10-Q 1 f10q0920_newbornacq.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended September 30, 2020

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                   to

 

Commission file number: 001-39230

 

NEWBORN ACQUISITION CORP.
(Exact Name of Registrant as Specified in Its Charter)
 
Cayman Islands   n/a
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Room 801, Building C

SOHO Square, No. 88

Zhongshan East 2nd Road, Huangpu District

Shanghai, China, 200002

(Address of principal executive offices)

 

+86 15502195891

(Issuer’s telephone number)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. Yes ☐ No ☒

 

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). Yes ☒ No ☐

 

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
Non-accelerated filer Smaller reporting company
    Emerging Growth Company

 

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 ☒ No ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on
which registered
Ordinary Shares, no par value   NBAC   The NASDAQ Stock Market LLC
Warrants   NBACW   The NASDAQ Stock Market LLC
Units   NBACU   The NASDAQ Stock Market LLC
Rights   NBACR   The NASDAQ Stock Market LLC

 

As of November 13, 2020, 7,460,000 ordinary shares, with a par value of $0.0001 per share, were issued and outstanding.

 

 

 

 

 

 

NEWBORN ACQUISITION CORP.

 

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020

 

TABLE OF CONTENTS

 

    Page
Part I. Financial Information 1
  Item 1. Financial Statements 1
  Condensed Balance Sheets 1
  Condensed Statements of Operations 2
  Condensed Statement of Changes in Shareholders’ Equity 3
  Condensed Statements of Cash Flows 4
  Notes to Unaudited Condensed Financial Statements 5
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
  Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk 18
  Item 4. Controls and Procedures 18
Part II. Other Information 19
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
  Item 6. Exhibits 19
Signatures 20

 

i

 

 

PART I – FINANCIAL STATEMENTS

 

Item 1. Financial Statements

 

NEWBORN ACQUISITION CORP.

CONDENSED BALANCE SHEETS

 

   September 30,
2020
   December 31,
2019
 
   (Unaudited)     
ASSETS        
         
Current assets        
Cash  $301,714   $108,667 
Prepaid expenses   46,789    - 
Deferred offering costs   -    220,996 

Total Current Assets

   

348,503

    

329,663

 
           
Cash and marketable securities held in trust account   57,894,310    - 
Total Assets  $58,242,813   $329,663 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Current Liabilities          
Accrued payables  $50,000    29,241 
Note payable to a related party   -    280,000 
Total Current Liabilities   50,000    309,241 
           
Deferred underwriting compensation   1,437,500    - 
Total Liabilities   1,487,500    309,241 
           
Commitments and Contingencies          
Ordinary shares subject to possible redemption; 5,140,269 (at redemption value of $10.0686 per share)   51,755,312    - 
           
Shareholders’ Equity          
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, none issued or outstanding   -    - 
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 2,319,731 and 1,437,500 ordinary shares issued and outstanding, respectively   232    144 
Additional paid- in capital   5,787,136    24,856 
Accumulated deficit   (787,367)   (4,578)
Total Shareholders’ Equity   5,000,001    20,422 
           
Total Liabilities and Shareholders’ Equity  $58,242,813   $329,663 

 

The accompanying notes are an integral part of the condensed financial statements

 

1

 

 

NEWBORN ACQUISITION CORP.

CONDENSED STATEMENTS OF OPERATIONS

 

   For The
Three Months
   For The
Three Months
   For The
Nine Months
   For The
Period From
April 12,
2019
(Inception)
 
   Ended   Ended   Ended   Through  
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
                 
General and administrative expenses  $97,034   $185   $1,177,099   $4,403 
Loss from operation   (97,034)   (185)   (1,177,099)   (4,403)
Other income                    
Interest income on cash and marketable securities held in trust account   87,534    -    394,310    - 
Net Loss   (9,500)   (185)   (782,789)   (4,403)
Less: income attributable to ordinary shares subject to redemption   (77,787)   -    (352,497)   - 
Adjusted net loss   (87,287)   (185)   (1,135,286)   (4,403)
Basic and diluted weighted average shares outstanding(1)   2,319,731    1,437,500    2,164,613    1,437,500 
Basic and diluted adjusted net loss per share(2)  $(0.04)  $(0.00)  $(0.52)  $(0.00)

 

(1) Excludes an aggregate of up to 5,140,269 ordinary shares subject to redemption at September 30, 2020.
(2) Excludes income attributable to ordinary shares subject to possible redemption.

