UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
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(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐Accelerated filer |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of August 5, 2021, there were
NEWBURY STREET ACQUISITION CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION | |||
Item 1. Financial Statements | |||
1 | |||
2 | |||
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4 | |||
5 | |||
1
NEWBURY STREET ACQUISITION CORPORATION
UNAUDITED CONDENSED BALANCE SHEET
As of June 30, 2021
ASSETS |
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Current Assets | |||
Cash | $ | | |
Prepaid expenses - current |
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Total Current Assets | | ||
Cash held in Trust Account | | ||
Prepaid expenses - non-current | | ||
Total Assets | $ | | |
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities | |||
Promissory note - related party | $ | | |
Total Current Liabilities | | ||
Derivative warrant liabilities | | ||
Total Liabilities |
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Commitments and Contingencies |
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Common stock subject to possible redemption; | | ||
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STOCKHOLDERS' EQUITY |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders' Equity | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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NEWBURY STREET ACQUISITION CORPORATION
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Period from | ||||||
January 15, 2021 | ||||||
Three Months | (commencement of | |||||
Ended | operations) through | |||||
June 30, 2021 | June 30, 2021 | |||||
Operating costs | $ | | $ | | ||
Loss from operations | ( | ( | ||||
Other income: |
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Change in fair value of derivative warrant liabilities | ( | ( | ||||
Reclassification of warrants transaction costs | — | | ||||
Dividend income | | | ||||
Net loss | $ | ( | $ | ( | ||
Weighted average shares outstanding, basic and diluted |
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Basic and diluted net loss per share of common stock | $ | ( | $ | ( |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
NEWBURY STREET ACQUISITION CORPORATION
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the period from January 15, 2021 (commencement of operations) through June 30, 2021
Common Stock | Total | |||||||||||||
Additional Paid- | Accumulated | Stockholders’ | ||||||||||||
| Shares |
| Amount |
| in Capital |
| Deficit |
| Equity | |||||
Balance — January 15, 2021 (commencement of operations) | | $ | | $ | | $ | | $ | | |||||
Issuance of common stock to Sponsor | | | | — | | |||||||||
Surrender of common stock by Sponsor | ( | ( | | — | — | |||||||||
Sale of | | | | — | | |||||||||
Sale of | | | | — | | |||||||||
Issuance of common stock to Representative | | | ( | — | — | |||||||||
Surrender of common stock by Representative | ( | ( | | — | — | |||||||||
Forfeiture of common stock by Sponsor | ( | ( | | — | — | |||||||||
Offering Costs | — | — | ( | — | ( | |||||||||
Initial classification of derivative warrant liabilities | — | — | ( | — | ( | |||||||||
Change in value of common stock subject to possible redemption | ( | ( | ( | — | ( | |||||||||
Net loss |
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Balance - March 31, 2021 | | $ | | $ | | $ | ( | $ | | |||||
Change in value of common stock subject to possible redemption | | | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance — June 30, 2021 |
| | $ | | $ | | $ | ( | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
NEWBURY STREET ACQUISITION CORPORATION
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
For the period from January 15, 2021 (commencement of operations) through June 30, 2021
Cash Flows from Operating Activities: |
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Net loss | $ | ( | |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Change in fair value of derivative warrant liabilities | | ||
Reclassification of warrants transaction costs | ( | ||
Changes in operating assets and liabilities: |
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Prepaid expenses - current | ( | ||
Prepaid expenses - non-current | ( | ||
Net cash used in operating activities |
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Cash Flows from Investing Activities: | |||
Investment of cash held in Trust Account | ( | ||
Net cash used in investing activities | ( | ||
Cash Flows from Financing Activities: |
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Proceeds from issuance of common stock to Sponsor |
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Proceeds from sale of Units, net of underwriting discounts paid | | ||
Proceeds from sale of Private Units | | ||
Proceeds from promissory note - related party |
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Payments of offering costs |
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Net cash provided by financing activities |
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Net Change in Cash |
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Cash - Beginning of period |
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Cash - End of period | $ | | |
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Non-cash investing and financing activities: |
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Issuance of Representative Shares | $ | | |
Offering costs paid through promissory note – related party | $ | | |
Initial classification of warrant liability | $ | | |
Initial classification of common stock subject to possible redemption | $ | | |
Change in value of common stock subject to possible redemption | $ | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS
Newbury Street Acquisition Corporation (the “Company”) was incorporated in Delaware on November 6, 2020. The Company is a blank check formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
While the Company may pursue an acquisition or business combination target in any business or industry, the Company intends to focus its search on a technology business in the consumer internet or media space, including sports and entertainment verticals. In particular, the Company shall focus on disruptive, high growth companies with a global ambition that take advantage of: (a) the rise of new consumer behaviors driven by the internet or new technologies, or (b) paradigm shifts in media, sports and entertainment that give rise to disruptive new entrants here to stay for the coming decades. 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.
