References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Nubia Brand International Corp. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Mach FM. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the condensed 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.
Overview
We are a blank check company incorporated as a Delaware corporation and formed
for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (the "Initial Business Combination").
We intend to effectuate an Initial Business Combination using cash from the
proceeds of our initial public offering (the "Public Offering") that closed on
March 15, 2022 (the "Closing Date") and the private placement warrants sold in a
private placement (the "Private Placement Warrants") that closed on the Closing
Date and from additional issuances, if any, of, our capital stock and our debt,
or a combination of cash, stock and debt.
Our business activities from inception to June 30, 2022 consisted primarily of
our preparation for our Public Offering that was completed on March 15, 2022
and, since the Closing Date, identification and evaluation of prospective
acquisition targets for an Initial Business Combination.
At June 30, 2022, we had cash of $662,748 and working capital of $664,214.
Further, we expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an Initial
Business Combination will be successful.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" 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 (as defined below) 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.
Results of Operations
For the three months ended June 30, 2022, we had a net loss of $21,393 which
consisted of interest income earned in the amount of $170,309 on cash and funds
held in the Trust Account, a gain on the over-allotment liability of $15,720 and
operating expenses totaling $190,581. In addition, the Company recorded an
income tax provision of $16,841.
18
For the six months ended June 30, 2022, we had a net loss of $133,392 which
consisted of interest income earned in the amount of $178,964 on cash and funds
held in the Trust Account, a gain on the over-allotment liability of $19,432 and
operating expenses totaling $314,947. In addition, the Company recorded an
income tax provision of $16,841.
For the period from June 14, 2021 (inception) through June 30, 2021, we had a
net loss of $939 which consisted solely of formation expenses.
Going Concern Considerations, Liquidity and Capital Resources
On March 15, 2022, we consummated the Initial Public Offering of 11,000,000
Units at a price of $10.00 per Unit, which includes the exercise by the
underwriters of the over-allotment option to purchase an additional 1,350,000
Units, generating gross proceeds of $123,500,000. Simultaneously with the
closing of the Initial Public Offering and exercise of the over-allotment
option, we consummated the sale of 5,405,000 Private Placement Warrants at a
price of $1.00 per Private Placement Warrant in a private placement to our
Sponsor, generating gross proceeds of $5,405,000.
Following the Initial Public Offering, the exercise of the over-allotment option
by the underwriters' and the sale of the Private Placement Warrants, a total of
$125,970,000 was placed in the Trust Account and as of March 31, 2022, we had
$1,268,183 of cash held outside of the Trust Account, after payment of costs
related to the Initial Public Offering, and available for working capital
purposes. Transaction costs amounted to $6,951,081 consisting of $1,235,000 of
underwriting fees, $4,322,500 of deferred underwriting fees payable and $597,334
of other offering costs. In addition, the Company recorded the fair value of
$776,815 for representative shares issued upon close of the Public Offering as
well as the fair value of the remaining over-allotment option of $19,432 as
offering costs.
For the six months ended June 30, 2022, cash used in operating activities was
$608,009 which consisted of the net loss of $133,392, interest earned on
marketable securities held in the Trust Account of $178,752, the gain on the
change in fair value of the over-allotment liability of $19,432 and changes in
operating liabilities used $276,433 of cash from operating activities.
For the six months ended June 30, 2022, the Company used cash of $125,970,000 in
investing activities for the purchase of investments in the Trust Account
following the Initial Public Offering, the exercise of the over-allotment option
by the underwriters' and the sale of the Private Placement Warrants.
For the six months ended June 30, 2022, cash from financing activities provided
$127,240,757. The Company received gross proceeds of $128,905,000 from the
Initial Public Offering, the exercise of the over-allotment option by the
underwriters' and the sale of the Private Placement Warrants. These increases
were offset by payment of the underwriting fees and offering costs of $1,235,000
and $429,243, respectively.
For the period from June 14, 2021 (inception) through June 30, 2021, cash used
in operating activities was $0 which consisted of the net loss of $939 offset by
advances from related party of $939.