 

The accompanying notes are an integral part of the condensed financial statements

 

2

 

 

NEWBORN ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

 

FOR THE PERIOD FROM APRIL 12, 2019 (INCEPTION) THROUGH SEPTEMBER 30, 2019

 

           Additional       Total 
   Ordinary Shares   Paid- in   Accumulated   Shareholders’ 
   Shares   Amount   Capital   Deficit   Equity 
                     
Balance, April 12, 2019 (Inception)   -   $-   $-   $-   $- 
Issuance of ordinary shares to initial shareholders   1,437,500    144    24,856    -    25,000 
Net loss   -    -    -    (4,218)   (4,218)
Balance, June 30, 2019   1,437,500    144   $24,856    (4,218)   20,782 
Net loss   -    -    -    (185)   (185)
Balance, September 30, 2019   1,437,500   $144   $24,856   $(4,403)  $20,597 

 

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

 

           Additional       Total 
   Ordinary Shares   Paid- in   Accumulated   Shareholders’ 
   Shares   Amount   Capital   Deficit   Equity 
                     
Balance, December 31, 2019   1,437,500    144    24,856    (4,578)   20,422 
Sales of 272,500 units at $10.00 per unit during the private placement   272,500    27    2,724,973    -    2,725,000 
Sales of 5,750,000 units at $10.00 per unit during the public offering   5,750,000    575    57,499,425    -    57,500,000 
Underwriters’ discount   -    -    (3,162,500)   -    (3,162,500)
Offering expenses   -    -    (514,910)   -    (514,910)
Proceeds from sale of underwriter’s unit purchase option   -    -    100    -    100 
Change in value of ordinary shares subject to possible redemption   (5,161,114)   (516)   (51,610,624)   -    (51,611,140)
Net income   -    -    -    43,036    43,036 
Balance, March 31, 2020   2,298,886    230    4,961,320    38,458    5,000,008 
Share-based compensation   -    -    969,990    -    969,990 
Change in value of ordinary shares subject to possible redemption   12,129    1    (153,667)   -    (153,666)
Net loss   -    -    -    (816,325)   (816,325)
Balance, June 30, 2020   2,311,015    231    5,777,643    (777,867)   5,000,007 
Change in value of ordinary shares subject to possible redemption   8,716    1    9,493    -    9,494 
Net loss   -    -    -    (9,500)   (9,500)
Balance, September 30, 2020   2,319,731   $232   $5,787,136   $(787,367)  $5,000,001 

 

The accompanying notes are an integral part of the condensed financial statements

 

3

 

 

NEWBORN ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

 

   For The
Nine Months
   For The
Period From
April 12,
2019
 
   Ended   (Inception) 
   September 30,
2020
   September 30,
2019
 
   (Unaudited)   (Unaudited) 
         
Cash flow from operating activities        
Net loss  $(782,789)  $(4,403)
Adjustments to reconcile net loss to net cash used in operating activities:          
Interest income earned in trust account   (394,310)   - 
Share-based compensation   969,990    - 
Change in operating assets and liabilities:          
Change in prepaid expenses   (46,789)   - 
Change in accrued payables   45,970    4,030 
Net cash used in operating activities   (207,928)   (373)
           
Cash flows from investing activities          
Cash deposited in trust account   (57,500,000)   - 
Net cash used in investing activities   (57,500,000)   - 
           
Cash flow from financing activities          
Proceeds from sale of units during the public offering   57,500,000    - 
Proceeds from sale of units during the private placement   2,445,000    - 
Proceeds from sale of underwriter’s unit purchase option   100    - 
Payment of costs of public offering   (2,044,125)   (190,636)
Proceeds from note payable to a related party   -    280,000 
Proceeds from sale of ordinary shares   -    25,000 
Net cash provided by financing activities   57,900,975    114,364 
           
Net increase in cash   193,047    113,991 
Cash at beginning of period   108,667    - 
Cash at end of period  $301,714   $113,991 
           
Supplemental disclosure of non-cash financing activities          
Repayment of note payable by converting into partial proceeds of private placement  $280,000   $- 

 

The accompanying notes are an integral part of the condensed financial statements

 

4

 

 

NEWBORN ACQUISITION CORP.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

September 30, 2020

 

Note 1 — Organization, Plan of Business Operations and Going Concern Consideration

 

Organization and General

 

Newborn Acquisition Corp. (the “Company” or “Newborn”) was incorporated in Cayman Islands on April 12, 2019 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although the Company initially intends to focus on operating businesses in Asia (excluding China) and the United States.

 

At September 30, 2020, the Company had not yet commenced any operations. All activities through September 30, 2020 relate to the Company’s formation, the public offering described below and its effort in seeking a target business. 

 

Financing

 

The registration statement for the Company’s Public Offering (as described in Note 3) was declared effective by the United States Securities and Exchange Commission (“SEC”) on February 13, 2020. The Company consummated the Public Offering on February 19, 2020. The Public Offering consisted of 5,750,000 units (which includes the full exercise of the over-allotment option by the underwriters in the Public Offering) at $10.00 per unit (the “Public Units’). Concurrently with the Public Offering, the Company sold to its sponsor 272,500 units at $10.00 per unit (the “Private Units”) in a private placement (as described in Note 4). The Company received net proceeds of approximately $57,989,380.