As of June 30, 2021, the Company had not commenced any operations. All activity for the period from January 15, 2021 (commencement of operations) through June 30, 2021 relates to the Company’s formation and the Public offering (“Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Public Offering. The Company has selected December 31 as its fiscal year end.
On March 25, 2021, the Company closed its Public Offering of
Transaction costs amounted to $
On March 30, 2021, the underwriters partially exercised their over-allotment option and purchased an additional
As a result of the underwriters’ election to partially exercise the over-allotment option, an aggregate of
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS (Continued)
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Units, 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 a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least
Upon the closing of the Public Offering on March 25, 2021, the Company deposited $
On March 30, 2021, the underwriters exercised their over-allotment option in part (see Note 6). Accordingly, on March 30, 2021, the Company consummated the sale of an additional
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. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption are recorded at redemption value and are classified as temporary equity upon the completion of the Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS (Continued)
The Company will proceed with a Business Combination 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 Certificate of Incorporation 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 Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares (defined at Note 5) and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem
The Company will have up to
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS (Continued)
The Sponsor has 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 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. 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 Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed 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 (1) $
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Correction of previously issued financial statement
The Company corrected certain line items related to the previously audited balance sheet as of March 25, 2021 in the Form 8-K filed with the SEC on March 31, 2021 related to misstatements identified in improperly applying accounting guidance on certain warrants, recognizing them as components of equity instead of a derivative warrant liability under the guidance of Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging — Contracts on an Entity’s Own Equity” (“ASC 815-40”). The following balance sheet items as of March 25, 2021 were impacted: an increase of $
NOTE 2 ─ SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statement is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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.
8
NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Emerging Growth Company (Continued)
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 an emerging growth 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 standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements 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 financial statement in conformity with GAAP requires the Company’s 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 financial statements and the reported amounts of expenses during the reporting period.
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 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 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.
Cash held in Trust Account
At June 30, 2021, substantially all of the assets held in the Trust Account were held in U.S. Treasury securities.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (‘ASC’) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable 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, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, on June 30, 2021,
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Offering Costs
Offering costs consists of underwriting, legal, accounting, and other expenses incurred through the Public Offering that are directly related to the Public Offering.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the federal depository insurance coverage of $0.25 million. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● | 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 the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
As of June 30, 2021, the carrying values of cash and accrued expenses approximate their fair values due to the short-term nature of the instruments. The Company’s marketable securities held in Trust Account are comprised of investments in U.S. Treasury securities with an original maturity of 185 days. The fair value of marketable securities held in Trust Account is determined using quoted prices in active markets.
Derivative warrant liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 ─ SIGNIFICANT ACCOUNTING POLICIES (Continued)
Derivative warrant liabilities (Continued)
The
Net Loss Per Share of Common Stock
Net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the periods. The Company had not considered the effect of the warrants sold in the Public Offering (including the consummation of the full over-allotment option) and private placement to purchase shares of common stock in the calculation of diluted income per share, because their inclusion would be anti-dilutive under the treasury stock method.
