Broad Capital Acquisition p(BRAC) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section details the company's financial performance, condition, and internal controls, along with management's analysis and market risk disclosures Financial Statements The company reported a significant net loss increase and asset decrease for the six months ended June 30, 2024, raising substantial doubt about its going concern ability Balance Sheets Total assets significantly decreased to $19.8 million by June 30, 2024, primarily due to reduced trust account cash from redemptions Balance Sheet Summary (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $2,826 | $15,282 | | Cash and Marketable Securities held in trust account | $19,806,184 | $50,772,949 | | Total Assets | $19,849,510 | $50,817,322 | | Liabilities & Stockholders' Deficit | | | | Total Current Liabilities | $8,355,777 | $6,907,172 | | Total Liabilities | $11,911,451 | $10,462,846 | | Common Stock subject to possible redemption | $19,083,401 | $50,095,136 | | Total Stockholders' Deficit | $(11,145,342) | $(9,740,660) | Statements of Operations The company reported a net loss of $917,136 for the six months ended June 30, 2024, a significant increase from the prior year Statement of Operations Highlights (Unaudited) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Loss from Operations | $(1,204,315) | $(1,455,684) | | Interest earned on marketable securities | $498,614 | $1,451,430 | | Net Loss | $(917,136) | $(312,214) | | Net Loss per Share | $(0.19) | $(0.03) | Statements of Changes in Stockholders' Deficit The total stockholders' deficit widened to $(11.1) million by June 30, 2024, driven by ongoing net losses and other charges - The accumulated deficit grew from $(9,740,663) at the start of the period to $(11,145,345) by June 30, 2024, reflecting ongoing net losses and other charges[9] Statements of Cash Flows Net cash used in operating activities was $706,813, with significant trust account withdrawals for redemptions largely offsetting financing outflows Cash Flow Summary (Unaudited) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(706,813) | $(1,055,645) | | Net cash provided by investing activities | $31,465,379 | $56,963,238 | | Net cash provided by financing activities | $(30,771,022) | $(56,247,365) | | Net change in cash | $(12,456) | $(339,772) | | Cash at end of period | $2,826 | $52,152 | Notes to Financial Statements Notes detail the company's blank check status, ongoing merger efforts, significant redemptions, and substantial doubt about its going concern ability - The company is a blank check company formed to effect a business combination and has not commenced any operations, with all activity relating to its formation, IPO, and pursuit of a business combination[13][14] - The company entered into a merger agreement with Openmarkets Group Pty Ltd on January 18, 2023, which has been amended five times, most recently on August 8, 2024, to adjust the number of shares in the transaction[27][32][96] - The company has extended its deadline to consummate a business combination multiple times, now to January 13, 2025, by making monthly deposits into the trust account, which have been reduced over time from ~$370k to $150k, and now to $60k per month[36][40][43] - Significant stock redemptions occurred in January 2023 ($43.35M), June 2023 ($15.05M), and January 2024 ($31.2M), substantially reducing the number of public shares and funds in the trust account[37][42][46] - Management has determined that there is substantial doubt about the company's ability to continue as a going concern due to the requirement to liquidate if a business combination is not completed within the permitted timeframe[52][113] - The company recorded an excise tax liability of $895,904 as of June 30, 2024, related to the 1% federal excise tax on stock redemptions under the Inflation Reduction Act of 2022[67] Related Party Loans Outstanding | Loan Type | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Working Capital Loan | $931,134 | $754,748 | | Extension Loan | $3,143,628 | $2,903,628 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, increased net loss, critical liquidity issues, and reliance on Sponsor loans, raising going concern doubts - The company is a blank check company with all activity to date related to its formation, IPO, and search for a business combination, having generated no operating revenue[99][102] Net Income (Loss) Comparison | Period | Net Income/(Loss) | Key Drivers | | :--- | :--- | :--- | | Three Months Ended June 30, 2024 | $(383,704) | Operating costs and lower interest income | | Three Months Ended June 30, 2023 | $340,082 | Higher interest income offset operating costs | | Six Months Ended June 30, 2024 | $(917,136) | Operating costs and significantly lower interest income | | Six Months Ended June 30, 2023 | $(312,214) | Higher interest income partially offset higher operating costs | - As of June 30, 2024, the company had only $2,826 in its operating bank account, which management states may not be sufficient to operate for the next 12 months, raising substantial doubt about its ability to continue as a going concern[109][112] - The company relies on Working Capital Loans and Extension Loans from its Sponsor to finance transaction costs and extend its business combination deadline, with outstanding balances of $931,134 and $3,143,628 respectively as of June 30, 2024[110][111] - Contractual obligations include a $10,000 monthly fee to an affiliate of the Sponsor for administrative services and a deferred underwriting commission of $3,555,674 payable only upon completion of a business combination[114][115] Quantitative and Qualitative Disclosures About Market Risk The company believes it has no material market or interest rate risk due to its short-term U.S. government treasury investments - The company's funds in the Trust Account are invested in U.S. government treasury bills with maturities of 185 days or less, or in money market funds investing solely in U.S. treasuries, which management believes poses no material exposure to interest rate risk[119] Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of June 30, 2024, with no material changes to internal controls - Based on an evaluation as of June 30, 2024, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were not effective[121] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, internal controls[121] PART II - OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, equity sales, and exhibits filed with the report Legal Proceedings The company reported no legal proceedings - None[122] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the period ending December 31, 2023 have been reported[122] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds - None[122] Other Information The company reported no other information - None[122] Exhibits The report lists several exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act, and various Inline XBRL documents - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL data files[123]