 

Trust Account

 

Upon the closing of the Public Offering and the private placement, $57,500,000 was placed in a trust account (the “Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee.

 

The funds held in the Trust Account can be invested in United States government treasury bills, bonds or notes, having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation of the Company’s initial Business Combination and (ii) the Company’s failure to consummate a Business Combination within 12 months from the closing of the Public Offering (or 18 months if expended as provided in the prospectus for the Public Offering). Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations.

 

Business Combination

 

Pursuant to Nasdaq listing rules, the Company’s Initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80% of the value of the funds in the Trust Account (excluding any deferred underwriter’s fees and taxes payable on the income earned on the Trust Account), which the Company refers to as the 80% test, at the time of the execution of a definitive agreement for its initial business combination, although the Company may structure a business combination with one or more target businesses whose fair market value significantly exceeds 80% of the trust account balance. If the Company is no longer listed on Nasdaq, it will not be required to satisfy the 80% test.

 

5

 

 

The Company currently anticipates structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. The Company may, however, structure a business combination where the Company merges directly with the target business or where the Company acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target business management team or shareholders or for other reasons, but the Company will only complete such business combination if the post-transaction company owns 50% or more of the outstanding voting securities of the target business or otherwise owns a controlling interest in the target business sufficient enough for it not to be required to register as an investment company under the Investment Company Act. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test. 

 

The Company will either seek shareholder approval of any Business Combination at a meeting called for such purpose at which shareholders may seek to convert their shares into their pro rata share of the aggregate amount in the Trust Account, less any taxes then due but not yet paid, or provide shareholders with the opportunity to sell their shares to the Company by means of a tender offer for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. These shares will be recorded at redemption value and classified as temporary equity upon the completion of the Public Offering, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination only if it will have net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, solely if shareholder approval is sought, and obtain an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company will be required to approve the business combination. 

 

The shareholders immediately prior to Public Offering (“Initial Shareholders”) have agreed (i) to vote any of their respective shares, including the ordinary shares sold to the Initial Shareholders in connection with the organization of the Company (the “Initial Shares”), ordinary shares included in the Private Units sold in the Private Placement, and any ordinary shares which were initially issued in connection with the Public Offering, whether acquired in or after the effective date of the Public Offering, in favor of the initial Business Combination and (ii) not to convert such respective shares into a pro rata portion of the Trust Account or seek to sell their shares in connection with any tender offer the Company engages in.

 

Liquidation

 

Pursuant to the Company’s Certificate of Incorporation, if the Company is unable to complete its initial Business Combination within 12 months from the date of the Public Offering, 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 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of Ordinary Shares and the Company’s board of directors, dissolve and liquidate. However, if the Company anticipates that it may not be able to consummate its initial business combination within 12 months, the Company may, but is not obligated to, extend the period of time to consummate a business combination up to two times, each by an additional three months (for a total of up to 18 months to complete a business combination). Pursuant to the terms of the Company’s amended and restated articles of incorporation and the trust agreement, in order to extend the time available for the Company to consummate its initial business combination, the Company’s insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the trust account $575,000 ($0.10 per share), on or prior to the date of the applicable deadline, up to an aggregate of $1,150,000, or $0.20 per share. The insiders will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that the Company is unable to close a business combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of the Company’s initial business combination, or, at the lender’s discretion, converted upon consummation of the Company’s business combination into additional private units at a price of $10.00 per unit. The Company’s shareholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of the Company’s initial business combination. In the event that the Company receives notice from its insiders five days prior to the applicable deadline of their intent to effect an extension, the Company intends to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, the Company intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Company’s insiders and their affiliates or designees are not obligated to fund the trust account to extend the time for the Company to complete its initial business combination. To the extent that some, but not all, of the Company’s insiders, decide to extend the period of time to consummate its initial business combinations, such insiders (or their affiliates or designees) may deposit the entire amount required. If the Company is unable to consummate an initial Business Combination and is forced to redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a pro rata portion of the amount then in the Trust Account. Holders of rights will receive no proceeds in connection with the liquidation. The Initial Shareholders and the holders of Private Units will not participate in any redemption distribution with respect to their Initial Shares and Private Units, including the Ordinary Shares included in the Private Units.

 

6

 

 

To the extent that the Company is unable to consummate a business combination, it will pay the costs of liquidation from the remaining assets outside of the trust account. If such funds are insufficient, NeoGenesis Holding Co., Ltd., the Company’s sponsor, has agreed to pay the funds necessary to complete such liquidation and have agreed not to seek repayment of such expenses.