As of June 30, 2022, we had investments held in the Trust Account of
$126,148,752 principally invested in U.S. government securities. Interest income
on the balance in the Trust Account may be used by us to pay taxes, and to pay
up to $100,000 of any dissolution expenses. As of June 30, 2022, we had working
capital of approximately $664,200, current liabilities of approximately $273,000
and cash of approximately $662,700.
At June 30, 2022, the Company had cash outside of trust of $662,748 and working
capital of $664,214. Further, the Company has incurred and expects to continue
to incur significant costs in pursuit of its financing and acquisition plans. In
connection with the Company's assessment of going concern considerations in
accordance with Accounting Standards Update ("ASU") 2014-15, "Disclosures of
Uncertainties about an Entity's Ability to Continue as a Going Concern,"
management has determined that these liquidity risks, as well as if the Company
is unsuccessful in consummating an initial business combination within 12
months, or March 15, 2023, (or up to 18 months, September 15, 2023, if the
Company extends the period of time to consummate a business combination) from
the closing of the IPO , the requirement that the Company cease all operations,
redeem the public shares and thereafter liquidate and dissolve raises
substantial doubt about the ability to continue as a going concern. The
unaudited condensed balance sheets do not include any adjustments that might
result from the outcome of this uncertainty. Management has determined that the
Company has funds that are sufficient to fund the working capital needs of the
Company until the consummation of an initial business combination or the winding
up of the Company as stipulated in the Company's amended and restated memorandum
of association. The accompanying unaudited condensed financial statements have
been prepared in conformity with generally accepted accounting principles in the
United States of America ("GAAP"), which contemplate continuation of the Company
as a going concern.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account,
excluding the deferred underwriting commissions, to complete an initial business
combination. To the extent that capital stock or debt is used, in whole or in
part, as consideration to complete an initial 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 growth strategies. If an initial business combination
agreement requires us to use a portion of the cash in the Trust Account to pay
the purchase price or requires us to have a minimum amount of cash at closing,
we will need to reserve a portion of the cash in the Trust Account to meet such
requirements or arrange for third-party financing.
19
We completed the sale of 12,350,000 units (the "Public Units") at an offering
price of $10.00 per unit in the Public Offering including 1,350,000 units at the
initial public offering price less the underwriting discounts and commissions
pursuant to the full exercise of the underwriters' over-allotment option. On the
Closing Date, simultaneously with the consummation of the Public Offering, the
Company consummated the private sale (the "Private Placement") of an aggregate
of 5,000,000 warrants (the "Private Placement Warrants") to our Sponsor at a
purchase price of $1.00 per Private Placement Warrant, generating gross proceeds
to the Company in the amount of $5,000,000.
Each Public Unit consists of one share of our Class A common stock, $0.0001 par
value (each a "Public Share"), and one-half of one redeemable warrant, with each
whole warrant exercisable for one share of Class A common stock (each, a
"Warrant" and, collectively, the "Warrants"). One Warrant entitles the holder
thereof to purchase one whole share of Class A common stock at a price of $11.50
per share.
Of the proceeds of the Public Offering and the Private Placement aggregating
$128,905,000, $125,970,000 were deposited in a trust account (the "Trust
Account"). Income on the funds held in the Trust Account may be released to us
to pay our franchise and income taxes.