The Company’s statement of operations includes a presentation of income per share of common stock subject to redemption in a manner similar to the two-class method of income per share. Net loss per share for the period from January 15, 2021 (commencement of operations) through June 30, 2021, basic and diluted for shares of common stock were calculated by dividing the net loss $
Income Taxes
The Company complies with the accounting and reporting requirements of ASC 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were
The provision for income taxes was deemed to be de minimis for the period ended June 30, 2021.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 ─ PUBLIC OFFERING
On March 25, 2021, the Company closed on the sale of
On March 30, 2021, the underwriters exercised the over-allotment option in part and purchased an additional
NOTE 4 ─ PRIVATE UNITS
Concurrently with the closing of the Public Offering, the Sponsor and the underwriters purchased an aggregate of
As a result of the underwriters’ election to partially exercise their over-allotment option on March 30, 2021, the Sponsor and the underwriters and its designees purchased an additional
If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
NOTE 5 ─ RELATED PARTY TRANSACTIONS
Founder Shares
On January 15, 2021, the Sponsor paid $
On March 22, 2021, the Sponsor returned to the Company for no consideration, an aggregate of
Furthermore,
On March 30, 2021, as a result of the underwriters’ election to partially exercise their over-allotment option, an aggregate of
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 ─ RELATED PARTY TRANSACTIONS (Continued)
Founder Shares (Continued)
Founder Shares are subject to lock-up until the earlier of (A)
Promissory Note — Related Party
On November 23, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $
Subsequent to the balance sheet date, the Promissory Note was paid off in full on July 30, 2021.
Related Party Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Each loan would be evidenced by promissory note.
The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $
Related Party Payable
At the closing of the Public Offering, the Trust Account held an excess of $
Administrative Support Agreement
The Company has agreed to pay the Sponsor a total of $
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 ─ COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
The holders of the Founder Shares and Representative Shares, as well as the holders of the Private Units (and underlying securities) and any warrants issued in payment of Working Capital Loans made to Company (and underlying securities) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of Public Offering. The holders of a majority of these securities are entitled to make up to
The holders of a majority of the Representative Shares, Private Units and warrants issued in payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. Notwithstanding anything to the contrary, EarlyBirdCapital may only make a demand on one occasion and only during the five-year period beginning on the effective date of the registration statement of which this prospectus forms a part. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to consummation of a Business Combination; provided, however, that EarlyBirdCapital may participate in a “piggy-back” registration only during the seven-year period beginning on the effective date of the registration statement of which this prospectus forms a part.
The registration rights agreement does not contain liquidating 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 Company has granted the underwriters a 45-day option from the date of Public Offering to purchase up to
The underwriters received to an underwriting discount of $
On March 30, 2021, the underwriters partially exercised their over-allotment option to purchase an additional
In connection with the underwriters’ partial exercise of the over-allotment option on March 30, 2021, the underwriters were paid an additional cash underwriting discount of approximately $
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 ─ COMMITMENTS AND CONTINGENCIES (Continued)
Business Combination Marketing Agreement
The Company has engaged EarlyBirdCapital as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination.
