Bannix Acquisition (US:BNIX)2023-10-03 16:00PART I – FINANCIAL INFORMATION Item 1. Financial Statements Bannix Acquisition Corp.'s financial statements reflect reduced assets from redemptions, a net loss, and pre-combination activities Condensed Balance Sheets The balance sheet reflects a significant asset decrease from redemptions, increased liabilities, and a growing stockholders' deficit Condensed Balance Sheet Summary (Unaudited) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $31,463,212 | $71,466,678 | | Investments held in Trust Account | $31,310,191 | $71,421,125 | | Total Liabilities | $3,271,107 | $1,735,906 | | Promissory notes - Evie | $436,040 | $0 | | Due to related parties | $1,182,850 | $1,002,850 | | Common stock subject to possible redemption | $30,838,531 | $70,973,384 | | Total Stockholders' Deficit | ($2,646,426) | ($1,242,612) | Unaudited Condensed Statements of Operations Net loss improved for the six months ended June 30, 2023, due to higher interest income offsetting increased operating costs Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Operating Costs | $490,123 | $257,312 | $803,653 | $442,192 | | Interest Income on Trust Account | $340,353 | $46,030 | $1,023,275 | $47,786 | | Net Loss | ($239,409) | ($146,322) | ($50,696) | ($236,066) | | Basic and Diluted Net Loss Per Share | ($0.04) | ($0.02) | ($0.01) | ($0.03) | Unaudited Condensed Statements of Cash Flows Cash flows were dominated by significant redemptions from the Trust Account, largely offset by financing activities for stock - Cash flows were dominated by the movement of funds related to stock redemptions. $41.1 million was provided by investing activities (from Trust Account redemptions) and $40.5 million was used in financing activities (to pay for stock redemptions)82 - The company received $436,040 from promissory notes with Evie and $150,000 from new sponsors to fund operations and extensions82 Notes to Unaudited Condensed Financial Statements Notes detail the company's SPAC status, Evie Group business combination, funding for extensions, and key accounting policies - The Company is a blank check company formed to effect a business combination. It has not commenced any operations and its activities relate to its formation, IPO, and search for a target5984 - On June 23, 2023, the Company entered into a Business Combination Agreement to acquire Evie Group, which will become a wholly owned subsidiary. The consideration is eighty-five million new shares of Bannix common stock102281 - In March 2023, stockholders holding 3,960,387 shares redeemed them for approximately $41.1 million, leading to the recognition of a $410,772 excise tax liability96235 - The company has issued multiple unsecured, non-interest-bearing promissory notes to Instant Fame and Evie Autonomous Ltd. to fund deposits into the Trust Account, extending the business combination deadline9198198 - Private Warrants are classified as a liability at fair value, which is re-measured each period. The fair value was $16,240 at June 30, 2023, up from $12,180 at December 31, 20221217 - On September 7, 2023, the company engaged RBSM LLP as its new independent registered public accounting firm, dismissing Marcum LLP6 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's SPAC status, Evie Group agreement, precarious financial condition, and going concern doubts Overview and Proposed Business Combination Bannix, a SPAC, extended its business combination deadline to October 14, 2023, and agreed to acquire Evie Group - The company entered into a definitive Business Combination Agreement with Evie Group on June 23, 2023, to acquire all of its share capital in exchange for 85 million new shares of Bannix common stock102281 - The deadline to complete a business combination has been extended to October 14, 2023, funded by deposits from non-interest-bearing promissory notes from Instant Fame, LLC and Evie Group239279 - Following a stockholder vote, 3,960,387 shares were redeemed for $41,077,199, leaving 5,463,613 shares outstanding96240 - The company also has a Letter of Intent to acquire the 'Apollo System,' a machine learning-driven imaging technology, from GBT Technologies Inc126241 Results of Operations Net loss improved for the six months ended June 30, 2023, due to increased interest income offsetting higher operating costs Comparison of Results of Operations (Six Months Ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss | ($50,696) | ($236,066) | | Interest Income on Trust Account | $1,023,275 | $47,786 | | Operating Costs | $803,653 | $442,192 | | Provision for Income Taxes | $266,258 | $0 | Comparison of Results of Operations (Three Months Ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss | ($239,409) | ($146,322) | | Interest Income on Trust Account | $340,353 | $46,030 | | Operating Costs | $490,123 | $257,312 | Liquidity, Capital Resources, and Going Concern The company faces substantial doubt about its going concern ability due to a working capital deficit and reliance on sponsor loans - The company has insufficient funds and borrowing capacity to meet its operating needs through the consummation of a Business Combination166317 - As of June 30, 2023, the company had $129,264 in cash and a working capital deficit of $2,319,706165293 - Management has determined that there is substantial doubt about the company's ability to continue as a going concern due to the risk of mandatory liquidation167318 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Bannix Acquisition Corp. is exempt from market risk disclosures - The company is not required to make disclosures under this item because it qualifies as a smaller reporting company324 Controls and Procedures Disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of June 30, 2023300 - A material weakness was identified in internal control over financial reporting. This relates to the accounting for complex financial instruments, fair value measurements, and the failure to properly design the financial closing and reporting process330333 - The company also identified misstatements in prepaid expense, income and franchise taxes, and legal fees304 PART II—OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - There are no legal proceedings to report306332 Risk Factors Key risks include ineffective internal controls, potential SEC rule changes, and a 1% excise tax on stock redemptions - The identified material weakness in internal control over financial reporting could adversely affect investor confidence, lead to an inability to report financial results accurately, and result in regulatory sanctions306332 - The company may be subject to a 1% excise tax on stock redemptions under the Inflation Reduction Act of 2022, which could reduce cash available for a business combination310312337 - 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 one could be completed336 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for this period - None reported339 Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported346 Mine Safety Disclosures The company reports no mine safety disclosures - None reported314 Other Information The company reports no other information - None reported341 Exhibits Exhibits include promissory notes for deadline extensions, officer certifications, and XBRL data files - Exhibits filed include various promissory notes from March and April 2023, officer certifications (Sections 302 and 906 of Sarbanes-Oxley), and XBRL interactive data files315342348 Signature Signature The report was signed by Douglas Davis, Co-Chairman and CEO, on October 4, 2023 - The report is signed by Douglas Davis, Co-Chairman and Chief Executive Officer (Principal Executive, Accounting and Financial Officer) on October 4, 2023345