 

Emerging Growth Company

 

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) permits emerging growth companies to delay complying with new or revised financial accounting standards that do not yet apply to 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). 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 an 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 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.

 

Note 2 — Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting, the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all of the information and notes required by GAAP for complete financial statements. The unaudited condensed financial information should be read in conjunction with the audited financial statements and the notes thereto for the period from April 12 (inception) through December 31, 2019.

 

In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results to be expected for a full year.

 

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.

 

7

 

 

Cash and Marketable Securities Held in Trust Account

 

At September 30, 2020, the assets held in the Trust Account was consisted of $57,894,310 in money market fund. The investment in money market fund is recorded at fair value.

 

Ordinary Shares Subject to Possible Redemption

 

The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares 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 September 30, 2020, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

 

Offering Costs

 

The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to shareholders’ equity upon the completion of the Public Offering. Accordingly, on February 19, 2020, offering costs with a total amount of $3,677,410 have been charged to shareholders’ equity (consisting of $3,162,500 in underwriters’ fees, plus $514,910 of other cash expenses).

 

Fair Value of Financial Instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

 

Use of Estimates

 

The preparation of financial statement in conformity with U.S. 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 financial statement and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

 

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 $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

8

 

 

Income Taxes

 

The Company accounts for income taxes under ASC 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 financial statement 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.

 

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement 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. The Company has identified Cayman Islands as its only “major” tax jurisdiction, as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statement. Since the Company was incorporated on April 12, 2019, the evaluation was performed for 2019 tax year which was the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

 

The Company may be subject to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws.

 

The Company’s tax provision is zero and it has no deferred tax assets. The Company is considered to be an exempted Cayman Islands company, and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.

 

Recent Accounting Pronouncements

 

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 financial statement.

 

Note 3 — Public Offering

 

Public Unit

 

On February 19, 2020, the Company sold 5,750,000 units at a price of $10.00 per Public Unit in the Public Offering (which includes the full exercise of the underwriter’s over-allotment option). Each Unit consists of one share of ordinary shares in the Company, one warrant (“Warrant”) and one right (“Right”) (see Note 8).

 

The Company paid an up-front underwriting discount of $1,725,000 (3.0% of the gross offering proceeds) to the underwriter at the closing of the Public Offering, with an additional fee of $1,437,500 (the “Deferred Discount”, which represents 2.5% of the gross offering proceeds). The Deferred Discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes its Business Combination. In the event that the Company does not close a Business Combination, the underwriter has waived its right to receive the Deferred Discount. The underwriter is not entitled to any interest accrued on the Deferred Discount.

 

Purchase Option

 

On February 19, 2020, the Company sold to the underwriters, for $100, a unit purchase option to purchase up to a total of 316,250 units at $11.50 per Unit (or an aggregate exercise price of $3,636,875) commencing on the close of the consummation of a Business Combination. The unit purchase option expires five years from the effective date of the registration statement relating to the Public Offering. The units issuable upon exercise of this option are identical to the Units being offered in the Public Offering. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy back” registration rights for periods of five and seven years, respectively, from the effective date of this Public Offering, including securities directly and indirectly issuable upon exercise of the unit purchase option.

 

9

 

 

The Company has accounted for the fair value of the unit purchase option, inclusive of the receipt of a $100 cash payment, as an expense of the Public Offering resulting in a charge directly to shareholders’ equity. The Company estimates that the fair value of this unit purchase option is approximately $428,906 using a Black-Scholes option-pricing model adjusted for the likelihood of a completed Business Combination. The fair value of the unit purchase option granted to the placement agent is estimated as of the date of grant using the following assumptions: (1) expected volatility of 31.00%, (2) risk-free interest rate of 2.19% and (3) expected life of five years, (4) estimated possibility of 52.1% for consummation of initial business combination.

 

Note 4 — Private Placement

 

On February 19, 2020, NeoGenesis Holding Co., Ltd., the Company’s sponsor, purchased an aggregate of 272,500 Private Units at $10.00 per Private Unit.

 

The Private Units are identical to the Units sold in the Public Offering, except that the private warrants are not redeemable so long as they are held by the purchaser or its permitted transferees. Additionally, the holders of the Private Units have agreed (A) to vote the shares underlying their Private Units in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated certificate of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides dissenting Public Shareholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any shares underlying the Private Units into the right to receive cash from the Trust Account in connection with a shareholder vote to approve an initial Business Combination or a vote to amend the provisions of the Company’s amended and restated certificate of incorporation relating to shareholders’ rights or pre-Business Combination activity or sell their shares to the Company in connection with a tender offer the Company engages in and (D) that the shares underlying the Private Units shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to transferees that agree to the same terms and restrictions) until the completion of an initial Business Combination.

