Related Party Transactions	9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On January 19, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B Common Stock (the “Founder Shares”). In February 2021, the Sponsor transferred 10,000 Founder Shares to each of the Company’s independent directors at that time, Rick Mazer, Dan Ginsberg, Tim Gannon, Terry Wilson and Greg Stevens (collectively with the Sponsor, the “Founder Share Holders”). On November 4, 2021, the Company effected a stock capitalization resulting in the Sponsor any other holders of the Founder Shares prior to the Initial Public Offering (or their permitted transferees) (collectively, the Initial Stockholders”) holding 6,468,750 shares of its Class B Common Stock. Following the underwriter’s election to partially exercise its over-allotment option at the Initial Public Offering and forfeiture by the underwriters of the remaining outstanding option, 218,750 Founder Shares were forfeited. The sale of the Founder Shares to the Company’s independent directors was in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards was measured at fair value upon the grant date. The Company had hired a valuation firm who used the lattice model to assess the fair value associated with the Founder Shares granted. The fair value of the 50,000 Founder Shares granted to the Company’s directors was $487,000 or $9.74 per share. The Founder Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founder Shares was recognized only when the performance condition was probable of occurrence under the applicable accounting literature in this circumstance. As of September 30, 2024, the Company determined the performance conditions were not considered probable, and, therefore, no stock-based compensation expense had been recognized. Stock-based compensation would be recognized at the date the performance conditions were considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founder Shares vested times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares. The Founder Share Holders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) subsequent to a Business Combination, (x) if the last reported sale price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property. On May 5, 2023, in connection with the First Special Meeting, the Company issued an aggregate of 3,000,000 shares of Class A Common Stock to the Sponsor upon the conversion of an equal number of shares of Class B Common Stock held by the Sponsor as Founder Shares. The 3,000,000 shares of Class A Common Stock issued in connection with the 2023 Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the 2023 Founder Share Conversion as described above. On July 29, 2024, the Company issued an aggregate of 3,249,999 shares of Class A Common Stock to the Founder Shareholders upon the conversion of an equal number of shares of Class B Common Stock held by them. The shares of Class A Common Stock issued in connection with the 2024 Founder Share Conversion are subject to the same restrictions applicable to the shares of Class B Common Stock prior to the 2024 Founder Share Conversion, including certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of a Business Combination, as described in the IPO Registration Statement. Following the 2024 Founder Share Conversion, there are 6,932,523 shares of Class A Common Stock issued and outstanding and one share of Class B Common Stock issued and outstanding. The shares of Class A Common Stock issued upon the 2024 Founder Share Conversion have not been registered under the Securities Act in reliance on the exemption from registration provided by Section 3(a)(9) thereof. The Company effected the 2024 Founder Share Conversion to regain compliance with the MVLS Requirement. Administrative Support Agreement The Company entered into an agreement, commencing on November 4, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of up to $20,000 per month for, among other things, the provision of the services of one or more investment professionals, who may be related parties of the Sponsor or of one of the Company’s executive officers. For the three and nine months ended September 30, 2024, the Company incurred $60,000 and $180,000 in fees for these services, respectively, of which $180,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheets for the period ended September 30, 2024. For the three and nine months ended September 30, 2023, the Company incurred $60,000 and $180,000, respectively, in fees for these services, of which $120,000 is recorded in accounts payable and accrued expenses in the accompanying condensed balance sheets for the period ended September 30, 2023. Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. Any warrants issued upon conversion of the Working Capital Loans would be identical to the Private Placement Warrants. At September 30, 2024 and December 31, 2023, the Company had no Working Capital Loans. Promissory Note — Related Party On September 15, 2023, the Company issued an unsecured promissory note in the principal amount of $300,000 to the Sponsor (the “First Promissory Note”). The First Promissory Note bears no interest and has been amended and restated to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of the Company’s liquidation (see Note 1). The Company and the Sponsor agree that the Company may request up to $300,000 for costs reasonably related to the Business Combination. The principal of the First Promissory Note may be drawn down upon written request from the Company to the Sponsor (each, a “Drawdown Request”). Each Drawdown Request must state the amount to be drawn down and must not be an amount less than $1,000 unless agreed upon by the Company and the Sponsor. As of September 30, 2024 and December 31, 2023, there was $290,000 outstanding under the First Promissory Note. On March 7, 2024, the Company issued a non-interest bearing promissory note to the Sponsor to borrow up to $400,000 (the “Second Promissory Note”, and together with the First Promissory Note, the “Promissory Notes”). On May 20, 2024, the Promissory Notes were amended and restated to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of the Company’s liquidation. The principal balance may be prepaid at any time. The rest of the terms of the Promissory Notes remain the same, including that the Promissory Notes bear no interest. On July 18, 2024, the Second Promissory Note was amended and restated to increase the principal balance available under the Second Promissory Note from $400,000 to $900,000. The rest of the terms of the Second Promissory Note remain the same, including that the Second Promissory Note bears no interest. Through September 30, 2024, the Company has borrowed $500,000 under the Second Promissory Note and an aggregate of $400,000 remains available to borrow under the Second Promissory Note, as amended and restated. As of September 30, 2024, there was $500,000 outstanding under the Second Promissory Note. As of September 30, 2024 and December 31, 2023, respectively, there was an aggregate of $790,000 and $290,000 outstanding under the Promissory Notes.

