue a business combination[22] - The Initial Public Offering (IPO) on November 9, 2021, generated gross proceeds of $250,000,000 from 25,000,000 units at $10.00 per unit[25] - Simultaneously, a private placement of 8,000,000 warrants at $1.50 each generated $12,000,000[26] - A total of $255,000,000 was placed in a Trust Account, invested in U.S. government securities, to be used for a business combination or stockholder redemption[28] - The Company has until May 9, 2023, to consummate a Business Combination, and the inability to do so raises substantial doubt about its ability to continue as a going concern[41] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the significant accounting policies, including the basis of presentation, the company's status as an emerging growth company, and specific treatments for marketable securities, redeemable common stock, offering costs, income taxes, and warrants - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations[44] - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new accounting standards[46][47] - Marketable securities held in the Trust Account are classified as trading securities and presented at fair value[53] - Class A common stock subject to possible redemption is classified as temporary equity at redemption value[54] - Warrants are accounted for as equity-classified instruments based on specific terms and applicable accounting guidance[68] NOTE 3. INITIAL PUBLIC OFFERING This note details the terms of the Initial Public Offering, including the number of units sold, the price per unit, and the components of each unit (Class A common stock and redeemable warrants) - The Company sold 25,000,000 units in its IPO, including a partial exercise of the over-allotment option[72] - Each unit was sold at $10.00 and consists of one share of Class A common stock and one-third of one redeemable Public Warrant[72] - Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share[72] NOTE 4. PRIVATE PLACEMENT This note describes the private placement of warrants to the Sponsor, including the number of warrants, the purchase price, and the use of proceeds - The Sponsor purchased 8,000,000 Private Placement Warrants at $1.50 per warrant, totaling $12,000,000[74] - Proceeds from the Private Placement Warrants were added to the Trust Account[74] - If a Business Combination is not completed, Private Placement Warrants will expire worthless[74] NOTE 5. RELATED PARTY TRANSACTIONS This note details transactions with related parties, including the issuance of Founder Shares to the Sponsor and directors, an administrative support agreement, and a promissory note from the Sponsor - The Sponsor received 5,750,000 Founder Shares for $25,000, with some shares transferred to director nominees[75] - The Company pays the Sponsor up to $20,000 per month for administrative support services[78] - For the three and six months ended June 30, 2022, the Company incurred and paid $60,000 and $120,000, respectively, in administrative fees[78] - A $300,000 unsecured promissory note from the Sponsor was repaid on November 18, 2021[79] NOTE 6. COMMITMENTS AND CONTINGENCIES This note outlines the company's commitments and contingent liabilities, including registration rights for certain securities, deferred underwriting fees, and consulting service arrangements - The underwriter is entitled to a deferred fee of $8,750,000, payable upon completion of a Business Combination[84] - The Company has arrangements with third-party consultants for identification and negotiation with potential targets, incurring $30,000 and $33,000 for the three and six months ended June 30, 2022, respectively[85] NOTE 7. STOCKHOLDERS' DEFICIT This note details the authorized and outstanding shares of preferred, Class A, and Class B common stock, as well as the terms and conditions of the Public and Private Placement Warrants, including their exercisability and redemption features - As of June 30, 2022, there were 25,000,000 shares of Class A common stock subject to possible redemption and 6,250,000 shares of Class B common stock issued and outstanding[87][88] - Public Warrants (8,333,333 outstanding) become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, expiring five years from Business Combination completion[92] - Private Placement Warrants (8,000,000 outstanding) are identical to Public Warrants but are non-transferable, exercisable on a cashless basis, and non-redeemable[101] NOTE 8. FAIR VALUE MEASUREMENTS This note provides information on the fair value measurements of the company's financial assets and liabilities, classifying them according to the fair value hierarchy Fair Value of Marketable Securities Held in Trust Account | Description | Level | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :---- | :-------------- | :------------------ | | Marketable securities held in Trust Account | 1 | $255,223,647 | $254,992,376 | - Marketable securities held in the Trust Account are classified as Level 1, indicating they are valued using quoted prices in active markets for identical assets[104][105] NOTE 9. SUBSEQUENT EVENTS This note states that management evaluated subsequent events up to the financial statement issuance date and found no events requiring adjustment or disclosure - No subsequent events requiring adjustment or disclosure were identified by management[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, discussing its status as a blank check company, financial performance, liquidity, and critical accounting policies, including the identified material weakness in internal controls Overview This section provides a high-level summary of the company's formation, purpose as a blank check company, and initial financial activities - The Company is a blank check company formed to effectuate a business combination, having completed its IPO and private placement in November 2021[109][110] - A total of $255,000,000 was placed in the trust account following the IPO and private placement[111] - The Company incurred $14,566,172 in IPO-related costs, including $8,750,000 in deferred underwriting fees[111] Results of Operations This section analyzes the company's financial performance, highlighting the absence of operating revenues and the impact of formation costs and interest income on net loss - The Company has not generated operating revenues to date, with activities focused on organizational tasks, IPO preparation, and identifying a target for a business combination[112] Net Loss and Key Components | Period | Net Loss | Operating and Formation Costs | Interest Income (Trust Account) | Unrealized Loss (Trust