 

Note 5 — Related Party Transactions

 

On May 17, 2019, the Company issued an unsecured promissory note of $280,000 principal amount to the Company’s Chairman and Chief Executive Officer. The note was non-interest bearing and payable on the consummation of the Public Offering or the date on which the Company determines not to conduct an initial public offering of its securities. Due to the short-term nature of the note, the fair value of the note approximates the carrying amount. On February 19, 2020, the $280,000 loan was converted into part of the subscription of $2,725,000 private placement at a price of $10.00 per unit. The note was cancelled and no amount is owed under the note. 

  

The Company currently maintains the principal executive offices at Room 801, Building C, SOHO Square, No. 88 Zhongshan East 2nd Road, Huangpu District, Shanghai, 200002, China. This space is being provided to the Company by Wenhui Xiong, the Company’s Chairman and Chief Executive officer, at no cost to the Company. The Company considers the current office space, combined with the other office space otherwise available to the Company’s executive officers, adequate for current operations.

 

Note 6 — Deferred Underwriter Commission

 

The Company is committed to pay the Deferred Discount in the amount of $1,437,500, to the underwriter upon the Company’s consummation of the Business Combination. The underwriter is not entitled to any interest accrued on the Deferred Discount, and has waived its right to receive the Deferred Discount if the Company does not close a Business Combination.

 

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Note 7 — Commitments

 

Warrant Solicitation Fee

 

The Company has agreed to pay Chardan Capital Markets, LLC a warrant solicitation fee of five percent (5%) of the exercise price of each public warrant exercised during the period commencing twelve months after the effective date of the registration statement of which this prospectus forms a part, including warrants acquired by security holders in the open market, but excluding warrants exercised during the 30 day period following notice of a proposed redemption. The warrant solicitation fee will be payable in cash. There is no limitation on the maximum warrant solicitation fee payable to Chardan Capital Markets, LLC, except to the extent it is limited by the number of public warrants outstanding.

 

Right of First Refusal

 

Subject to certain conditions, the Company granted Chardan, for a period of 15 months after the date of the consummation of the Company’s business combination, a right of first refusal to act as lead underwriters or minimally as a co-manager, with at least 30% of the economics; or, in the case of a three-handed deal 20% of the economics, for any and all future public and private equity and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement of which this prospectus forms a part.

 

Registration Rights

 

The Initial Shareholders will be entitled to registration rights with respect to their Initial Shares, as well as the holders of the Private Units and holders of any securities issued to the Company’s Initial Shareholders, officers, directors or their affiliates in payment of working capital loans or extension loans made to the Company, will be entitled to registration rights with respect to the Private Units (and underlying securities), pursuant to an agreement signed on the effective date of the Public Offering. The holders of the majority of the Initial Shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Units (or underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.

  

Note 8 — Shareholders’ Equity

 

Preferred Shares

 

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share. No preferred shares were issued or outstanding as of September 30, 2020 and December 31, 2019.

 

Ordinary shares

 

The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 per share.

 

On May 17, 2019, 1,150,000 ordinary shares were sold to the Initial Shareholders for an aggregate of $25,000. The Company subsequently declared a share dividend of 0.25 shares for each outstanding share, resulting in 1,437,500 ordinary shares being outstanding. All share and per-share amounts have been retroactively restated to reflect the share dividend. All of these shares was placed in escrow until (1) with respect to 50% of the shares, the earlier of six months after the date of the consummation of an initial Business Combination and the date on which the closing price of the Company’s Ordinary Shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Company’s initial business combination and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent to an initial Business Combination, the Company consummates a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their shares for cash, securities or other property.

 

11

 

 

On February 19, 2020, the Company sold 5,750,000 units at a price of $10.00 per Public Unit in the Public Offering and NeoGenesis Holding Co., Ltd., the Company’s sponsor, purchased an aggregate of 272,500 Private Units at $10.00 per Private Unit. Each Public Unit and Private Unit consists of one share of ordinary shares in the Company, one Warrant and one Right.

 

At September 30, 2020, there were 2,319,731 shares of ordinary shares issued and outstanding excluding 5,140,269 shares subject to possible redemption.

 

Share Transfer of Ordinary Shares

 

On April 20, 2020, NeoGenesis Holding Co., Ltd., the Company’s sponsor transferred 100,000 shares of the Company’s ordinary share to Deyin Chen, a special advisor to the Company for a total cash consideration of $10.

 

Based on ASC 718-10-15-4 and ASC 718-10-30-3, the value for nonemployee share issuances in exchange for service should be determined based on either the fair value of the goods or services received or the fair value of the equity instruments issued, whichever is more reliably measurable. The shares were granted (effective on April 20, 2020) and are nonforfeitable. The Company recognized $969,990 ($970,000 of fair value for the shares less $10 of the transfer price) as general and administrative expenses in the Company’s financial statements with a corresponding increase in additional paid-in capital. The fair value of the shares transferred was $9.70 per share, which is estimated to be equal to the most recently available closing price of ordinary shares traded on Nasdaq Stock Exchange on May 1, 2020.