The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
The Company will pay EarlyBirdCapital a cash fee for such services upon the consummation of a Business Combination in an amount equal to
Additionally, the Company will pay EarlyBirdCapital a cash fee equal to
NOTE 7 ─ STOCKHOLDERS’ EQUITY
Common Stock
Preferred Stock — The Company is authorized to issue
Common Stock — The Company is authorized to issue
On March 30, 2021, as a result of the underwriters’ election to partially exercise the over-allotment option, an aggregate of
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 ─ STOCKHOLDERS’ EQUITY (Continued)
Public Warrants
The Public Warrants will become exercisable at any time commencing
If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire
The Company may redeem the Public Warrants (excluding the Private Warrants and any warrants underlying units issued upon conversion of the Working Capital Loans):
● | in whole and not in part; |
● | at a price of $ |
● | at any time after the warrants become exercisable; |
● | upon not less than |
● | if, and only if, the reported last sale price of the shares of common stock equals or exceeds $ |
● | if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the 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 warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 ─ STOCKHOLDERS’ EQUITY (Continued)
Public Warrants (Continued)
In addition, if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
Representative Shares
In January 2021, the Company issued to EarlyBirdCapital and its designees,
On March 22, 2021,
The Company accounted for the Representative Shares as an offering cost of the Public Offering, with a corresponding credit to stockholders’ equity. The Company estimated the fair value of Representative Shares to be $
The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.
The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 ─ DERIVATIVE WARRANTS LIABILITIES
The Private Warrants will be identical to the Public Warrants underlying the Units being sold in the Public Offering, except that the Private Warrants and the shares of common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 9 ─ FAIR VALUE MEASUREMENTS
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 the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
The fair value of the Private Warrants was initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Warrants have been estimated using a Monte Carlo simulation model each measurement date. For the period from January 15, 2021 (commencement of operations) through June 30, 2021, the Company recognized a gain to the statements of operations resulting from an increase in the fair value of liabilities of $
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of June 30, 2021 by level within the fair value hierarchy:
|
| Significant |
| ||||||
Quoted Prices | Other | Significant | |||||||
in Active | Observable | Other | |||||||
Markets | Inputs | Unobservable Inputs | |||||||
Description | (Level 1) | (Level 2) | (Level 3) | ||||||
Assets: | |||||||||
U.S. Treasury securities | $ | | $ | — | $ | — | |||
$ | | $ | — | $ | — | ||||
Liabilities: |
|
|
|
|
|
| |||
Derivative warrant liabilities - Private | $ | — | $ | — | $ | | |||
$ | — | $ | — | $ | |
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NEWBURY STREET ACQUISITION CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 9 ─ FAIR VALUE MEASUREMENTS (Continued)
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period.
The estimated fair value of the Private Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at
The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
| As of June 30, 2021 | |||
Exercise Price | $ | | ||
Stock Price |
| | ||
Volatility | | % | ||
Probability of completing a Business Combination | | % | ||
Term (in years) |
| | ||
Risk-free rate |
| | % |
The change in the fair value of the derivative warrant liabilities for the period ended June 30, 2021, is summarized as follows:
Derivative warrant liabilities at March 25,2021 |
| $ | |
Issuance of Private Warrants |
| | |
Change in fair value of derivative warrant liabilities |
| | |
Derivative warrant liabilities at June 30, 2021 | $ | |
NOTE 10 ─ SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date financial statements were issued. Other than as described herein, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.
Subsequent to the balance sheet date, the Promissory Note was paid off in full on July 30, 2021.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Newbury Street Acquisition Corp. References to its “management” or its “management team” refer to its officers and directors, and references to the “Sponsor” refer to Newbury Street Acquisition Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on November 6, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate its business combination using cash from the proceeds of the initial public offering and the sale of the private units, its capital stock, debt or a combination of cash, stock and debt.
All activity through June 30, 2021 relates to its formation, initial public offering, and search for a prospective initial business combination target.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Its only activities from commencement of operations through June 30, 2021 were organizational activities and those necessary to prepare for the initial public offering, described below. We do not expect to generate any operating revenues until after the completion of its business combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the initial public offering. 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 expenses.
For the three months ended June 30, 2021, we had a net loss of $182,863, which consisted of general and administrative expenses, change in fair value of derivatives warrant liabilities and dividend income.
For the period from January 15, 2021 (commencement of operations) through June 30, 2021, we had a net loss of $195,073, which consisted of general and administrative expenses, change in fair value of derivatives warrant liabilities, reclassification of warrants transaction costs and dividend income.