On July 27, 2021, 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 $300,000. The Promissory Note is non-interest
bearing and payable on the earlier of (i) March 31, 2022 or (ii) the
consummation of the Initial Public Offering (the "Original Maturity Date"). On
May 20, 2022, the Company and the Sponsor amended and restated the Promissory
Note (the "Amended Note") (i) to extend the Original Maturity Date to a new
maturity date which shall be upon the earlier of the closing of the Company's
initial business combination or the Company's liquidation, and (ii) to permit
the holder of the Amended Note, in its sole discretion, to convert any or all of
the unpaid principal under the Amended Note into warrants, at a price of $1.00
per warrant, upon consummation of the Company's initial business combination. As
of June 30, 2022 and December 31, 2021, there was $125,341 outstanding under the
Promissory Note. On May 20, 2022, the Company and the Sponsor entered into the
Amended Note (i) to extend the Original Maturity Date to a new maturity date
which shall be upon the earlier of the closing of the Company's initial business
combination or the Company's liquidation, and (ii) to permit the holder of the
Amended Note, in its sole discretion, to convert any or all of the unpaid
principal under the Amended Note into Warrants, at a price of $1.00 per warrant,
upon consummation of the Company's initial business combination.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements. We do not participate in transactions that
create relationships with unconsolidated entities or financial partnerships,
often referred to as variable interest entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or entered into any non-financial agreements involving assets.
Contractual Obligations
At June 30, 2022, we did not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities. In connection with the
Public Offering, we entered into an administrative support agreement pursuant to
which we agreed to pay an affiliate of the Sponsor a total of $10,000 per month
for office space, utilities and secretarial, and administrative support
services. Upon the earlier of the completion of the Initial Business Combination
and the Company's liquidation, we will cease paying these monthly fees.
Pursuant to the Underwriting Agreement., upon the consummation of our Initial
Business Combination, we will pay the underwriters a cash fee in an amount equal
to 3.5% of the gross proceeds of the Public Offering (exclusive of any
applicable finders' fees which might become payable). No fee will be due if we
do not complete an Initial Business Combination.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States 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 unaudited condensed financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following as our critical accounting policies:
Net Loss per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share." Net loss per share of common stock is computed
by dividing net loss by the weighted average number of shares of common stock
outstanding for the period. The Company applies the two-class method in
calculating earnings per share. The remeasurement adjustment associated with the
redeemable shares of Class A Common Stock is excluded from earnings per share as
the redemption value approximates fair value.
20
The calculation of diluted loss per share of common stock does not consider the
effect of the warrants issued in connection with the (i) Initial Public Offering
and (ii) the Private Placement. As of June 30, 2022, the warrants are
exercisable to purchase 11,580,000 shares of Class A common stock in the
aggregate. As a result, diluted loss per share of common stock is the same as
basic loss per common stock for the periods presented. On March 10, 2022, the
Company effectuated a 1.1-for-1 share split on the Class B common stock,
resulting in an aggregate of 3,162,500 founder shares outstanding (up to 412,500
shares of which were subject to forfeiture). For the three and six month periods
ended June 30, 2022, due to the partial exercise of the over-allotment option,
the remaining 75,000 shares subject to forfeiture were excluded from the basic
and diluted weighted average shares outstanding. For the period from June 14,
2021 (inception) through June 30, 2021, the 412,500 shares subject to forfeiture
were excluded from the basic and diluted weighted average shares outstanding.
Class A common stock subject to possible redemption
The Company accounts for its shares of Class A common stock subject to possible
redemption in accordance with the guidance enumerated in ASC 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 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,
common stock is classified as stockholders' equity. The shares of the Company's
Class A common stock feature certain redemption rights that are considered by
the Company to be outside of the Company's control and subject to the occurrence
of uncertain future events.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset
or paid to transfer of a liability, in an orderly transaction between market
participants at the measurement date. US 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).
Derivative Financial Instruments
The Company evaluates its financial instruments, including the over-allotment
option, to determine if such instruments are derivatives or contain features
that qualify as embedded derivatives in accordance with ASC Topic 815,
"Derivatives and Hedging". For derivative financial instruments that are
accounted for as liabilities, the derivative instrument is initially recorded at
its fair value on the grant date and is then re-valued at each reporting date,
with changes in the fair value reported in the statements of operations. The
classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is evaluated at the end of each
reporting period. Derivative liabilities are classified in the unaudited
condensed balance sheets as current or non-current based on whether or not
net-cash settlement or conversion of the instrument could be required within 12
months of the balance sheet date.
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
Company's balance sheet.
© Edgar Online, source Glimpses
NUBA BRANPAR 