 

Warrants

 

Each Warrant entitles the holder to purchase one-half share of ordinary Shares at a price of $11.50 per share commencing on the later of the Company’s completion of its initial Business Combination or 12 months from the closing of the offering, and expiring five years from after the completion of an initial business combination. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the ordinary shares is at least $16.50 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given, provided there is an effective registration statement and current prospectus in effect with respect to the ordinary shares underlying such Warrants during the 30 day redemption period. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants sold and issued in the Public Offering, the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not effective within 90 days following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act of 1933, as amended. In the event that a registration statement is not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant exercise. If an initial Business Combination is not consummated, the Warrants will expire and will be worthless. 

 

In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial business combination at an issue price or effective issue price of less than $9.50 per ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial business combination, and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial business combination (such price, the “Market Price”) is below $9.50 per share, the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Price, and the $16.50 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 165% of the Market Price.

 

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Rights

 

Each Right will entitle the holder to receive one-tenth (1/10) of an ordinary share upon the consummation of an initial Business Combination. The Company will not issue fractional shares in connection with an exchange of Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of Cayman Islands law. As a result, an investor must hold Rights in multiples of 10 in order to receive shares for all of its Rights upon closing of a business combination. If the Company is unable to consummate a Business Combination, the Company will redeem 100% of the Public Shares issued in the Public Offering using the funds in the Trust Account as described in Note 1. There are no contractual penalties for failure to deliver securities to the holders of the Rights upon consummation of the Company’s initial Business Combination. Additionally, in no event will the Company be required to net cash settle the Rights. In such events, the Rights will expire and will be worthless. Since the Company is not required to net cash settle the Rights and the Rights are convertible upon the consummation of an initial Business Combination, the Management determined that the Rights are classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and Rights based on the relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares and Rights will be based on the closing price paid by investors.

  

Note 9 — Reconciliation of Adjusted Net Loss per Ordinary Share 

 

The Company’s net income is adjusted for the portion of income that is attributable to ordinary share subject to redemption, as these shares only participate in the income of the Trust Account and not the losses of the Company. Accordingly, basic and diluted loss per common share is:

 

   For The
Three Months
   For The
Three Months
   For The
Nine Months
   For The
Period From
April 12,
2019
(Inception)
 
   Ended   Ended   Ended   Through 
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
                 
Net Loss  $(9,500)  $(185)  $(782,789)  $(4,403)
Less: income attributable to ordinary shares subject to redemption   (77,787)   -    (352,497)   - 
Adjusted net loss   (87,287)   (185)   (1,135,286)   (4,403)
Basic and diluted weighted average shares outstanding (1)   2,319,731    1,437,500    2,164,613    1,437,500 
Basic and diluted net loss per share (2)   $(0.04)  $(0.00)  $(0.52)  $(0.00)

 

(1) Excludes an aggregate of up to 5,140,269 ordinary shares subject to redemption at September 30, 2020.
(2) Income attributable to ordinary share subject to redemption was calculated in portion of the interest income earned in trust account, which would be distributed to ordinary shareholders at the event they choose to exercise their redemption right at the closing of Initial Business Combination.

 

Note 10 — Subsequent Events

 

On November 11, 2020, Newborn, a Delaware corporation, NB Merger Corp., a Delaware corporation and wholly-owned subsidiary of Newborn (the “Purchaser”), Nuvve Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Purchaser (the “Merger Sub”), Nuvve Corporation, a Delaware corporation (“Nuvve”), and Ted Smith, an individual, as the representative of the stockholders of Nuvve entered into a Merger Agreement (the “Merger Agreement”).

 

Concurrently with the execution of the Merger Agreement, on November 11, 2020, Newborn has entered into a Subscription Agreement with certain investors pursuant to which the investors agreed to purchase 1,425,000 of Newborn’s ordinary shares and warrants to purchase 712,500 of Newborn ordinary shares for an aggregate purchase price of $14,250,000 (the “PIPE”). The warrants will be exercisable at $11.50 per share and have the same terms as Newborn’s public warrants. The investors will receive demand and piggyback registration rights in connection with the securities issued to them.

 

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Also on November 11, 2020, Nuvve entered into a bridge loan agreement with an investor, pursuant to which the investor agreed to purchase a $4,000,000 convertible debenture from Nuvve. The debenture will automatically convert into shares of Nuvve common stock immediately prior to the closing of the transactions contemplated by the Merger Agreement. The bridge loan is expected to close on or before November 13, 2020.