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Liquidity and Capital Resources
Until the consummation of the initial public offering, its only source of liquidity was an initial purchase of common stock by the Sponsor and loans from its Sponsor.
On March 25, 2021, we consummated the initial public offering of 12,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $120,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 390,000 placement units at a price of $10.00 per placement unit in a private placement to Sponsor and EarlyBirdCapital, Inc., generating gross proceeds of $3,900,000. On March 30, 2021, the underwriters exercised the over-allotment option in part and purchased an additional 843,937 units, generating gross proceeds of $8,439,370. In connection with the underwriters’ partial exercise of the over-allotment option, the Company sold an additional 16,879 placement units at a price of $10.00 per placement unit in a private placement to Sponsor and EarlyBirdCapital, Inc., generating gross proceeds of $168,790.
Following the initial public offering and the private placement, a total of $128,439,370 was placed in the trust account. We incurred $3,006,105 in transaction costs, including $2,568,790 of underwriting fees and $437,315 of other offering costs.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete its business combination. We may withdraw interest to pay taxes. To the extent that its capital stock or debt is used, in whole or in part, as consideration to complete its 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 its growth strategies.
We intend to 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.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, its Sponsor or an affiliate of its Sponsor or certain of its officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. 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 loaned amounts, but no proceeds from its trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the placement units.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating its business. However, if its estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate its business prior to its business combination. Moreover, we may need to obtain additional financing either to complete its business combination or because we become obligated to redeem a significant number of its public shares upon consummation of its business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of its business combination. If we are unable to complete its business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following its business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet its obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2021.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than described below.
We have engaged EarlyBirdCapital, Inc. as an advisor in connection with its business combination to assist us in holding meetings with its stockholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing its securities in connection with its initial business combination, assist us in obtaining stockholder approval for the business combination and assist us with its press releases and public filings in connection with the business combination. We will pay EarlyBirdCapital, Inc. a cash fee of up to $4,200,000 for such services upon the consummation of its initial business combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 30% of the fee may be allocated at its sole discretion to other FINRA members that assist us in identifying or consummating an initial business combination. We will also pay EarlyBirdCapital, Inc. a cash fee of up to 1% of the gross proceeds from the initial public offering as a fee for introducing the Company to target companies for an initial business combination.
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the period reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on its condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures [Company to review and update with auditor]
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in its Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to its management, including its principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of its management, including its principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of its disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, its principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, its disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter ended June 30, 2021, there was no change in its internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Not required for a smaller reporting company. However, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in the Company’s final prospectus as filed with the SEC on March 25, 2021 and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021 as filed with the SEC on May 24, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
For a description of the use of the proceeds generated in our initial public offering, see Part II, Item 2 of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021. There has been no material change in the planned use of the proceeds from the Company’s initial public offering and private placement as is described in the Company’s final prospectus, dated March 25, 2021.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. |
| Description of Exhibit |
|
3.1 | Second Amended and Restated Certificate of Incorporation.(1) | ||
3.2 | |||
31.1* | |||
31.2* | |||
32.1** | |||
32.2** | |||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Labels Linkbase Document. | ||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||
104* | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit). |
*Filed herewith.
**Furnished.
(1) | Previously filed as an exhibit to its Current Report on Form 8-K filed on March 26, 2021 and incorporated by reference herein. |
(2) | Previously filed as an exhibit to its Current Report on Form S-1 filed on March 15, 2021 and incorporated by reference herein. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NEWBURY STREET ACQUISITION CORP. | |
|
|
|
Date: August 5, 2021 | By: | /s/ Thomas Bushey |
| Name: | Thomas Bushey |
| Title: | Chief Executive Officer |
|
| (Principal Executive Officer) |
|
|
|
Date: August 5, 2021 | By: | /s/ Kenneth King |
| Name: | Kenneth King |
| Title: | Chief Financial Officer |
|
| (Principal Accounting and Financial Officer) |
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