Financial Overview - The company completed its Initial Public Offering on November 4, 2024, raising gross proceeds of $172.5 million from the sale of 17,250,000 Public Units at a price of $10.00 per Unit [25]. - An additional $6.48 million was generated from the private sale of 648,375 Private Placement Units, bringing total funds in the Trust Account to approximately $173.36 million [26][27]. - The Trust Account holds approximately $174.58 million as of December 31, 2024, available for a Business Combination [39]. - The company has available funds for a Business Combination amounting to $174,580,335 as of December 31, 2024, assuming no redemptions and before payment of any Deferred Discount or taxes [69]. - The expected pro rata redemption price for Public Shares is approximately $10.12 as of December 31, 2024, before taxes [133]. - The amount in the Trust Account was $10.12 per Public Share as of December 31, 2024, before taxes payable [83]. - The company placed $173,362,500 in its Trust Account from the proceeds of the Initial Public Offering and Private Placement [133]. - A total of $173,362,500 was placed in the Trust Account after the IPO and private placement, with offering expenses amounting to $10,113,129 [165]. - As of December 31, 2024, the company had cash of $1,237,201 outside the Trust Account for operational expenses and due diligence on target businesses [167]. Business Combination Strategy - The company must complete its initial Business Combination by November 4, 2026, which is 24 months from the IPO closing date [28]. - The company aims to provide an alternative path to public listing for target businesses, which may be less expensive and more certain than traditional IPOs [36]. - The company intends to structure its initial Business Combination so that the post-transaction entity will own or acquire 100% of the equity interests or assets of the target business [63]. - The initial Business Combination must have an aggregate fair market value of at least 80% of the assets held in the Trust Account, excluding certain deductions [62]. - The company may seek additional financing through private offerings of debt or equity securities to complete its initial Business Combination [56]. - If the initial Business Combination involves multiple target businesses, the 80% Test will be based on the aggregate value of all transactions [64]. - The company does not intend to purchase multiple businesses in unrelated industries in conjunction with its initial Business Combination [65]. - The company may incur losses if the identification and evaluation of a target business do not lead to a completed Business Combination [54]. - The company may apply any balance of cash released from the Trust Account for general corporate purposes if not all funds are used for the Business Combination [57]. - The company may seek to extend the Combination Period if it cannot consummate its initial Business Combination by November 4, 2026, which could reduce the amount held in its Trust Account [128]. Shareholder Approval and Redemption Rights - To approve the initial Business Combination, 5,191,813 or 30.01% of the 17,250,000 Public Shares sold in the IPO must be voted in favor [91]. - Shareholder approval is required if the transaction involves issuing more than 20% of the outstanding Ordinary Shares or amending the Amended and Restated Charter [85]. - The redemption rights allow Public Shareholders to redeem their shares at the per-share price based on the Trust Account amount, regardless of their voting decision [83]. - If shareholder approval is not required, the company may conduct redemptions without a vote, following the tender offer rules [86]. - Public Shareholders are restricted from redeeming more than 15% of the Public Shares sold in the Initial Public Offering without prior consent, aimed at preventing large block accumulations [94]. - The redemption process requires Public Shareholders to tender their certificates or deliver their Public Shares electronically, with a nominal cost of approximately $100.00 for the tendering process [98]. - If the initial Business Combination is not completed, Public Shareholders who elected to redeem their shares will not be entitled to redeem for their pro rata share of the Trust Account [101]. - The company will not complete the initial Business Combination if the cash required for redemptions exceeds the available cash [93]. Management and Governance - The management team has experience in building and operating multi-billion dollar companies, which is expected to aid in identifying suitable Business Combination targets [38]. - The company currently has two officers and does not plan to hire full-time employees before completing its initial Business Combination, relying on the management team's discretion for time allocation [114]. - The company has adopted a Code of Business Conduct and Ethics applicable to directors, officers, and employees [213]. - The Audit Committee consists of Matthew Hong, Jennifer Vescio, and Josh Gold, with Matthew Hong qualifying as an "audit committee financial expert" as per SEC rules [206]. - The Compensation Committee, chaired by Jennifer Vescio, is responsible for reviewing and approving the CEO's compensation and other executive remuneration plans [208]. - The company has not established specific minimum qualifications for directors but considers educational background, professional experience, and integrity in the nomination process [212]. - The company intends to form a corporate governance and nominating committee as required by law or Nasdaq Rules [210]. - The Audit Committee is tasked with overseeing the integrity of financial statements and compliance with legal and regulatory requirements [208]. Risks and Challenges - Intense competition from other SPACs and private investors may complicate the search for attractive acquisition targets [40]. - The company faces intense competition from established entities, including private investors and other blank check companies, which may limit its ability to acquire sizable target businesses due to relatively limited financial resources [113]. - The company may face significant dilution for Public Shareholders if additional funds are raised through equity or convertible debt issuances [61]. - The company may face risks related to competition for attractive target businesses, which could increase costs and hinder its ability to complete an initial Business Combination [127]. - Adverse developments in the financial services industry or geopolitical conflicts could negatively impact the company's ability to consummate its initial Business Combination [130]. Financial Reporting and Compliance - The company is required to file annual, quarterly, and current reports with the SEC, ensuring transparency and compliance with financial reporting standards [115]. - Audited financial statements of prospective target businesses will be provided to shareholders, which may limit the pool of potential acquisition candidates if targets cannot meet these requirements [116]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements, which may affect the attractiveness of its securities to investors [121]. - The company will remain an emerging growth company until it meets specific revenue or market value thresholds, including total annual gross revenue of at least $1.235 billion or a market value of Class A Ordinary Shares held by non-affiliates exceeding $700 million [123]. - The company is subject to the Nasdaq 36-Month Requirement, needing to complete its initial Business Combination by October 31, 2027, to avoid delisting [158]. - The company has not generated any operating revenues to date and does not expect to until after the completion of its Business Combination [159]. - The company incurred formation and operating costs of $175,611 during the same period [160]. - The company has not paid any cash dividends and does not intend to do so prior to the completion of its initial Business Combination [149]. Insider Trading and Compensation Policies - The company has adopted an Insider Trading Policy to restrict insiders from purchasing securities during blackout periods [76]. - The company adopted the Executive Compensation Clawback Policy on October 22, 2024, to comply with the SEC Clawback Rule and Nasdaq Rules [218]. - The Clawback Policy mandates recovery of erroneously awarded incentive-based compensation from current and former executive officers if an accounting restatement is required [219]. - The recovery applies regardless of misconduct and covers a lookback period of three completed fiscal years preceding the accounting restatement [219]. - No cash compensation has been paid to directors or officers; however, the company pays an affiliate of its Sponsor $10,000 per month for office space and administrative services [221]. - After the initial Business Combination, compensation for directors or management team members will be disclosed to shareholders, although the exact amounts may not be known at that time [222]. - The Audit Committee reviews all payments made to the Sponsor, directors, and officers on a quarterly basis [221]. - The company is required to prepare a report on executive compensation for inclusion in the annual proxy statement [217].
Newbury Street II Acquisition Corp(NTWO) - 2024 Q4 - Annual Report