  

Upon the closing of the transactions contemplated in the Merger Agreement, Purchaser will acquire 100% of the issued and outstanding equity securities of Nuvve (the “Acquisition Merger”), in exchange for an aggregate of approximately 10.2 million shares of Purchaser Common Stock, par value $0.001 per share (the “Purchaser Common Stock”), among which (i) approximately 1.3 million shares of Purchaser Common Stock will be issuable pursuant to options, and (ii) approximately 0.9 million shares of Purchaser Common Stock are to be issued and held in escrow to satisfy any indemnification obligations incurred under the Merger Agreement.

 

Immediately prior to the Acquisition Merger, Newborn will be merged with and into Purchaser, the separate corporate existence of Newborn will cease and Purchaser will continue as the surviving corporation (the “Reincorporation Merger”).

 

Pursuant to a Purchase and Option Agreement between the Purchaser and an existing Nuvve stockholder, 0.6 million shares of Purchaser Common Stock will be repurchased immediately after the closing at $10.00 per share out of the proceeds available from the PIPE, the bridge and the Newborn trust account. In addition, existing Nuvve stockholders will have the option to sell up to an additional $2 million of shares of Purchaser Common Stock back to the combined company within a year after closing at a price per share equal to the then-current market price. Certain stockholders of Nuvve have agreed to purchase any option shares acquired by the combined company for the same amount paid for them.

 

Additionally, certain Nuvve Shareholders may be entitled to receive up to 4.0 million earn-out shares if, for the fiscal year ending December 31, 2021, the Purchaser’s revenue, as determined in accordance with U.S. GAAP as consistently applied heretofore by the Company Group, equals or exceeds $30,000,000.

 

The Acquisition Merger will be consummated subject to the deliverables and provisions as further described in the Merger Agreement.

 

The Company evaluated subsequent events and transactions that occur after the balance sheet date up to the date that the financial statement were available to be issued. Other than as described above, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement.

 

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Item 2. Management’s Discussion and Analysis.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Newborn Acquisition Corp., except where the context requires otherwise. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report.

 

Overview

 

We were formed on April 12, 2019 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses. Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although we intend to focus our search on target businesses being operated in Asia (excluding China) and the United States. We intend to utilize cash derived from the proceeds of our initial public offering in effecting our initial business combination.

 

We presently have no revenue, have had losses since inception from incurring formation costs and have had no operations other than the active solicitation of a target business with which to complete a business combination. We have relied upon the sale of our securities and loans from our officers and directors to fund our operations.

 

On February 19, 2020, the Company consummated its initial public offering (“IPO”) of 5,750,000 units (which includes full exercise of the underwriter’s over-allotment option) (the “Units”). Each Unit consists of one ordinary share (“Ordinary Share”), one warrant (“Warrant”) entitling its holder to purchase one-half of one Ordinary Share at a price of $11.50 per whole share, and one right to receive one-tenth (1/10) of an Ordinary Share upon the consummation of an Initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $57,500,000 (including full exercise of the underwriter’s over-allotment option). The Company granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any, which the underwriter simultaneously exercised in full with the consummation of the IPO. On February 19, 2020, simultaneously with the closing of the IPO, the Company consummated a private placement (“Private Placement”) with NeoGenesis Holding Co. Ltd. (“Sponsor”), a British Virgin Islands entity that is owned and controlled by Wenhui Xiong, of 272,500 units as the underwriter exercised the over-allotment option in full (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,725,000, less underwriters’ discount of $1,725,000. A total of $57,500,000 of the net proceeds from the sale of Units in the IPO (including the over-allotment option units) and the Private Placement of February 19, 2020 were placed in a trust account established for the benefit of the Company’s public stockholders.

 

As of September 30, 2020, a total of $57,894,310 were in a trust account established for the benefit of the Company’s public shareholders.

 

Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination. 

 

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Recent Developments

  

On November 11, 2020, we, a Delaware corporation, NB Merger Corp., a Delaware corporation and wholly-owned subsidiary of the Company (the “Purchaser”), Nuvve Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Purchaser (the “Merger Sub”), Nuvve Corporation, a Delaware corporation (“Nuvve”), and Ted Smith, an individual, as the representative of the stockholders of Nuvve, entered into a Merger Agreement.

 

In addition, we entered into a Subscription Agreement with certain investors.

 

See Note 10 in Item 1 above for a description of the Merger Agreement, the Subscription Agreement and the transactions contemplated thereby.

 

Results of Operations

 

Our entire activity from inception up to February 19, 2020 was in preparation for the IPO. Since the IPO, our activity has been limited to the evaluation of business combination candidates and negotiating the Acquisition Merger, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We expect to generate small amounts of non-operating income in the form of interest income on cash and marketable securities held in trust account. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). We expect to incur increased expenses as a result of being a public company (for legal fees; financial reporting; accounting and auditing compliance), as well as for due diligence expenses.