Related Party Transactions

9 Months Ended

Sep. 30, 2024

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

On January 19, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B Common Stock (the “Founder Shares”). In February 2021, the Sponsor transferred 10,000 Founder Shares to each of the Company’s independent directors at that time, Rick Mazer, Dan Ginsberg, Tim Gannon, Terry Wilson and Greg Stevens (collectively with the Sponsor, the “Founder Share Holders”). On November 4, 2021, the Company effected a stock capitalization resulting in the Sponsor any other holders of the Founder Shares prior to the Initial Public Offering (or their permitted transferees) (collectively, the Initial Stockholders”) holding 6,468,750 shares of its Class B Common Stock. Following the underwriter’s election to partially exercise its over-allotment option at the Initial Public Offering and forfeiture by the underwriters of the remaining outstanding option, 218,750 Founder Shares were forfeited.

The sale of the Founder Shares to the Company’s independent directors was in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards was measured at fair value upon the grant date. The Company had hired a valuation firm who used the lattice model to assess the fair value associated with the Founder Shares granted. The fair value of the 50,000 Founder Shares granted to the Company’s directors was $487,000 or $9.74 per share. The Founder Shares were granted subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the Founder Shares was recognized only when the performance condition was probable of occurrence under the applicable accounting literature in this circumstance. As of September 30, 2024, the Company determined the performance conditions were not considered probable, and, therefore, no stock-based compensation expense had been recognized. Stock-based compensation would be recognized at the date the performance conditions were considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founder Shares vested times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares.

The Founder Share Holders have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) subsequent to a Business Combination, (x) if the last reported sale price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.

On May 5, 2023, in connection with the First Special Meeting, the Company issued an aggregate of 3,000,000 shares of Class A Common Stock to the Sponsor upon the conversion of an equal number of shares of Class B Common Stock held by the Sponsor as Founder Shares. The 3,000,000 shares of Class A Common Stock issued in connection with the 2023 Founder Share Conversion are subject to the same restrictions as applied to the Class B Common Stock before the 2023 Founder Share Conversion as described above.

On July 29, 2024, the Company issued an aggregate of 3,249,999 shares of Class A Common Stock to the Founder Shareholders upon the conversion of an equal number of shares of Class B Common Stock held by them. The shares of Class A Common Stock issued in connection with the 2024 Founder Share Conversion are subject to the same restrictions applicable to the shares of Class B Common Stock prior to the 2024 Founder Share Conversion, including certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of a Business Combination, as described in the IPO Registration Statement. Following the 2024 Founder Share Conversion, there are 6,932,523 shares of Class A Common Stock issued and outstanding and one share of Class B Common Stock issued and outstanding.

The shares of Class A Common Stock issued upon the 2024 Founder Share Conversion have not been registered under the Securities Act in reliance on the exemption from registration provided by Section 3(a)(9) thereof.

The Company effected the 2024 Founder Share Conversion to regain compliance with the MVLS Requirement.

Administrative Support Agreement

The Company entered into an agreement, commencing on November 4, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of up to $20,000 per month for, among other things, the provision of the services of one or more investment professionals, who may be related parties of the Sponsor or of one of the Company’s executive officers. For the three and nine months ended September 30, 2024, the Company incurred $60,000 and $180,000 in fees for these services, respectively, of which $180,000 is included in accounts payable and accrued expenses in the accompanying condensed balance sheets for the period ended September 30, 2024. For the three and nine months ended September 30, 2023, the Company incurred $60,000 and $180,000, respectively, in fees for these services, of which $120,000 is recorded in accounts payable and accrued expenses in the accompanying condensed balance sheets for the period ended September 30, 2023.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. Any warrants issued upon conversion of the Working Capital Loans would be identical to the Private Placement Warrants. At September 30, 2024 and December 31, 2023, the Company had no Working Capital Loans.

Promissory Note — Related Party

On September 15, 2023, the Company issued an unsecured promissory note in the principal amount of $300,000 to the Sponsor (the “First Promissory Note”). The First Promissory Note bears no interest and has been amended and restated to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of the Company’s liquidation (see Note 1). The Company and the Sponsor agree that the Company may request up to $300,000 for costs reasonably related to the Business Combination. The principal of the First Promissory Note may be drawn down upon written request from the Company to the Sponsor (each, a “Drawdown Request”). Each Drawdown Request must state the amount to be drawn down and must not be an amount less than $1,000 unless agreed upon by the Company and the Sponsor. As of September 30, 2024 and December 31, 2023, there was $290,000 outstanding under the First Promissory Note.

On March 7, 2024, the Company issued a non-interest bearing promissory note to the Sponsor to borrow up to $400,000 (the “Second Promissory Note”, and together with the First Promissory Note, the “Promissory Notes”).

On May 20, 2024, the Promissory Notes were amended and restated to be payable in full upon the earlier of (i) the date of the consummation of the initial Business Combination, and (ii) the date of the Company’s liquidation. The principal balance may be prepaid at any time. The rest of the terms of the Promissory Notes remain the same, including that the Promissory Notes bear no interest.

On July 18, 2024, the Second Promissory Note was amended and restated to increase the principal balance available under the Second Promissory Note from $400,000 to $900,000. The rest of the terms of the Second Promissory Note remain the same, including that the Second Promissory Note bears no interest. Through September 30, 2024, the Company has borrowed $500,000 under the Second Promissory Note and an aggregate of $400,000 remains available to borrow under the Second Promissory Note, as amended and restated. As of September 30, 2024, there was $500,000 outstanding under the Second Promissory Note.

As of September 30, 2024 and December 31, 2023, respectively, there was an aggregate of $790,000 and $290,000 outstanding under the Promissory Notes.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

New Providence Acquisition Corp. II 10-Q