Account) | | :------------------------------- | :--------- | :---------------------------- | :------------------------------ | :------------------------------ | | Three months ended June 30, 2022 | $(136,544) | $310,187 | $248,900 | $(41,103) | | Six months ended June 30, 2022 | $(457,845) | $654,445 | $313,454 | $(82,700) | | Three months ended June 30, 2021 | $(65) | $65 | — | — | | Jan 1, 2021 - June 30, 2021 | $(1,065) | $1,065 | — | — | Liquidity and Going Concern This section assesses the company's ability to meet its short-term obligations and continue operations, addressing cash resources, funding needs, and the uncertainty of completing a business combination - As of June 30, 2022, the Company had $772,239 in cash outside the trust account and $255,223,647 in marketable securities within the trust account[118][120] - The Company expects to use funds outside the trust account for identifying and evaluating target businesses and related due diligence[120] - The Company may need to raise additional capital through loans from its Sponsor, stockholders, officers, directors, or third parties[123] - The Company has until May 9, 2023, to consummate a Business Combination, and the uncertainty of meeting this deadline raises substantial doubt about its ability to continue as a going concern[123] Off-Balance Sheet Financing Arrangements This section confirms the absence of any off-balance sheet obligations, assets, or liabilities for the company - The Company has no obligations, assets, or liabilities considered off-balance sheet arrangements as of June 30, 2022[124] Contractual Obligations This section details the company's significant contractual commitments, including administrative support fees and deferred underwriting fees - The Company has an agreement to pay its Sponsor up to $20,000 per month for administrative support services, which commenced on November 4, 2021[125] - A deferred underwriting fee of $8,750,000 is payable to the underwriter upon completion of a Business Combination[126] Critical Accounting Policies This section outlines the key accounting policies that require significant judgment and estimation, specifically for warrants and redeemable common stock - The Company accounts for warrants as equity-classified instruments based on specific terms and applicable accounting guidance[128] - Class A common stock subject to possible redemption is classified as temporary equity at redemption value[129] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the Company is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is exempt from providing quantitative and qualitative disclosures about market risk[132] Item 4. Controls and Procedures This section discusses the evaluation of the company's disclosure controls and procedures, identifying a material weakness in internal accounting controls related to accrued expenses, and outlining remediation plans Evaluation of Disclosure Controls and Procedures This section reports on management's assessment of the effectiveness of the company's disclosure controls, noting a material weakness but affirming fair financial statement presentation - Management concluded that disclosure controls and procedures were not effective as of June 30, 2022, due to a material weakness in the accounting for accrued expenses[134] - Despite the material weakness, management believes the condensed financial statements fairly present the financial position, results of operations, and cash flows[134] Changes in Internal Control Over Financial Reporting This section outlines the company's plans to remediate the identified material weakness by enhancing accounting standard evaluation and communication with third-party professionals - The Company plans to enhance its system for evaluating and implementing accounting standards, particularly for accrued expenses, through enhanced analyses and increased communication with third-party professionals[135][138] - No other material changes in internal control over financial reporting occurred during the most recent fiscal quarter[138] PART II – OTHER INFORMATION This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The Company reported no legal proceedings - There are no legal proceedings[141] Item 1A. Risk Factors This section highlights the material weakness in internal control over financial reporting as a significant risk factor, detailing its potential adverse effects on financial reporting and investor confidence Material Weakness This section details the identified material weakness in internal control over financial reporting related to accrued expenses and its potential negative impact on the company - A material weakness in internal control over financial reporting related to accrued expenses has been identified as of June 30, 2022[143][144] - This material weakness could adversely affect investor confidence, business operations, and the ability to accurately report financial results in a timely manner[143][145] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the Initial Public Offering and the private placement of warrants, including the gross proceeds, offering costs, and the allocation of net proceeds to the trust account - The IPO generated $250,000,000 from 25,000,000 units at $10.00 per unit[146] - The Sponsor purchased 8,000,000 private placement warrants for $12,000,000[147] - Total IPO-related costs were $14,566,172, including $8,750,000 in deferred underwriting fees[148] - Net proceeds of $256,183,828 from the IPO and private placement, with $255,000,000 placed in the trust account[149] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - There were no defaults upon senior securities[151] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable[152] Item 5. Other Information The Company reported no other information - There is no other information to report[153] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report, including certifications, corporate documents, and XBRL data files - Exhibits include certifications of principal executive and financial officers, corporate documents (Amended and Restated Certificate of Incorporation, Bylaws), and Inline XBRL documents[156] SIGNATURES This section formally concludes the report with the required signatures from the company's executive officers Signatures The report is duly signed on behalf of New Providence Acquisition Corp. II by its Chief Executive Officer, Gary Smith, and Chief Financial Officer, James Bradley, on August 9, 2022 - The report was signed by Gary Smith, Chief Executive Officer, and James Bradley, Chief Financial Officer, on August 9, 2022[162]