Bannix Acquisition (US:BNIX)2024-07-31 22:31Part I. Financial Information Financial Statements The unaudited condensed financial statements as of June 30, 2024, reflect decreased assets due to stock redemptions, a net loss, and a $4.4 million working capital deficit, raising substantial doubt about the company's going concern ability Condensed Balance Sheets As of June 30, 2024, total assets decreased to $17.4 million from $32.4 million due to stock redemptions, while liabilities and stockholders' deficit increased Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $29,694 | $232,278 | | Cash held in Trust Account | $17,375,843 | $32,116,099 | | Total Assets | $17,410,827 | $32,353,628 | | Liabilities & Stockholders' Deficit | | | | Total Current Liabilities | $4,458,841 | $3,938,606 | | Total Liabilities | $4,691,961 | $4,167,666 | | Common stock subject to possible redemption | $17,425,962 | $31,839,150 | | Total Stockholders' Deficit | $(4,707,096) | $(3,653,188) | Unaudited Condensed Statements of Operations The company reported a net loss of $153,104 for the three months and $181,323 for the six months ended June 30, 2024, primarily due to lower interest income from the trust account Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Operating Costs | $348,402 | $490,123 | $768,454 | $803,653 | | Interest Income on Trust Account | $200,064 | $340,353 | $566,267 | $1,023,275 | | Net Loss | $(153,104) | $(239,409) | $(181,323) | $(50,696) | | Net Loss Per Share | $(0.04) | $(0.04) | $(0.04) | $(0.01) | Unaudited Condensed Statements of Changes in Stockholders' Deficit The total stockholders' deficit increased from $(3.7) million to $(4.7) million by June 30, 2024, driven by net loss, excise tax, and accretion of redeemable common stock - The accumulated deficit grew from $(3,678,428) on January 1, 2024, to $(4,732,336) on June 30, 20249 - Key drivers for the increased deficit in the first six months of 2024 include a net loss of $181,323, excise tax of $151,344, and accretion to redemption value of $721,2419 Unaudited Condensed Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities was $419,658, while investing activities provided $15.3 million and financing activities used $15.1 million, resulting in a net cash decrease of $202,584 Cash Flow Summary for Six Months Ended June 30, 2024 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | $(419,658) | | Net cash provided by investing activities | $15,306,523 | | Net cash used in financing activities | $(15,089,449) | | Net change in cash | $(202,584) | | Cash, end of the period | $29,694 | - The company redeemed $15,134,429 of Class A common stock, which was the primary use of cash in financing activities and was funded by withdrawals from the Trust Account11 Notes to Unaudited Condensed Financial Statements The notes detail the company's status as a blank check company with no operations, its September 14, 2024, business combination deadline, the new agreement with VisionWave Technologies, and a going concern issue due to insufficient funds and approaching liquidation - The company is a blank check company formed to effect a business combination and has not commenced any operations as of June 30, 20241213 - The business combination agreement with Evie Group was terminated on March 11, 2024, and a new agreement was signed with VisionWave Technologies Inc. on March 26, 20244546 - The company has until September 14, 2024 (as extended) to consummate a business combination, or it will be forced to liquidate2972 - Management has concluded that there is substantial doubt about the company's ability to continue as a going concern due to insufficient funds and the mandatory liquidation deadline7273 - In July 2024, the company deposited $25,000 into the Trust Account to extend the business combination deadline to August 14, 2024, and filed a preliminary proxy to seek further extensions to March 14, 2025148149 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company with a September 14, 2024, business combination deadline, detailing the new agreement with VisionWave Technologies, a $181,323 net loss, significant stock redemptions, and a $4.4 million working capital deficit raising going concern doubts - The business combination agreement with Evie Group was terminated on March 11, 2024, and a new agreement was entered into with VisionWave Technologies on March 26, 2024, for an all-stock acquisition166167 - Stockholders redeemed 3,960,387 shares in March 2023 and 1,381,866 shares in March 2024, resulting in cash outflows from the Trust Account of $41.1 million and $15.1 million, respectively161 - The company has a working capital deficit of $4,423,857 as of June 30, 2024, and management believes it may not have sufficient funds to meet operating needs through the September 14, 2024, business combination deadline185188 - Insufficient funds and the mandatory liquidation date raise substantial doubt about the company's ability to continue as a going concern, with the proposed business combination with VisionWave cited as a potential cure189 Results of Operations Summary | Period | Net Loss | Key Drivers | | :--- | :--- | :--- | | Six Months Ended June 30, 2024 | $(181,323) | Operating costs of $768,454 and taxes, partially offset by interest income of $566,267 and a $33,750 gain on forgiven payables | | Six Months Ended June 30, 2023 | $(50,696) | Operating costs of $803,653 and taxes, largely offset by higher interest income of $1,023,275 | Quantitative and Qualitative Disclosures Regarding Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures regarding market risk - As a smaller reporting company, disclosures under this item are not required195 Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of June 30, 2024, due to a material weakness in internal control over financial reporting related to complex financial instruments, fair value measurements, and misstatements in various accounts - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024195 - A material weakness was identified in internal control over financial reporting, defined as a deficiency with a reasonable possibility of material misstatement not being prevented or detected timely198 - The weakness relates to the accounting for complex financial instruments, fair value measurements, and misstatements in prepaid expense, income and franchise taxes, and legal fees195199 - No changes were made to internal controls during the quarter that materially affected, or are likely to materially affect, internal control over financial reporting, and remediation efforts are ongoing200 Part II. Other Information Legal Proceedings The company is not currently subject to any legal proceedings - The company is not subject to any litigation at the present time131201 Risk Factors Key risks include a material weakness in internal control over financial reporting, potential changes in SEC regulations for SPACs, and the applicability of a 1% federal excise tax on stock redemptions - A material weakness in internal control over financial reporting could adversely affect the company's ability to report financial results accurately and on time, potentially leading to a loss of investor confidence and a decline in stock price203204 - Proposed SEC rules for SPACs could increase the costs and time needed to complete an initial business combination and may constrain the circumstances under which a deal could be completed208 - The company may be subject to a 1% excise tax on stock redemptions under the Inflation Reduction Act of 2022, which would be payable by the company and could reduce the cash available to complete a business combination209210 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None reported211 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported211 Mine Safety Disclosures The company reported no mine safety disclosures - None reported211 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter211 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files