 

For the three months ended September 30, 2020, we had a net loss of $9,500. We earned $87,534 of interest income from investments in our Trust Account and incurred $97,034 of general and administrative expenses. For the three months ended September 30, 2019, we had a net loss of $185, which were mainly general and administrative expenses.

  

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For the nine months ended September 30, 2020, we had a net loss of $782,789. We earned $394,310 of interest income from investments in our Trust Account and incurred $1,177,099 of general and administrative expenses, of which $969,990 was share-based compensation to a special advisor. For the period from April 12, 2020 (Inception) through September 30, 2019, we had a net loss of $4,403, which were mainly formation, general and administrative expenses.

 

Liquidity and Capital Resources

 

As of September 30, 2020, we had $301,714 in cash, available for working capital needs. All remaining cash was held in the trust account and is generally unavailable for our use, prior to an initial business combination.

 

Our liquidity needs have been satisfied to date through receipt of $25,000 from the sale of the initial shares and loans from insiders in an aggregate amount of $280,000, which was cancelled in connection with the Private Placement and not outstanding as of February 19, 2020, and, following the IPO, the remaining net proceeds from our IPO and Private Placements.

 

We intend to use substantially all of the net proceeds of the IPO, including the funds held in the trust account, in connection with our initial business combination and to pay our expenses relating thereto, including a deferred underwriting commission payable to Chardan Capital Markets, LLC in an amount equal to 2.5% of the total gross proceeds raised in the IPO upon consummation of our initial business combination. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial business combination if the funds available to us outside of the trust account were insufficient to cover such expenses.

 

We anticipate that the amounts outside of our trust account will be sufficient to allow us to operate 12 months from the filing date of this Form 10-Q, assuming that a business combination is not consummated during that time.

 

If our estimates of the costs of undertaking due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to convert a significant number of our public shares upon consummation of our initial 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 consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

 

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Off-Balance Sheet Arrangements

 

As of September 30, 2020, we did not have any off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As of September 30, 2020, we were not subject to any market or interest rate risk. The net proceeds of the IPO held in the trust account are currently invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30. 2020, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our 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 our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2020 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

 

On February 19, 2020, the Company consummated its initial public offering (“IPO”) of 5,750,000 units (which includes full exercise of the underwriter’s over-allotment option) (the “Units”). Each Unit consists of one ordinary share (“Ordinary Share”), one warrant (“Warrant”) entitling its holder to purchase one-half of one Ordinary Share at a price of $11.50 per whole share, and one right to receive one-tenth (1/10) of an Ordinary Share upon the consummation of an Initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $57,500,000 (including full exercise of the underwriter’s over-allotment option). The Company granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover over-allotments, if any, which the underwriter simultaneously exercised in full with the consummation of the IPO. On February 19, 2020, simultaneously with the closing of the IPO, the Company consummated a private placement (“Private Placement”) with NeoGenesis Holding Co. Ltd. (“Sponsor”), a Cayman Islands entity that is owned and controlled by Wenhui Xiong, of 272,500 units as the underwriter exercised the over-allotment option in full (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,725,000, less underwriters’ discount of $1,725,000. A total of $57,500,000 of the net proceeds from the sale of Units in the IPO (including the over-allotment option units) and the Private Placement of February 19, 2020 were placed in a trust account established for the benefit of the Company’s public stockholders.

 

The Private Units are identical to the units sold in the IPO except the warrants included in the Private Units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. The holders of the Private Units have agreed (A) to vote the private shares underlying the Private Units (the “Private Shares”) and any public shares acquired by them in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by February 19, 2021 (or August 19, 2021, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of ordinary share upon approval of any such amendment 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 us to pay our franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the Private Shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by February 19, 2021 (or August 19, 2021, as applicable) and (D) that the Private Shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. Additionally, our insiders (and/or their designees) have agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination.

 

We paid a total of $1,725,000 in underwriting discounts and commissions (not including the 2.5% deferred underwriting commission payable at the consummation of initial business combination) and $514,910 for other costs and expenses related to our formation and the IPO.

 

For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of this Form 10-Q.

 

Item 6. Exhibits.

 

Exhibit No.   Description
     
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
     
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
     
32   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   XBRL Instance Document
   
101.SCH   XBRL Taxonomy Extension Schema Document
   
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

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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.

 

  NEWBORN ACQUISITION CORP.
     
  By: /s/ Wenhui Xiong
  Wenhui Xiong
  Chief Executive Officer
(Principal executive officer)
     
  By: /s/ Jianjun Nie
  Jianjun Nie
  Chief Financial Officer
(Principal financial and accounting officer)

 

Date: November 13, 2020

 

 

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